OPPS FY2022 Final Rule – Overview

The Hospital Outpatient Prospective Payment System (OPPS) Final Rule for Fiscal Year 2022 has been released by the Centers for Medicare and Medicaid Services (CMS). Included in the 1394 page OPPS final rule announcement that came on 11/2/2021 was the 2022 payment policy for Ambulatory Surgery Centers (ASCs) which is available at: https://public-inspection.federalregister.gov/2021-24011.pdf

There are lots of important aspects to this rule that hospitals need to be aware of and plan for. A two (2) percent increase on outpatient payment rates will be given to those hospitals that meet the quality reporting requirements. Due to the COVID-19 Pandemic, CMS used 2019 data to help set the payment rates accurately to reflect estimates of the costs associated with furnishing outpatient services.

Inpatient Only Rule (IPOR): CMS has decided as part of their policy of enhancing protections for Medicare beneficiaries they will NOT eliminate the Inpatient Only Rule. This rule provides a guidance on those surgical procedures or services that for Medicare beneficiaries must be performed in the hospital inpatient acute care setting in order to receive Medicare coverage.

There was a proposal to eliminate this rule entirely, but CMS has decided for FY2022 that will continue with this rule and have added back several surgical procedures to the Inpatient Only List that they were going to remove. The three operative services that will remain eligible for coverage if performed in an outpatient setting are:

  • Lumbar spine fusion (CPT code 22630)
  • Reconstruct shoulder joint (23472)
  • Reconstruct ankle joint (27702)

CMS evaluates the complexity of the procedure, the risk for complications, the need for post-operative monitoring, and an anticipated prolonged time for recovery before the decision is made to be on the inpatient only list (needing a higher level of care than outpatient).

This means that hospital outpatient surgical admissions and case management need to continue to check the inpatient only list before scheduling an outpatient surgery for a Medicare beneficiary. Sometimes the HIM Coding professional will be coding an outpatient surgery encounter and receive an edit from the coding software (encoder) regarding the CPT code(s) being on the “Inpatient Only List,” which if the encounter is a Medicare beneficiary, that encounter (claim) should be brought to the attention of the Business Office Manager or Patient Financial Services Manager, as the claim will result in a Medicare denial if processed. A good resource is the CMS OPPS Addendum B, which lists all HCPCS/CPT codes and their status of coverage. Note that status “C” means the procedure is not paid under OPPS and the patient should probably be admitted to the hospital for the procedure/services. One best practice is for an upfront, pre-surgery coverage and setting type verification to be conducted in order to inform the physician (check the order for setting type) and the beneficiary of the lack of coverage for the outpatient encounter.

Price Transparency: Simply stated, “Hospital price transparency helps people know what a hospital charges for the items and services they provide.” Enforcement activities for compliance with price transparency continue in FY2022 beginning January 1st. CMS communicated the following modifications:

Beginning January1, 2022, CMS will increase the penalty for some hospitals that do not comply with the Hospital Price transparency final rule. Specifically, CMS is setting a minimum civil monetary penalty of $300 per day that will apply to smaller hospitals with a bed count of 30 or fewer, and a penalty of $10 per bed per day for hospital with a bed count greater than 30, not to exceed a maximum daily dollar amount of $5,500. Under this approach, for a full calendar year of noncompliance, the minimum total penalty amount would be $109,500 per hospital, and the maximum total penalty amount would be $2,007,500 per hospital.

In addition to the above, CMS is requiring machine-readable file be included with hospital prices and to be accessible for automated search and direct downloads.

Health Equity: CMS received lots of comments regarding their ‘Requests for Information (RFIs)” and “potential proposal and action to further the vision of advancing health equality, driving high-quality, person-centered care, and promoting affordability and sustainability.

Transitional Payment for Drug and Biological Pass-Through and Transitional Payment  for Device Pass-Through: For CY 2022, CMS received eight applications for device pass-through payments. One of these applications received preliminary approval for pass-through payment status through the quarterly review process. For FY2022 there are three (3) devices have been approved for pass-through status for FY22, as have 46 drugs and biologicals.

According to the CMS press release, for CY 2022, they are continuing our current policy of paying an adjusted amount of ASP minus 22.5 percent for drugs and biologicals acquired under the 340B program. CMS will continue to exempt Rural SCHs, PPS-exempt cancer hospitals and children’s hospitals from the CMS 340B payment policy.

Radiation Oncology Model: The CMS has a new Radiation Oncology (RO) Model that is designed to test whether making payments to hospital outpatient departments and physician group practices (including freestanding radiation therapy centers) for radiotherapy (RT) services that do not vary based on care setting or how much or what type of care is delivered over time, preserves or enhances the quality of care furnished to Medicare beneficiaries while reducing Medicare spending. The RO Model seeks to align incentives to give radiation oncologists the flexibility to provide high-quality, patient-centered care aligned with the latest evidence-based guidelines, without worrying that providing less care, if applicable, will reduce their payments.

There is a lot to read and absorb with this model, so it is best to read more about the RO Model in the CMS OPPS Fact Sheet: For more information on the RO Model, visit: https://innovation.cms.gov/initiatives/radiation- oncology-model/

Hospital Outpatient Quality Reporting (OQR) Program: The hospital OQR program is a pay-for-reporting quality program for the hospital outpatient department setting. Hospitals that do not meet the program’s quality reporting requirements receive a reduction of 2.0 percentage points in their annual payment update. The FY2022 OPPS/ASC final rule, CMS is finalizing proposals to:

  • adopt three new measures, including the COVID-19 Vaccination of Health Care Personnel (NQF #0431) and Breast Cancer Screening Recall Rates;
  • make the reporting of two voluntary or suspended measures mandatory;
  • remove two measures; and
  • update the validation policies of the Hospital OQR Program to reduce provider burden and improve processes.

Outpatient quality validation processes are being updated, including by requiring electronic-only submission of medical records to the CMS Data Abstraction Center and reducing the turnaround time after a validation request from 45 to 30 days.

For the CMS fact sheet on the CY 2022 OPPS/ASC Payment System Final Rule (CMS-1753-F), please visit: https://www.cms.gov/newsroom/fact-sheets/cy-2022-medicare-hospital-outpatient-prospective-payment-system-and-ambulatory-surgical-center-0

Outpatient encounters have specific ICD-10-CM Guidelines for Coding and Reporting this need to be followed for diagnosis coding. In addition, CPT coding for the hospital outpatient settings drives the OPPS reimbursement so knowing the roles and edits for appropriate and compliant coding is essential. The above OPPS changes become effective January 1, 2022.

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