Q&A: 2022 IPPS proposed rule

Tuesday, May 25, 2021

The following is an excerpt from the May 20 episode of The Revenue Integrity Show: A NAHRI Podcast in which we covered the 2022 IPPS proposed rule with guest Jugna Shah, MPH, CHRI, President, Nimitt Consulting Inc., in Spicer, Minnesota.

Register for free to join us live for our June 3 episode or stream past episodes on your favorite podcast streaming platform. The June 3 episode, Tackling COVID-19 Vaccination Billing Challenges: A System Approach (Part 2), features members of the CommonSpirit Health team:  Melissa Deuel, system manager, charge master, Christian S. Gabriel, national director of revenue integrity, and Marie Garcia, system manager, revenue integrity.

Q. What were some of the most significant things that stood out to you and where do you see those proposals going or what impact they might have down the line?

A. Very early on in the rule you see CMS' proposal to repeal—and I think they use exactly that word, “repeal”—what had been finalized in last year's final rule, which hospitals will recognize, to report their median payer-specific negotiated rates for all MA payers and also to report information through the Medicare Cost Report. Basically, CMS proposes to scrap both of these things.  They're telling hospitals we're not going to use that methodology to set rates going forward. This is really significant because it’s the agency undoing something that had been finalized even though practically no one supported it.

I certainly know hospitals and hospital associations were vehemently against that proposal. Mostly because it was just a very circular, sort of illogical way of suggesting rate setting. It was just fantastic right out of the gate to see CMS suggesting to repeal that. I can't imagine that it would not get finalized. 

Use of older data for rate setting (i.e., 2019 instead of 2020) is something I don't think we've ever seen before.  Medicare typically sets payment rates for the future using the the most current hospital data they have, which for fiscal year 2022 rate setting would be FY 2020 claims, but because of the public health emergency and hospital volumes being way down, CMS is basically, saying, we think that we should go back further and use a more representative year of claims data, so it’s proposing fiscal year 2019 claims instead of FY 2020 for fiscal year 2022 rate setting.

Their whole rationale is that it would be more representative of the types of services and volume that hospitals would have been delivering. I think this is a very thoughtful perspective to have. They offer their calculations in two different ways. But the one thing I'm curious about and might be commenting on is did CMS consider a hybrid relative weight setting methodology where they'd use some of fiscal year 2019 data and some fiscal year 2020 data—find those date ranges where they could get the best of both worlds. That’s something that I think people should just watch for that there'll be comments on.

Q. What were some of your reactions to the cell and gene therapy and new technology applications in the proposed rule?

A. CMS likes to change the names of DRGs when it needs to. DRG 18, which was new for fiscal year 2021 for CAR-T cell therapy, housing the first CAR-T products, that DRG’s name is being proposed to be changed. So, it will be CAR-T and other immunotherapies. 

We've got a number of additional new CAR-T therapies coming online as well as other therapies that are not CAR-T and they've got to put them somewhere and so they are expanding DRG 18 by proposing a name change. Then they would route specific therapies into that DRG. 

One question that I've been hearing people say is, what do they mean by other immunotherapies? Will products that we traditionally think of as immunotherapy go there? That would be a massive overpayment. Or is it very specific immunotherapies? And what is in the immunotherapy and what does CMS intend for it to be? People can certainly ask CMS, what do you mean by other immunotherapies right now? What we know is that they are proposing to put the additional CAR-T products that are seeking NTAP in DRG 018.  CMS is also asking, if we put those therapies in DRG 18 and those manufacturers are requesting NTAP for those therapies, should we grant both? 

The number of cell therapy providers has increased, almost doubled, in terms of the claims data that we see from fiscal year 2019 to fiscal year 2020. I expect more and more hospitals will get certified and start providing these therapies. They're going to start coming out fast and furious and, at the moment, they'll go into this DRG 18. My read of the rule is, I think some of those therapies will be hard pressed to be deemed as new, but there are a couple in that bunch—new indications, multiple myeloma, TIL therapy—that's in there. Those might be granted NTAP based on meeting all the criteria. We'll just have to wait and see.

Cell and gene therapies are definitely pushing the boundaries of what CMS has traditionally had to address with this DRG system.

Q. CMS seemed to ask over and over if it should pay the highest paying MS-DRG, the new CAR-T DRG, and still allow for NTAP payment. What is your take on that? Can you explain this further?

A. That is the highest paying DRG, and more stuff is going to route there in terms of procedure codes for these new, high-cost therapies. I think CMS is just saying, wow, we're putting them in this high-cost DRG but we’re still being asked to evaluate if they're new in terms of a new mechanism of action or a new indication, a different type of clinical benefit, different patient population. It makes perfect sense to me that the manufacturers are seeking NTAP for these therapies. 

My take is if new therapies meet the NTAP criteria, then CMS should grant NTAP and not worry about, the fact that it’s also paying out the highest DRG that exists. I understand CMS' perspective that they might be reluctant to do this, but to me the NTAP criteria are the NTAP criteria and should be applied objectively and irrespective of the MS-DRG that the therapy will be assigned to. I have a guess on what CMS will do but we won’t know until the final rule.

By placing other high cost therapies into DRG 018, CMS is maintaining resource homogeneity but not necessarily clinical homogeneity depending on what products get assigned and for what indicators. One thing that’s great going forward is that CMS is preserving continuing to set aside clinical trial cases, and not using those to set the payment rate, which makes a lot of sense because the high-cost therapy would be zero on those claims, so they're not going to use those. 

They're also doing a little data cleaning still. CMS proposes to continue eliminating claims from the CAR-T rate setting methodology where standardized pharmacy charges less than $373,000 are present as using those claims would result in dragging down the final payment rate. I don’t know how long CMS will keep this data cleaning step in place so in the meantime, providers should ensure they charge appropriately and recall that CMS did a great thing last year in the final rule, when they addressed this question of essentially marking up these products, so if you pay $373,000 for a product, people don't feel comfortable turning around and putting through a $1.5 million charge or $2 million charge but that is exactly what they should do as long as the charge being set is in accordance with their overall operating cost-to-charge ratio.

People left NTAP dollars on the table in the past, and then when those claims are used to set future rates, the MS-DRG weight will get pulled lower. So, last year, CMS basically said, hospitals need to set their charges in accordance with their cost-to-charge ratios. They’re all but giving people permission to charge correctly for this stuff, even if it feels uncomfortable.

Q. What is your take on CMS’ proposal to no longer allow unspecified codes to count towards assigning a case into a CC MS-DRG? Is that going into effect for fiscal year 2022 or later?

A. That's one of the biggest proposed changes in the rule because it's potentially going to mix up and shuffle around a bunch of things. 

They tell us that in light of the public health emergency, they don't think it would be appropriate to go through with this whole thing that they're talking about until fiscal year 2023. So that's a good thing in terms of implementation. 

I think that CMS is proposing this quite seriously because they are relying on what they finalized in the past, which is their criteria of determining if a DRG gets a two-way split or a three-way split—so, a non-CC/MCC, with CC, or with MCC. Some DRGs have the three severity levels, some only have two. They're basically saying that there are about 3,490 codes that are unspecified ICD-10-CM codes, and that those codes can go into a CC or MCC type DRG today and that CMS doesn’t want that to continue going forward since CC and MCC DRGs pay more than non CC/MCC.CMS is saying, it wants the fewest amount of DRGs it can get away with but they've got to have clinical meaningfulness and explanatory power. Their perspective is if there's a better code available, like one that would specify an anatomic site like left or right, then people need to be coding them. From a coding perspective, I totally agree but they should take a step wise approach where they encourage better coding and allow the data to get cleaned up before they take the step to no longer allow unspecified codes to map to a CC or MCC MS-DRG. That feels like a little too much all at once.

Q. Do you have any recommendations as people think about submitting comments to CMS on the 2022 IPPS proposed rule?

A. Don’t let a large rule—it’s a couple thousand pages in the display copy—don't let be daunting. You can pick and choose topics that matter to you. You can submit them electronically at regulations.gov. I've been saying this for years, you don't have to be a terrific writer or an English major and you don't have to write pages and pages. CMS really wants to hear from providers more than anybody else. The more that you can make it about impact, whether it's operational impact or financial impact, it's really helpful for them to understand.