2022 OPPS proposed rule: CMS increases price transparency penalties, backs off from eliminating inpatient-only list

Wednesday, July 21, 2021

Less than a year after CMS finalized the three-year phaseout of the inpatient-only (IPO) list to be completed by 2024, the agency is looking to reverse course, according to the 2022 OPPS proposed rule, released Monday, July 19.

In addition, CMS says it intends to increase hospital compliance with its price transparency policies by increasing financial penalties for certain facilities, among other proposals related to 2-midnight policy medical reviews and potentially codifying certain policies created during the COVID-19 public health emergency (PHE).

IPO list reversal

Citing “a large number of stakeholder comments” received during and after the 2021 rulemaking cycle that opposed the gradual elimination of the IPO list due patient safety concerns, CMS proposes to halt the previously finalized three-year phase out and restore the 298 services removed from the IPO list on January 1.

“What’s interesting to me about this is twofold,” says Jugna Shah, MPH, CHRI, president of Nimitt Consulting Inc., in Spicer, Minnesota. “First, CMS isn’t pausing or halting its policy changes to better understand the concerns, but turning the ship around 100%.

“Second, in addition to patient safety concerns that some hospital groups raised, there were also concerns about the decrease in hospital reimbursement for procedures removed from the IPO list under OPPS,” Shah adds. “For those who felt and continue to feel strongly that clinical decision-making, including considerations around patient safety, should reside in the clinician’s hands, it may now be appropriate to once again request that an IPO list be created under the Medicare Physician Fee Schedule so that physician and hospital payment rules and incentives are better aligned.”

Acknowledging patient safety concerns in the 2021 OPPS final rule, CMS stated:

We believe that the evolving nature in of the practice of medicine, which has allowed more procedures to be performed on an outpatient basis with a shorter recovery time, in addition to physician judgment, state and local licensure requirements, accreditation requirements, hospital conditions of participation (CoPs), medical malpractice laws, and CMS quality and monitoring initiatives and programs will continue to ensure the safety of beneficiaries in both the inpatient and outpatient settings, even in the absence of the IPO list.

As opposed to those criteria, the agency is now proposing to codify its own criteria for removing procedures from the IPO list in the 2022 OPPS proposed rule. CMS is also seeking comment on whether the agency should continue to maintain the IPO list or return to a “longer-term objective” of eliminating it.

As part of its reversal on eliminating the IPO list, CMS proposes to revise the policy established January 1 stating that procedures eliminated from the IPO list would be exempt from certain medical review activities related to the 2-midnight rule. The agency proposes all procedures removed this year would be subject to the previous exemption period of two years after removal from the list, to ensure all OPPS services are eventually subject to medical review.

Another reversal could be coming to the process used for adding procedures to the Ambulatory Surgical Center Covered Procedures List (ASC CPL). In the 2021 OPPS final rule, CMS added 267 procedures to the ASC CPL and revised the previous criteria use to add procedures to the list.

For 2022, CMS proposes reinstating the prior patient safety criteria and removing 258 of the 267 just-added procedures.

“During last year’s rule-making cycle, this was also a controversial topic that raised questions about patient safety and ASC infrastructure,” says Shah. “The good news is that CMS is seeking stakeholder input on both topics. But in the meantime, it’s very clear that CMS is taking a conservative stance about which services can be provided to outpatients, either at the hospital or in an ASC, given the type of patient safety concerns stakeholders raised after the release of the CY 2021 final OPPS rule.”

Increasing penalties for price transparency noncompliance

Following a recent JAMA Internal Medicine study that found 75% of the country’s 100 highest-revenue hospitals noncompliant with at least one of the major requirements of CMS’ price transparency policy effective January 1, the agency is proposing reforms to increase compliance.

CMS appears intent on raising civil monetary penalties (CMP) on large providers that do not comply, but is seeking comment on what criteria to use to scale the CMPs appropriately, including:

  • Hospital revenue
  • The nature, scope, severity, and duration of noncompliance
  • The hospital’s reason for noncompliance

This scaled approach is intended to maintain the current penalty for small hospitals but increasing it for larger hospitals. For example, CMS proposes a minimum CMP of $300 per day for hospitals with 30 or fewer beds and adding $10 per bed per day for hospitals with more than 30 beds. This penalty would be capped at $5,500 per day.

If CMS moves forward with this proposal, the minimum total annual penalty for a year of noncompliance would be $109,500 and the maximum would be $2,007,500.

The agency is considering administrative changes in addition to tweaking the CMPs. CMS proposes the machine-readable file of standard charges should be accessible to automated searches and direct downloads. For facilities using online price estimator tools, CMS is clarifying that the tool must provide a cost estimate that takes the consumer’s individual insurance information into account. The hospital tool must provide an estimate that reflects the amount the facility expects the patient will pay, barring unusual or unforeseen circumstances.

“It seems clear that CMS has doubled and tripled down on all things price transparency, including monitoring what hospital are doing, and is going to continue layering on requirements,” says Shah. “Simply doing the bare minimum, or being ready to pay the fine and calling it a day, as some hospitals have been doing, may no longer be a good long-term strategy. However, commenting to CMS remains crucial to minimize administrative burden while hospitals try to provide patients with useful and meaningful information.”

CMS is seeking comment on the following topics related to price transparency:

  • Considerations for best practice online price estimator tools
  • Improving expectations related to plain language descriptions of shoppable services
  • Methods to identify and highlight exemplar hospitals
  • Improving standardization of the machine-readable files

Extending PHE policies

While CMS is not outright extending provider flexibilities granted as part of the COVID-19 PHE, the agency is seeking feedback on several regulations it could make permanent.

Specifically, CMS is asking stakeholders to comment on:

  • The degree to which providers relied on the flexibility to allow the presence of the physician for purposes of the direct supervision requirement for pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac rehabilitation services to include virtual presence through audio/video real-time communications technology when use of such technology is indicated to reduce exposure risks for the beneficiary or practitioner.
  • The extent to which hospitals have been billing for mental health services furnished to beneficiaries in their homes through communication technology during the PHE, and whether continued demand for such care is anticipated.
  • Whether CMS should keep HCPCS code C9803 (hospital outpatient clinic visit specimen collection for COVID-19, any specimen source) active beyond the conclusion of the COVID-19 PHE and whether it should extend or make permanent the OPPS payment associated with specimen collection for COVID-19 tests after the COVID-19 PHE ends.
  • Whether there are any changes that CMS should make to account for shifting practice patterns that rely on communication technology to provide mental health services to beneficiaries in their homes.

Additional information

To read more about policies in the 2022 OPPS proposed rule, see CMS’ fact sheet and press release.

Editor's note: For more expert analysis, register for the "2022 OPPS Proposed Rule: Prepare for CMS' Latest Changes" webinar.