CY 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS-1753-P)

Centers for Medicare & Medicaid Services

July 19, 2021 11:29 am

On July 19, 2021, the Centers for Medicare & Medicaid Services (CMS) proposed Medicare payment rates for hospital outpatient and Ambulatory Surgical Center (ASC) services. The Calendar Year (CY) 2022 Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System Proposed Rule is published annually and will have a 60-day comment period, which will end on September 17, 2021. The final rule with comment period will be issued in early November.  

In addition to proposing updated payment rates, this year’s rule includes proposals that align with several key goals of the Administration, including addressing the health equity gap, fighting the COVID-19 Public Health Emergency (PHE), encouraging transparency in the health system, and promoting safe, effective, and patient-centered care. 

The proposed rule would further the agency’s commitment to strengthening Medicare and uses the lessons learned from the COVID-19 PHE to inform the approach to quality measurement, focusing on changes that will help to close the health equity gap.

As with these other rules, CMS is publishing this proposed rule to meet the legal requirements to update Medicare payment policies for OPPS hospitals and ASCs on an annual basis. This fact sheet discusses the major provisions of the proposed rule (CMS- 1753-P), which can be downloaded at:

Price Transparency of Hospital Standard Charges

On January 1, 2021, the Hospital Price Transparency final rule became effective.  This final rule implements section 2718(e) of the Public Health Service Act, which requires each hospital operating within the United States to establish (and update) and make public a yearly list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act.  

CMS is committed to ensuring consumers have the information they need to make fully informed decisions regarding their health care. Hospital price transparency helps Americans know what a hospital charges for the items and services it provides.  CMS expects hospitals to comply with these legal requirements, and is enforcing these rules to ensure Americans know what a hospital charges for items and services.

The Hospital Price Transparency final rule established regulations at 45 CFR 180 and includes the following: (1) definitions of “hospital,” “standard charges,” and “items and services;” (2) requirements for making public a machine-readable file online that includes all standard charges (specifically, gross charges, payer-specific negotiated charges, discounted cash prices, and de-identified minimum and maximum negotiated charges) for all hospital items and services; (3) requirements for making public standard charges for a limited set of ‘shoppable’ services that are displayed and packaged in a consumer-friendly manner, or use of an online price estimator tool; and (4) monitoring for hospital noncompliance and actions to address hospital noncompliance (including issuing a warning notice, requesting a corrective action plan, and imposing civil monetary penalties of $300/day), and a process for hospitals to appeal these penalties. 

In this proposed rule, CMS is proposing several modifications designed to increase compliance and reduce hospital burden beginning January 1, 2022, including the following:  

Proposed Increase in Civil Monetary Penalties (CMP):  CMS proposes to set a minimum CMP of $300/day that would apply to smaller hospitals with a bed count of 30 or fewer and apply a penalty of $10/bed/day for hospitals with a bed count greater than 30, not to exceed a maximum daily dollar amount of $5,500.  Under this proposed approach, for a full calendar year of noncompliance, the minimum total penalty amount would be $109,500 per hospital, and the maximum total penalty amount would be $2,007,500 per hospital.  CMS is seeking comment on alternative or additional criteria that could be used to scale a CMP such as: hospital revenue; the nature, scope, severity, and duration of noncompliance; and the hospital’s reason for noncompliance.  The proposed approach to scaling the CMP amount would retain the current penalty amount for small hospitals, while also proposing to increase the penalty amount for larger hospitals, and signal the Secretary’s continued support for public access to pricing information and enforcement.  

Proposing to Deem State Forensic Hospitals as Having Met Requirements:  CMS proposes to modify the hospital price transparency regulation’s deeming policy to include state forensic hospitals as having met requirements, so long as such facilities provide treatment exclusively to individuals who are in the custody of penal authorities and do not offer services to the general public.  

Proposing to Prohibit Additional Specific Barriers to Access to the Machine-Readable File:  CMS proposes to update the list of activities that present barriers to access to the machine-readable file, specifically to require that the machine-readable file is accessible to automated searches and direct downloads.

Clarifications and Seeking Comment:  CMS clarifies the expected output of hospital online price estimator tools, if a hospital chooses to use an online price estimator tool in lieu of posting its standard charges for 300 shoppable services in a consumer-friendly format.  Specifically, CMS is clarifying that an online price estimator tool must provide a cost estimate to an individual that takes the individual’s insurance information into account, and that the estimate reflects the amount the hospital anticipates will be paid by the individual for the shoppable service, absent unusual or unforeseeable circumstances.

Additionally, CMS is seeking public input on a variety of issues it may consider in future rulemaking including:

  • 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; and
  • Improving standardization of the machine-readable files.  

Consolidated Appropriations Act—Rural Emergency Hospital (REH) Provider Type Request for Information

There has been a growing concern that closures of rural hospitals and CAHs are leading to a lack of services for people living in rural areas. One of these key services is access to emergency care.  Section 125 of the Consolidated Appropriations Act of 2021 (CAA) established a new provider type called Rural Emergency Hospitals (REHs), effective January 1, 2023.  

REHs are facilities that convert from either a critical access hospital (CAH) or a rural hospital (or one treated as such under section 1886(d)(8)(E) of the Social Security Act) with less than 50 beds, and that do not provide acute care inpatient services with the exception of skilled nursing facility services furnished in a distinct part unit. REHs will be required to furnish emergency department services and observation care, and may provide other outpatient medical and health services as specified by the Secretary. 

CMS has included a Request for Information (RFI) to seek public input on a broad range of issues that should be taken into account in establishing this new provider type. For example, CMS is interested in feedback on the health and safety standards, payment policies, and quality measures for REHs.  Public comment on these areas will help inform proposed rulemaking for CY 2023. CMS also intends to host other opportunities for public engagement as it considers policies related to establishing the REH provider type, including open door forums and listening sessions. 

Updates to OPPS and ASC payment rates

In accordance with Medicare law, CMS is proposing to update OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.3 percent. This update is based on the projected hospital market basket increase of 2.5 percent reduced by 0.2 percentage point for the productivity adjustment.

In the CY 2019 OPPS/ASC final rule with comment period, we finalized our proposal to apply the hospital market basket update to ASC payment system rates for an interim period of 5 years (CY 2019 through CY 2023).  Using the proposed hospital market basket, CMS is updating the ASC rates for CY 2022 by 2.3 percent. The proposed update applies to ASCs meeting relevant quality reporting requirements. This change is based on the projected hospital market basket increase of 2.5 percent with a 0.2 percentage point productivity adjustment.

Use of CY 2019 Claims Data for CY 2022 OPPS and ASC Payment System Ratesetting Due to the PHE

For the OPPS and ASC ratesetting process, the best available data for ratesetting is used so that the payment rates can accurately reflect estimates of the costs associated with furnishing outpatient services, and thus set appropriate payment rates. Ordinarily, the best available claims data is the most recent set of data which would be from two years prior to the calendar year that is the subject of rulemaking. However, due to a number of COVID-19 PHE-related factors, CMS believes that the CY 2020 data are not the best overall approximation of expected outpatient hospital services in CY 2022. Instead, we believe the CY 2019 data, as the most recent complete calendar year of data prior to the COVID–19 PHE, are a better approximation of expected costs for CY 2022 hospital outpatient services for ratesetting purposes. As a result, CMS is proposing to use CY 2019 data to set CY 2022 OPPS and ASC payment system rates.

Changes to the Inpatient Only List 

Since the beginning of the OPPS, the Inpatient Only (IPO) list has defined the list of services that, due to their medical complexity, Medicare will only pay for when performed in the inpatient setting. In the CY 2021 OPPS/ASC final rule, CMS finalized a policy to eliminate the IPO list over a three-year period, removing 298 services from the IPO list in the first phase of the elimination. However, we received a large number of stakeholder comments throughout the CY 2021 rulemaking cycle and following issuance of the final rule with comment period that opposed the elimination of the IPO list primarily due to patient safety concerns, stating that the IPO list serves as an important programmatic safeguard.

For CY 2022, CMS is proposing to halt the elimination of the IPO list and, after clinical review of the services removed from the IPO list in CY 2021, we propose to add the 298 services removed from the IPO list in CY 2021 back to the IPO list beginning in CY 2022. This change in policy would ensure that any service removed from the IPO list has been reviewed against Medicare’s longstanding IPO list criteria to determine if it is appropriate for Medicare to pay for the provision of the service in the outpatient setting. Furthermore, CMS is proposing to codify the longstanding criteria for removal of procedures from the IPO list to make clear in regulatory text how we will evaluate future procedures for removal.

In addition, we solicit comment on several policy modifications including whether CMS should maintain the longer-term objective of eliminating the IPO list or maintaining the IPO list but continuing to systematically scale the list back so that inpatient only designations are consistent with current standards of practice. 

Two-Midnight Rule Medical Review Activities Exemptions

In the CY 2021 OPPS/ASC final rule, CMS established a policy in which procedures removed from the IPO list beginning January 1, 2021 would be indefinitely exempted from certain medical review activities related to the two-midnight policy.  For CY 2022, CMS is proposing to revise the exemption for procedures removed on or after January 1, 2021 from the IPO list to the exemption period that was previously in effect (e.g.,  two years), so that all services paid for under the OPPS are eventually subject to medical review.

Changes to the ASC Covered Procedures List

In the CY 2021 OPPS/ASC final rule, CMS revised the long-standing safety criteria that were historically used to add covered surgical procedures to the ASC Covered Procedures List (ASC CPL), and adopted a notification process for surgical procedures the public believes can be added to the ASC CPL under the criteria we retained. Using these revised criteria, CMS added 267 surgical procedures to the ASC CPL beginning in CY 2021.  

For CY 2022, CMS is proposing to reinstate the criteria (which related to patient safety) for adding a procedure to the ASC CPL that were in place in CY 2020 and prior.  CMS is also proposing to remove from the ASC CPL 258 of the 267 procedures that were added in CY 2021.  

CMS is requesting comment on whether any of the 258 procedures proposed for removal from the ASC CPL meet the proposed reinstated criteria. 

CMS is also proposing to adopt a nomination process, under which, on or after January 1, 2023, an external party could nominate a surgical to be added to the ASC CPL. If CMS determines that a surgical procedure meets the requirements to be added to the ASC CPL, including a surgical procedure nominated by an external party, it would propose to add the surgical procedure to the ASC CPL in the next applicable rulemaking.  

OPPS Payment for Drugs Acquired Through the 340B Program

Section 340B of the Public Health Service Act (340B) allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices. In the CY 2018 OPPS/ASC final rule, CMS reexamined the appropriateness of paying the Average Sale Price (ASP) plus 6 percent for drugs acquired through the 340B Program, given that 340B hospitals acquire these drugs at steep discounts. Beginning January 1, 2018, Medicare adopted a policy to pay an adjusted amount of ASP minus 22.5 percent for certain separately payable drugs or biologicals acquired through the 340B Program. 

In this rule, we are proposing to maintain the payment rate of ASP minus 22.5 percent for certain separately payable drugs or biologicals acquired through the 340B Program. Under this proposal, rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals would continue to be excepted from this policy.

Payment for Non-Opioid Products Under Section 6082 of the SUPPORT Act

The law requires that the Secretary must review payments under the OPPS and ASC for opioids and evidence-based non-opioid alternatives for pain management to ensure there are not financial incentives to use opioids instead of non-opioid alternatives. For CY 2022, CMS is proposing to modify its current policy, adopted under section 1833(t)(22)(A) and section 1833(i)(8), as added by section 6082(a) and (b), respectively, of the SUPPORT Act, to provide for separate or modified payment for non-opioid pain management drugs and biologicals that function as supplies in the ASC setting when those products meet certain criteria, as determined by CMS.  

CMS proposes that beginning on or after January 1, 2022, a non-opioid pain management drug or biological that functions as a surgical supply in the ASC setting would be eligible for separate payment when it is FDA approved and indicated for pain management or as an analgesic, and with a per day cost above the OPPS/ASC drug packaging threshold. Accordingly, CMS is proposing to continue separate payment in the ASC setting in CY 2022 for the two products currently receiving separate payment under this policy since they meet the proposed criteria.

CMS is soliciting comment on establishing an application process, through which an external party could submit an application for separate payment for a non-opioid pain management drug or biological that functions as a surgical supply. 

In addition, CMS is soliciting comment on several additional criteria that could be implemented through future rulemaking, such as the presence of peer-reviewed literature that demonstrates a clinically significant decrease in opioid use for the surgical procedure and post-operative period. 

Comment Solicitation on Temporary Policies for the PHE for COVID-19

In response to the COVID-19 PHE, CMS undertook emergency rulemaking to implement a number of flexibilities to address the PHE, 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, CMS is seeking comment on the extent to which stakeholders utilized these flexibilities as well as whether stakeholders believe there are certain policies that should be made permanent to the extent possible. Specifically, CMS is seeking comment on:

  1. 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. 
  1. 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. 
  1. 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. This flexibility is scheduled expire with the later of the end of the PHE or December 31, 2021.  
  1. Whether CMS should keep HCPCS code C9803 (Hospital outpatient clinic visit specimen collection for severe acute respiratory syndrome coronavirus 2 (sars-cov-2) (coronavirus disease [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. This code was established in response to the significant increase in specimen collection and testing for COVID-19 in Hospital Outpatient Departments (HOPDs) and is expected to be retired at the end of the COVID-19 PHE.

OPPS Transitional Payment for Drug and Biological Pass-Through and Transitional Payment for Device Pass-Through

For CY 2022, CMS received eight applications for device pass-through payments. One of these applications (the Shockwave C2 Coronary Intravascular Lithotripsy (IVL) catheter) received preliminary approval for pass-through payment status through our quarterly review process.  CMS is 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. 

In addition, as a result of the proposal to use CY 2019 claims data, rather than CY 2020 claims data, for CY 2022 ratesetting, CMS is also proposing to use its 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. 

Partial Hospitalization Program

Partial Hospitalization Program (PHP) Rate Setting

The CY 2022 OPPS/ASC proposed rule would update Medicare payment rates for Partial Hospitalization Program (PHP) services furnished in hospital outpatient departments and Community Mental Health Centers (CMHCs). The PHP is a structured intensive outpatient program consisting of a group of mental health services paid on a per diem basis under the OPPS, based on PHP per diem costs.  

Update to PHP Per Diem Rates

CMS is proposing to maintain the existing unified rate structure, with a single PHP Ambulatory Payment Classification (APC) for each provider type for days with three or more services per day. In order to maintain consistency with OPPS, for this CY 2022 ratesetting, CMS is proposing to use CY 2019 claims and the cost information from prior to the COVID-19 PHE, that is, the cost information that was available for the CY 2021 OPPS/ASC rulemaking. CMS believes this is appropriate and necessary for PHP services, because of the substantial decrease in the number of PHP days in the CY 2020 claims dataset, which we would normally use for ratesetting

Radiation Oncology Model

In September 2020, the Center for Medicare and Medicaid Innovation (the Innovation Center) published a final rule that established the Radiation Oncology (RO) Model with a start date of January 1, 2021. The RO Model will test whether making site-neutral, modality agnostic, prospective episode-based payments to Hospital Outpatient Departments (HOPDs) and physician group practices (including freestanding radiation therapy (RT) centers) for RT episodes of care preserves or enhances the quality of care furnished to Medicare beneficiaries while reducing or maintaining Medicare spending. 

As a result of the ongoing COVID-19 PHE, CMS included an interim final rule with comment period (IFC) in the CY 2021 OPPS/ASC Final Rule to delay the start of the RO Model until July 1, 2021.  Subsequently, the Consolidated Appropriations Act, 2021, included a provision that prohibits implementation of the RO Model prior to January 1, 2022, effectively delaying the start date by at least 6 months.  CMS is making proposals to address necessary changes as a result of the legislatively mandated delay and additional proposed modifications to the model design.

Proposals to Address the RO Model Timing and Design

The CY 2022 OPPS and ASC Payment System proposed rule includes the following proposals to modify the RO Model’s timing and design:

  • To begin the RO Model on January 1, 2022, with a 5-year Model performance period (ending December 31, 2026).  
  • To change the baseline period from 2016-2018 to 2017-2019. 
  • To lower the discounts to 3.5 percent (Professional Component) and 4.5 percent (Technical Component). 
  • To remove brachytherapy from the list of included modalities under the RO Model so that it would still be paid FFS.  
  • To revise the cancer inclusion criteria under the RO Model. 
  • In cases where a beneficiary switches from traditional Medicare to Medicare Advantage during an episode before treatment is complete, CMS would consider this an incomplete episode and RT services would be paid the traditional Medicare rate instead of being paid under the RO Model.
  • To adopt an extreme and uncontrollable circumstances policy. This policy would provide flexibility to reduce administrative burden of Model participation, including reporting requirements, and/or adjust the payment methodology as necessary when extreme and uncontrollable circumstances exist. 
  • To exclude hospital outpatient departments participating in the Community Transformation track of the CHART Model from participation in the RO Model. For the CHART ACO Transformation track, we would follow the same policy for overlap between the RO Model and the Medicare Shared Savings Program ACOs.  
  • That only hospital outpatient departments that are participating in the Pennsylvania Rural Health Model (PARHM) would be excluded from the RO Model, rather than those that are eligible to participate in PARHM.
  • To remove liver cancer from the RO Model as it does not satisfy the model’s cancer inclusion criteria.  

Finally, CMS includes clarifications to help address questions from stakeholders and future RO participants related to the interaction between the RO Model and the Quality Payment Program.  

For more information on the RO Model, visit:

Hospital Outpatient/ASC Quality Reporting Programs

CMS is proposing changes to the Hospital Outpatient Quality Reporting (OQR) and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs to further meaningful measurement and reporting for quality of care in the outpatient setting.

Closing the Health Equity Gap in CMS Quality Programs

Consistent with Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities through the Federal Government, CMS is committed to addressing significant and persistent inequities in health outcomes in the U.S. through improving data collection to better measure and analyze disparities across programs and policies. 

In the proposed rule, CMS is seeking input on ideas to revise the Hospital OQR and ASCQR Programs to make reporting of health disparities based on social risk factors and race and ethnicity more comprehensive and actionable for facilities, providers, and patients. 

Under the Hospital OQR Program, CMS is seeking comment on future potential additional stratification of quality measure results by race, Medicare/Medicaid dual eligible status, disability status, LGBTQ+, and socioeconomic status. The agency is also seeking input on potential future application of an algorithm to indirectly estimate race and ethnicity to permit stratification of measures (in addition to dual-eligibility) for facility-level disparity reporting until more accurate forms of self-identified demographic information are available. 

CMS is also seeking comment on the possible collection of a minimum set of demographic data elements by facilities at the time of admission, and using electronic data definitions to permit nationwide, interoperable health information exchange, for the purposes of incorporating into measure specifications and other data collection efforts relating to quality.  

Under the ASCQR Program, CMS is seeking comment on: (1) ways to address the unique challenges of measuring disparities in the ASC setting, such as small sample sizes, ASC specialization, and the relatively smaller proportion of patients with social risk factors; (2) the utility of neighborhood-level socioeconomic factors toward measuring disparities in quality-of-care outcomes for ASCs; and (3) ways social risk factors influence the access to care, quality of care and outcomes for ASC patients in general or for specific ASC services.

Future of Digital Quality Measurement

CMS is seeking comment on future plans to modernize its quality measurement enterprise:

  • The potential definition of digital quality measures;
  • Standardizing data required for quality measures for collection via Fast Healthcare Interoperability Resources (FHIR®)-based Application Programming Interfaces (APIs);
  • Leveraging technological opportunities to facilitate digital quality measurement;
  • Better supporting data aggregation;
  • Developing a common portfolio of measures for potential alignment across CMS regulated programs, federal programs and agencies, and the private sector.

Hospital Outpatient Quality Reporting (OQR) Program

The Hospital OQR Program is a pay-for-reporting quality program for the hospital outpatient department setting. The Hospital OQR Program requires hospitals to meet quality reporting requirements, or receive a reduction of 2.0 percentage points in their annual payment update if these requirements are not met. In the CY 2022 OPPS/ASC proposed rule, CMS is proposing to (1) adopt three new measures, including the COVID-19 Vaccination of Health Care Personnel (NQF #0431), (2) make the reporting of two voluntary or suspended measures mandatory, (3) remove two measures, and (4) update the validation policies of the Hospital OQR Program to reduce provider burden and improve processes.  In addition, CMS is soliciting comments on potential future measure adoptions.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program

The ASCQR Program is a pay-for-reporting quality program for the ASC setting. The ASCQR Program requires ASCs to meet quality reporting requirements or receive a reduction of 2.0 percentage points in their annual fee schedule update if these requirements are not met. CMS is proposing to (1) adopt one new measure, the COVID-19 Vaccination of Health Care Personnel (NQF #0431) and (2) to make the reporting of six voluntary or suspended measures mandatory. CMS is requesting comment on quality measures for pain management procedures performed in this setting. 

Hospital Inpatient Quality Reporting (IQR) Program and Medicare Promoting Interoperability Program

The Hospital IQR Program is a pay-for-reporting quality program. By law, hospitals that do not submit quality data or fail to meet all Hospital IQR Program requirements are subject to a one-fourth reduction in their Annual Payment Update under the Inpatient Prospective Payment System (IPPS).   The Medicare Promoting Interoperability Program for eligible hospitals (EHs) and critical access hospitals (CAHs) began in 2011 as authorized by the American Recovery and Reinvestment Act of 2009 (ARRA), and provided incentive payments for the demonstration of meaningful use of certified electronic health record technology (CEHRT) through 2016.  

Currently hospitals are required to report (a) Three self-selected electronic clinical quality measures (eCQMs), and (b) the Safe Use of Opioids eCQM for the CY 2022 reporting period and subsequent years for the Hospital IQR Program and the Medicare Promoting Interoperability Program.   

As we consider future reporting on the Safe Use of Opioids eCQM, we seek comments on the appropriateness of maintaining this previously finalized policy or instead proposing in future rulemaking to allow hospitals to self-select the Safe Use of Opioids eCQM from our finalized set of eCQMs. We also seek any other information or considerations commenters may have to inform future measure updates to the Safe Use of Opioids eCQM.