Author: Arlene Baril, MHA, RHIA, CHC

Author: Amy Crenshaw-Pritchett, CCS, CPC-I, CPMA, CDEO, CASCC, CANPC, CRC, CDEC, CMPM, C-AHI
Senior Consultant


(303) 801-0111

The Centers for Medicare and Medicaid Services (CMS) released the Calendar Year (CY) 2022 Outpatient Prospective Payment System (OPPS) and Ambulatory Surgery Center (ASC) Payment System final rule on November 16, 2021.

The final rule increased payment rates for hospitals that meet applicable quality reporting requirements by 2%.  The update was based on projected hospital market basket increase of 2.7%, which is a reduction by 0.7% for the productivity adjustment.

Due to COVID-19 and corresponding public health emergency factors, CMS determined that CY 2020 data was not the best approximation of expected outpatient hospital services for CY 2022.  Therefore, CMS utilized CY 2019 data to set the CY 2022 OPPS and ASC payment system rates.

OPPS Co-pays

The unadjusted copayments for services payable under the OPPS which will be effective January 1, 2022 are shown in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS website).   In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year.  It is noted that the copay is not to exceed 20% of the allowable amount.

OPPS Outlier Payments

CMS will continue estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS for CY 2022, with an amount equal to less than 0.01 percent of outlier payments to be allocated specifically for community mental health centers for partial hospitalization program (PHP) outlier payments.


Hospital Price Transparency

The rule finalized proposed changes to price transparency requirements for hospital standard charges.  This specifically discussed the civil monetary penalties (CMPs) for noncompliance with price transparency requirements; increasing penalties based on bed count and prohibiting some activities that present barriers associated with machine-readable files.

As CMS maintained the commitment to consumers to have information needed to make fully informed decisions regarding their healthcare, the hospital transparency rule educates people about what a hospital charges for items and services provided.  CMS expects hospitals to comply with the requirements and is enforcing the rules to ensure people know “up-front” what hospitals charge for items and services.

CMS imposed several penalties as a result:

  • A minimum CMP of $300.00 per day for hospitals with 30 or fewer beds
  • A penalty of $10.00 per bed, per day would apply to hospitals with a bed count greater than 30; however, not to exceed a maximum daily dollar amount of $5,500.00
  • For a full calendar year of noncompliance, the minimum total penalty amount would be $109,500.00 per hospital with a maximum total penalty of $2,007,500.00
  • CMS finalized the policy to require that machine-readable files are accessible for automated searches and direct downloads


304B- Acquired Drugs

In July 2021, the US Supreme Court announced that it would uphold the American Medical Association v. Becerra ruling.  The matter under review related to CMS’s decision to cut nearly 30% of payment for specified covered outpatient drugs under OPPS for certain hospitals that participate in 304B programs.  This ruling has been under challenge in the court by provider groups since early 2017.  Provider groups have urged CMS to reverse payment reductions as part of the CY 2022 rulemaking process.  CMS’s decision to continue the 304B payment cuts leaves open the question: has CMS exceeded their authority to adjust the payment rates under the existing framework? This is still under litigation and will ultimately be decided by the US Supreme Court.


Section 304B of the Public Health Service Act:

  • Allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices
  • During the CY 2018 OPPS/ASC final rule, CMS reviewed the Average Sales Price (ASP) plus 6% for drugs that were acquired through the 304B program
  • In CY 2018, as of January 1, 2018, CMS adopted the policy to pay an adjusted amount of ASP minus 22.5% for certain separately payable drugs or biologicals acquired through the program
  • CY 2022 final rule did maintain the payment rate of average sales price minus 22.5% for certain separately payable drugs or biologics acquired through the program
  • The final rule also maintained sole rural community hospitals, children’s hospitals, and PPS-exempt cancer hospitals would continue to be exempt from the policy
  • CMS finalized the payment policy for biosimilar products, which made all eligible for pass-through payment and not just the first for a reference product. Biosimilars acquired through the 340B program will continue to be paid at biosimilar ASP minus 5% rather than the referenced products’ ASP


Non-Pass-Through Drugs, Biologicals, and Radiopharmaceuticals

  • With finalization of the CY 2022 OPPS rule, CMS determined the threshold for CY 2022 drug packaging would be $130.00.
  • The threshold did not increase from last year and the methodology of payment for pass-through and non-pass-through separately payable drugs is finalized at ASP plus 6% or wholesale cost minus 3% when the ASP is unavailable.
  • CMS also listed the APC rates to which a policy-packaged drug may be offset in CY 2022
  • Diagnostic Radiopharmaceutical
    • 5591- Level 1 Nuclear Medicine and Related Services
    • 5592- Level 2 Nuclear Medicine and Related Services
    • 5593- Level 3 Nuclear Medicine and Related Services
    • 5594- Level 4 Nuclear Medicine and Related Services
  • Contrast Agents
    • 5571- Level 1 Imaging with Contrast
    • 5572- Level 2 Imaging with Contrast
    • 5573- Level 3 Imaging with Contrast
  • Stress Agents
    • 5722- Level 2 Diagnostic Tests and Related Services
    • 5593- Level 3 Nuclear Medicine and Related Services
  • Skin Substitutes
    • 5054- Level 4 Skin Procedures
    • 5055- Level 5 Skin Procedures


Inpatient Only List (IPO):

The final rule suspended elimination of the Inpatient Only List, which was scheduled to go into effect January 1, 2022.  The rule also solidified criteria of removing procedures from the IPO list to make clear how future procedures would be evaluated for removal.  The IPO exempts procedures removed from the IPO list beginning on or after 1/1/2022 from site-of-service and noncompliance with the Two-Midnight Rule for 2 years.  CMS also eliminated the proposal to halt the IPO list and added back 293 of the 298 codes removed in CY 2021.

Five codes met criteria for removal along with their corresponding anesthesia CPT codes 01638 and 01486:

  • 22630- Arthrodesis, posterior interbody technique, including laminectomy and/or discectomy to prepare interspace (other than decompression), single interspace
  • 23472- Arthroplasty, glenohumeral joint, total shoulder (glenoid and proximal humeral replacement (e.g., total shoulder)
  • 27702- Arthroplasty, ankle with implant (total ankle)

Three codes were proposed for removal but are being retained:

  • 0499T- Cystourethroscopy, with mechanical dilation and urethral therapeutic drug delivery for urethral stricture or stenosis, including fluoroscopy, when performed
  • 54650- Orchiopexy, abdominal approach, for intra-abdominal testis (e.g., Fowler-Stephens)
  • 60512- (Add-On Code)- Parathyroid auto-transplantation (List separately in addition to code for the primary procedure)


Wage Index Changes

The wage index continues to reflect adjustments implemented in prior years.  This included adjustments for occupational mix, adjustment to the wage index based on patterns of employees, and certain low-wage index hospitals.  The wage index changes assist in addressing disparities between low and high wage index hospital classifications.  CMS utilized the FY 2022 IPPS to reclassify wage indices for urban and rural areas for OPPS to determine the wage adjustments for both OPPS payment rates and copayment rates for CY 2022 without any modifications.


Hospital Inpatient Quality Reporting (IQR) Program and Medicare Promoting Inoperability Program

CMS maintained the pay-for-reporting quality program for CY 2022.  The rule also noted that all hospitals that fail to meet quality IQR program requirements would be subject to ¼ reduction in Annual Payment Update (APU) under the IPPS.

Hospitals are currently required to report the following:

  • Three (3) self-selected electronic quality measures (eCQMs)
  • The Safe Use of Opioids eCQM for CY 2022


Ambulatory Surgical Center (ASC) Covered Procedures List

CMS reinstated patient safety criteria adding a procedure to the ASC CPL that was in place in CY 2020.  CMS also removed 255 procedures that were removed from the ASC CPL in CY 2021.  The final rule also adopted a nomination process that will begin in March 2022.  This will allow external parties to nominate surgical procedures to be added to the ASC CPL.  CMS also updated the payment rate by 2.0% for all ASCs that met quality-reporting requirements.

If CMS determines a surgical procedure met requirements to be added to the ASC CPL including a surgical procedure that was nominated by external policies, CMS will propose to add the surgical procedure to the ASC CPL for January 1, 2023.  CMS will also provide sub-regulatory guidance on the nomination process in early 2022.


Ambulatory Surgery Center (ASC) Payment for Non-Opioid Products

Section 1833(t)(22)(A) and Section 1833(i)(8) of the Social Security Act, which was added by Section 6082 of the SUPPORT Act; required review of payments under the OPPS and ASC for opioids and evidence-based non-opioid alternatives for pain management.  CMS is utilizing this information to verify there are not financial incentives to use opioids versus non-opiate alternatives.

The final rule modified the current CY 2022 policies and provides separate payments for non-opioid pain management drugs and biologicals that function as supplies in an ASC setting.  Their guidance provided stipulated payment only when the following criteria are met:

  • The product is Food and Drug Administration (FDA) approved
  • Indicated for pain management as an analgesic by the FDA
  • Has a per-day cost above the OPPS drug packaging threshold

CMS also provided a list of products that met criteria for separate payment in the ASC setting under the new non-opioid pain management drugs that would function as a surgical supply:

  • C9290 – Injection, bupivacaine liposome, 1 mg
  • J1097 – Phenylephrine 10.16 mg/ml and ketorolac 2.88 mg/ml ophthalmic irrigation solution, 1 ml
  • C9088 – Instillation, bupivacaine, and meloxicam, 1 mg/0.03 mg
  • C9089 – Bupivacaine, collagen-matrix implant, 1 mg


Beneficiary Coinsurance for Colorectal Cancer Screening Tests

The final rule also made changes to colorectal screening tests and guidance from previous years.  Flexible sigmoidoscopies and colonoscopies are now considered screening procedures.   The definition of “screening” is regardless of whether tissue or other matter was removed during the screening test.  This rule will be effective January 1, 2022 and will gradually reduce beneficiary cost-sharing for screening services, leading to a zero co-insurance by January 1, 2030.


OPPS Transitional Payment for Drug and Biological Pass-Through and Transitional Payment for Device Pass-Through Services

In CY 2021, CMS received numerous applications for device pass-through payments.  Public comment periods were held and CMS approved 3 of the 8 applications submitted for pass-through status for CY 2022.  CMS continues pass-through payments for 46 drugs and biologicals; including 27 drugs and biologicals CMS is using for equitable adjustment authority under section 1833 (t)(2)(E).  The goal is to utilize CY 2019 claims data for rate-setting to provide up to 4 quarters of separate payments; where pass-through payment status will expire between December 31, 2021, and September 30, 2022.


Partial Hospitalization Program (PHP)

The final rule will update CMS payment rates for PHP services that are furnished in hospital outpatient departments and Community Mental Health Centers (CMHCs).  The PHP is an intensive outpatient program that consists of group mental health services paid on per-diem basis under OPPS and is based on PHP per-diem costs.  CMS updated the final rule to maintain existing unified rate structures.  There is a single PHP Ambulatory Payment Classification (APC) for each provider type and there must be 3 or more services per day.  The finalized rule used CY 2019 claims and cost information provided prior to COVID-19.


Mental Health Services Composite Ambulatory Payment Classification (APC)

CMS finalized the proposal when aggregate payment for mental health services is provided by one hospital to a single beneficiary on a single date of service.  The services must exceed the maximum per-diem payment rate for partial hospitalization services.  According to the final rule, services would be paid through a composite APC of 8010.  CMS is also set to finalize payment for APC 5863, which is the maximum partial hospitalization per-diem payment rate.

The final rule also provided CY 2022 APC Geometric Mean Per-Diem Costs:

  • 5853- Partial Hospitalization (three ore more services per day) for CMHCs $136.14
  • 5863- Partial Hospitalization (three or more services per day) for hospital-based PHPs $253.76


Radiation Oncology Model

This is a new rule that was established for CY 2022.  The rule is designed to test payments to hospital outpatient departments and physician groups for services that do not vary based on care setting and / or care delivered over time.  The rule also seeks to align incentives to give radiation oncologists flexibility to delivery high-quality care without fear of less care = reduction in payment.  There are several guidelines that come with the passing of this final rule:

  • The new rule will be effective January 1, 2022
  • Will be a 5-year model performance and is slated to terminate on December 31, 2026
  • The baseline for all claims data was taken from 2017-2019 instead of 2016-2018
  • Will offer discounts of 3.5% for professional and 4.5% for technical components
  • Brachytherapy was excluded from the modality and will be paid under CMS fee-for-service
  • CMS will include an intense circumstance policy under which
    • CMS will have the flexibility to delay the model period and
    • Reduce administrative burdens of participation including “but not limited to”, reporting requirements and pricing methodologies
  • Excludes hospital outpatient departments that participate in the Community Transformation track of the Community Health Access and Rural Transformation (CHART) model
  • The same policy will intersect between the new RO model and Medicare Shared Savings Program (ACO)
  • Liver cancer will no longer be included as it did not satisfy the cancer inclusion criteria

The three (3) tracks related to status under QPP and RO participant type include:

  • Professional and Dual participants who follow all RO requirements including CEHRT
  • Professional and Dual participants who would qualify as MIPS APM only
  • All other RO participants who would not meet MIPS APM or Advanced APM models

More information can be located on the CMS website


Outpatient Quality Reporting (OQR) Program

The final rule adopted three (3) new measures:

  • Breast cancer screening recall rates (OP-39) will be claim-based and begins with the data collection period of July 2020 to June 2021
  • COVID-19 vaccination coverage among healthcare personnel measure (OP-38) begins with CY 2022 reporting to the CDC through the National Healthcare Safety Network system
  • ST-Segment Elevation Myocardial Infarction (STEMI) eCQM (OP-40) will begin with one quarter of data for CY 2024 reporting; however, has guideline stipulations
    • After a year of voluntary reporting in CY 2023
    • Two chart-abstracted measures (OP-2) and (OP-3) were removed as a result
    • The measures will no longer need to be reported beginning CY 2023 reporting year
  • The rule also updated the validation policies to reduce the reporting period from 45 to 30 days beginning with validations of CY 2022 reporting
  • CMS also reviewed comments received in response for information regarding transitioning to digital quality measures and addressing health equity in hospital quality programs


Comments on Temporary Policies to Address COVID-19

Comments were solicited by CMS on continuation to allow a two-way, audio/video communication technology platform for pulmonary, cardiac, and intensive cardiac rehabilitation services.  Commenters supported the change and CMS is considering comments for future rulemaking.

CMS also solicited comments from the public regarding extension or permanent OPPS payments associated with specimen collection for COVID-19 tests after the COVID-19 Public Health Emergency ends.  Comments were supportive of making HCPCS code C9803 permanent.  Comments were also received requesting CMS’s continuation of payment for HCPCS code C9803 due to concerns of the unknown future of COVID-19.

Devices, drugs, and biologicals with pass-through status that would have expired on December 31, 2021, and September 30, 2022, were considered under Section 1833 (t)(2)(E) as equitable adjustments and would consider separate payment for the remainder of CY 2022.

Addendum N to the CY 2022 OPPS/ASC proposed rule listed 30 out of 167 HCPCS codes that were scheduled to be phased out.  The proposed list of bypass codes contains codes that are reported on claims for services in CY 2019 and, therefore include codes that were in effect in CY 2019 and utilized for billing.  There was a proposal to retain deleted bypass codes on the CY 2022 bypass list as the codes existed in CY 2019 and were covered Outpatient Payment Data (OPD) services during that period.  As a result, CY 2019 claims data was used to calculate the proposed CY 2022 payment rates.

CMS noted that keeping the deleted bypass codes on the bypass list would potentially allow creation of “pseudo” single procedure claims for rate setting purposes.  HCPCS codes that were proposed to be added for CY 2022 are identified by an asterisk (*) in the fourth column of Addendum N.

The codes are limited to radiology services and include:

  • CT scans
  • MRIs
  • Echocardiogram of the Abdomen
  • Ultrasounds

In summary, CMS will increase financial penalties to a maximum of $5,500.00 per day, or over $2 million per year for noncompliance under the hospital transparency rules.  We will also see continuation of the Average Sales Price (ASP) minus 22.5% for separately payable drugs or biologicals acquired through the Section 340B Program.  CMS declined to eliminate the Inpatient Only List (IPO) and remove regulatory references to the list.  CY 2022 will also see the implementation of the updated Radiology Oncology Model which begins on January 1, 2022.

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