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Proposed Rule2021-15496

Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency of Hospital Standard Charges; Radiation Oncology Model; Request for Information on Rural Emergency Hospitals

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Published

August 4, 2021

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This proposed rule would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for Calendar Year (CY) 2022 based on our continuing experience with these systems. In this proposed rule, we describe the proposed changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. Also, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program, update Hospital Price Transparency requirements, and update and refine the design of the Radiation Oncology Model. Finally, this proposed rule includes a Request for Information (RFI) focusing on the health and safety standards, quality measures and reporting requirements, and payment policies for Rural Emergency Hospitals (REHs), a new Medicare provider type. The RFI will be used to inform future rulemaking for REHs.

Full Text

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[Federal Register Volume 86, Number 147 (Wednesday, August 4, 2021)]
[Proposed Rules]
[Pages 42018-42360]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-15496]

[[Page 42017]]

Vol. 86

Wednesday,

No. 147

August 4, 2021

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 412, 416, 419, et al.

45 CFR Part 180

Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; Price Transparency of Hospital Standard Charges; Radiation
Oncology Model; Request for Information on Rural Emergency Hospitals;
Proposed Rule

Federal Register / Vol. 86, No. 147 / Wednesday, August 4, 2021 /
Proposed Rules

[[Page 42018]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 416, 419, and 512

Office of the Secretary

45 CFR Part 180

[CMS-1753-P]
RIN 0938-AU43

AGENCY: Centers for Medicare & Medicaid Services (CMS), Depatment of
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment system for Calendar Year (CY)
2022 based on our continuing experience with these systems. In this
proposed rule, we describe the proposed changes to the amounts and
factors used to determine the payment rates for Medicare services paid
under the OPPS and those paid under the ASC payment system. Also, this
proposed rule would update and refine the requirements for the Hospital
Outpatient Quality Reporting (OQR) Program and the ASC Quality
Reporting (ASCQR) Program, update Hospital Price Transparency
requirements, and update and refine the design of the Radiation
Oncology Model. Finally, this proposed rule includes a Request for
Information (RFI) focusing on the health and safety standards, quality
measures and reporting requirements, and payment policies for Rural
Emergency Hospitals (REHs), a new Medicare provider type. The RFI will
be used to inform future rulemaking for REHs.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by September 17, 2021.

ADDRESSES: In commenting, please refer to file code CMS-1753-P when
commenting on the issues in this proposed rule. Because of staff and
resource limitations, we cannot accept comments by facsimile (FAX)
transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1753-P, P.O. Box 8010,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1753-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Advisory Panel on Hospital Outpatient
Payment (HOP Panel), contact the HOP Panel mailbox at
<a href="/cdn-cgi/l/email-protection#db9a8b988bbab5beb79bb8b6a8f5b3b3a8f5bcb4ad">[email&#160;protected]</a>.
Ambulatory Surgical Center (ASC) Payment System, contact Scott
Talaga via email at <a href="/cdn-cgi/l/email-protection#3c6f5f53484812685d505d5b5d7c5f514f1254544f125b534a">[email&#160;protected]</a> or Mitali Dayal via email
at <a href="/cdn-cgi/l/email-protection#44092d3025282d6a00253d252876042729376a2c2c376a232b32">[email&#160;protected]</a>.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Administration, Validation, and Reconsideration Issues, contact Anita
Bhatia via email at <a href="/cdn-cgi/l/email-protection#92d3fcfbe6f3bcd0faf3e6fbf3d2f1ffe1bcfafae1bcf5fde4">[email&#160;protected]</a>.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Measures, contact Cyra Duncan via email <a href="/cdn-cgi/l/email-protection#c586bcb7a4eb81b0aba6a4ab85a6a8b6ebadadb6eba2aab3">[email&#160;protected]</a>.
Blood and Blood Products, contact Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#743e1b071c01155a391732111100110607341719075a1c1c075a131b02">[email&#160;protected]</a>.
Cancer Hospital Payments, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#f0a3939f8484dea4919c919791b0939d83de989883de979f86">[email&#160;protected]</a>.
CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck
Braver via email at <a href="/cdn-cgi/l/email-protection#4c0f24392f27620e3e2d3a293e0c2f213f6224243f622b233a">[email&#160;protected]</a>.
Composite APCs (Low Dose Brachytherapy and Multiple Imaging),
contact Au'Sha Washington via email at <a href="/cdn-cgi/l/email-protection#69281c3a0108473e081a0100070e1d0607290a041a4701011a470e061f">[email&#160;protected]</a>.
Comprehensive APCs (C-APCs), contact Mitali Dayal via email at
<a href="/cdn-cgi/l/email-protection#ca87a3beaba6a3e48eabb3aba6f88aa9a7b9e4a2a2b9e4ada5bc">[email&#160;protected]</a>.
Hospital Inpatient Quality Reporting Program--Administration
Issues, contact Julia Venanzi, <a href="/cdn-cgi/l/email-protection#87edf2ebeee6a9f1e2e9e6e9fdeec7e4eaf4a9efeff4a9e0e8f1">[email&#160;protected]</a>.
Hospital Outpatient Quality Reporting (OQR) Program Administration,
Validation, and Reconsideration Issues, contact Shaili Patel via email
<a href="/cdn-cgi/l/email-protection#c596ada4aca9aceb95a4b1a0a985a6a8b6ebadadb6eba2aab3">[email&#160;protected]</a>.
Hospital Outpatient Quality Reporting (OQR) Program Measures,
contact Janis Grady via email <a href="/cdn-cgi/l/email-protection#e2a8838c8b91cca59083869ba2818f91cc8a8a91cc858d94">[email&#160;protected]</a>.
Hospital Outpatient Visits (Emergency Department Visits and
Critical Care Visits), contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#17527b7e647239557665657e7970726557747a64397f7f6439707861">[email&#160;protected]</a>.
Hospital Price Transparency, contact the Hospital Price
Transparency email box at <a href="/cdn-cgi/l/email-protection#2070524943457452414e53504152454e4359684f53504954414c6348415247455360434d530e4848530e474f56">[email&#160;protected]</a>.
Inpatient Only (IPO) Procedures List, contact Au'Sha Washington via
email at <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="236256504b420d7442504b4a4d44574c4d63404e500d4b4b500d444c55">[email&#160;protected]</a>, or Allison Bramlett via email
<a href="/cdn-cgi/l/email-protection#cd8ca1a1a4bea2a3e38fbfaca0a1a8b9b98daea0bee3a5a5bee3aaa2bb">[email&#160;protected]</a>, Lela Strong-Holloway via email
<a href="/cdn-cgi/l/email-protection#86cae3eae7a8d5f2f4e9e8e1c6e5ebf5a8eeeef5a8e1e9f0">[email&#160;protected]</a>, or Abigail Cesnik at
<a href="/cdn-cgi/l/email-protection#e4a5868d83858d88caa781978a8d8fa4878997ca8c8c97ca838b92">[email&#160;protected]</a>.
Medical Review of Certain Inpatient Hospital Admissions under
Medicare Part A for CY 2021 and Subsequent Years (2-Midnight Rule),
contact Elise Barringer via email at <a href="/cdn-cgi/l/email-protection#d297bebba1b7fc90b3a0a0bbbcb5b7a092b1bfa1fcbabaa1fcb5bda4">[email&#160;protected]</a>.
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email at <a href="/cdn-cgi/l/email-protection#7427171b00005a201518151315341719075a1c1c075a131b02">[email&#160;protected]</a>.
No Cost/Full Credit and Partial Credit Devices, contact Scott
Talaga via email at <a href="/cdn-cgi/l/email-protection#1d4e7e72696933497c717c7a7c5d7e706e3375756e337a726b">[email&#160;protected]</a>.
OPPS Brachytherapy, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#d083b3bfa4a4fe84b1bcb1b7b190b3bda3feb8b8a3feb7bfa6">[email&#160;protected]</a>.
OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier
Payments, and Wage Index), contact Erick Chuang via email at
<a href="/cdn-cgi/l/email-protection#aaefd8c3c9c184e9c2dfcbc4cdeac9c7d984c2c2d984cdc5dc">[email&#160;protected]</a>, or Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#5605353922227802373a37313716353b25783e3e2578313920">[email&#160;protected]</a>, or Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#b5ffdac6ddc0d49bf8d6f3d0d0c1d0c7c6f5d6d8c69bddddc69bd2dac3">[email&#160;protected]</a>.
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#9dd7f2eef5e8fcb3d0fedbf8f8e9f8efeeddfef0eeb3f5f5eeb3faf2eb">[email&#160;protected]</a>, or Gil Ngan via email at
<a href="/cdn-cgi/l/email-protection#e1a6888dcfaf86808fa1828c92cf898992cf868e97">[email&#160;protected]</a>, or Cory Duke via email at <a href="/cdn-cgi/l/email-protection#55163a272c7b11203e30153638267b3d3d267b323a23">[email&#160;protected]</a>,
or Au'Sha

[[Page 42019]]

Washington via email at <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="7b3a0e08131a552c1a081312151c0f14153b18160855131308551c140d">[email&#160;protected]</a>.
OPPS New Technology Procedures/Services, contact the New Technology
APC mailbox at <a href="/cdn-cgi/l/email-protection#eba58e9cbf8e8883aabba88a9b9b8782888a9f82848598ab888698c5838398c58c849d">[email&#160;protected]</a>.
OPPS Packaged Items/Services, contact Mitali Dayal via email at
<a href="/cdn-cgi/l/email-protection#115c7865707d783f557068707d2351727c623f7979623f767e67">[email&#160;protected]</a> or Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#12517d606b3c5667797752717f613c7a7a613c757d64">[email&#160;protected]</a>.
OPPS Pass-Through Devices, contact the Device Pass-Through mailbox
at <a href="/cdn-cgi/l/email-protection#97d3f2e1fef4f2c7c3f6e7e7fbfef4f6e3fef8f9e4d7f4fae4b9ffffe4b9f0f8e1">[email&#160;protected]</a>.
OPPS Status Indicators (SI) and Comment Indicators (CI), contact
Marina Kushnirova via email at <a href="/cdn-cgi/l/email-protection#b9f4d8cbd0d7d897f2cccad1d7d0cbd6cfd8f9dad4ca97d1d1ca97ded6cf">[email&#160;protected]</a>.
Partial Hospitalization Program (PHP) and Community Mental Health
Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at
<a href="/cdn-cgi/l/email-protection#7a2a322a2a1b03171f140e2a15161319033a19170954121209541d150c">[email&#160;protected]</a>.
Rural Hospital Payments, contact Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#3b715448534e5a1576587d5e5e4f5e49487b58564815535348155c544d">[email&#160;protected]</a>.
Skin Substitutes, contact Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#feb4918d968b9fd0b39db89b9b8a9b8c8dbe9d938dd096968dd0999188">[email&#160;protected]</a>.
Supervision of Outpatient Therapeutic Services in Hospitals and
CAHs, contact Josh McFeeters via email at <a href="/cdn-cgi/l/email-protection#22684d514a57430c6f416447475647505162414f510c4a4a510c454d54">[email&#160;protected]</a>.
All Other Issues Related to Hospital Outpatient and Ambulatory
Surgical Center Payments Not Previously Identified, contact Elise
Barringer via email at <a href="/cdn-cgi/l/email-protection#07426b6e746229456675756e6960627547646a74296f6f7429606871">[email&#160;protected]</a> or at 410-786-9222.
RO Model, contact <a href="/cdn-cgi/l/email-protection#f4a695909d95809d9b9aa09c918695848db4979987da9c9c87da939b82">[email&#160;protected]</a> or at 844-711-2664,
Option 5.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the individual will take actions to harm the individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.

Addenda Available Only Through the Internet on the CMS Website

In the past, a majority of the Addenda referred to in our OPPS/ASC
proposed and final rules were published in the Federal Register as part
of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC
proposed rule, all of the Addenda no longer appear in the Federal
Register as part of the annual OPPS/ASC proposed and final rules to
decrease administrative burden and reduce costs associated with
publishing lengthy tables. Instead, these Addenda are published and
available only on the CMS website. The Addenda relating to the OPPS are
available at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices</a>.
The Addenda relating to the ASC payment system are available at:
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices</a>.

Current Procedural Terminology (CPT) Copyright Notice

Throughout this proposed rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2019 American Medical Association. All Rights Reserved.
CPT is a registered trademark of the American Medical Association
(AMA). Applicable Federal Acquisition Regulations (FAR and Defense
Federal Acquisition Regulations (DFAR) apply.

Table of Contents

I. Summary and Background
A. Executive Summary of This Document
B. Legislative and Regulatory Authority for the Hospital OPPS
C. Excluded OPPS Services and Hospitals
D. Prior Rulemaking
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel
or the Panel)
F. Public Comments Received on the CY 2021 OPPS/ASC Final Rule
with Comment Period
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Payment Weights
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default Cost-to-Charge Ratios
(CCRs)
E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs)
and Essential Access Community Hospitals (EACHs) under Section
1833(t)(13)(B) of the Act for CY 2021
F. Proposed Payment Adjustment for Certain Cancer Hospitals for
CY 2021
G. Proposed Hospital Outpatient Outlier Payments
H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
I. Proposed Beneficiary Copayments
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New and Revised HCPCS Codes
B. Proposed OPPS Changes--Variations Within APCs
C. Proposed New Technology APCs
D. Proposed OPPS APC-Specific Policies
IV. Proposed OPPS Payment for Devices
A. Proposed Pass-Through Payments for Devices
B. Proposed Device-Intensive Procedures
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Payment Status
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Hospital Outpatient Visits and
Critical Care Services
VIII. Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update for CY 2021
C. Proposed Outlier Policy for CMHCs
IX. Proposed Services That Would Be Paid Only as Inpatient Services
A. Background
B. Proposed Changes to the Inpatient Only (IPO) List
C. Comment Solicitation
X. Proposed Nonrecurring Policy Changes
A. Proposed Changes in the Level of Supervision of Outpatient
Therapeutic Services in Hospitals and Critical Access Hospitals
(CAHs)
B. Proposed Medical Review of Certain Inpatient Hospital
Admissions Under Medicare Part A for CY 2021 and Subsequent Years
XI. Proposed CY 2021 OPPS Payment Status and Comment Indicators
A. Proposed CY 2021 OPPS Payment Status Indicator Definitions
B. Proposed CY 2021 Comment Indicator Definitions
XII. MedPAC Recommendations
A. Proposed OPPS Payment Rates Update
B. Proposed ASC Conversion Factor Update
C. Proposed ASC Cost Data
XIII. Proposed Updates to the Ambulatory Surgical Center (ASC)
Payment System
A. Background
B. Proposed ASC Treatment of New and Revised Codes
C. Proposed Update to the List of ASC Covered Surgical
Procedures and Covered Ancillary Services
D. Proposed Update and Payment for ASC Covered Surgical
Procedures and Covered Ancillary Services

[[Page 42020]]

E. Proposed New Technology Intraocular Lenses (NTIOLs)
F. Proposed ASC Payment and Comment Indicators
G. Proposed Calculation of the ASC Payment Rates and the ASC
Conversion Factor
XIV. Advancing to Digital Quality Measurement and the Use of Fast
Healthcare Interoperability Resources (FHIR) in Outpatient Quality
Programs--Request for Information
XV. Proposed Requirements for the Hospital Outpatient Quality
Reporting (OQR) Program
A. Background
B. Proposed Hospital OQR Program Quality Measures
C. Administrative Requirements
D. Form, Manner, and Timing of Data Submitted for the Hospital
OQR Program
E. Proposed Payment Reduction for Hospitals That Fail To Meet
the Hospital OQR Program Requirements for the CY 2021 Payment
Determination
XVI. Requirements for the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program
A. Background
B. Proposed ASCQR Program Quality Measures
C. Administrative Requirements
D. Form, Manner, and Timing of Data Submitted for the ASCQR
Program
E. Proposed Payment Reduction for ASCs That Fail To Meet the
ASCQR Program Requirements
XVII. Request for Information on Rural Emergency Hospitals
A. Background
B. Solicitation of Public Comments
C. RO Model Proposed Regulations
XVIII. Radiation Oncology Model
A. Introduction
B. Background
XIX. Proposed Updates to Requirements for Hospitals To Make Public a
List of Their Standard Charges
A. Introduction and Overview
B. Proposal To Increase the Civil Monetary Penalty Using a
Scaling Factor
C. Proposal To Deem Certain State Forensic Hospitals as Having
Met Requirements
D. Proposals Prohibiting Additional Barriers To Accessing the
Machine-Readable File
E. Clarifications and Requests for Comment
XX. Additional Hospital Inpatient Quality Reporting (IQR) Program
Policies
XXI. Additional Medicare Promoting Interoperability Program Policies
XXII. Files Available to the Public via the Internet
XXIII. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
B. ICRs for the Hospital OQR Program
C. ICRs for the ASCQR Program
D. ICRs for [placeholder for any rider]
E. Total Reduction in Burden Hours and in Costs
XXIV. Response to Comments
XXV. Economic Analyses
A. Statement of Need
B. Overall Impact for the Provisions of This Proposed Rule
C. Detailed Economic Analyses
D. Regulatory Review Costs
E. Regulatory Flexibility Act (RFA) Analysis
F. Unfunded Mandates Reform Act Analysis
G. Federalism Analysis

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
In this proposed rule, we propose to update the payment policies
and payment rates for services furnished to Medicare beneficiaries in
hospital outpatient departments (HOPDs) and ambulatory surgical centers
(ASCs), beginning January 1, 2022. Section 1833(t) of the Social
Security Act (the Act) requires us to annually review and update the
payment rates for services payable under the Hospital Outpatient
Prospective Payment System (OPPS). Specifically, section 1833(t)(9)(A)
of the Act requires the Secretary to review certain components of the
OPPS not less often than annually, and to revise the groups, the
relative payment weights, and the wage and other adjustments that take
into account changes in medical practices, changes in technology, and
the addition of new services, new cost data, and other relevant
information and factors. In addition, under section 1833(i)(D)(v) of
the Act, we annually review and update the ASC payment rates. This
proposed rule also includes additional policy changes made in
accordance with our experience with the OPPS and the ASC payment system
and recent changes in our statutory authority. We describe these and
various other statutory authorities in the relevant sections of this
proposed rule. In addition, this proposed rule would update and refine
the requirements for the Hospital Outpatient Quality Reporting (OQR)
Program and the ASC Quality Reporting (ASCQR) Program.
2. Summary of the Major Provisions
<bullet> OPPS Update: For 2022, we propose to increase the payment
rates under the OPPS by an Outpatient Department (OPD) fee schedule
increase factor of 2.3 percent. This increase factor is based on the
proposed hospital inpatient market basket percentage increase of 2.5
percent for inpatient services paid under the hospital inpatient
prospective payment system (IPPS) reduced by a proposed productivity
adjustment of 0.2 percentage point. Based on this update, we estimate
that total payments to OPPS providers (including beneficiary cost-
sharing and estimated changes in enrollment, utilization, and case-mix)
for calendar year (CY) 2022 would be approximately $82.704 billion, an
increase of approximately $10.757 billion compared to estimated CY 2021
OPPS payments.
We propose to continue to implement the statutory 2.0 percentage
point reduction in payments for hospitals that fail to meet the
hospital outpatient quality reporting requirements by applying a
reporting factor of 0.9805 to the OPPS payments and copayments for all
applicable services.
<bullet> Data used in CY 2022 OPPS/ASC Ratesetting: To set CY 2022
OPPS and ASC payment rates, we would normally use the most updated
claims and cost report data available. However, because the CY 2020
claims data includes services furnished during the COVID-19 PHE, which
significantly affected outpatient service utilization, we have
determined that CY 2019 data would better approximate expected CY 2022
outpatient service utilization than CY 2020 data. As a result, we are
proposing to utilize CY 2019 data to set CY 2022 OPPS and ASC payment
rates.
<bullet> Partial Hospitalization Update: For the CY 2022 OPPS/ASC
proposed rule, CMS is proposing to use the CMHC and hospital-based PHP
(HB PHP) geometric mean per diem costs, consistent with existing
methodology, but with a cost floor that would maintain the per diem
costs finalized in CY 2021. CMS is also proposing to use CY 2019 claims
and cost report data for each provider type. This proposal is
consistent with a broader CY 2022 OPPS ratesetting proposal to use
claims and cost report data prior to the PHE.
<bullet> Changes to the Inpatient Only (IPO) List: For 2022, we
propose to halt the elimination of the IPO list and, after clinical
review of the services removed from the IPO list in CY 2021 against our
longstanding criteria for removal, we propose to add the 298 services
removed from the IPO list in CY 2021 back to the IPO list beginning in
CY 2022. CMS is also proposing to codify in regulation the five
longstanding criteria used to determine whether a procedure or service
should be removed from the IPO list. In addition, we solicit comment on
several policy modifications including whether CMS should maintain the
longer-term objective of eliminating the IPO list or maintain the IPO
list but continue to systematically scale the list back so that
inpatient only designations are consistent with current standards of
practice.
<bullet> Medical Review of Certain Inpatient Hospital Admissions
under Medicare Part A for CY 2021 and Subsequent Years (2-Midnight
Rule): For CY 2022,

[[Page 42021]]

we propose to exempt procedures that are removed from the inpatient
only (IPO) list under the OPPS beginning on or January 1, 2021, from
site-of-service claim denials, Beneficiary and Family-Centered Care
Quality Improvement Organization (BFCC-QIO) referrals to Recovery Audit
Contractor (RAC) for persistent noncompliance with the 2-midnight rule,
and RAC reviews for ``patient status'' (that is, site-of-service) for a
time period of 2 years.
<bullet> 340B-Acquired Drugs: We propose to continue our current
policy of paying an adjusted amount of ASP minus 22.5 percent for drugs
and biologicals acquired under the 340B program. We are proposing to
continue to exempt Rural SCHs, PPS-exempt cancer hospitals and
children's hospitals from our 340B payment policy.
<bullet> Device Pass-Through Payment Applications: For CY 2022, we
received eight applications for device pass-through payments. One of
these applications (the Shockwave C\2\ Coronary Intravascular
Lithotripsy (IVL) catheter) received preliminary approval for pass-
through payment status through our quarterly review process. We are
soliciting public comment on all eight of these applications and final
determinations on these applications will be made in the CY 2022 OPPS/
ASC final rule.
<bullet> Equitable Adjustment for Device Category, Drugs, and
Biologicals with Expiring Pass-through Status: As a result of our
proposal to use CY 2019 claims data, rather than CY 2020 claims data,
to inform CY 2022 ratesetting, we are proposing to use our equitable
adjustment authority under 1833(t)(2)(E) to provide up to four quarters
of separate payment for 27 drugs and biologicals and one device
category whose pass-through payment status will expire between December
31, 2021 and September 30, 2022.
<bullet> Cancer Hospital Payment Adjustment: For 2022, we propose
to continue to provide additional payments to cancer hospitals so that
a cancer hospital's payment-to-cost ratio (PCR) after the additional
payments is equal to the weighted average PCR for the other OPPS
hospitals using the most recently submitted or settled cost report
data. However, section 16002(b) of the 21st Century Cures Act requires
that this weighted average PCR be reduced by 1.0 percentage point.
Based on the data and the required 1.0 percentage point reduction, we
propose that a target PCR of 0.89 would be used to determine the CY
2022 cancer hospital payment adjustment to be paid at cost report
settlement. That is, the payment adjustments will be the additional
payments needed to result in a PCR equal to 0.89 for each cancer
hospital.
<bullet> ASC Payment Update: For CYs 2019 through 2023, we adopted
a policy to update the ASC payment system using the hospital market
basket update. Using the hospital market basket methodology, for CY
2022, we propose to increase payment rates under the ASC payment system
by 2.3 percent for ASCs that meet the quality reporting requirements
under the ASCQR Program. This proposed increase is based on a hospital
market basket percentage increase of 2.5 percent reduced by a proposed
productivity adjustment of 0.2 percentage point. Based on this proposed
update, we estimate that total payments to ASCs (including beneficiary
cost-sharing and estimated changes in enrollment, utilization, and
case-mix) for CY 2022 would be approximately 5.16 billion, a decrease
of approximately 20 million compared to estimated CY 2021 Medicare
payments.
<bullet> ASC Payment Policy for Non-Opioid Pain Management Drugs
and Biologicals under Section 6082 of the SUPPORT Act (Section
1833(t)(22) of the Social Security Act): Under section 1833(t)(22)(A)
of the Act, the Secretary was required to conduct a review (part of
which may include a request for information) of payments for opioids
and evidence-based non-opioid alternatives for pain management
(including drugs and devices, nerve blocks, surgical injections, and
neuromodulation) with a goal of ensuring that there are not financial
incentives to use opioids instead of non-opioid alternatives. Section
1833(t)(22)(A)(ii) provides that the Secretary may, as the Secretary
determines appropriate, conduct subsequent reviews of such payment.
In accordance with our review, for CY 2022, we are proposing to
continue to pay separately for two drugs currently receiving separate
payment in the ASC setting as non-opioid pain management drugs that
function as surgical supplies. For CY 2022, we propose to modify the
current non-opioid pain management payment policy and regulatory text
to require that evidence-based non opioid alternatives for pain
management must have Food and Drug Administration (FDA) approval, an
FDA-approved indication for pain management or analgesia, and for the
drugs and biologicals to have a per-day cost in excess of the OPPS drug
packaging threshold, which is proposed at $130 for CY 2022 and
described in section V.B.1.a., to qualify under this policy. Further,
we are soliciting comment on potential additional requirements the
Secretary should consider establishing for this policy as well as
whether any additional products meet the proposed criteria for CY 2022.
<bullet> Changes to the List of ASC Covered Surgical Procedures:
For CY 2022, we are proposing to re-adopt the ASC Covered Procedures
List (CPL) criteria that were in effect in CY 2020 and to remove 258 of
the 267 procedures that were added to the ASC CPL in CY 2021. We are
requesting comments on whether any of the 258 procedures meet the CY
2020 criteria that we are proposing to reinstate. We are also proposing
to change the notification process adopted in CY 2021 to a nomination
process, under which stakeholders could nominate procedures they
believe meet the requirements to be added to the ASC CPL. The formal
nomination process would begin in CY 2023.
Hospital Outpatient Quality Reporting (OQR) Program: For the
Hospital OQR Program, we are proposing changes for the CY 2023, CY
2024, CY 2025, and CY 2026 payment determinations and subsequent years.
For the Hospital OQR Program measure set, we are proposing to: (1)
Remove the OP-02: Fibrinolytic Therapy Received Within 30 Minutes of ED
Arrival measure beginning with the CY 2025 payment determination; (2)
remove the OP-03: Median Time to Transfer to Another Facility for Acute
Coronary Intervention measure beginning with the CY 2025 payment
determination; (3) adopt the COVID-19 Vaccination Coverage Among Health
Care Personnel (HCP) measure beginning with the CY 2024 payment
determination; (4) adopt the Breast Screening Recall Rates measure
beginning with the CY 2023 payment determination; (5) adopt the ST-
Segment Elevation Myocardial Infarction (STEMI) electronic clinical
quality measure (eCQM) beginning with voluntary reporting for the CY
2023 reporting period and mandatory reporting beginning with the CY
2024 reporting period/CY 2026 payment determination; (6) make voluntary
the reporting of the OP-37a-e: Outpatient and Ambulatory Surgery
Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS)
Survey-based measures beginning with the CY 2023 reporting period and
mandatory beginning with the CY 2024 reporting period/CY 2026 payment
determination; and (7) make mandatory the reporting of the OP-31:
Cataracts: Improvement in Patient's Visual Function within 90 Days
Following Cataract Surgery measure beginning with the CY 2025 payment
determination. In addition, we are proposing data submission

[[Page 42022]]

requirements for the OAS CAHPS Survey-based measures and the COVID-19
Vaccination Coverage Among HCP measure. Similarly, we are proposing
data submission and certification requirements for eCQMs and expanding
our Extraordinary Circumstances Exemption (ECE) policy to these
measures.
Beginning with the CY 2024 payment determination, we are proposing
three updates to our validation requirements by proposing to: (1) Use
electronic file submissions for chart-abstracted measure medical record
requests; (2) change the chart validation requirements and methods; and
(3) update the targeting criteria. We are also requesting comment from
stakeholders on: (1) The potential future development and inclusion of
a patient-reported outcomes measure following elective total hip and/or
total knee arthroplasty (THA/TKA); (2) the possibility of expanding our
current disparities methods to include reporting by race and ethnicity;
and (3) the possibility of hospital collection of standardized
demographic information for quality reporting and measure
stratification. We are also requesting feedback across programs on
potential actions and priority areas that would enable the continued
transformation of our quality measurement toward greater digital
capture of data and use of the FHIR standard.
<bullet> Ambulatory Surgical Center Quality Reporting (ASCQR)
Program: For the ASCQR Program, we are proposing changes for the CY
2024, CY 2025, and CY 2026 payment determinations and subsequent years.
For the ASCQR Program measure set, we are proposing to: (1) Adopt the
COVID-19 Vaccination Coverage Among HCP measure beginning with the CY
2024 payment determination; (2) resume data collection for four
measures beginning with the CY 2025 payment determination: (a) ASC-1:
Patient Burn; (b) ASC-2: Patient Fall; (c) ASC-3: Wrong Site, Wrong
Side, Wrong Patient, Wrong Procedure, Wrong Implant; and (d) ASC-4:
All-Cause Hospital Transfer/Admission; (3) require the ASC-11:
Cataracts: Improvement in Patient's Visual Function within 90 Days
Following Cataract Surgery measure beginning with the CY 2025 payment
determination; and (4) require the ASC-15a-e: OAS CAHPS Survey-based
measures with voluntary reporting beginning with the CY 2023 reporting
period and mandatory reporting beginning with the CY 2024 reporting
period/CY 2026 payment determination. In addition, we are proposing
data submission requirements for the OAS CAHPS Survey-based measures
and the COVID-19 Vaccination Coverage Among HCP measure.
We are requesting stakeholder comment on: (1) The potential future
development and inclusion of a patient-reported outcomes measure
following elective THA/TKA; (2) potential measurement approaches or
social risk factors that influence health disparities in the ASC
setting; and (3) the future inclusion of a measure to assess pain
management surgical procedures performed in ASCs. In this proposed
rule, we are also requesting feedback across programs on potential
actions and priority areas that would enable the continued
transformation of our quality measurement toward greater digital
capture of data and use of the FHIR standard.
<bullet> Hospital Inpatient Quality Reporting (IQR) Program Update:
In this proposed rule, we are requesting information from stakeholders
on potential measure updates on reporting and submission requirements
for the Safe Use of Opioids--Concurrent Prescribing eCQM.
<bullet> Updates to Requirements for Hospitals to Make Public a
List of Their Standard Charges: We are proposing to amend several
hospital price transparency policies codified at 45 CFR part 180 in
order to encourage compliance. We are proposing to: (1) Increase the
amount of the penalties for noncompliance through the use of a proposed
scaling factor based on hospital bed count; (2) deem state forensic
hospitals that meet certain requirements to be in compliance with the
requirements of 45 CFR part 180; and (3) prohibit certain conduct that
we have concluded are barriers to accessing the standard charge
information. In addition, we clarify the expected output of hospital
online price estimator tools when hospitals choose to use an online
price estimator tool in lieu of posting its standard charges for the
required shoppable services in a consumer-friendly format. Finally, we
seek comment on a variety of issues that we may consider in future
rulemaking, including improving standardization of the data disclosed
by hospitals.
<bullet> Request for Information on Rural Emergency Hospitals
(REHs):
Congress enacted section 125 of the Consolidated Appropriations Act
(CAA) of 2021, which establishes REHs as a new provider type. In
accordance with the statutory requirements in the CAA, REHs will
provide emergency department services, observation care, and, at the
election of the REH, other medical and health services on an outpatient
basis, as specified by the Secretary through rulemaking. Additionally,
REHs must not provide acute care inpatient services, with the exception
of skilled nursing facility services furnished in a distinct part unit.
The REH must have a staffed emergency department 24 hours a day, 7 days
a week, with staffing requirements similar to those for Critical Access
Hospitals (CAHs). The CAA provides that the statutory provisions
governing Medicare payment to REHs shall apply to items and services
furnished on or after January 1, 2023. We are seeking public comment
via a Request for Information on the health and safety standards,
payment policies, the REH enrollment process, and quality measures and
reporting requirements for REHs to inform our policy making as we
establish this new provider type.
<bullet> Radiation Oncology Model (RO Model): Section 133 of the
Consolidated Appropriations Act (CAA), 2021 (Pub. L. 116-260), enacted
on December 27, 2020, included a provision that prohibits the RO Model
from beginning before January 1, 2022. This law supersedes the RO Model
delayed start date established in the CY 2021 OPPS/ASC final rule. In
this proposed rule, we are proposing provisions related to the
additional delayed implementation due to the CAA, 2021, as well as
modifications to certain RO Model policies not related to the delay.
These proposals if finalized would necessitate modifying 42 CFR
512.205, 512.210, 512.217, 512.220, 512.230, 512.240, 512.245, 512.250,
512.255, 512.275, 512.280, and 512.285 and add 42 CFR 512.292 and
512.294.
<bullet> Comment Solicitation on Temporary Policies for the PHE for
COVID-19: In response to the COVID-19 pandemic, CMS undertook emergency
rulemaking to implement a number of flexibilities to address the
pandemic, such as preventing spread of the infection and supporting
diagnosis of COVID-19. While many of these flexibilities will expire at
the conclusion of the PHE, we are seeking comment on whether there are
certain policies that should be made permanent. Specifically, we are
seeking comment on services furnished by hospital staff to
beneficiaries in their homes through use of communication technology,
direct supervision when the supervising practitioner is available
through two-way, audio/video communication technology, and code and
payment for COVID-19 specimen collection.
<bullet> Changes to Beneficiary Coinsurance for Colorectal Cancer
Screening Test: Section 122 of the Consolidated Appropriations Act
(CAA) of 2021 amends section 1833(a) of the Act to

[[Page 42023]]

offer a special coinsurance rule for screening flexible sigmoidoscopies
and screening colonoscopies regardless of the code that is billed for
the establishment of a diagnosis as a result of the test, or for the
removal of tissue or other matter or other procedure, that is furnished
in connection with, as a result of, and in the same clinical encounter
as the colorectal cancer screening test. We propose that all surgical
services furnished on the same date as a planned screening colonoscopy
or planned flexible sigmoidoscopy could be viewed as being furnished in
connection with, as a result of, and in the same clinical encounter as
the screening test for purposes of determining the coinsurance required
of Medicare beneficiaries for planned colorectal cancer screening tests
that result in additional procedures furnished in the same clinical
encounter.
3. Summary of Costs and Benefit
In sections XXIV. and XXV. of this proposed rule, we set forth a
detailed analysis of the regulatory and federalism impacts that the
changes would have on affected entities and beneficiaries. Key
estimated impacts are described below.
a. Impacts of All OPPS Changes
Table U1 in section XXIV.B of this proposed rule displays the
distributional impact of all the OPPS changes on various groups of
hospitals and CMHCs for CY 2021 compared to all estimated OPPS payments
in CY 2020. We estimate that the policies in this proposed rule would
result in a 1.8 percent overall increase in OPPS payments to providers.
We estimate that total OPPS payments for CY 2021, including beneficiary
cost-sharing, to the approximately 3,662 facilities paid under the OPPS
(including general acute care hospitals, children's hospitals, cancer
hospitals, and CMHCs) would increase by approximately $1.3 billion
compared to CY 2020 payments, excluding our estimated changes in
enrollment, utilization, and case-mix.
We estimated the isolated impact of our OPPS policies on CMHCs
because CMHCs are only paid for partial hospitalization services under
the OPPS. Continuing the provider-specific structure we adopted
beginning in CY 2011, and basing payment fully on the type of provider
furnishing the service, we estimate a 1.6 percent increase in CY 2021
payments to CMHCs relative to their CY 2020 payments.
b. Impacts of the Proposed Updated Wage Indexes
We estimate that our proposed update of the wage indexes based on
the FY 2022 IPPS proposed rule wage indexes would result in no change
for urban hospitals under the OPPS and no change for rural hospitals.
These wage indexes include the continued implementation of the OMB
labor market area delineations based on 2010 Decennial Census data,
with updates, as discussed in section II.C. of this proposed rule.
c. Impacts of the Proposed Rural Adjustment and the Cancer Hospital
Payment Adjustment
There are no significant impacts of our CY 2022 payment policies
for hospitals that are eligible for the rural adjustment or for the
cancer hospital payment adjustment. We are not proposing to make any
change in policies for determining the rural hospital payment
adjustments. While we propose to implement the reduction to the cancer
hospital payment adjustment for CY 2022 required by section
1833(t)(18)(C) of the Act, as added by section 16002(b) of the 21st
Century Cures Act, the target payment-to-cost ratio (PCR) for CY 2021
is 0.89, equivalent to the 0.89 target PCR for CY 2021, and therefore
has no budget neutrality adjustment.
d. Impacts of the Proposed OPD Fee Schedule Increase Factor
For the CY 2021 OPPS/ASC, we propose to establish an OPD fee
schedule increase factor of 2.3 percent and apply that increase factor
to the conversion factor for CY 2021. As a result of the OPD fee
schedule increase factor and other budget neutrality adjustments, we
estimate that urban hospitals will experience an increase in payments
of approximately 2.3 percent and that rural hospitals would experience
an increase in payments of 2.3 percent. Classifying hospitals by
teaching status, we estimate nonteaching hospitals would experience an
increase in payments of 2.5 percent, minor teaching hospitals would
experience an increase in payments of 2.3 percent, and major teaching
hospitals would experience an increase in payments of 2.2 percent. We
also classified hospitals by the type of ownership. We estimate that
hospitals with voluntary ownership would experience an increase of 2.3
percent in payments, while hospitals with government ownership would
experience an increase of 2.4 percent in payments. We estimate that
hospitals with proprietary ownership would experience an increase of
2.5 percent in payments.
e. Impacts of the Proposed ASC Payment Update
For impact purposes, the surgical procedures on the ASC covered
surgical procedure list are aggregated into surgical specialty groups
using CPT and HCPCS code range definitions. The percentage change in
estimated total payments by specialty groups under the CY 2022 payment
rates, compared to estimated CY 2021 payment rates, generally ranges
between an increase of 2 and 4 percent, depending on the service, with
some exceptions. We estimate the impact of applying the hospital market
basket update to ASC payment rates would increase payments by $90
million under the ASC payment system in CY 2022.

B. Legislative and Regulatory Authority for the Hospital OPPS

When Title XVIII of the Act was enacted, Medicare payment for
hospital outpatient services was based on hospital-specific costs. In
an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section
1833(t) to the Act, authorizing implementation of a PPS for hospital
outpatient services. The OPPS was first implemented for services
furnished on or after August 1, 2000. Implementing regulations for the
OPPS are located at 42 CFR parts 410 and 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: The Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements

[[Page 42024]]

for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275),
enacted on July 15, 2008; the Patient Protection and Affordable Care
Act (Pub. L. 111-148), enacted on March 23, 2010, as amended by the
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152),
enacted on March 30, 2010 (these two public laws are collectively known
as the Affordable Care Act); the Medicare and Medicaid Extenders Act of
2010 (MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut
Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on December
23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012
(MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; the American
Taxpayer Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013;
the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) enacted on
December 26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA,
Pub. L. 113-93), enacted on March 27, 2014; the Medicare Access and
CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted
April 16, 2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74),
enacted November 2, 2015; the Consolidated Appropriations Act, 2016
(Pub. L. 114-113), enacted on December 18, 2015, the 21st Century Cures
Act (Pub. L. 114-255), enacted on December 13, 2016; the Consolidated
Appropriations Act, 2018 (Pub. L. 115-141), enacted on March 23, 2018;
the Substance Use-Disorder Prevention that Promotes Opioid Recovery and
Treatment for Patients and Communities Act (Pub. L. 115-271), enacted
on October 24, 2018; the Further Consolidated Appropriations Act, 2020
(Pub. L. 116-94), enacted on December 20, 2019; the Coronavirus Aid,
Relief, and Economic Security Act (Pub. L. 116-136), enacted on March
27, 2020; and the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260), enacted on December 27, 2020.
Under the OPPS, we generally pay for hospital Part B services on a
rate-per-service basis that varies according to the APC group to which
the service is assigned. We use the Healthcare Common Procedure Coding
System (HCPCS) (which includes certain Current Procedural Terminology
(CPT) codes) to identify and group the services within each APC. The
OPPS includes payment for most hospital outpatient services, except
those identified in section I.C. of this proposed rule. Section
1833(t)(1)(B) of the Act provides for payment under the OPPS for
hospital outpatient services designated by the Secretary (which
includes partial hospitalization services furnished by CMHCs), and
certain inpatient hospital services that are paid under Medicare Part
B.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use, as required by section
1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of
the Act, subject to certain exceptions, items and services within an
APC group cannot be considered comparable with respect to the use of
resources if the highest median cost (or mean cost, if elected by the
Secretary) for an item or service in the APC group is more than 2 times
greater than the lowest median cost (or mean cost, if elected by the
Secretary) for an item or service within the same APC group (referred
to as the ``2 times rule''). In implementing this provision, we
generally use the cost of the item or service assigned to an APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
clinical information and cost data to appropriately assign them to a
clinical APC group, we have established special APC groups based on
costs, which we refer to as New Technology APCs. These New Technology
APCs are designated by cost bands which allow us to provide appropriate
and consistent payment for designated new procedures that are not yet
reflected in our claims data. Similar to pass-through payments, an
assignment to a New Technology APC is temporary; that is, we retain a
service within a New Technology APC until we acquire sufficient data to
assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercises the
authority granted under the statute to also exclude from the OPPS
certain services that are paid under fee schedules or other payment
systems. Such excluded services include, for example, the professional
services of physicians and nonphysician practitioners paid under the
Medicare Physician Fee Schedule (MPFS); certain laboratory services
paid under the Clinical Laboratory Fee Schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD prospective payment system; and services and procedures that
require an inpatient stay that are paid under the hospital IPPS. In
addition, section 1833(t)(1)(B)(v) of the Act does not include
applicable items and services (as defined in subparagraph (A) of
paragraph (21)) that are furnished on or after January 1, 2017 by an
off-campus outpatient department of a provider (as defined in
subparagraph (B) of paragraph (21)). We set forth the services that are
excluded from payment under the OPPS in regulations at 42 CFR 419.22.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals that are excluded from payment under the OPPS. These excluded
hospitals are:
<bullet> Critical access hospitals (CAHs);
<bullet> Hospitals located in Maryland and paid under Maryland's
All-Payer or Total Cost of Care Model;
<bullet> Hospitals located outside of the 50 States, the District
of Columbia, and Puerto Rico; and
<bullet> Indian Health Service (IHS) hospitals.

D. Prior Rulemaking

On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9)(A) of the Act requires the Secretary to review certain
components of the OPPS, not less often than

[[Page 42025]]

annually, and to revise the groups, the relative payment weights, and
the wage and other adjustments to take into account changes in medical
practices, changes in technology, the addition of new services, new
cost data, and other relevant information and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices</a>.html.

E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the
Panel)

1. Authority of the Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113, requires that we consult with an expert outside advisory panel
composed of an appropriate selection of representatives of providers to
annually review (and advise the Secretary concerning) the clinical
integrity of the payment groups and their weights under the OPPS. In CY
2000, based on section 1833(t)(9)(A) of the Act, the Secretary
established the Advisory Panel on Ambulatory Payment Classification
Groups (APC Panel) to fulfill this requirement. In CY 2011, based on
section 222 of the Public Health Service Act, which gives discretionary
authority to the Secretary to convene advisory councils and committees,
the Secretary expanded the panel's scope to include the supervision of
hospital outpatient therapeutic services in addition to the APC groups
and weights. To reflect this new role of the panel, the Secretary
changed the panel's name to the Advisory Panel on Hospital Outpatient
Payment (the HOP Panel or the Panel). The HOP Panel is not restricted
to using data compiled by CMS, and in conducting its review, it may use
data collected or developed by organizations outside the Department.
2. Establishment of the Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the Panel, and, at that time, named the APC Panel. This
expert panel is composed of appropriate representatives of providers
(currently employed full-time, not as consultants, in their respective
areas of expertise) who review clinical data and advise CMS about the
clinical integrity of the APC groups and their payment weights. Since
CY 2012, the Panel also is charged with advising the Secretary on the
appropriate level of supervision for individual hospital outpatient
therapeutic services. The Panel is technical in nature, and it is
governed by the provisions of the Federal Advisory Committee Act
(FACA). The current charter specifies, among other requirements, that
the Panel--
<bullet> May advise on the clinical integrity of Ambulatory Payment
Classification (APC) groups and their associated weights;
<bullet> May advise on the appropriate supervision level for
hospital outpatient services;
<bullet> May advise on OPPS APC rates for ASC covered surgical
procedures;
<bullet> Continues to be technical in nature;
<bullet> Is governed by the provisions of the FACA;
<bullet> Has a Designated Federal Official (DFO); and
<bullet> Is chaired by a Federal Official designated by the
Secretary.
The Panel's charter was amended on November 15, 2011, renaming the
Panel and expanding the Panel's authority to include supervision of
hospital outpatient therapeutic services and to add critical access
hospital (CAH) representation to its membership. The Panel's charter
was also amended on November 6, 2014 (80 FR 23009), and the number of
members was revised from up to 19 to up to 15 members. The Panel's
current charter was approved on November 20, 2020, for a 2-year period.
The current Panel membership and other information pertaining to
the Panel, including its charter, Federal Register notices, membership,
meeting dates, agenda topics, and meeting reports, can be viewed on the
CMS website at: <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html">https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html</a>.
3. Panel Meetings and Organizational Structure
The Panel has held many meetings, with the last meeting taking
place on August 31, 2020. Prior to each meeting, we publish a notice in
the Federal Register to announce the meeting, new members, and any
other changes of which the public should be aware. Beginning in CY
2017, we have transitioned to one meeting per year (81 FR 31941). In CY
2018, we published a Federal Register notice requesting nominations to
fill vacancies on the Panel (83 FR 3715). As published in this notice,
CMS is accepting nominations on a continuous basis.
In addition, the Panel has established an administrative structure
that, in part, currently includes the use of three subcommittee
workgroups to provide preparatory meeting and subject support to the
larger panel. The three current subcommittees include the following:
<bullet> APC Groups and Status Indicator Assignments Subcommittee,
which advises and provides recommendations to the Panel on the
appropriate status indicators to be assigned to HCPCS codes, including
but not limited to whether a HCPCS code or a category of codes should
be packaged or separately paid, as well as the appropriate APC
assignment of HCPCS codes regarding services for which separate payment
is made;
<bullet> Data Subcommittee, which is responsible for studying the
data issues confronting the Panel and for recommending options for
resolving them; and
<bullet> Visits and Observation Subcommittee, which reviews and
makes recommendations to the Panel on all technical issues pertaining
to observation services and hospital outpatient visits paid under the
OPPS.
Each of these workgroup subcommittees was established by a majority
vote from the full Panel during a scheduled Panel meeting, and the
Panel recommended at the August 31, 2020, meeting that the
subcommittees continue. We accepted this recommendation.
Discussions of the other recommendations made by the Panel at the
August 31, 2020 Panel meeting, namely APC assignments for certain CPT
codes, a comprehensive APC for skin substitute products, a
comprehensive APC for autologous hematopoietic stem cell
transplantation, and packaging policies, were discussed in relevant
specific sections in the CY 2021 OPPS/ASC final rule with comment
period (85 FR 85866). For discussions of earlier Panel meetings and
recommendations, we refer readers to previously published OPPS/ASC
proposed and final rules, the CMS website mentioned earlier in this
section, and the FACA database at <a href="http://facadatabase.gov">http://facadatabase.gov</a>.

F. Public Comments Received on the CY 2020 OPPS/ASC Final Rule With
Comment Period

We received approximately 32 timely pieces of correspondence on the
CY 2021 OPPS/ASC final rule with comment period that appeared in the
Federal Register on December 2, 2020 (85 FR 85866), most of which were

[[Page 42026]]

outside of the scope of the final rule. In-scope comments related to
the interim APC assignments and/or status indicators of new or
replacement Level II HCPCS codes (identified with comment indicator
``NI'' in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that
final rule).

II. Proposed Updates Affecting OPPS Payments

A. Proposed Recalibration of APC Relative Payment Weights

1. Database Construction
a. Use of CY 2019 Data in the CY 2022 OPPS Ratesetting
We primarily use two data sources in OPPS ratesetting: Claims data
and cost report data. Our goal is always to use the best available data
overall for ratesetting. Ordinarily, the best available full year of
claims data would be 2 years prior to the calendar year that is the
subject of the rulemaking. As discussed in further detail in Section
X.E. of this CY 2022 OPPS/ASC proposed rule, given our concerns with CY
2020 data as a result of the COVID-19 PHE, in general, we are proposing
to use CY 2019 claims data and the data components related to it in
establishing the CY 2022 OPPS.
b. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for APCs. In the April 7, 2000 OPPS final rule with comment period (65
FR 18482), we explained in detail how we calculated the relative
payment weights that were implemented on August 1, 2000 for each APC
group.
For the CY 2022 OPPS, we propose to recalibrate the APC relative
payment weights for services furnished on or after January 1, 2022, and
before January 1, 2023 (CY 2022), using the same basic methodology that
we described in the CY 2021 OPPS/ASC final rule with comment period (85
FR 85873), using CY 2019 claims data. That is, we propose to
recalibrate the relative payment weights for each APC based on claims
and cost report data for hospital outpatient department (HOPD) services
to construct a database for calculating APC group weights.
For the purpose of recalibrating the proposed APC relative payment
weights for CY 2022, we began with approximately 180 million final
action claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for HOPD services furnished on or
after January 1, 2019, and before January 1, 2020, before applying our
exclusionary criteria and other methodological adjustments. After the
application of those data processing changes, we used approximately 93
million final action claims to develop the proposed CY 2022 OPPS
payment weights. For exact numbers of claims used and additional
details on the claims accounting process, we refer readers to the
claims accounting narrative under supporting documentation for this
proposed rule on the CMS website at: <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html</a>.
Addendum N to this proposed rule (which is available via the
internet on the CMS website) includes the proposed list of bypass codes
for CY 2022. The proposed list of bypass codes contains codes that are
reported on claims for services in CY 2019 and, therefore, includes
codes that were in effect in CY 2019 and used for billing. We propose
to retain deleted bypass codes on the proposed CY 2022 bypass list
because these codes existed in CY 2019 and were covered OPD services in
that period, and CY 2019 claims data were used to calculate proposed CY
2022 payment rates. Keeping these deleted bypass codes on the bypass
list potentially allows us to create more ``pseudo'' single procedure
claims for ratesetting purposes. ``Overlap bypass codes'' that are
members of the proposed multiple imaging composite APCs are identified
by asterisks (*) in the third column of Addendum N to the proposed
rule. HCPCS codes that we propose to add for CY 2022 are identified by
asterisks (*) in the fourth column of Addendum N.
c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
For 2022, we propose to continue to use the hospital-specific
overall ancillary and departmental cost-to-charge ratios (CCRs) to
convert charges to estimated costs through application of a revenue
code-to-cost center crosswalk. To calculate the APC costs on which the
CY 2022 APC payment rates are based, we calculated hospital-specific
overall ancillary CCRs and hospital-specific departmental CCRs for each
hospital for which we had CY 2019 claims data by comparing these claims
data to hospital cost reports available for the CY 2021 OPPS/ASC final
rule with comment period ratesetting, which, in most cases, are from CY
2019. For the proposed CY 2022 OPPS payment rates, we used the set of
CY 2019 claims processed through June 30, 2020. We applied the
hospital-specific CCR to the hospital's charges at the most detailed
level possible, based on a revenue code-to-cost center crosswalk that
contains a hierarchy of CCRs used to estimate costs from charges for
each revenue code. To ensure the completeness of the revenue code-to-
cost center crosswalk, we reviewed changes to the list of revenue codes
for CY 2019 (the year of claims data we used to calculate the proposed
CY 2022 OPPS payment rates) and updates to the NUBC 2020 Data
Specifications Manual. That crosswalk is available for review and
continuous comment on the CMS website at: <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html</a>.
In accordance with our longstanding policy, we calculate CCRs for
the standard and nonstandard cost centers accepted by the electronic
cost report database. In general, the most detailed level at which we
calculate CCRs is the hospital-specific departmental level. For a
discussion of the hospital-specific overall ancillary CCR calculation,
we refer readers to the CY 2007 OPPS/ASC final rule with comment period
(71 FR 67983 through 67985). The calculation of blood costs is a
longstanding exception (since the CY 2005 OPPS) to this general
methodology for calculation of CCRs used for converting charges to
costs on each claim. This exception is discussed in detail in the CY
2007 OPPS/ASC final rule with comment period and discussed further in
section II.A.2.a.(1) of this proposed rule.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840
through 74847), we finalized our policy of creating new cost centers
and distinct CCRs for implantable devices, magnetic resonance imaging
(MRIs), computed tomography (CT) scans, and cardiac catheterization.
However, in response to comments we received from our CY 2014 OPPS/ASC
proposed rule, we finalized a policy in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74847) to remove claims from providers that
use a cost allocation method of ``square feet'' to calculate CCRs used
to estimate costs associated with the APCs for CT and MRI. As finalized
in the CY 2020 OPPS/ASC final rule with comment period (84 FR 61152),
beginning in CY 2021, we use all claims with valid CT and MRI cost
center CCRs, including those that use a ``square feet'' cost allocation
method, to estimate costs for the CT and MRI APCs.
2. Proposed Data Development and Calculation of Costs Used for
Ratesetting
In this section of this proposed rule, we discuss the use of claims
to calculate the OPPS payment rates for CY 2022.

[[Page 42027]]

The Hospital OPPS page on the CMS website on which this proposed rule
is posted (<a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html</a>) provides an accounting of
claims used in the development of the proposed payment rates. That
accounting provides additional detail regarding the number of claims
derived at each stage of the process. In addition, later in this
section we discuss the file of claims that comprises the data set that
is available upon payment of an administrative fee under a CMS data use
agreement. The CMS website, <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html</a>, includes
information about obtaining the ``OPPS Limited Data Set,'' which now
includes the additional variables previously available only in the OPPS
Identifiable Data Set, including ICD-10-CM diagnosis codes and revenue
code payment amounts. This file is derived from the CY 2019 claims that
were used to calculate the proposed payment rates for this CY 2022
OPPS/ASC proposed rule.
Previously, the OPPS established the scaled relative weights on
which payments are based using APC median costs, a process described in
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188).
However, as discussed in more detail in section II.A.2.f. of the CY
2013 OPPS/ASC final rule with comment period (77 FR 68259 through
68271), we finalized the use of geometric mean costs to calculate the
relative weights on which the CY 2013 OPPS payment rates were based.
While this policy changed the cost metric on which the relative
payments are based, the data process in general remained the same under
the methodologies that we used to obtain appropriate claims data and
accurate cost information in determining estimated service cost. For
2022, we propose to continue to use geometric mean costs to calculate
the relative weights on which the proposed CY 2022 OPPS payment rates
are based.
We used the methodology described in sections II.A.2.a. through
II.A.2.c. of this proposed rule to calculate the costs we used to
establish the proposed relative payment weights used in calculating the
OPPS payment rates for CY 2022 shown in Addenda A and B to this
proposed rule (which are available via the internet on the CMS
website). We refer readers to section II.A.4. of this proposed rule for
a discussion of the conversion of APC costs to scaled payment weights.
We note that under the OPPS, CY 2019 was the first year in which
the claims data used for setting payment rates (CY 2017 data) contained
lines with the modifier ``PN'', which indicates nonexcepted items and
services furnished and billed by off-campus provider-based departments
(PBDs) of hospitals. Because nonexcepted services are not paid under
the OPPS, in the CY 2019 OPPS/ASC final rule with comment period (83 FR
58832), we finalized a policy to remove those claim lines reported with
modifier ``PN'' from the claims data used in ratesetting for the CY
2019 OPPS and subsequent years. For the CY 2022 OPPS, we will continue
to remove claim lines with modifier ``PN'' from the ratesetting
process.
For details of the claims accounting process used in this proposed
rule, we refer readers to the claims accounting narrative under
supporting documentation for this CY 2022 OPPS/ASC proposed rule on the
CMS website at: <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html</a>.
a. Proposed Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
We propose to continue to establish payment rates for blood and
blood products using our blood-specific CCR methodology, which utilizes
actual or simulated CCRs from the most recently available hospital cost
reports to convert hospital charges for blood and blood products to
costs. This methodology has been our standard ratesetting methodology
for blood and blood products since CY 2005. It was developed in
response to data analysis indicating that there was a significant
difference in CCRs for those hospitals with and without blood-specific
cost centers, and past public comments indicating that the former OPPS
policy of defaulting to the overall hospital CCR for hospitals not
reporting a blood-specific cost center often resulted in an
underestimation of the true hospital costs for blood and blood
products. Specifically, to address the differences in CCRs and to
better reflect hospitals' costs, we propose to continue to simulate
blood CCRs for each hospital that does not report a blood cost center
by calculating the ratio of the blood-specific CCRs to hospitals'
overall CCRs for those hospitals that do report costs and charges for
blood cost centers. We also propose to apply this mean ratio to the
overall CCRs of hospitals not reporting costs and charges for blood
cost centers on their cost reports to simulate blood-specific CCRs for
those hospitals. We propose to calculate the costs upon which the
proposed CY 2022 payment rates for blood and blood products are based
using the actual blood-specific CCR for hospitals that reported costs
and charges for a blood cost center and a hospital-specific, simulated
blood-specific CCR for hospitals that did not report costs and charges
for a blood cost center.
We continue to believe that the hospital-specific, simulated blood-
specific, CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into
account the unique charging and cost accounting structure of each
hospital, we believe that it yields more accurate estimated costs for
these products. We continue to believe that using this methodology in
CY 2022 would result in costs for blood and blood products that
appropriately reflect the relative estimated costs of these products
for hospitals without blood cost centers and, therefore, for these
blood products in general.
We note that we defined a comprehensive APC (C-APC) as a
classification for the provision of a primary service and all
adjunctive services provided to support the delivery of the primary
service. Under this policy, we include the costs of blood and blood
products when calculating the overall costs of these C-APCs. We propose
to continue to apply the blood-specific CCR methodology described in
this section when calculating the costs of the blood and blood products
that appear on claims with services assigned to the C-APCs. Because the
costs of blood and blood products would be reflected in the overall
costs of the C-APCs (and, as a result, in the proposed payment rates of
the C-APCs), we propose not to make separate payments for blood and
blood products when they appear on the same claims as services assigned
to the C-APCs (we refer readers to the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66795 through 66796) for

[[Page 42028]]

more information about our policy not to make separate payments for
blood and blood products when they appear on the same claims as
services assigned to a C-APC).
We refer readers to Addendum B of this proposed rule (which is
available via the internet on the CMS website) for the proposed CY 2022
payment rates for blood and blood products (which are generally
identified with status indicator ``R''). For a more detailed discussion
of the blood-specific CCR methodology, we refer readers to the CY 2005
OPPS proposed rule (69 FR 50524 through 50525). For a full history of
OPPS payment for blood and blood products, we refer readers to the CY
2008 OPPS/ASC final rule with comment period (72 FR 66807 through
66810).
For CY 2022, we propose to continue to establish payment rates for
blood and blood products using our blood-specific CCR methodology.
(2) Brachytherapy Sources
Section 1833(t)(2)(H) of the Act mandates the creation of
additional groups of covered OPD services that classify devices of
brachytherapy consisting of a seed or seeds (or radioactive source)
(``brachytherapy sources'') separately from other services or groups of
services. The statute provides certain criteria for the additional
groups. For the history of OPPS payment for brachytherapy sources, we
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC
final rule with comment period (77 FR 68240 through 68241). As we have
stated in prior OPPS updates, we believe that adopting the general OPPS
prospective payment methodology for brachytherapy sources is
appropriate for a number of reasons (77 FR 68240). The general OPPS
methodology uses costs based on claims data to set the relative payment
weights for hospital outpatient services. This payment methodology
results in more consistent, predictable, and equitable payment amounts
per source across hospitals by averaging the extremely high and low
values, in contrast to payment based on hospitals' charges adjusted to
costs. We believe that the OPPS methodology, as opposed to payment
based on hospitals' charges adjusted to cost, also would provide
hospitals with incentives for efficiency in the provision of
brachytherapy services to Medicare beneficiaries. Moreover, this
approach is consistent with our payment methodology for the vast
majority of items and services paid under the OPPS. We refer readers to
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323
through 70325) for further discussion of the history of OPPS payment
for brachytherapy sources.
For CY 2022, except where otherwise indicated, we propose to use
the costs derived from CY 2019 claims data to set the proposed CY 2022
payment rates for brachytherapy sources because CY 2019 is the year of
data we propose to use to set the proposed payment rates for most other
items and services that would be paid under the CY 2022 OPPS. With the
exception of the proposed payment rate for brachytherapy source C2645
(Brachytherapy planar source, palladium-103, per square millimeter) and
brachytherapy source C2636 (Brachytherapy linear source, non-stranded,
palladium-103, per 1 mm), we propose to base the payment rates for
brachytherapy sources on the geometric mean unit costs for each source,
consistent with the methodology that we propose for other items and
services paid under the OPPS, as discussed in section II.A.2. of this
proposed rule. We also propose to continue the other payment policies
for brachytherapy sources that we finalized and first implemented in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). We
propose to pay for the stranded and nonstranded not otherwise specified
(NOS) codes, HCPCS codes C2698 (Brachytherapy source, stranded, not
otherwise specified, per source) and C2699 (Brachytherapy source, non-
stranded, not otherwise specified, per source), at a rate equal to the
lowest stranded or nonstranded prospective payment rate for such
sources, respectively, on a per-source basis (as opposed to, for
example, a per mCi), which is based on the policy we established in the
CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). We also
propose to continue the policy we first implemented in the CY 2010
OPPS/ASC final rule with comment period (74 FR 60537) regarding payment
for new brachytherapy sources for which we have no claims data, based
on the same reasons we discussed in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66786; which was delayed until January 1,
2010 by section 142 of Pub. L. 110-275). Specifically, this policy is
intended to enable us to assign new HCPCS codes for new brachytherapy
sources to their own APCs, with prospective payment rates set based on
our consideration of external data and other relevant information
regarding the expected costs of the sources to hospitals. The proposed
CY 2022 payment rates for brachytherapy sources are included in
Addendum B to this proposed rule (which is available via the internet
on the CMS website) and identified with status indicator ``U''.
For CY 2018, we assigned status indicator ``U'' (Brachytherapy
Sources, Paid under OPPS; separate APC payment) to HCPCS code C2645
(Brachytherapy planar source, palladium-103, per square millimeter) in
the absence of claims data and established a payment rate using
external data (invoice price) at $4.69 per mm\2\. For CY 2019, in the
absence of sufficient claims data, we continued to establish a payment
rate for C2645 at $4.69 per mm\2\. Our CY 2018 claims data available
for the final CY 2020 OPPS/ASC final rule with comment period included
two claims with a geometric mean cost for HCPCS code C2645 of $1.02 per
mm\2\. In response to comments from stakeholders, we agreed with
commenters that given the limited claims data available and a new
outpatient indication for C2645, a payment rate for HCPCS code C2645
based on the geometric mean cost of 1.02 per mm\2\ may not adequately
reflect the cost of HCPCS code C2645. In the CY 2020 OPPS/ASC final
rule with comment period, we finalized our policy to use our equitable
adjustment authority under section 1833(t)(2)(E) of the Act, which
states that the Secretary shall establish, in a budget neutral manner,
other adjustments as determined to be necessary to ensure equitable
payments, to maintain the CY 2019 payment rate of $4.69 per mm\2\ for
HCPCS code C2645 for CY 2020. Similarly, in the absence of sufficient
claims data to establish an APC payment rate, in the CY 2021 OPPS/ASC
final rule with comment period, we finalized our policy to use our
equitable adjustment authority under section 1833(t)(2)(E) of the Act
to maintain the CY 2019 payment rate of $4.69 per mm\2\ for HCPCS code
C2645 for CY 2021.
As discussed in Section X.E. of this CY 2022 OPPS/ASC proposed
rule, given our concerns with CY 2020 data as a result of the COVID-19
PHE, in general we are proposing to use CY 2019 claims data and the
data components related to it in establishing the CY 2022 OPPS.
Therefore, we are proposing to use our equitable adjustment authority
under section 1833(t)(2)(E) of the Act to maintain the CY 2019 payment
rate of $4.69 per mm\2\ for HCPCS code C2645 for CY 2022.
Additionally, for CY 2022 and subsequent calendar years, as
discussed in Section X.C., we are proposing to establish a Low Volume
APC policy for New Technology APCs, clinical APCs, and brachytherapy
APCs. For these

[[Page 42029]]

APCs with fewer than 100 single claims that can be used for ratesetting
purposes in the existing claims year, we are proposing to use up to
four years of claims data to establish a payment rate for each item or
service as we currently do for low volume services assigned to New
Technology APCs. Further, we propose to calculate the cost for Low
Volume APCs based on the greatest of the arithmetic mean cost, median
cost, or geometric mean cost. We are proposing to designate 5
brachytherapy APCs as Low Volume APCs for CY 2022. For more information
on our Low Volume APC proposal, see Section X.C. of this CY 2022 OPPS/
ASC proposed rule.
We continue to invite hospitals and other parties to submit
recommendations to us for new codes to describe new brachytherapy
sources. Such recommendations should be directed via email to
<a href="/cdn-cgi/l/email-protection#f59a80818594819c909b81858586b5969886db9d9d86db929a83">[email&#160;protected]</a> or by mail to the Division of Outpatient
Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services,
7500 Security Boulevard, Baltimore, MD 21244. We will continue to add
new brachytherapy source codes and descriptors to our systems for
payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2022
(1) Background
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), we finalized a comprehensive payment policy that
packages payment for adjunctive and secondary items, services, and
procedures into the most costly primary procedure under the OPPS at the
claim level. The policy was finalized in CY 2014 but the effective date
was delayed until January 1, 2015 to allow additional time for further
analysis, opportunity for public comment, and systems preparation. The
comprehensive APC (C-APC) policy was implemented effective January 1,
2015, with modifications and clarifications in response to public
comments received regarding specific provisions of the C-APC policy (79
FR 66798 through 66810).
A C-APC is defined as a classification for the provision of a
primary service and all adjunctive services provided to support the
delivery of the primary service. We established C-APCs as a category
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015
(79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70332), we finalized 10 additional C-APCs to be
paid under the existing C-APC payment policy and added 1 additional
level to both the Orthopedic Surgery and Vascular Procedures clinical
families, which increased the total number of C-APCs to 37 for CY 2016.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584
through 79585), we finalized another 25 C-APCs for a total of 62 C-
APCs. In the CY 2018 OPPS/ASC final rule with comment period, we did
not change the total number of C-APCs from 62. In the CY 2019 OPPS/ASC
final rule with comment period, we created 3 new C-APCs, increasing the
total number to 65 (83 FR 58844 through 58846). In the CY 2020 OPPS/ASC
final rule with comment period, we created two new C-APCs, increasing
the total number to 67 C-APCs (84 FR 61158 through 61166). Most
recently, in the CY 2021 OPPS/ASC final rule, we created two new C-
APCs, increasing the total number to 69 C-APCs (85 FR 85885).
Under our C-APC policy, we designate a service described by a HCPCS
code assigned to a C-APC as the primary service when the service is
identified by OPPS status indicator ``J1''. When such a primary service
is reported on a hospital outpatient claim, taking into consideration
the few exceptions that are discussed below, we make payment for all
other items and services reported on the hospital outpatient claim as
being integral, ancillary, supportive, dependent, and adjunctive to the
primary service (hereinafter collectively referred to as ``adjunctive
services'') and representing components of a complete comprehensive
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services
are packaged into the payments for the primary services. This results
in a single prospective payment for each of the primary, comprehensive
services based on the costs of all reported services at the claim
level.
Services excluded from the C-APC policy under the OPPS include
services that are not covered OPD services, services that cannot by
statute be paid for under the OPPS, and services that are required by
statute to be separately paid. This includes certain mammography and
ambulance services that are not covered OPD services in accordance with
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also
are required by statute to receive separate payment under section
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which
also require separate payment under section 1833(t)(6) of the Act;
self-administered drugs (SADs) that are not otherwise packaged as
supplies because they are not covered under Medicare Part B under
section 1861(s)(2)(B) of the Act; and certain preventive services (78
FR 74865 and 79 FR 66800 through 66801). A list of services excluded
from the C-APC policy is included in Addendum J to this proposed rule
(which is available via the internet on the CMS website).
In the interim final rule with request for comments (IFC) entitled,
``Additional Policy and Regulatory Revisions in Response to the COVID-
19 Public Health Emergency'', published on November 6, 2020, we stated
that, effective for services furnished on or after the effective date
of the IFC and until the end of the PHE for COVID-19, there is an
exception to the OPPS C-APC policy to ensure separate payment for new
COVID-19 treatments that meet certain criteria (85 FR 71158 through
71160). Under this exception, any new COVID-19 treatment that meets the
following two criteria will, for the remainder of the PHE for COVID-19,
always be separately paid and will not be packaged into a C-APC when it
is provided on the same claim as the primary C-APC service. First, the
treatment must be a drug or biological product (which could include a
blood product) authorized to treat COVID-19, as indicated in section
``I. Criteria for Issuance of Authorization'' of the FDA letter of
authorization for the emergency use of the drug or biological product,
or the drug or biological product must be approved by the FDA for
treating COVID-19. Second, the emergency use authorization (EUA) for
the drug or biological product (which could include a blood product)
must authorize the use of the product in the outpatient setting or not
limit its use to the inpatient setting, or the product must be approved
by the FDA to treat COVID-19 disease and not limit its use to the
inpatient setting. For further information regarding the exception to
the C-APC policy for COVID-19 treatments, please refer to the November
6, 2020 IFC (85 FR 71158 through 71160).
The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period for the C-APCs and modified and
implemented beginning in CY 2015 is summarized as follows (78 FR 74887
and 79 FR 66800):
Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule
with comment period, we define the C-APC payment policy as including
all covered OPD services on a hospital outpatient claim reporting a
primary service that is assigned to status indicator ``J1'', excluding
services that are not covered

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OPD services or that cannot by statute be paid for under the OPPS.
Services and procedures described by HCPCS codes assigned to status
indicator ``J1'' are assigned to C-APCs based on our usual APC
assignment methodology by evaluating the geometric mean costs of the
primary service claims to establish resource similarity and the
clinical characteristics of each procedure to establish clinical
similarity within each APC.
In the CY 2016 OPPS/ASC final rule with comment period, we expanded
the C-APC payment methodology to qualifying extended assessment and
management encounters through the ``Comprehensive Observation
Services'' C-APC (C-APC 8011). Services within this APC are assigned
status indicator ``J2''. Specifically, we make a payment through C-APC
8011 for a claim that:
<bullet> Does not contain a procedure described by a HCPCS code to
which we have assigned status indicator ``T;''
<bullet> Contains 8 or more units of services described by HCPCS
code G0378 (Hospital observation services, per hour);
<bullet> Contains services provided on the same date of service or
1 day before the date of service for HCPCS code G0378 that are
described by one of the following codes: HCPCS code G0379 (Direct
admission of patient for hospital observation care) on the same date of
service as HCPCS code G0378; CPT code 99281 (Emergency department visit
for the evaluation and management of a patient (Level 1)); CPT code
99282 (Emergency department visit for the evaluation and management of
a patient (Level 2)); CPT code 99283 (Emergency department visit for
the evaluation and management of a patient (Level 3)); CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)) or HCPCS code G0380
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B
emergency department visit (Level 2)); HCPCS code G0382 (Type B
emergency department visit (Level 3)); HCPCS code G0383 (Type B
emergency department visit (Level 4)); HCPCS code G0384 (Type B
emergency department visit (Level 5)); CPT code 99291 (Critical care,
evaluation and management of the critically ill or critically injured
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient
clinic visit for assessment and management of a patient); and
<bullet> Does not contain services described by a HCPCS code to
which we have assigned status indicator ``J1''.
The assignment of status indicator ``J2'' to a specific set of
services performed in combination with each other allows for all other
OPPS payable services and items reported on the claim (excluding
services that are not covered OPD services or that cannot by statute be
paid for under the OPPS) to be deemed adjunctive services representing
components of a comprehensive service and resulting in a single
prospective payment for the comprehensive service based on the costs of
all reported services on the claim (80 FR 70333 through 70336).
Services included under the C-APC payment packaging policy, that
is, services that are typically adjunctive to the primary service and
provided during the delivery of the comprehensive service, include
diagnostic procedures, laboratory tests, and other diagnostic tests and
treatments that assist in the delivery of the primary procedure; visits
and evaluations performed in association with the procedure; uncoded
services and supplies used during the service; durable medical
equipment as well as prosthetic and orthotic items and supplies when
provided as part of the outpatient service; and any other components
reported by HCPCS codes that represent services that are provided
during the complete comprehensive service (78 FR 74865 and 79 FR
66800).
In addition, payment for hospital outpatient department services
that are similar to therapy services and delivered either by therapists
or nontherapists is included as part of the payment for the packaged
complete comprehensive service. These services that are provided during
the perioperative period are adjunctive services and are deemed not to
be therapy services as described in section 1834(k) of the Act,
regardless of whether the services are delivered by therapists or other
nontherapist health care workers. We have previously noted that therapy
services are those provided by therapists under a plan of care in
accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the
Act and are paid for under section 1834(k) of the Act, subject to
annual therapy caps as applicable (78 FR 74867 and 79 FR 66800).
However, certain other services similar to therapy services are
considered and paid for as hospital outpatient department services.
Payment for these nontherapy outpatient department services that are
reported with therapy codes and provided with a comprehensive service
is included in the payment for the packaged complete comprehensive
service. We note that these services, even though they are reported
with therapy codes, are hospital outpatient department services and not
therapy services. We refer readers to the July 2016 OPPS Change Request
9658 (Transmittal 3523) for further instructions on reporting these
services in the context of a C-APC service.
Items included in the packaged payment provided in conjunction with
the primary service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged
supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We
refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit
Policy Manual for a description of our policy on SADs treated as
hospital outpatient supplies, including lists of SADs that function as
supplies and those that do not function as supplies.
We define each hospital outpatient claim reporting a single unit of
a single primary service assigned to status indicator ``J1'' as a
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line
item charges for services included on the C-APC claim are converted to
line item costs, which are then summed to develop the estimated APC
costs. These claims are then assigned one unit of the service with
status indicator ``J1'' and later used to develop the geometric mean
costs for the C-APC relative payment weights. (We note that we use the
term ``comprehensive'' to describe the geometric mean cost of a claim
reporting ``J1'' service(s) or the geometric mean cost of a C-APC,
inclusive of all of the items and services included in the C-APC
service payment bundle.) Charges for services that would otherwise be
separately payable are added to the charges for the primary service.
This process differs from our traditional cost accounting methodology
only in that all such services on the claim are packaged (except
certain services as described above). We apply our standard data trims,
which exclude claims with extremely high primary units or extreme
costs.
The comprehensive geometric mean costs are used to establish
resource similarity and, along with clinical similarity, dictate the
assignment of the primary services to the C-APCs. We establish a
ranking of each primary service (single unit only) to be assigned to
status indicator ``J1'' according to its comprehensive geometric mean
costs. For the minority of claims reporting more than one primary
service assigned to status indicator ``J1'' or units thereof,

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we identify one ``J1'' service as the primary service for the claim
based on our cost-based ranking of primary services. We then assign
these multiple ``J1'' procedure claims to the C-APC to which the
service designated as the primary service is assigned. If the reported
``J1'' services on a claim map to different C-APCs, we designate the
``J1'' service assigned to the C-APC with the highest comprehensive
geometric mean cost as the primary service for that claim. If the
reported multiple ``J1'' services on a claim map to the same C-APC, we
designate the most costly service (at the HCPCS code level) as the
primary service for that claim. This process results in initial
assignments of claims for the primary services assigned to status
indicator ``J1'' to the most appropriate C-APCs based on both single
and multiple procedure claims reporting these services and clinical and
resource homogeneity.
Complexity Adjustments. We use complexity adjustments to provide
increased payment for certain comprehensive services. We apply a
complexity adjustment by promoting qualifying paired ``J1'' service
code combinations or paired code combinations of ``J1'' services and
certain add-on codes (as described further below) from the originating
C-APC (the C-APC to which the designated primary service is first
assigned) to the next higher paying C-APC in the same clinical family
of C-APCs. We apply this type of complexity adjustment when the paired
code combination represents a complex, costly form or version of the
primary service according to the following criteria:
<bullet> Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
<bullet> Violation of the 2 times rule, as stated in section
1833(t)(2) of the Act and section III.B.2. of this proposed rule, in
the originating C-APC (cost threshold).
These criteria identify paired code combinations that occur
commonly and exhibit materially greater resource requirements than the
primary service. The CY 2017 OPPS/ASC final rule with comment period
(81 FR 79582) included a revision to the complexity adjustment
eligibility criteria. Specifically, we finalized a policy to
discontinue the requirement that a code combination (that qualifies for
a complexity adjustment by satisfying the frequency and cost criteria
thresholds described above) also not create a 2 times rule violation in
the higher level or receiving APC.
After designating a single primary service for a claim, we evaluate
that service in combination with each of the other procedure codes
reported on the claim assigned to status indicator ``J1'' (or certain
add-on codes) to determine if there are paired code combinations that
meet the complexity adjustment criteria. For a new HCPCS code, we
determine initial C-APC assignment and qualification for a complexity
adjustment using the best available information, crosswalking the new
HCPCS code to a predecessor code(s) when appropriate.
Once we have determined that a particular code combination of
``J1'' services (or combinations of ``J1'' services reported in
conjunction with certain add-on codes) represents a complex version of
the primary service because it is sufficiently costly, frequent, and a
subset of the primary comprehensive service overall according to the
criteria described above, we promote the claim including the complex
version of the primary service as described by the code combination to
the next higher cost C-APC within the clinical family, unless the
primary service is already assigned to the highest cost APC within the
C-APC clinical family or assigned to the only C-APC in a clinical
family. We do not create new APCs with a comprehensive geometric mean
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity
adjustments. Therefore, the highest payment for any claim including a
code combination for services assigned to a C-APC would be the highest
paying C-APC in the clinical family (79 FR 66802).
We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70331), all add-on codes that can be
appropriately reported in combination with a base code that describes a
primary ``J1'' service are evaluated for a complexity adjustment.
To determine which combinations of primary service codes reported
in conjunction with an add-on code may qualify for a complexity
adjustment for 2022, we propose to apply the frequency and cost
criteria thresholds discussed above, testing claims reporting one unit
of a single primary service assigned to status indicator ``J1'' and any
number of units of a single add-on code for the primary ``J1'' service.
If the frequency and cost criteria thresholds for a complexity
adjustment are met and reassignment to the next higher cost APC in the
clinical family is appropriate (based on meeting the criteria outlined
above), we make a complexity adjustment for the code combination; that
is, we reassign the primary service code reported in conjunction with
the add-on code to the next higher cost C-APC within the same clinical
family of C-APCs. As previously stated, we package payment for add-on
codes into the C-APC payment rate. If any add-on code reported in
conjunction with the ``J1'' primary service code does not qualify for a
complexity adjustment, payment for the add-on service continues to be
packaged into the payment for the primary service and is not reassigned
to the next higher cost C-APC. We list the complexity adjustments for
``J1'' and add-on code combinations for CY 2022, along with all of the
other proposed complexity adjustments, in Addendum J to this CY 2022
OPPS/ASC proposed rule (which is available via the internet on the CMS
website).
Addendum J to this proposed rule includes the cost statistics for
each code combination that would qualify for a complexity adjustment
(including primary code and add-on code combinations). Addendum J to
this proposed rule also contains summary cost statistics for each of
the paired code combinations that describe a complex code combination
that would qualify for a complexity adjustment and are proposed to be
reassigned to the next higher cost C-APC within the clinical family.
The combined statistics for all proposed reassigned complex code
combinations are represented by an alphanumeric code with the first 4
digits of the designated primary service followed by a letter. For
example, the proposed geometric mean cost listed in Addendum J for the
code combination described by complexity adjustment assignment 3320R,
which is assigned to C-APC 5224 (Level 4 Pacemaker and Similar
Procedures), includes all paired code combinations that are proposed to
be reassigned to C-APC 5224 when CPT code 33208 is the primary code.
Providing the information contained in Addendum J to this proposed rule
allows stakeholders the opportunity to better assess the impact
associated with the proposed reassignment of claims with each of the
paired code combinations eligible for a complexity adjustment.

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(2) Exclusion of Procedures Assigned to New Technology APCs From the C-
APC Policy
Services that are assigned to New Technology APCs are typically new
procedures that do not have sufficient claims history to establish an
accurate payment for the procedures. Beginning in CY 2002, we retain
services within New Technology APC groups until we gather sufficient
claims data to enable us to assign the service to an appropriate
clinical APC. This policy allows us to move a service from a New
Technology APC in less than 2 years if sufficient data are available.
It also allows us to retain a service in a New Technology APC for more
than 2 years if sufficient data upon which to base a decision for
reassignment have not been collected (82 FR 59277).
The C-APC payment policy packages payment for adjunctive and
secondary items, services, and procedures into the most costly primary
procedure under the OPPS at the claim level. Prior to CY 2019, when a
procedure assigned to a New Technology APC was included on the claim
with a primary procedure, identified by OPPS status indicator ``J1'',
payment for the new technology service was typically packaged into the
payment for the primary procedure. Because the new technology service
was not separately paid in this scenario, the overall number of single
claims available to determine an appropriate clinical APC for the new
service was reduced. This was contrary to the objective of the New
Technology APC payment policy, which is to gather sufficient claims
data to enable us to assign the service to an appropriate clinical APC.
To address this issue and ensure that there is sufficient claims
data for services assigned to New Technology APCs, in the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58847), we finalized
excluding payment for any procedure that is assigned to a New
Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from
being packaged when included on a claim with a ``J1'' service assigned
to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we
finalized that payment for services assigned to a New Technology APC
would be excluded from being packaged into the payment for
comprehensive observation services assigned status indicator ``J2''
when they are included on a claim with a ``J2'' service starting in CY
2020 (84 FR 61167). We proposed to continue to exclude payment for any
procedure that is assigned to a New Technology APC (APCs 1491 through
1599 and APCs 1901 through 1908) from being packaged when included on a
claim with a ``J1'' or ``J2'' service assigned to a C-APC.
(3) Additional C-APCs for CY 2022
For CY 2022 and subsequent years, we propose to continue to apply
the C-APC payment policy methodology. We refer readers to the CY 2017
OPPS/ASC final rule with comment period (81 FR 79583) for a discussion
of the C-APC payment policy methodology and revisions.
Each year, in accordance with section 1833(t)(9)(A) of the Act, we
review and revise the services within each APC group and the APC
assignments under the OPPS. As a result of our annual review of the
services and the APC assignments under the OPPS, we are not proposing
to convert any standard APCs to C-APCs in CY 2022, thus we propose that
the number of C-APCs for CY 2022 would be the same as the number for CY
2021, which is 69 C-APCs.
Table 1 lists the proposed C-APCs for CY 2022, all of which were
established in past rules. All C-APCs are displayed in Addendum J to
this proposed rule (which is available via the internet on the CMS
website). Addendum J to this proposed rule also contains all of the
data related to the C-APC payment policy methodology, including the
list of complexity adjustments and other information.
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c. Proposed Calculation of Composite APC Criteria-Based Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide necessary, high quality care as
efficiently as possible. For CY 2008, we developed composite APCs to
provide a single payment for groups of services that are typically
performed together during a single clinical encounter and that result
in the provision of a complete service.

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Combining payment for multiple, independent services into a single OPPS
payment in this way enables hospitals to manage their resources with
maximum flexibility by monitoring and adjusting the volume and
efficiency of services themselves. An additional advantage to the
composite APC model is that we can use data from correctly coded
multiple procedure claims to calculate payment rates for the specified
combinations of services, rather than relying upon single procedure
claims which may be low in volume and/or incorrectly coded. Under the
OPPS, we currently have composite policies for mental health services
and multiple imaging services. (We note that, in the CY 2018 OPPS/ASC
final rule with comment period, we finalized a policy to delete the
composite APC 8001 (LDR Prostate Brachytherapy Composite) for CY 2018
and subsequent years.) We refer readers to the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66611 through 66614 and 66650 through
66652) for a full discussion of the development of the composite APC
methodology, and the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74163) and the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59241 through 59242 and 59246 through 52950) for more recent
background.
(1) Mental Health Services Composite APC
We propose to continue our longstanding policy of limiting the
aggregate payment for specified less resource-intensive mental health
services furnished on the same date to the payment for a day of partial
hospitalization services provided by a hospital, which we consider to
be the most resource-intensive of all outpatient mental health
services. We refer readers to the April 7, 2000 OPPS final rule with
comment period (65 FR 18452 through 18455) for the initial discussion
of this longstanding policy and the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74168) for more recent background.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588
through 79589), we finalized a policy to combine the existing Level 1
and Level 2 hospital-based PHP APCs into a single hospital-based PHP
APC, and thereby discontinue APCs 5861 (Level 1--Partial
Hospitalization (3 services) for Hospital-Based PHPs) and 5862 (Level--
2 Partial Hospitalization (4 or more services) for Hospital-Based PHPs)
and replace them with APC 5863 (Partial Hospitalization (3 or more
services per day)).
In the CY 2018 OPPS/ASC proposed rule and final rule with comment
period (82 FR 33580 through 33581 and 59246 through 59247,
respectively), we proposed and finalized the policy for CY 2018 and
subsequent years that, when the aggregate payment for specified mental
health services provided by one hospital to a single beneficiary on a
single date of service, based on the payment rates associated with the
APCs for the individual services, exceeds the maximum per diem payment
rate for partial hospitalization services provided by a hospital, those
specified mental health services will be paid through composite APC
8010 (Mental Health Services Composite). In addition, we set the
payment rate for composite APC 8010 for CY 2018 at the same payment
rate that will be paid for APC 5863, which is the maximum partial
hospitalization per diem payment rate for a hospital, and finalized a
policy that the hospital will continue to be paid the payment rate for
composite APC 8010. Under this policy, the I/OCE will continue to
determine whether to pay for these specified mental health services
individually, or to make a single payment at the same payment rate
established for APC 5863 for all of the specified mental health
services furnished by the hospital on that single date of service. We
continue to believe that the costs associated with administering a
partial hospitalization program at a hospital represent the most
resource intensive of all outpatient mental health services. Therefore,
we do not believe that we should pay more for mental health services
under the OPPS than the highest partial hospitalization per diem
payment rate for hospitals.
We propose that when the aggregate payment for specified mental
health services provided by one hospital to a single beneficiary on a
single date of service, based on the payment rates associated with the
APCs for the individual services, exceeds the maximum per diem payment
rate for partial hospitalization services provided by a hospital, those
specified mental health services would be paid through composite APC
8010 for CY 2022. In addition, we propose to set the proposed payment
rate for composite APC 8010 at the same payment rate that we proposed
for APC 5863, which is the maximum partial hospitalization per diem
payment rate for a hospital, and that the hospital continue to be paid
the proposed payment rate for composite APC 8010.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide a single payment each time a
hospital submits a claim for more than one imaging procedure within an
imaging family on the same date of service, to reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session (73 FR 41448 through 41450). We
utilize three imaging families based on imaging modality for purposes
of this methodology: (1) Ultrasound; (2) computed tomography (CT) and
computed tomographic angiography (CTA); and (3) magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes
subject to the multiple imaging composite policy and their respective
families are listed in Table 2 below.
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement under section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast.
The five multiple imaging composite APCs established in CY 2009 are:
<bullet> APC 8004 (Ultrasound Composite);
<bullet> APC 8005 (CT and CTA without Contrast Composite);
<bullet> APC 8006 (CT and CTA with Contrast Composite);
<bullet> APC 8007 (MRI and MRA without Contrast Composite); and
<bullet> APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment based on the payment rate for APC 8008, the ``with
contrast'' composite APC.
We make a single payment for those imaging procedures that qualify
for payment based on the composite APC payment rate, which includes any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging

[[Page 42036]]

procedures performed across families. For a full discussion of the
development of the multiple imaging composite APC methodology, we refer
readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR
68559 through 68569).
For CY 2022, we propose to continue to pay for all multiple imaging
procedures within an imaging family performed on the same date of
service using the multiple imaging composite APC payment methodology.
We continue to believe that this policy would reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session.
For CY 2022, except where otherwise indicated, we propose to use
the costs derived from CY 2019 claims data to set the proposed CY 2022
payment rates. Therefore, for CY 2022, the payment rates for the five
multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)
are based on proposed geometric mean costs calculated from CY 2019
claims available for this CY 2022 OPPS/ASC proposed rule that qualified
for composite payment under the current policy (that is, those claims
reporting more than one procedure within the same family on a single
date of service). To calculate the proposed geometric mean costs, we
used the same methodology that we have used to calculate the geometric
mean costs for these composite APCs since CY 2014, as described in the
CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The
imaging HCPCS codes referred to as ``overlap bypass codes'' that we
removed from the bypass list for purposes of calculating the proposed
multiple imaging composite APC geometric mean costs, in accordance with
our established methodology as stated in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74918), are identified by asterisks in
Addendum N to this CY 2022 OPPS/ASC proposed rule (which is available
via the internet on the CMS website) and are discussed in more detail
in section II.A.1.b. of this CY 2022 OPPS/ASC proposed rule.
For this CY 2022 OPPS/ASC proposed rule, we were able to identify
approximately 1.04 million ``single session'' claims out of an
estimated 2.2 million potential claims for payment through composite
APCs from our ratesetting claims data, which represents approximately
47 percent of all eligible claims, to calculate the proposed CY 2022
geometric mean costs for the multiple imaging composite APCs. Table 2
of this CY 2022 OPPS/ASC proposed rule lists the proposed HCPCS codes
that would be subject to the multiple imaging composite APC policy and
their respective families and approximate composite APC proposed
geometric mean costs for CY 2022.
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3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or a bundle of specific services for a particular
beneficiary. The OPPS packages payments for multiple interrelated items
and services into a single payment to create incentives for hospitals
to furnish services most efficiently and to manage their resources with
maximum flexibility. Our packaging policies support our strategic goal
of using larger payment bundles in the OPPS to maximize hospitals'
incentives to provide care in the most efficient manner. For example,
where there are a variety of devices, drugs, items, and supplies that
could be used to furnish a service, some of which are more costly than
others, packaging encourages hospitals to use the most cost efficient
item that meets the patient's needs, rather than to routinely use a
more expensive item, which may occur if separate payment is provided
for the item.
Packaging also encourages hospitals to effectively negotiate with
manufacturers and suppliers to reduce the purchase price of items and
services

[[Page 42041]]

or to explore alternative group purchasing arrangements, thereby
encouraging the most economical health care delivery. Similarly,
packaging encourages hospitals to establish protocols that ensure that
necessary services are furnished, while scrutinizing the services
ordered by practitioners to maximize the efficient use of hospital
resources. Packaging payments into larger payment bundles promotes the
predictability and accuracy of payment for services over time. Finally,
packaging may reduce the importance of refining service-specific
payment because packaged payments include costs associated with higher
cost cases requiring many ancillary items and services and lower cost
cases requiring fewer ancillary items and services. Because packaging
encourages efficiency and is an essential component of a prospective
payment system, packaging payments for items and services that are
typically integral, ancillary, supportive, dependent, or adjunctive to
a primary service has been a fundamental part of the OPPS since its
implementation in August 2000. For an extensive discussion of the
history and background of the OPPS packaging policy, we refer readers
to the CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66580), the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66817), the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70343), the CY 2017 OPPS/ASC
final rule with comment period (81 FR 79592), the CY 2018 OPPS/ASC
final rule with comment period (82 FR 59250), the CY 2019 OPPS/ASC
final rule with comment period (83 FR 58854), the CY 2020 OPPS/ASC
final rule with comment period (84 FR 61173), and the CY 2021 OPPS/ASC
final rule with comment period (85 FR 85894). As we continue to develop
larger payment groups that more broadly reflect services provided in an
encounter or episode of care, we have expanded the OPPS packaging
policies. Most, but not necessarily all, categories of items and
services currently packaged in the OPPS are listed in 42 CFR 419.2(b).
Our overarching goal is to make payments for all services under the
OPPS more consistent with those of a prospective payment system and
less like those of a per-service fee schedule, which pays separately
for each coded item. As a part of this effort, we have continued to
examine the payment for items and services provided under the OPPS to
determine which OPPS services can be packaged to further achieve the
objective of advancing the OPPS toward a more prospective payment
system.
For CY 2022, we examined the items and services currently provided
under the OPPS, reviewing categories of integral, ancillary,
supportive, dependent, or adjunctive items and services for which we
believe payment would be appropriately packaged into payment for the
primary service that they support. Specifically, we examined the HCPCS
code definitions (including CPT code descriptors) and hospital
outpatient department billing patterns to determine whether there were
categories of codes for which packaging would be appropriate according
to existing OPPS packaging policies or a logical expansion of those
existing OPPS packaging policies.
For CY 2022, we propose no changes to the overall packaging policy
previously discussed. We propose to continue to conditionally package
the costs of selected newly identified ancillary services into payment
for a primary service where we believe that the packaged item or
service is integral, ancillary, supportive, dependent, or adjunctive to
the provision of care that was reported by the primary service HCPCS
code. Below we discuss a proposed change to an ASC payment system
packaging policy for CY 2022 and solicit comment on potential
additional changes to that policy and application of that policy to the
OPPS.
b. Proposed Payment Policy for Non-Opioid Pain Management Drugs and
Biologicals That Function as Surgical Supplies Under the ASC Payment
System
(1) Background on OPPS/ASC Non-Opioid Pain Management Packaging
Policies
In the CY 2018 OPPS/ASC proposed rule (82 FR 33588), within the
framework of existing packaging categories, such as drugs that function
as supplies in a surgical procedure or diagnostic test or procedure, we
requested stakeholder feedback on common clinical scenarios involving
currently packaged items and services described by HCPCS codes that
stakeholders believe should not be packaged under the OPPS. We also
expressed interest in stakeholder feedback on common clinical scenarios
involving separately payable HCPCS codes for which payment would be
most appropriately packaged under the OPPS. Commenters who responded to
the CY 2018 OPPS/ASC proposed rule expressed a variety of views on
packaging under the OPPS. While several commenters were in support of
maintaining packaging policies, most of the public comments ranged from
requests to unpackage most items and services that are unconditionally
packaged under the OPPS, including drugs and devices, to specific
requests for separate payment for a particular drug or device.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
52485), we reiterated our position with regard to payment for
Exparel[supreg], a non-opioid analgesic that functions as a surgical
supply, stating that we believed that payment for this drug is
appropriately packaged with the primary surgical procedure. We also
stated in the CY 2018 OPPS/ASC final rule with comment period that we
would continue to explore and evaluate packaging policies under the
OPPS and consider these policies in future rulemaking.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR
58855), we explained that, in addition to stakeholder feedback
regarding OPPS packaging policies, the President's Commission on
Combating Drug Addiction and the Opioid Crisis (the Commission)\1\ had
recently recommended that CMS examine payment policies for certain
drugs that function as a supply, specifically non-opioid pain
management treatments. The Commission was established in 2017 to study
the scope and effectiveness of the Federal response to drug addiction
and the opioid crisis and to make recommendations to the President for
improving the Federal response to the crisis. The Commission's report
included a recommendation for CMS to ``. . . review and modify
ratesetting policies that discourage the use of non-opioid treatments
for pain, such as certain bundled payments that make alternative
treatment options cost prohibitive for hospitals and doctors,
particularly those options for treating immediate postsurgical pain. .
. .'' We explained that, as discussed in the CY 2019 OPPS/ASC proposed
rule (83 FR 37068 through 37071), in response to stakeholder comments
on the CY 2018 OPPS/ASC proposed rule and in light of the
recommendations regarding payment policies for certain drugs, we had
recently evaluated the impact of our packaging policy for drugs that
function as a supply when used in a surgical

[[Page 42042]]

procedure on the utilization of these drugs in both the hospital
outpatient department and the ASC setting. We stated that, although we
found increases in utilization of Exparel when it was paid under the
OPPS, we noticed decreased utilization of Exparel under the ASC payment
system. Accordingly, in the CY 2019 OPPS/ASC final rule with comment
period (83 FR 58855 through 58860), we finalized a policy to unpackage
and pay separately at ASP plus 6 percent for non-opioid pain management
drugs that function as surgical supplies when they are furnished in the
ASC setting for CY 2019, due to decreased utilization in the ASC
setting. Historically, we stated that we consider all items related to
the surgical outcome and provided during the hospital stay in which the
surgery is performed, including postsurgical pain management drugs, to
be part of the surgery for purposes of our drug and biological surgical
supply packaging policy (79 FR 66875).
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\1\ <a href="https://www.federalregister.gov/documents/2017/04/03/2017-06716/establishing-the-presidents-commission-on-combating-drug-addiction-and-the-opioid-crisis">https://www.federalregister.gov/documents/2017/04/03/2017-06716/establishing-the-presidents-commission-on-combating-drug-addiction-and-the-opioid-crisis</a>.
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On October 24, 2018, the Substance Use-Disorder Prevention that
Promotes Opioid Recovery and Treatment for Patients and Communities
(SUPPORT) Act (Pub. L. 115-271) was enacted. Section 1833(t)(22)(A)(i)
of the Act, as added by section 6082(a) of the SUPPORT Act, states that
the Secretary must review payments under the OPPS for opioids and
evidence-based non-opioid alternatives for pain management (including
drugs and devices, nerve blocks, surgical injections, and
neuromodulation) with a goal of ensuring that there are not financial
incentives to use opioids instead of non-opioid alternatives. As part
of this review, under section 1833(t)(22)(A)(iii) of the Act, the
Secretary must consider the extent to which revisions to such payments
(such as the creation of additional groups of covered OPD services to
separately classify those procedures that utilize opioids and non-
opioid alternatives for pain management) would reduce the payment
incentives for using opioids instead of non-opioid alternatives for
pain management. In conducting this review and considering any
revisions, the Secretary must focus on covered OPD services (or groups
of services) assigned to C-APCs, APCs that include surgical services,
or services determined by the Secretary that generally involve
treatment for pain management. If the Secretary identifies revisions to
payments pursuant to section 1833(t)(22)(A)(iii) of the Act, section
1833(t)(22)(C) of the Act requires the Secretary to, as determined
appropriate, begin making revisions for services furnished on or after
January 1, 2020. Revisions under this paragraph are required to be
treated as adjustments for purposes of paragraph (9)(B), which requires
any adjustments to be made in a budget neutral manner. Section
1833(i)(8), as added by section 6082(b) of the SUPPORT Act, requires
the Secretary to conduct a similar type of review as required for the
OPPS and to make revisions to the ASC payment system in an appropriate
manner, as determined by the Secretary.
For the CY 2020 OPPS/ASC proposed rule (84 FR 39423 through 39427),
as required by section 1833(t)(22)(A)(i) of the Act, we reviewed
payments under the OPPS for opioids and evidence-based non-opioid
alternatives for pain management (including drugs and devices, nerve
blocks, surgical injections, and neuromodulation) with a goal of
ensuring that there are not financial incentives to use opioids instead
of non-opioid alternatives. We used currently available data to analyze
the payment and utilization patterns associated with specific non-
opioid alternatives, including drugs that function as a supply, nerve
blocks, and neuromodulation products, to determine whether our
packaging policies may have reduced the use of non-opioid alternatives.
For the CY 2020 OPPS/ASC proposed rule (84 FR 39423 through 39427), we
proposed to continue our policy to pay separately at ASP plus 6 percent
for non-opioid pain management drugs that function as surgical supplies
in the performance of surgical procedures when they are furnished in
the ASC setting and to continue to package payment for non-opioid pain
management drugs that function as surgical supplies in the performance
of surgical procedures in the hospital outpatient department setting
for CY 2020. In the CY 2020 OPPS/ASC final rule with comment period (84
FR 61173 through 61180), after reviewing data from stakeholders and
Medicare claims data, we did not find compelling evidence to suggest
that revisions to our OPPS payment policies for non-opioid pain
management alternatives were necessary for CY 2020. We finalized our
proposal to continue to unpackage and pay separately at ASP plus 6
percent for non-opioid pain management drugs that function as surgical
supplies when furnished in the ASC setting for CY 2020. Under this
policy, for CY 2020, the only drug that qualified for separate payment
in the ASC setting as a non-opioid pain management drug that functions
as a surgical supply was Exparel.
In the CY 2021 OPPS/ASC final rule with comment period (85 FR 85896
to 85899), we continued the policy to pay separately at ASP plus 6
percent for non-opioid pain management drugs that function as surgical
supplies in the performance of surgical procedures when they are
furnished in the ASC setting and to continue to package payment for
non-opioid pain management drugs that function as surgical supplies in
the performance of surgical procedures in the hospital outpatient
department setting for CY 2021. For CY 2021, only two drug products met
the criteria as non-opioid pain management drugs that function as
surgical supplies in the ASC setting, and thus receive separate payment
under the ASC payment system. These drugs are Exparel and Omidria.
(2) CY 2022 Evaluation of Payments for Opioids and Non-Opioid
Alternatives for Pain Management and Comment Solicitation on Extending
the Policy to the OPPS
As noted in the background above, over the past several years we
have reviewed non-opioid alternatives and evaluated the impact of our
packaging policies on access to these products. In our previous
evaluations, we used currently available data to analyze the payment
and utilization patterns associated with specific non-opioid
alternatives, including drugs that function as a supply, nerve blocks,
and neuromodulation products, to determine whether our packaging
policies may have reduced the use of non-opioid alternatives. In the CY
2021 OPPS/ASC final rule with comment period (85 FR 85896 to 85899), we
stated that we would continue to analyze the issue of access to non-
opioid pain management alternatives in the HOPD and the ASC settings as
part of any reviews we conduct under section 1833(t)(22)(A)(ii), with a
specific focus on whether there is evidence that our current payment
policies are creating access barriers for other non-opioid pain
management alternatives for which there is evidence-based support that
these products help to deter or avoid prescription opioid use and
opioid use disorder.
For CY 2022, we conducted a subsequent review of payments for
opioids and non-opioid alternatives as authorized by section
1833(t)(22)(A)(ii). We analyzed utilization patterns in both the HOPD
and ASC settings for multiple non-opioid pain management drugs,
including the two drugs that are receiving separate payment when
furnished in the ASC setting under our current policy for CY 2021:
Exparel and Omidria. The results of our CY 2022 review were similar to
the results of our

[[Page 42043]]

reviews in previous years. Generally, utilization of non-opioid pain
management drugs continued to increase year after year in the HOPD
setting, where payment for these non-opioid alternatives is packaged
with the payment for the associated surgical procedure. In the ASC
setting, where Exparel and Omidria are separately paid, we also saw
utilization increases for these two drugs. However, in the ASC setting,
the rate of increase in utilization is much more substantial than in
the HOPD setting. In particular, in the HOPD setting where payment for
Exparel is packaged, utilization of Exparel increased from 19.7 million
units in 2019 to 21.8 million units in 2020, whereas utilization of
Exparel increased from 1.5 million units in 2019 to 3.3 million units
in 2020 in the ASC setting, where Exparel is separately paid. We note
that a number of reasons could explain this discrepancy other than our
policy to pay separately for Exparel under the ASC payment system,
including evolving clinical practice in the ASC setting, which could
increase the number of surgeries performed in ASCs for which Exparel is
an appropriate pain management drug.
We have consistently explained, including as recently as in the CY
2021 OPPS/ASC final rule with comment period (85 FR 85894), that our
packaging policies support our strategic goal of using larger payment
bundles in the OPPS to maximize hospitals' incentives to provide care
in the most efficient manner. For example, where there are a variety of
devices, drugs, items, and supplies that could be used to furnish a
service, some of which are more costly than others, packaging
encourages hospitals to use the most cost-efficient item that meets the
patient's needs, rather than to routinely use a more expensive item,
which may occur if separate payment is provided for the item. We have
not found conclusive evidence to support the notion that the OPPS
packaging policy, under which non-opioid drugs and biologicals are
packaged when they function as a supply in a surgical procedure, has
created financial incentives to use opioids instead of evidence-based
non-opioid alternatives for pain management. For example, we have not
observed decreased utilization of non-opioid alternatives for pain
management in the HOPD setting. Therefore, for CY 2022, we are
proposing to continue to package payment for non-opioid pain management
drugs that function as surgical supplies in the performance of surgical
procedures in the hospital outpatient department setting.
As explained earlier in this section, while packaging encourages
efficiency and is a fundamental component of a prospective payment
system, where there is an overriding policy objective to reduce
disincentives for use of non-opioid products to the extent possible, we
believe it may be appropriate to establish payment that reduces
disincentives for use of non-opioid drugs and biologicals for pain
management when there is evidence that use of those products reduces
unnecessary opioid use. For these reasons, we are soliciting comment as
to whether we should expand our current policy that only applies in the
ASC setting--to pay separately at ASP plus 6 percent for non-opioid
pain management drugs that function as surgical supplies in the
performance of surgical procedures when they are furnished in the ASC
setting--to the HOPD setting. We are interested in learning from
stakeholders whether similar disincentives for the use of non-opioid
pain management drugs and biologicals identified in the ASC setting
exist in the HOPD setting. Previously, in the CY 2019 OPPS/ASC final
rule with comment period (83 FR 59067), we identified several
disincentives that were unique to the ASC setting compared to the HOPD
setting, including the fact that ASCs tend to provide specialized care
and a more limited range of services in comparison to hospital
outpatient departments. Also, ASCs are paid, in aggregate,
approximately 55 percent of the OPPS rate. Therefore, fluctuations in
payment rates for specific services may affect these providers more
acutely than hospital outpatient departments; and ASCs may be less
likely to choose to furnish non-opioid postsurgical pain management
treatments, which are typically more expensive than opioids, as a
result. Additionally, we are seeking comment on what evidence supports
the expansion of this policy to the HOPD setting, including the
clinical benefit that Medicare beneficiaries may receive from the
availability of separate or modified payment for these products in the
HOPD setting.
Finally, we are seeking comment on if we should treat products the
same depending on the setting, ASC or HOPD. For example, we are seeking
comment on whether products should have the same eligibility
requirements to qualify for revised payment in the ASC and the HOPD
settings. We are additionally seeking comment on how the additional
comment solicitations described below, which refer to the ASC setting,
could also be applied to the HOPD setting.
(3) Proposed Criteria for Eligibility for Separate Payment Under the
ASC Payment System for Non-Opioid Pain Management Drugs and Biologicals
That Function as Surgical Supplies
As described in section 1833(t)(22)(A)(i) of the Act, the Secretary
shall conduct a review of payments for opioids and evidence-based non-
opioid alternatives for pain management with a goal of ensuring that
there are not financial incentives to use opioids instead of non-opioid
alternatives. In any future reviews the Secretary may determine
appropriate to conduct under section 1833(t)(22)(A)(ii) of the Act, we
believe it is important to establish the evidence-base for non-opioid
alternatives for pain management when evaluating whether current
payment policies result in an incentive for providers to use opioids
instead of such evidence-based non-opioid alternatives for pain
management. Accordingly, for CY 2022 and subsequent years, we are
proposing two criteria that non-opioid pain management drugs and
biologicals would be required to meet to be eligible for a payment
revision under the ASC payment system in accordance with section
1833(t)(22)(C). The proposed criteria are intended to identify non-
opioid pain management drugs and biologicals that function as supplies
in surgical procedures for which revised payment under the ASC payment
system would be appropriate.
Specifically, for CY 2022, we are proposing the following criteria
that non-opioid pain management drugs and biologicals would be required
to meet to be eligible for separate payment under the ASC payment
system in accordance with section 1833(t)(22)(C):
Criterion 1: FDA Approval and Indication for Pain Management or
Analgesia
We propose that the drug or biological product must be safe and
effective, as determined by the FDA. We propose that the drug must be
approved under a new drug application under section 505(c) of the
Federal Food, Drug, and Cosmetic Act (FDCA), generic drug application
under an abbreviated new drug application under section 505(j), or, in
the case of a biological product, be licensed under section 351 of the
Public Health Service Act. We further propose that the drug or
biological must also have an FDA-approved indication for pain
management or analgesia. We believe FDA approval is an appropriate
requirement for a drug or biological to

[[Page 42044]]

be eligible for this policy because the FDA reviews drugs and
biologicals for safety and effectiveness, which would allow us to
identify safe and effective non-opioid products to which this separate
payment policy should apply. Given that the FDA has an existing and
detailed review process already in place to review drugs and
biologicals, we believe it would be appropriate and administratively
efficient to utilize FDA approval as a requirement to ensure that the
drugs and biologicals approved under this policy are generally safe and
effective for beneficiaries. We believe the vast majority of drugs and
biologicals on the market have undergone FDA review and approval, and
we do not anticipate this criterion would prevent otherwise eligible
drugs or biologicals from qualifying. In addition, section
1833(t)(22)(C) of the Act, our current policy, and our proposed policy
all focus on pain management products. Specifically, section
1833(t)(22)(C) of the Act refers to reviews of opioid and evidence-
based non opioid products for pain management. Therefore, we propose to
require an FDA-approved indication for pain management or analgesia for
a drug or biological to qualify as a pain management product. The FDA
approval process would allow us to confirm that a drug or biological
is, in fact, a non-opioid. Drugs and biologicals that are approved as
opioids or opioid agonists, or that receive an opioid-related approval
from the FDA would not be eligible for separate payment under this
policy.
Criterion 2: Cost of the Product
Currently, under the OPPS, drugs that are not policy-packaged are
subject to the drug packaging threshold. In accordance with section
1833(t)(16)(B) of the Act, the threshold for establishing separate APCs
for payment of drugs and biologicals was set at $50 per administration
during CYs 2005 and 2006. We set the packaging threshold for
establishing separate APCs for drugs and biologicals through annual
notice and comment rulemaking. (Please see section V.B.1.a. of this
proposed rule for additional details on the drug packaging threshold
policy). The proposed per-day drug packaging threshold for CY 2022 is
$130.
As our second criterion, we are proposing that a drug or biological
would only be eligible for a payment revision under the ASC payment
system in accordance with section 1833(t)(22)(C) if its per-day cost
exceeds the drug packaging threshold described in section V.B.1.a. of
this rule. We believe this is an appropriate requirement because we
believe that not all non-opioid alternative treatments are equally
disincentivized by our packaging policies. In particular, the cost of
non-opioid drugs and biologicals below the packaging threshold of $130
per day does not generally have a significant impact on the overall
procedure costs, and we believe use of these drugs and biologicals is
unlikely to be disincentivized by CMS packaging policies. However, when
the per-day cost of the drug is above the drug packaging threshold, the
cost of these drugs or biologicals generally has a significant impact
on the overall procedure costs. Section 1833(t)(22)(A)(i) of the Act
discusses financial incentives to use opioids instead of non-opioid
alternative treatments. As such, we do not believe non-opioid pain
management drugs that are lower in cost are generally disincentivized
by our packaging policies, as their cost is more easily absorbed into
the payment for the primary procedure in which they are used when
compared to drugs and biologicals above the threshold. We are proposing
to use the existing OPPS drug packaging threshold as it is familiar to
stakeholders and its application to drugs and biologicals under this
policy creates uniformity across the OPPS and ASC payment systems.
Therefore, CMS is proposing that drugs and biologicals would be
required to have a per-day cost that exceeds the drug packaging
threshold that CMS sets annually through notice and comment rulemaking.
We also believe the use of this threshold as an eligibility
criterion for drugs under consideration for a payment revision under
this policy is appropriate, as it conforms with the broader goals of
the OPPS and ASC payment systems. Like other prospective payment
systems, the OPPS relies on the concept of averaging to establish a
payment rate for services. The payment may be more or less than the
estimated cost of providing a specific service or a bundle of specific
services for a particular beneficiary. The OPPS packages payments for
multiple interrelated items and services into a single payment to
create incentives for hospitals to furnish services most efficiently
and to manage their resources with maximum flexibility. Our packaging
policies, including the drug packaging threshold, support our strategic
goal of using larger payment bundles to maximize hospitals' incentives
to provide care in the most efficient manner. Packaging payments into
larger payment bundles promotes the predictability and accuracy of
payment for services over time. For the reasons mentioned above, we
believe it to be appropriate to package drugs under consideration for
this policy which fall below the OPPS drug packaging threshold.
We propose that non-opioid drugs and biologicals currently
receiving transitional drug pass-through status in the OPPS would not
be candidates for this policy as they are already paid separately under
the OPPS and ASC payment system. Please see section V.A., Proposed OPPS
Transitional Pass-Through Payment for Additional Costs of Drugs,
Biologicals, and Radiopharmaceuticals, of this proposed rule for
additional details on transitional pass-through payments for drugs and
biologicals. We propose that once transitional drug pass-through status
expires, the non-opioid drug or biological may qualify for separate
payment under the ASC payment system if it meets the proposed
eligibility requirements.
We seek comment on whether there are any other non-opioid drug or
biological products that would meet the proposed criteria if finalized.
(4) Proposed Regulation Text Changes
We propose to codify our proposed criteria for separate payment for
qualifying non-opioid pain management drugs and biologicals that
function as surgical supplies in the regulation text for the ASC
payment system in a new Sec. 416.174. In particular, we propose to
provide in a new Sec. 416.174(a)(1) that non-opioid pain management
drugs or biologicals that function as a supply in a surgical procedure
are eligible for separate payment if they are approved under a new drug
application under section 505(c) of the Federal Food, Drug, and
Cosmetic Act (FDCA), generic drug application under an abbreviated new
drug application under section 505(j), or, in the case of a biological
product, are licensed under section 351 of the Public Health Service
Act. Section 416.174(a)(1) would also provide that the drug or
biological must have an FDA-approved indication for pain management or
analgesia. New Sec. 416.174(a)(2) would require that the per-day cost
of the drug or biological must exceed the OPPS drug packaging threshold
set annually through notice and comment rulemaking.
We also propose to amend Sec. 416.164(b)(6) to provide that non-
opioid pain management drugs and biologicals that function as a supply
when used in a surgical procedure as determined by CMS under Sec.
416.174 are ancillary items that are integral to a

[[Page 42045]]

covered surgical procedure and for which separate payment is allowed.
We also propose to amend Sec. 416.171(b)(1) to provide that the
payment rate for non-opioid pain management drugs and biologicals that
function as a supply when used in a surgical procedure as determined by
CMS under Sec. 416.174 are paid an amount derived from the payment
rate for the equivalent item or service under the OPPS, and if such a
payment amount is unavailable, are contractor priced.
(5) Eligibility for Separate Payment in CY 2022 for Exparel, Omidria,
and Other Non-Opioid Products for Pain Management
As discussed in the CY 2021 OPPS/ASC final rule with comment
period, there are two products receiving separate payment in the ASC
setting under our current policy to pay separately for non-opioid pain
management treatments that function as surgical supplies when furnished
in the ASC setting (85 FR 86171). These two products are Exparel (HCPCS
Code C9290, Injection, bupivacaine liposome, 1 mg) and Omidria (HCPCS
Code J1097, phenylephrine 10.16 mg/ml and ketorolac 2.88 mg/ml
ophthalmic irrigation solution, 1 ml). Based on the current information
available to us, as we explain below, we are proposing that both
products would be eligible for separate payment in CY 2022 under our
proposed policy. We have included our initial evaluation of these two
products below.
(a) Eligibility for Separate Payment in CY 2022 for Exparel Under the
Proposed Eligibility Criteria
We are proposing that Exparel would continue to receive separate
payment in the ASC setting as a non-opioid pain management drug that
functions as a surgical supply for CY 2022. Based on CMS's internal
review, we believe Exparel meets criterion 1. Exparel was approved by
the FDA with a New Drug Application (NDA #022496) on 10/28/2011.\2\
Exparel's FDA-approved indication is ``in patients 6 years of age and
older for single-dose infiltration to produce postsurgical local
analgesia (1). In adults as an interscalene brachial plexus nerve block
to produce postsurgical regional analgesia''.\3\ No component of
Exparel is opioid-based. Accordingly, we propose that Exparel meets
criterion one.
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\2\ Exparel. FDA Letter. 28 October 2011. <a href="https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2011/022496s000ltr.pdf">https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2011/022496s000ltr.pdf</a>.
\3\ Exparel. FDA Package Insert. 22 March 2021. <a href="https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/022496s035lbl.pdf">https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/022496s035lbl.pdf</a>.
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As discussed in section (3) above, for criterion two we are
proposing that a drug or biological would only be eligible for separate
payment under this policy if its per-day cost exceeds the drug
packaging threshold described in section V.B.1.a. of this rule. The
proposed per day cost threshold for CY 2022 is $130. Using the
methodology described at V.B.1.a., the per day cost of Exparel exceeds
the $130 per day cost threshold. Therefore, we propose that Exparel
meets criterion two.
Therefore, we are proposing that Exparel meets criteria one and
two, and should receive separate payment under the ASC payment system
for CY 2022.
(b) Eligibility for Separate Payment for Omidria in CY 2022 Under the
Proposed Eligibility Criteria
We are proposing that Omidria would continue to receive separate
payment in the ASC setting as a non-opioid pain management drug that
functions as a surgical supply for CY 2022. Based on our internal
review, we believe Omidria would meet criterion one. Omidria was
approved by the FDA with a New Drug Application (NDA #205388) on 5/30/
2014.\4\ Additionally, Omidria's FDA-approved indication is as ``an
alpha 1-adrenergic receptor agonist and nonselective cyclooxygenase
inhibitor indicated for: Maintaining pupil size by preventing
intraoperative miosis; Reducing postoperative pain''.\5\ No component
of Omidria is opioid-based. Therefore, we propose that Omidria would
meet proposed criterion one.
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\4\ Omidria. FDA Letter. 30 May 2014. <a href="https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2014/205388Orig1s000ltr.pdf">https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2014/205388Orig1s000ltr.pdf</a>.
\5\ Omidria. FDA Package Insert. 08 December 2017. <a href="https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/205388s006lbl.pdf">https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/205388s006lbl.pdf</a>.
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Using the methodology described at V.B.1.a., the per day cost of
Omidria exceeds the $130 per day cost threshold. Therefore, we propose
that Omidria meets criterion two. Therefore, we are proposing that
Omidria meets criteria one and two, and should receive separate payment
under the ASC payment system for CY 2022.
(6) Comment Solicitation on Policy Modifications and Potential
Additional Criteria for Revised Payment for Non-Opioid Pain Management
Treatments
In addition to the proposed eligibility criteria above, we are also
soliciting comment on potential policy modifications and additional
criteria that may help further align this policy with the intent of
section 1833(t)(22) of the Act. Below we discuss potential additional
criteria. We note that, depending on the public comments we receive and
our continued consideration of these potential criteria, we may adopt
these criteria as part of our final policy and include them in the
final regulation text; accordingly, we are providing substantial
details, explanations, and considerations about these potential
criteria. We welcome input from stakeholders on these and any
additional policy modifications or criteria they believe would enhance
our proposed policy. We are also soliciting comment on other barriers
to access to non-opioid pain management products that may exist, and to
what extent our policies under the OPPS or ASC payment system could be
modified to address these barriers.
(a) Utilization of the Product
We have historically used utilization as a metric to determine
whether a change in our payment policy was necessary to determine
whether our policies create a disincentive to use non-opioid
alternatives. For example, as previously discussed, Exparel's
decreasing utilization in the ASC setting caused us to propose to pay
separately for non-opioid pain management drugs that function as
surgical supplies in the ASC setting. We have used currently available
claims data in prior years to analyze the payment and utilization
patterns associated with specific non-opioid alternatives to determine
whether our packaging policies may have reduced the use of non-opioid
alternatives. We believe that higher utilization may be a potential
indicator that the packaged payment is not causing an access to care
issue and that the payment rate for the primary procedure adequately
reflects the cost of the drug or biological. We also believe decreased
utilization could potentially indicate that our packaging policy is
discouraging use of drug or biological and that providers are choosing
less expensive treatments. We note that it is difficult to attribute
product-specific changes in utilization to our packaging policies
alone. Nonetheless, while we acknowledge certain limitations of
utilization data, we believe analyzing utilization either on a product-
specific basis or on a broader basis could be an important criterion in
determining whether separate payment is warranted for a non-opioid pain
management alternative.
Therefore, we are soliciting comment on whether specific evidence
of reduced utilization should be part of our evaluation and
determination of whether a non-opioid pain management product should
qualify for modified

[[Page 42046]]

payment. This data may help to demonstrate that our packaging policies
are causing an access issue for these products. Additionally, we
realize that new products to the market may not have utilization data
available, or reliable utilization data may be difficult to obtain for
some products; therefore, we are also requesting comment on whether
utilization data requirements should vary based on the newness of a
product or its FDA marketing approval date.
(b) FDA Indication for Pain Management or Analgesia for the Drug or
Biological Product
As previously discussed, section 1833(t)(22)(A) of the Act
specifically refers to reviews of opioid and evidence-based non opioid
products for pain management. We believe the majority of drugs and
biologicals that would meet the requirements of our proposed policy
would already have FDA approval as a pain management drug or as an
analgesic. However, we acknowledge there may be other non-opioid
products that would benefit from inclusion under this policy, but do
not have a specific FDA-approved indication for pain management or
analgesia, and would not satisfy criterion 1. Therefore, we are
soliciting comment on whether we should allow certain FDA-approved
drugs and biologicals to be eligible for separate payment under this
policy without a specific FDA-approved indication for pain management
or as an analgesic drug. In lieu of an FDA indication for pain
management or analgesia, we are seeking comment on whether it would be
appropriate to approve a product for inclusion under this policy if the
pain-management or analgesia attributes of the drug or biological are
recognized by a medical compendium. Similarly, we are seeking comment
as to whether we should consider specialty society or national
organization (such as a national surgery organization) recommendations
of non-opioid pain management products that function as surgical
supplies and reduce opioid use in the ASC setting, as evidence that a
product meets criterion one, where a drug or biological does not have
an FDA indication for pain management or analgesia.
(c) Peer-Reviewed Literature Requirement Comment Solicitation
We note that section 1833(t)(22)(B) requires the Secretary to focus
on covered OPD services (or groups of services) assigned to a
comprehensive ambulatory payment classification, ambulatory payment
classifications that primarily include surgical services, and other
services determined by the Secretary that generally involve treatment
for pain management. We are also soliciting comment as to whether we
should only adopt a payment revision to drugs and biologicals that
function as surgical supplies in the ASC setting when those products
have evidence in peer reviewed literature supporting that the product
actually decreases opioid. We believe this may be appropriate to ensure
Medicare payment policies would not financially incentivize use of
opioids rather than evidence-based non-opioid alternative treatments,
as required by section 1833(t)(22)(A)(iii) of the Act. Specifically, we
are seeking comment as to whether the drug or biological's use in a
surgical procedure as a non-opioid pain management product should be
supported by peer-reviewed literature demonstrating a clinically
significant decrease in opioid usage compared to the standard of care,
and we are seeking comment on whether such decreases in opioid usage
should be sustained decreases that continue into the post-operative
period.
Additionally, we are seeking input from commenters as to what they
believe the requirements for peer-reviewed literature requirements
should be. For example, we are seeking stakeholder feedback as to
whether peer-reviewed literature should demonstrate that use of the
drug or biological results in at least one, or several, of the
following: Decreased post-operative opioid use following surgery;
decreased opioid misuse following surgery; or decreased opioid use
disorder and dependency following surgery.
Additionally, we ask stakeholders if specific thresholds are
necessary to determine whether these decreases are statistically and
clinically significant and whether the decreases should simply be
measured against placebo or the standard of care. We also request
information on how stakeholders would define the standard of care in
these circumstances. When evaluating literature, we would expect to
examine the study methods, sample size, limitations, possible conflicts
of interest, patient populations studied, and how the evidence supports
the conclusion that the product can serve as a non-opioid pain
management product and provide a clinically significant reduction in
opioid use that continues into the post-operative period. However, we
welcome input from stakeholders about additional aspects of these
studies that they believe CMS should focus on for this potential
criterion. Additionally, we would expect to use our discretion to
assess whether the submitted studies meet these criteria, as well as
for clinical applicability, literature integrity, and potential biases
in consultation with our clinical advisors.
In order to provide stakeholders with some examples of what
supporting evidence CMS may consider for this potential criterion, we
believe it would be helpful for CMS to receive literature demonstrating
that use of a non-opioid drug or biological results in a statistically
and clinically significant decreased day supply of outpatient opioids
prescribed after surgery discharge compared to the generally accepted
standard of care, or a statistically and clinically significant
decreased morphine milligram equivalents (MME) per opioid dose
prescribed after surgery discharge compared to the generally accepted
standard of care. We would consider the generally accepted standard of
care to include pain management therapy a patient would receive in the
absence of the non-opioid alternative, such as the use of localized
analgesia and/or an opioid. As previously discussed, we would then
expect the use of a non-opioid pain management drug or biological to
result in a decline in opioids used compared to the pain management
therapy a patient would receive in the absence of the non-opioid
alternative. We would expect this decline in opioids to include a
decreased number of opioids received by a patient intraoperatively,
post-operatively, and most significantly at discharge. We are
soliciting comment on additional examples or measures that would be
beneficial for CMS to take into consideration. Additionally, we are
seeking comment on whether we should require a specific objective
measure for this criterion. We also seek input on how to assess whether
changes are statistically and clinically significant. We request
comment on whether stakeholders believe evidence of statistical
significance should be sufficient, or whether stakeholders believe the
literature should also demonstrate clinically significant differences
between treatment groups as well.
(d) Alternative Payment Mechanisms for Non-Opioid Drugs and Biologicals
As previously discussed, for CY 2022, we are proposing to pay
separately at ASP plus 6 percent for non-opioid pain management drugs
and biologicals that function as surgical supplies in the performance
of surgical procedures when they are furnished in the ASC setting and
meet our other proposed

[[Page 42047]]

criteria. Section 1833(t)(22)(A)(iii) requires the Secretary to
consider the extent to which revisions payments (such as the creation
of additional groups of covered OPD services to classify separately
those procedures that utilize opioids and non-opioid alternatives for
pain management) would reduce payment incentives to use opioids instead
of non-opioid alternatives for pain management. Accordingly, separate
payment is not the only possible revision that may be appropriate. We
seek comment on additional payment mechanisms that may be appropriate
aside from separate payment. For instance, we request feedback from
stakeholders as to whether a single, flat add-on payment, or separate
APC assignment, for products or procedures that use a product that
meets eligibility criteria would be preferable to separate payment. We
note that any revisions the Secretary determines appropriate under
section 1833(t)(22)(C) must be applied in a budget neutral manner under
section 1833(t)(9)(B). We also seek input from stakeholders on any
other innovative payment mechanisms for eligible non-opioid drugs and
biologicals for pain management.
(e) Non-Drug Products
We are also interested in information on any non-opioid non-drug
products that function as surgical supplies commenters believe should
be eligible for separate payment under this policy. Although we have
not currently identified any non-opioid pain management non-drug
products that are disincentivized by CMS packaging policies based on
utilization data, we believe it is reasonable to assume that if
disincentives exist for the use of non-opioid pain management drugs and
biological products under the ASC payment system, they may also exist
for non-opioid, non-drug products under the ASC payment system. If this
is the case, we would like to address these disincentives given the
severity, and importance of combatting, the opioid epidemic, regardless
of whether the non-opioid product is a drug, biological, or non-drug
product. We remain interested as to whether there are any non-opioid,
non-drug products that may meet the proposed eligibility criteria and
should qualify for separate or modified payment as discussed in section
(d) above, in the ASC setting. Similarly, we are also seeking comment
on if there are unique qualities of non-drug products that would make
revised payment in the HOPD setting appropriate instead of, or in
addition to, the ASC setting.
We are also soliciting comment on whether it is appropriate to
require non-drug products to meet the same criteria being proposed for
drugs and biologicals. Additionally, we are seeking comment from
stakeholders on whether they believe it would be appropriate to create
a broad category for non-drug products, or if a more limited category,
such as for devices, would be appropriate. Specifically, we are seeking
comment on whether there is information in the FDA approval for devices
that would be an appropriate criterion to determine eligibility for
separate payment, similar to how we are proposing to require FDA
approval with an indication for pain management or analgesia for drugs
and biologicals. We are also seeking comment on whether, if the non-
drug product is a ``device'' as defined in section 201(h) of the
Federal Food, Drug, and Cosmetic Act, the device should have received
FDA premarket approval, grant of a de novo request, 510(k) clearance or
meet an exemption from premarket review. We are soliciting comment on
all aspects of an extension of our current policy to include
appropriate products that are not drugs or biologicals.
We are also soliciting comment as to how peer-reviewed literature
and utilization claims data could be used as potential criteria for a
policy that would apply to non-drug products. Additionally, should a
payment revision be determined necessary, we are seeking comment on
appropriate payment mechanisms for non-opioid, non-drug products,
including assigning the non-drug product to its own APC to ensure that
the product is paid separately or establishing an add-on adjustment for
the cost of the non-drug product in addition to the payment for the APC
to which the non-drug product is assigned. Additionally, we seek
comment on whether it would be appropriate to subject non-drug products
to a cost threshold similar to the one we are proposing to apply to
drugs and biologicals.
4. Calculation of OPPS Scaled Payment Weights
We established a policy in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68283) of using geometric mean-based APC costs to
calculate relative payment weights under the OPPS. In the CY 2021 OPPS/
ASC final rule with comment period (85 FR 85902 through 85903), we
applied this policy and calculated the relative payment weights for
each APC for CY 2021 that were shown in Addenda A and B to that final
rule with comment period (which were made available via the internet on
the CMS website) using the APC costs discussed in sections II.A.1. and
II.A.2. of that final rule with comment period. For CY 2022, as we did
for CY 2021, we propose to continue to apply the policy established in
CY 2013 and calculate relative payment weights for each APC for CY 2022
using geometric mean-based APC costs.
For CY 2012 and CY 2013, outpatient clinic visits were assigned to
one of five levels of clinic visit APCs, with APC 0606 representing a
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75036 through 75043), we finalized a policy that created
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for
assessment and management of a patient), representing any and all
clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634
(Hospital Clinic Visits). We also finalized a policy to use CY 2012
claims data to develop the CY 2014 OPPS payment rates for HCPCS code
G0463 based on the total geometric mean cost of the levels one through
five CPT E/M codes for clinic visits previously recognized under the
OPPS (CPT codes 99201 through 99205 and 99211 through 99215). In
addition, we finalized a policy to no longer recognize a distinction
between new and established patient clinic visits.
For CY 2016, we deleted APC 0634 and reassigned the outpatient
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and
Related Services) (80 FR 70372). For CY 2022, as we did for CY 2021, we
propose to continue to standardize all of the relative payment weights
to APC 5012. We believe that standardizing relative payment weights to
the geometric mean of the APC to which HCPCS code G0463 is assigned
maintains consistency in calculating unscaled weights that represent
the cost of some of the most frequently provided OPPS services. For CY
2022, as we did for CY 2021, we propose to assign APC 5012 a relative
payment weight of 1.00 and to divide the geometric mean cost of each
APC by the geometric mean cost for APC 5012 to derive the unscaled
relative payment weight for each APC. The choice of the APC on which to
standardize the relative payment weights does not affect payments made
under the OPPS because we scale the weights for budget neutrality.
We note that in the CY 2019 OPPS/ASC final rule with comment period
(83 FR 59004 through 59015) and the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61365 through 61369), we discuss our policy,
implemented on January 1, 2019, to

[[Page 42048]]

control for unnecessary increases in the volume of covered outpatient
department services by paying for clinic visits furnished at excepted
off-campus provider-based department (PBD) at a reduced rate. While the
volume associated with these visits is included in the impact model,
and thus used in calculating the weight scalar, the policy has a
negligible effect on the scalar. Specifically, under this policy, there
is no change to the relativity of the OPPS payment weights because the
adjustment is made at the payment level rather than in the cost
modeling. Further, under this policy, the savings that result from the
change in payments for these clinic visits are not budget neutral.
Therefore, the impact of this policy will generally not be reflected in
the budget neutrality adjustments, whether the adjustment is to the
OPPS relative weights or to the OPPS conversion factor. For a full
discussion of this policy, we refer readers to the CY 2020 OPPS/ASC
final rule with comment period (84 FR 61142).
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2022 is neither
greater than nor less than the estimated aggregate weight that would
have been calculated without the changes. To comply with this
requirement concerning the APC changes, we propose to compare the
estimated aggregate weight using the CY 2021 scaled relative payment
weights to the estimated aggregate weight using the proposed CY 2022
unscaled relative payment weights.
For CY 2021, we multiplied the CY 2021 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2019 claims to calculate the total relative
payment weight for each service. We then added together the total
relative payment weight for each of these services in order to
calculate an estimated aggregate weight for the year. For CY 2022, we
propose to apply the same process using the estimated CY 2022 unscaled
relative payment weights rather than scaled relative payment weights.
We propose to calculate the weight scalar by dividing the CY 2021
estimated aggregate weight by the unscaled CY 2022 estimated aggregate
weight.
For a detailed discussion of the weight scalar calculation, we
refer readers to the OPPS claims accounting document available on the
CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html. Click on the CY 2022 OPPS
proposed rule link and open the claims accounting document link at the
bottom of the page.
We propose to compare the estimated unscaled relative payment
weights in CY 2022 to the estimated total relative payment weights in
CY 2021 using CY 2019 claims data, holding all other components of the
payment system constant to isolate changes in total weight. Based on
this comparison, we propose to adjust the calculated CY 2022 unscaled
relative payment weights for purposes of budget neutrality. We propose
to adjust the estimated CY 2022 unscaled relative payment weights by
multiplying them by a proposed weight scalar of 1.4436 to ensure that
the proposed CY 2022 relative payment weights are scaled to be budget
neutral. The proposed CY 2022 relative payment weights listed in
Addenda A and B to this proposed rule (which are available via the
internet on the CMS website) are scaled and incorporate the
recalibration adjustments discussed in sections II.A.1. and II.A.2. of
this proposed rule.
Section 1833(t)(14) of the Act provides the payment rates for
certain SCODs. Section 1833(t)(14)(H) of the Act provides that
additional expenditures resulting from this paragraph shall not be
taken into account in establishing the conversion factor, weighting,
and other adjustment factors for 2004 and 2005 under paragraph (9), but
shall be taken into account for subsequent years. Therefore, the cost
of those SCODs (as discussed in section V.B.2. of proposed rule) is
included in the budget neutrality calculations for the CY 2022 OPPS.

B. Proposed Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the hospital inpatient market
basket percentage increase applicable to hospital discharges under
section 1886(b)(3)(B)(iii) of the Act. In the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25435), consistent with current law, based on IHS
Global, Inc.'s fourth quarter 2020 forecast of the FY 2022 market
basket increase, the proposed FY 2022 IPPS market basket update was 2.5
percent.
Specifically, section 1833(t)(3)(F)(i) of the Act requires that,
for 2012 and subsequent years, the OPD fee schedule increase factor
under subparagraph (C)(iv) be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as
equal to the 10-year moving average of changes in annual economy-wide,
private nonfarm business multifactor productivity (MFP) (as projected
by the Secretary for the 10-year period ending with the applicable
fiscal year, year, cost reporting period, or other annual period) (the
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR
51689 through 51692), we finalized our methodology for calculating and
applying the MFP adjustment, and then revised this methodology, as
discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). In the
FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25435), the proposed MFP
adjustment for FY 2022 was 0.2 percentage point.
Therefore, we propose that the MFP adjustment for the CY 2022 OPPS
is 0.2 percentage point. We also propose that if more recent data
become subsequently available after the publication of this proposed
rule (for example, a more recent estimate of the market basket increase
and/or the MFP adjustment), we will use such updated data, if
appropriate, to determine the CY 2022 market basket update and the MFP
adjustment, which are components in calculating the OPD fee schedule
increase factor under sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of
the Act, in the CY 2022 OPPS/ASC final rule.
We note that section 1833(t)(3)(F) of the Act provides that
application of this subparagraph may result in the OPD fee schedule
increase factor under section 1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year, and may result in OPPS payment rates being
less than rates for the preceding year. As described in further detail
below, we propose for CY 2022 an OPD fee schedule increase factor of
2.3 percent for the CY 2022 OPPS (which is the proposed estimate of the
hospital inpatient market basket percentage increase of 2.5 percent,
less the proposed 0.2 percentage point MFP adjustment).
We propose that hospitals that fail to meet the Hospital OQR
Program reporting requirements would be subject to an additional
reduction of 2.0 percentage points from the OPD fee schedule increase
factor adjustment to the conversion factor that would be used to
calculate the OPPS payment

[[Page 42049]]

rates for their services, as required by section 1833(t)(17) of the
Act. For further discussion of the Hospital OQR Program, we refer
readers to section XIV. of the proposed rule.
To set the OPPS conversion factor for 2022, we propose to increase
the CY 2021 conversion factor of $82.797 by 2.3 percent. In accordance
with section 1833(t)(9)(B) of the Act, we propose further to adjust the
conversion factor for CY 2022 to ensure that any revisions made to the
wage index and rural adjustment are made on a budget neutral basis. We
propose to calculate an overall budget neutrality factor of 1.0012 for
wage index changes by comparing proposed total estimated payments from
our simulation model using the proposed FY 2022 IPPS wage indexes to
those payments using the FY 2021 IPPS wage indexes, as adopted on a
calendar year basis for the OPPS.
For the CY 2022 OPPS, we propose to maintain the current rural
adjustment policy, as discussed in section II.E. of this proposed rule.
Therefore, the proposed budget neutrality factor for the rural
adjustment is 1.0000.
We propose to continue previously established policies for
implementing the cancer hospital payment adjustment described in
section 1833(t)(18) of the Act, as discussed in section II.F. of this
proposed rule. We propose to calculate a CY 2022 budget neutrality
adjustment factor for the cancer hospital payment adjustment by
comparing estimated total CY 2022 payments under section 1833(t) of the
Act, including the proposed CY 2022 cancer hospital payment adjustment,
to estimated CY 2022 total payments using the CY 2021 final cancer
hospital payment adjustment, as required under section 1833(t)(18)(B)
of the Act. The proposed CY 2022 estimated payments applying the
proposed CY 2022 cancer hospital payment adjustment were the same as
estimated payments applying the CY 2021 final cancer hospital payment
adjustment. Therefore, we propose to apply a budget neutrality
adjustment factor of 1.0000 to the conversion factor for the cancer
hospital payment adjustment. In accordance with section 1833(t)(18)(C),
as added by section 16002(b) of the 21st Century Cures Act (Pub. L.
114-255), we are applying a budget neutrality factor calculated as if
the proposed cancer hospital adjustment target payment-to-cost ratio
was 0.90, not the 0.89 target payment-to-cost ratio we applied as
stated in section II.F. of the proposed rule.
For this CY 2022 OPPS/ASC proposed rule, we estimated that proposed
pass-through spending for drugs, biologicals, and devices for CY 2022
would equal approximately $1.03 billion, which represented 1.24 percent
of total projected CY 2022 OPPS spending. Therefore, the proposed
conversion factor would be adjusted by the difference between the 0.92
percent estimate of pass-through spending for CY 2021 and the 1.24
percent estimate of proposed pass-through spending for CY 2022,
resulting in a proposed decrease to the conversion factor for CY 2022
of 0.32 percent.
Proposed estimated payments for outliers would remain at 1.0
percent of total OPPS payments for CY 2022. We estimate for the
proposed rule that outlier payments would be 1.06 percent of total OPPS
payments in CY 2021; the 1.00 percent for proposed outlier payments in
CY 2022 would constitute a 0.06 percent decrease in payment in CY 2022
relative to CY 2021.
For this CY 2022 OPPS/ASC proposed rule, we also propose that
hospitals that fail to meet the reporting requirements of the Hospital
OQR Program would continue to be subject to a further reduction of 2.0
percentage points to the OPD fee schedule increase factor. For
hospitals that fail to meet the requirements of the Hospital OQR
Program, we propose to make all other adjustments discussed above, but
use a reduced OPD fee schedule update factor of 0.3 percent (that is,
the proposed OPD fee schedule increase factor of 2.3 percent further
reduced by 2.0 percentage points). This would result in a proposed
reduced conversion factor for CY 2022 of $82.810 for hospitals that
fail to meet the Hospital OQR Program requirements (a difference of -
1.647 in the conversion factor relative to hospitals that met the
requirements).
In summary, for 2022, we propose to use a reduced conversion factor
of $82.810 in the calculation of payments for hospitals that fail to
meet the Hospital OQR Program requirements (a difference of -1.647 in
the conversion factor relative to hospitals that met the requirements).
For 2022, we propose to use a conversion factor of $84.457 in the
calculation of the national unadjusted payment rates for those items
and services for which payment rates are calculated using geometric
mean costs; that is, the proposed OPD fee schedule increase factor of
2.3 percent for CY 2022, the required proposed wage index budget
neutrality adjustment of approximately 1.0012, the proposed cancer
hospital payment adjustment of 1.0000, and the proposed adjustment of
0.32 percentage point of projected OPPS spending for the difference in
pass-through spending that resulted in a proposed conversion factor for
CY 2022 of $84.457.

C. Proposed Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion
of the OPPS payment rate is called the OPPS labor-related share. Budget
neutrality is discussed in section II.B. of this proposed rule.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, approximately 60 percent of
the costs of services paid under the OPPS were attributable to wage
costs. We confirmed that this labor-related share for outpatient
services is appropriate during our regression analysis for the payment
adjustment for rural hospitals in the CY 2006 OPPS final rule with
comment period (70 FR 68553). We propose to continue this policy for
the CY 2022 OPPS. We refer readers to section II.H. of this proposed
rule for a description and an example of how the wage index for a
particular hospital is used to determine payment for the hospital.
As discussed in the claims accounting narrative included with the
supporting documentation for this proposed rule (which is available via
the internet on the CMS website), for estimating APC costs, we would
standardize 60 percent of estimated claims costs for geographic area
wage variation using the same FY 2022 pre-reclassified wage index that
we would use under the IPPS to standardize costs. This standardization
process removes the effects of differences in area wage levels from the
determination of a national unadjusted OPPS payment rate and copayment
amount.
Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS
April 7, 2000 final rule with comment period (65 FR 18495 and 18545)),
the OPPS adopted the final fiscal year IPPS post-reclassified wage
index as the calendar year wage index for adjusting the OPPS standard
payment amounts for labor market differences. Therefore, the wage index
that applies to a particular acute care, short-stay hospital under the
IPPS also applies to that hospital under the OPPS. As initially
explained in the September 8, 1998 OPPS proposed rule (63 FR 47576), we
believe that using the IPPS wage index as the source of an

[[Page 42050]]

adjustment factor for the OPPS is reasonable and logical, given the
inseparable, subordinate status of the HOPD within the hospital
overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS
wage index is updated annually.
The Affordable Care Act contained several provisions affecting the
wage index. These provisions were discussed in the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74191). Section 10324 of the
Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act,
which defines a frontier State and amended section 1833(t) of the Act
to add paragraph (19), which requires a frontier State wage index floor
of 1.00 in certain cases, and states that the frontier State floor
shall not be applied in a budget neutral manner. We codified these
requirements at Sec. 419.43(c)(2) and (3) of our regulations. For
2022, we propose to implement this provision in the same manner as we
have since CY 2011. Under this policy, the frontier State hospitals
would receive a wage index of 1.00 if the otherwise applicable wage
index (including reclassification, the rural floor, and rural floor
budget neutrality) is less than 1.00. Because the HOPD receives a wage
index based on the geographic location of the specific inpatient
hospital with which it is associated, the frontier State wage index
adjustment applicable for the inpatient hospital also would apply for
any associated HOPD. We refer readers to the FY 2011 through FY 2021
IPPS/LTCH PPS final rules for discussions regarding this provision,
including our methodology for identifying which areas meet the
definition of ``frontier States'' as provided for in section
1886(d)(3)(E)(iii)(II) of the Act: for FY 2011, 75 FR 50

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