Five Key Takeaways From the Public Healthcare Operators in 2021
February 9, 2022
On November 2, 2021, Centers for Medicare & Medicaid Services (“CMS”) released the CY 2022 Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgery Center (“ASC”) payment system policy changes and payment rates final rule. Based on the final ruling, CMS will continue to update the ASC payment system using the hospital market basket update, rather than the Consumer Price Index for All Urban Consumers (“CPI-U”) for CYs 2019 through 2023. The final rule resulted in overall expected growth in payments equal to 2.0% in CY 2022. This increase is determined based on a projected inflation rate of 2.7% less the multifactor productivity (“MFP”) reduction of 0.7% mandated by the ACA.
Presented in the chart below is a summary of the historical net inflation adjustments for CY 2015 through CY 2022. The annual inflation adjustments are presented net of additional adjustments, such as the MFP reduction, outlined in the final rule for the respective CY. The CY 2022 inflation adjustment continues the trend of relative stability of annual adjustments since CMS implemented the use of the hospital market basket update to finalize payment rates in CY 2019.
Alongside finalization of payment rates, CMS finalized its proposal to halt policy changes from the previous administration that added a significant number of codes to the ASC Covered Procedures List (“ASC-CPL”) and began the process of eliminating the inpatient-only (“IPO”) list. Procedures that were removed in 2021, except for CPT codes 22630 (Lumbar spine fusion), 23472 (Reconstruct ankle joint), and their corresponding anesthesia codes, have been added back to the IPO list.
“We are pleased that CMS recognized the unique role that hospital outpatient departments play in caring for patients by rolling back two problematic policies it put forth last year. Reinstating the list of services that Medicare will pay for only when performed in an inpatient setting due to their medical complexity, and reinstating long-standing safety criteria for allowing procedures to take place in ambulatory surgical centers, is a win for patients’ safety, health and quality of care.”
Stacey Hughes, Executive Vice President, AHA
“This final rule contains some modest improvements since the proposed rule, but we are disappointed that the agency finalized a decision to reduce beneficiary access to ASCs for a number of important procedures that were added just a year ago, despite CMS having little to no clinical data to use as a basis for removing them from our payable list. To that end, however, we were particularly pleased to see that our longstanding recommendation for a transparent process to add procedures to our payable list is included.”
ASCA Chief Executive Officer Bill Prentice
On December 2, 2020, CMS released the 2020 OPPS and ASC Payment System final rulings, which finalized the addition of 11 procedures to the ASC-CPL, most notably including total hip arthroplasty (hip replacement surgery). Additionally, CMS revised the criteria used to add covered surgical procedures to the ASC CPL. Under the revised criteria, CMS added an additional 267 surgical procedures to the ASC-CPL beginning in CY 2021.
For CY 2022, CMS is reinstating the criteria for adding procedures to the ASC CPL that were originally in place in 2020. After reviewing commentary on the 258 procedures proposed for removal, CMS is retaining six procedures, three already on the ASC CPL and three proposed for removal, and removing 255 of the procedures proposed for removal.
Though the final ruling for increases to ASC payments by CMS and the recovery from Covid-19 would both indicate an expected increase in total payments, this increase is slightly offset by the removal of the 255 CPT codes added with the CY 2021 final rule. Ultimately, CMS has projected total ASC payments in 2022 to increase approximately $40 million from 2021 payments, to be approximately $5.41 billion. The source of the increase in payments is a combination of enrollment, case-mix, and utilization changes.
In conclusion, we continue to see themes from 2020 play out through 2021 and continue into the finalization of the CY 2022 payment system. CMS continues to show stability on the annual inflation adjustment utilizing the hospital market basket to update rates. However, there remains uncertainty on the future of the CPL and IPO lists, with continued discussion around adjustments being made to the program and the impacts of regulatory changes surrounding outpatient care.