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

AGENCY:

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

ACTION:

Final rule with comment period.

SUMMARY:

This final rule with comment period revises 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 final rule with comment period, we describe the 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 final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program, updates Hospital Price Transparency requirements, and updates and refines the design of the Radiation Oncology Model.

DATES:

Effective date: The provisions of the final rule with comment are effective January 1, 2022.

Comment period: To be assured consideration, comments on the payment classifications assigned to the interim APC assignments and/or status indicators of new or replacement Level II HCPCS codes in this final rule with comment period (CMS-1753-FC) must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EST on December 2, 2021.

ADDRESSES:

In commenting, please refer to file code CMS-1753-FC.

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 submit electronic comments on this regulation to http://www.regulations.gov. Follow the “Submit a comment” instructions.

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-FC, P.O. Box 8010, Baltimore, MD 21244-1810.

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 to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1753-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:

Marjorie.Baldo@cms.hhs.gov or at 410-786-4617.

Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact the HOP Panel mailbox at APCPanel@cms.hhs.gov.

Ambulatory Surgical Center (ASC) Payment System, contact Scott Talaga via email at Scott.Talaga@cms.hhs.gov or Mitali Dayal via email at Mitali.Dayal2@cms.hhs.gov.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program Administration, Validation, and Reconsideration Issues, contact Anita Bhatia via email at Anita.Bhatia@cms.hhs.gov.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program Measures, contact Cyra Duncan via email Cyra.Duncan@cms.hhs.gov.

Blood and Blood Products, contact Josh McFeeters via email at Joshua.McFeeters@cms.hhs.gov.

Cancer Hospital Payments, contact Scott Talaga via email at Scott.Talaga@cms.hhs.gov.

CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck Braver via email at Chuck.Braver@cms.hhs.gov.

Comment Solicitation on Temporary Policies for the PHE for COVID-19, contact Emily Yoder via email at Emily.Yoder@cms.hhs.gov or Abigail Cesnik via email at Abigail.Cesnik@cms.hhs.gov.

Composite APCs (Low Dose Brachytherapy and Multiple Imaging), contact Au'Sha Washington via email at AuSha.Washington@cms.hhs.gov.

Comprehensive APCs (C-APCs), contact Mitali Dayal via email at Mitali.Dayal2@cms.hhs.gov.

Hospital Inpatient Quality Reporting Program—Administration Issues, contact Julia Venanzi, julia.venanzi@cms.hhs.gov.

Hospital Outpatient Quality Reporting (OQR) Program Administration, Validation, and Reconsideration Issues, contact Shaili Patel via email Shaili.Patel@cms.hhs.gov.

Hospital Outpatient Quality Reporting (OQR) Program Measures, contact Janis Grady via email Janis.Grady@cms.hhs.gov.

Hospital Outpatient Visits (Emergency Department Visits and Critical Care Visits), contact Allison Bramlett via email at Allison.Bramlett@cms.hhs.gov, or Emily Yoder via email at Emily.Yoder@cms.hhs.gov.

Hospital Price Transparency, contact the Hospital Price Transparency email box at PriceTransparencyHospitalCharges@cms.hhs.gov.

Inpatient Only (IPO) Procedures List, contact Au'Sha Washington via email at Ausha.Washington@cms.hhs.gov , or Allison Bramlett at Allison.Bramlett@cms.hhs.gov , or Abigail Cesnik at Abigail.Cesnik@cms.hhs.gov.

Medical Review of Certain Inpatient Hospital Admissions under Medicare Part A for CY 2022 and Subsequent Years (2-Midnight Rule), contact Abigail Cesnik via email at Abigail.Cesnik@cms.hhs.gov.

New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga via email at Scott.Talaga@cms.hhs.gov.

No Cost/Full Credit and Partial Credit Devices, contact Scott Talaga via email at Scott.Talaga@cms.hhs.gov.

OPPS Brachytherapy, contact Scott Talaga via email at Scott.Talaga@cms.hhs.gov.

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 Erick.Chuang@cms.hhs.gov, or Scott Talaga via email at Scott.Talaga@cms.hhs.gov, or Josh McFeeters via email at Joshua.McFeeters@cms.hhs.gov.

OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar Products, contact Josh McFeeters via email at Joshua.McFeeters@cms.hhs.gov, or Gil Ngan via email at Gil.Ngan@cms.hhs.gov, or Cory Duke via email at Cory.Duke@cms.hhs.gov, or Au'Sha Washington via email at Ausha.Washington@cms.hhs.gov.

OPPS New Technology Procedures/Services, contact the New Technology APC mailbox at NewTechAPCapplications@cms.hhs.gov.

OPPS Packaged Items/Services, contact Mitali Dayal via email at Mitali.Dayal2@cms.hhs.gov or Cory Duke via email at Cory.Duke@cms.hhs.gov.

OPPS Pass-Through Devices, contact the Device Pass-Through mailbox at DevicePTapplications@cms.hhs.gov.

OPPS Status Indicators (SI) and Comment Indicators (CI), contact Marina Kushnirova via email at Marina.Kushnirova@cms.hhs.gov.

Partial Hospitalization Program (PHP) and Community Mental Health Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at PHPPaymentPolicy@cms.hhs.gov.

RO Model, contact RadiationTherapy@cms.hhs.gov or at 844-711-2664, Option 5.

Skin Substitutes, contact Josh McFeeters via email at Joshua.McFeeters@cms.hhs.gov.

Supervision of Outpatient Therapeutic Services in Hospitals and CAHs, contact Josh McFeeters via email at Joshua.McFeeters@cms.hhs.gov.

All Other Issues Related to Hospital Outpatient Payments Not Previously Identified, contact the OPPS mailbox at OutpatientPPS@cms.hhs.gov.

All Other Issues Related to the Ambulatory Surgical Center Payments Not Previously Identified, contact the ASC mailbox at ASCPPS@cms.hhs.gov.

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: http://www.regulations.gov. Follow the search instructions on that website to view public comments. CMS will not post on Regulations.gov 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: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.

The Addenda relating to the ASC payment system are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.

Current Procedural Terminology (CPT) Copyright Notice

Throughout this final rule with comment period, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2021 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 in Response to the CY 2022 OPPS/ASC Proposed Rule

G. Public Comments Received on the CY 2021 OPPS/ASC Final Rule With Comment Period

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

B. Conversion Factor Update

C. Wage Index Changes

D. Statewide Average Default Cost-to-Charge Ratios (CCRs)

E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the Act for CY 2022

F. Payment Adjustment for Certain Cancer Hospitals for CY 2022

G. Hospital Outpatient Outlier Payments

H. Calculation of an Adjusted Medicare Payment From the National Unadjusted Medicare Payment

I. Beneficiary Copayments

III. OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New and Revised HCPCS Codes

B. OPPS Changes—Variations Within APCs

C. New Technology APCs

D. OPPS APC-Specific Policies

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

B. Device-Intensive Procedures

V. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals

A. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals

B. 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. Estimate of Pass-Through Spending

VII. OPPS Payment for Hospital Outpatient Visits and Critical Care Services

VIII. Payment for Partial Hospitalization Services

A. Background

B. PHP APC Update for CY 2022

C. Outlier Policy for CMHCs

IX. Services That Would Be Paid Only as Inpatient Services

A. Background

B. Changes to the Inpatient Only (IPO) List

C. Summary of Final Policy and Changes to the IPO List for CY 2022

X. Nonrecurring Policy Changes

A. Medical Review of Certain Inpatient Hospital Admissions Under Medicare Part A for CY 2022 and Subsequent Years

B. Changes to Beneficiary Coinsurance for Additional Procedures Furnished During the Same Clinical Encounter as Certain Colorectal Cancer Screening Tests

C. Low Volume Policy for Clinical and Brachytherapy APCs

D. Comment Solicitation on Temporary Policies To Address the COVID-19 PHE

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

F. Separate Payment in CY 2022 for the Device Category, Drugs, and Biologicals With Transitional Pass-Through Payment Status Expiring Between December 31, 2021 and September 30, 2022

XI. CY 2022 OPPS Payment Status and Comment Indicators

A. CY 2022 OPPS Payment Status Indicator Definitions

B. CY 2022 Comment Indicator Definitions

XII. MedPAC Recommendations

A. OPPS Payment Rates Update

B. ASC Conversion Factor Update

C. ASC Cost Data

XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System

A. Background

B. ASC Treatment of New and Revised Codes

C. Update to the List of ASC Covered Surgical Procedures and Covered Ancillary Services

D. Update and Payment for ASC Covered Surgical Procedures and Covered Ancillary Services

E. New Technology Intraocular Lenses (NTIOLs)

F. ASC Payment and Comment Indicators

G. 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

A. Background

B. Definition of Digital Quality Measures

C. Use of FHIR for Current eCQMs

D. Changes Under Consideration to Advance Digital Quality Measurement: Potential Actions in Four Areas to Transition to Digital Quality Measures by 2025

E. Solicitation of Comments

XV. Requirements for the Hospital Outpatient Quality Reporting (OQR) Program

A. Background

B. Hospital OQR Program Quality Measures

C. Administrative Requirements

D. Form, Manner, and Timing of Data Submitted for the Hospital OQR Program

E. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR Program Requirements for the CY 2022 Payment Determination

XVI. Requirements for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program

A. Background

B. ASCQR Program Quality Measures

C. Administrative Requirements

D. Form, Manner, and Timing of Data Submitted for the ASCQR Program

E. Payment Reduction for ASCs That Fail To Meet the ASCQR Program Requirements

XVII. Radiation Oncology Model

A. Introduction

B. Background

C. RO Model Regulations

XVIII. Updates to Requirements for Hospitals To Make Public a List of Their Standard Charges

A. Introduction and Overview

B. Increasing the Civil Monetary Penalty (CMP) Amounts Using a Scaling Factor

C. Deeming of Certain State Forensic Hospitals as Having Met Requirements

D. Improving Access to the Machine-Readable File

E. Clarification and Requests for Comment

XIX. Additional Hospital Inpatient Quality Reporting (IQR) Program Policies

XX. Additional Medicare Promoting Interoperability Program Policies

XXI. Files Available to the Public via the Internet

XXII. Collection of Information Requirements

A. Statutory Requirement for Solicitation of Comments

B. ICRs for the Hospital OQR Program

C. ICRs for the ASCQR Program

XXIII. Response to Comments

XXIV. Economic Analyses

A. Statement of Need

B. Overall Impact for the Provisions of This Final Rule With Comment Period

C. Detailed Economic Analyses

D. Regulatory Review Costs

E. Regulatory Flexibility Act (RFA) Analysis

F. Unfunded Mandates Reform Act Analysis

G. Conclusion

H. Federalism Analysis

I. Summary and Background

A. Executive Summary of This Document

1. Purpose

In this final rule with comment period, we are updating 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 final rule with comment period 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 final rule with comment period. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program, the ASC Quality Reporting (ASCQR) Program, Hospital Price Transparency requirements, and the design of the Radiation Oncology Model.

2. Summary of the Major Provisions

• OPPS Update: For 2022, we are increasing the payment rates under the OPPS by an Outpatient Department (OPD) fee schedule increase factor of 2.0 percent. This increase factor is based on the proposed hospital inpatient market basket percentage increase of 2.7 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS) reduced by a proposed productivity adjustment of 0.7 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 $82.078 billion, an increase of approximately $5.913 billion compared to estimated CY 2022 OPPS payments.

We are continuing 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 0.9804 to the OPPS payments and copayments for all applicable services.

• 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 include 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 utilizing CY 2019 data to set CY 2022 OPPS and ASC payment rates.

• Partial Hospitalization Update: For CY 2022, we are using the CMHC and hospital-based PHP (HB PHP) geometric mean per diem costs, consistent with existing methodology, but with a cost floor that will maintain the per diem costs finalized in CY 2021. We are also using the CY 2019 claims and cost report data for each provider type, consistent with the use of claims and cost report data prior to the PHE within the broader CY 2022 OPPS ratesetting.

• Changes to the Inpatient Only (IPO) List: For 2022, we are finalizing our proposal with modification to pause the elimination of the IPO list and add back to the IPO list the services removed in 2021, except for CPT code 22630 (Arthrodesis, posterior interbody technique, including laminectomy and/or discectomy to prepare interspace (other than for decompression), single interspace; lumbar); CPT code 23472 (Arthroplasty, glenohumeral joint; total shoulder (glenoid and proximal humeral replacement (for example, total shoulder))); CPT code 27702 (Arthroplasty, ankle; with implant (total ankle)) and their corresponding anesthesia codes: CPT code 00630 (Anesthesia for procedures in lumbar region; not otherwise specified), CPT code 00670 (Anesthesia for extensive spine and spinal cord procedures ( e.g., spinal instrumentation or vascular procedures)); CPT code 01638 (Anesthesia for open or surgical arthroscopic procedures on humeral head and neck, sternoclavicular joint, acromioclavicular joint, and shoulder joint; total shoulder replacement); and CPT 01486 (Anesthesia for open procedures on bones of lower leg, ankle, and foot; total ankle replacement). We are also classifying CPT code 0643T (Transcatheter left ventricular restoration device implantation including right and left heart catheterization and left ventriculography when performed, arterial approach) as an inpatient only procedure. We are finalizing our proposal to amend the regulation at § 419.22(n) to remove the reference to the elimination of the list of services and procedures designated as requiring inpatient care through a 3-year transition and to codify our five longstanding criteria for determining whether a service or procedure should be removed from the IPO list in the regulation in a new § 419.23.

• Medical Review of Certain Inpatient Hospital Admissions under Medicare Part A for CY 2021 and Subsequent Years (2-Midnight Rule): For CY 2022, we are finalizing a policy to exempt procedures that are removed from the inpatient only (IPO) list under the OPPS beginning on or after January 1, 2022, 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.

• 340B -Acquired Drugs: For CY 2022, we are continuing 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 continuing to exempt Rural SCHs, PPS-exempt cancer hospitals and children's hospitals from our 340B payment policy.

• Device Pass-Through Payment Applications: For CY 2022, we received eight applications for device pass-through payments. One of these applications received preliminary approval for pass-through payment status through our quarterly review process. We solicited public comment on all eight of these applications and are making final determinations on these applications in this CY 2022 OPPS/ASC final rule with comment period.

• 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 using 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.

• Cancer Hospital Payment Adjustment: For CY 2022, we are continuing 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 are using a target PCR of 0.89 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.

• 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 are increasing payment rates under the ASC payment system by 2.0 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This increase is based on a hospital market basket percentage increase of 2.7 percent reduced by a productivity adjustment of 0.7 percentage point. Based on this 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 5.41 billion, an increase of approximately 40 million compared to estimated CY 2021 Medicare payments.

• 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 payments.

In accordance with our review and comments from stakeholders, for CY 2022, we are finalizing our proposal 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 be approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act, 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 proposed that the drug or biological must also have an FDA-approved indication for pain management or analgesia and have a per-day cost in excess of the OPPS drug packaging threshold, which is finalized at $130 for CY 2022 and described in section V.B.1.a. of this final rule with comment period, to qualify for separate payment in the ASC setting. We appreciate the comments received on our multiple comment solicitations. We are not finalizing any policy modifications or additional criteria as a result of these comments but will take this information into consideration for future notice and comment rulemaking.

For CY 2022, in accordance with our finalized criteria, CMS review, and stakeholder comments, we will pay separately in the ASC setting for four drugs that are non-opioid pain management drugs that function as surgical supplies.

• Changes to the List of ASC Covered Surgical Procedures: For CY 2022, we are reinstating the ASC Covered Procedures List (CPL) criteria that were in effect in CY 2020 and removing several of the procedures that were added to the ASC CPL in CY 2021. We requested comments on whether any of the procedures that we proposed to remove from the ASC CPL in CY 2021 met the CY 2020 criteria that we proposed to reinstate. After reviewing these recommendations, we determined that a total of six procedures should either remain on or be added to the CPL We are also finalizing our proposal to adopt a nomination process, under which stakeholders may nominate procedures they believe meet the requirements to be added to the ASC CPL. CMS will provide subregulatory guidance on the nomination process in early 2022, with procedure nominations due in March 2022, and the formal nomination process beginning in CY 2023.

• Hospital Outpatient Quality Reporting (OQR) Program: For the Hospital OQR Program, we proposed changes for the CY 2023, CY 2024, CY 2025, and CY 2026 payment determinations and subsequent years in the CY 2022 OPPS/ASC proposed rule (86 FR 42018). In this final rule, we are finalizing our proposals 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-3: Median Time to Transfer to Another Facility for Acute Coronary Intervention measure beginning with the CY 2025 payment determination; (3) adopt OP-38: COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) measure beginning with the CY 2024 payment determination; (4) adopt OP-39: The Breast Screening Recall Rates measure beginning with the CY 2023 payment determination; (5) adopt OP-40: 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; and (6) restart reporting of the OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based measures beginning with voluntary reporting during the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/CY 2026 payment determination. We are finalizing as proposed the data submission requirements for the OAS CAHPS Survey-based measures and the COVID-19 Vaccination Coverage Among HCP measure (OP-38). Similarly, we are finalizing as proposed the 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 finalizing as proposed three updates to our validation requirements 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. In the CY 2022 OPPS/ASC proposed rule (86 FR 42018) we requested 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 also requested 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.

We are finalizing with modification, our proposal to make mandatory the reporting of the OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery measure. We are finalizing to make reporting of this measure mandatory beginning with the CY 2027 payment determination, instead of the CY 2025 payment determination.

• Ambulatory Surgical Center Quality Reporting (ASCQR) Program: For the ASCQR Program, we proposed changes for the CY 2024, CY 2025, and CY 2026 payment determinations and subsequent years in the CY 2022 OPPS/ASC proposed rule (86 FR 42018). For the ASCQR Program measure set, we are finalizing our proposals to: (1) Adopt ASC-20: COVID-19 Vaccination Coverage Among HCP measure beginning with the CY 2024 payment determination; and (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. We are also finalizing as proposed the data submission requirements for the OAS CAHPS Survey-based measures and the COVID-19 Vaccination Coverage Among HCP measure (ASC-20).

We are finalizing, with modification, the proposal to require the ASC-15a-e: OAS CAHPS Survey-based measures with voluntary reporting beginning with the CY 2024 reporting period and mandatory reporting beginning with the CY 2025 reporting period/CY 2027 payment determination.

We are also finalizing with modification the proposal to require the ASC-11: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery measure. We are finalizing mandatory reporting of this measure beginning with the CY 2027 payment determination, instead of the CY 2025 payment determination.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42018) we requested 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. We also requested 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.

• Hospital Inpatient Quality Reporting (IQR) Program Update: In the CY 2022 OPPS/ASC proposed rule (86 FR 25549 through 25628) we requested information from stakeholders on potential measure updates on reporting and submission requirements for the Safe Use of Opioids—Concurrent Prescribing eCQM.

• Updates to Requirements for Hospitals to Make Public a List of Their Standard Charges: We are amending several hospital price transparency policies codified at 45 CFR part 180 in order to encourage compliance. We are: (1) Increasing the amount of the penalties for noncompliance through the use of a scaling factor based on hospital bed count; (2) deeming state forensic hospitals that meet certain requirements to be in compliance with the requirements of 45 CFR part 180; and (3) finalizing a requirement that the machine-readable file be accessible to automated searches and direct downloads. 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.

• Radiation Oncology Model (RO Model): Section 133 of the Consolidated Appropriations Act (CAA), 2021 (Pub. L. 116-260), enacted on December 27, 2020, includes 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 with comment period. We are finalizing proposed provisions related to the additional delayed implementation of the RO Model due to the CAA, 2021, as well as modifications to certain RO Model policies not related to the delay.

• 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 sought comment on whether there are certain policies that should be made permanent. Specifically, we sought 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 a code and payment for COVID-19 specimen collection. We will consider comments received for future rulemaking.

• 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 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 are finalizing our proposal 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 Benefits

In sections XXIV. and XXV. of this final rule with comment period, 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 84 in section XXIV.C. of this final rule with comment period displays the distributional impact of all the OPPS changes on various groups of hospitals and CMHCs for CY 2022 compared to all estimated OPPS payments in CY 2021. We estimate that the policies in this final rule with comment period will result in a 1.6 percent overall increase in OPPS payments to providers. We estimate that total OPPS payments for CY 2022, including beneficiary cost-sharing, to the approximately 3,659 facilities paid under the OPPS (including general acute care hospitals, children's hospitals, cancer hospitals, and CMHCs) will increase by approximately $1.3 billion compared to CY 2021 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 1.1 percent increase in CY 2022 payments to CMHCs relative to their CY 2021 payments.

b. Impacts of the Updated Wage Indexes

We estimate that our update of the wage indexes based on the FY 2022 IPPS final rule wage indexes will 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 final rule with comment period.

c. Impacts of the 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 making any change in policies for determining the rural hospital payment adjustments. While we are implementing 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 OPD Fee Schedule Increase Factor

For the CY 2022 OPPS/ASC, we are establishing an OPD fee schedule increase factor of 2.0 percent and applying that increase factor to the conversion factor for CY 2022. 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 2.1 percent and that rural hospitals will experience an increase in payments of 2.3 percent. Classifying hospitals by teaching status, we estimate nonteaching hospitals will experience an increase in payments of 2.2 percent, minor teaching hospitals will experience an increase in payments of 2.2 percent, and major teaching hospitals will experience an increase in payments of 1.8 percent. We also classified hospitals by the type of ownership. We estimate that hospitals with voluntary ownership will experience an increase of 2.2 percent in payments, while hospitals with government ownership would experience an increase of 1.7 percent in payments. We estimate that hospitals with proprietary ownership will experience an increase of 2.3 percent in payments.

e. Impacts of the 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 will increase payments by $80 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 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 final rule with comment period. 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 § 419.20(b) of the regulations, we specify the types of hospitals that are excluded from payment under the OPPS. These excluded hospitals are:

• Critical access hospitals (CAHs);
• Hospitals located in Maryland and paid under Maryland's All-Payer or Total Cost of Care Model;
• Hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; and
• 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 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: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.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 (the PHS 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—

• May advise on the clinical integrity of Ambulatory Payment Classification (APC) groups and their associated weights;
• May advise on the appropriate supervision level for hospital outpatient services;
• May advise on OPPS APC rates for ASC covered surgical procedures;
• Continues to be technical in nature;
• Is governed by the provisions of the FACA;
• Has a Designated Federal Official (DFO); and
• 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: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.

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:

• 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;
• Data Subcommittee, which is responsible for studying the data issues confronting the Panel and for recommending options for resolving them; and
• 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 23, 2021, meeting that the subcommittees continue. We accepted this recommendation.

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 http://facadatabase.gov.

F. Public Comments Received in Response to the CY 2022 OPPS/ASC Proposed Rule

We received approximately 18,864 timely pieces of correspondence on the CY 2022 OPPS/ASC proposed rule that appeared in the Federal Register on August 4, 2021 (86 FR 42018). We note that we received some public comments that were outside the scope of the CY 2022 OPPS/ASC proposed rule. Out-of-scope-public comments are not addressed in this CY 2022 OPPS/ASC final rule with comment period. Summaries of those public comments that are within the scope of the proposed rule and our responses are set forth in the various sections of this final rule with comment period under the appropriate headings.

G. Public Comments Received on the CY 2021 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 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. Updates Affecting OPPS Payments

A. 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 the data from the year two years prior to the calendar year that is the subject of the rulemaking. As discussed in further detail in Section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190), given our concerns with CY2020 data as a result of the COVID-19 PHE we proposed to generally use CY 2019 claims data and the data components related to it in establishing the CY 2022 OPPS. As discussed in further detail in Section X.E. of this final rule with comment period, we are finalizing our proposal to generally 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 proposed 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 proposed 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 the CY 2022 OPPS/ASC proposed rule on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

Addendum N to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html ) 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 proposed 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 proposed to add for CY 2022 are identified by asterisks (*) in the fourth column of Addendum N.

We did not receive any public comments on our general proposal to recalibrate the relative payment weights for each APC based on claims and cost report data for HOPD services or on our proposed bypass code process. We are adopting as final the proposed “pseudo” single claims process and the final CY 2022 bypass list of 173 HCPCS codes, as displayed in Addendum N to this final rule with comment period (which is available via the internet on the CMS website). For this final rule with comment period, for the purpose of recalibrating the final APC relative payment weights for CY 2022, we used approximately 93 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. 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 final rule with comment period on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

c. Calculation and Use of Cost-to-Charge Ratios (CCRs)

For 2022, in the CY 2022 OPPS/ASC proposed rule (86 FR 42046) we proposed 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 National Uniform Billing Committee (NUBC) 2020 Data Specifications Manual. That crosswalk is available for review and continuous comment on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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 the CY 2022 OPPS/ASC 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.

Comment: One commenter stated that coronary CT angiography (CCTA) requires considerably more resources than the procedures that are currently assigned to the CT cost center. The commenter suggests that this has resulted in over a decade of inadequate reimbursement for CCTA below the actual cost of performing the test. The commenter recommends that CMS provide specific instructions that allow hospitals to submit charges for cardiac CT using revenue codes that provide more accurate cost estimates. The commenter stated that hospitals do not have the ability to directly report costs for cardiac CT services and that CMS regulations mandate that cardiac CT be lumped into generic diagnostic CT revenue codes.

Response: Hospital outpatient facilities make the final determination for reporting the appropriate cost centers and revenue codes. As stated in section 20.5 in Chapter 4 (Part B Hospital) of the Medicare Claims Processing Manual, CMS “does not instruct hospitals on the assignment of HCPCS codes to revenue codes for services provided under OPPS since hospitals' assignment of cost vary. Where explicit instructions are not provided, providers should report their charges under the revenue code that will result in the charge being assigned to the same cost center to which the cost of those services are assigned in the cost report.” Therefore, HOPDs must determine the most appropriate cost center and revenue code for the cardiac CT exams.

After consideration of the public comment we received on the general CCR process, we are finalizing for CY 2022 using the hospital-specific overall ancillary and departmental CCRs to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk and the established methodology.

2. Final Data Development and Calculation of Costs Used for Ratesetting

In this section of this final rule with comment period, we discuss the use of claims to calculate the OPPS payment rates for CY 2022. The Hospital OPPS page on the CMS website on which the CY 2022 OPPS/ASC final rule with comment period is posted ( http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html ) 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, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html,, 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 final payment rates for the CY 2022 OPPS/ASC final rule with comment period.

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.

We did not receive any public comments on our proposed process and are finalizing our proposed methodology to continue to use geometric mean costs to calculate the relative weights on which the final 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 final rule with comment period to calculate the costs we used to establish the final relative payment weights used in calculating the OPPS payment rates for CY 2022 shown in Addenda A and B to the CY 2022 OPPS/ASC final rule with comment period (which are available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html ). We refer readers to section II.A.4. of this final rule with comment period 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 the CY 2022 OPPS/ASC final rule with comment period, we refer readers to the claims accounting narrative under supporting documentation for the CY 2022 OPPS/ASC final rule with comment period on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

a. 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed 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 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 to the CY 2022 OPPS/ASC 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 proposed to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology. We did not receive any comments on our proposal to establish payment rates for blood and blood products using our blood-specific CCR methodology and we are finalizing this policy as proposed. Please refer to Addendum B to the CY 2022 OPPS/ASC final rule with comment period (which is available via the internet on the CMS website) for the final CY 2022 payment rates for blood and blood products.

(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 proposed 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 proposed 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 proposed to base the payment rates for brachytherapy sources on the geometric mean unit costs for each source, consistent with the methodology that we proposed for other items and services paid under the OPPS, as discussed in section II.A.2. of the CY 2022 OPPS/ASC proposed rule. We also proposed 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 proposed 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 proposed 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 the CY 2022 OPPS/ASC 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 mm² . For CY 2019, in the absence of sufficient claims data, we continued to establish a payment rate for C2645 at $4.69 per mm² . Our CY 2018 claims data available for the 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 mm² . 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 mm² 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 mm² 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 mm² for HCPCS code C2645 for CY 2021.

As discussed in Section X.E. of the CY 2022 OPPS/ASC proposed rule, given our concerns with CY 2020 data as a result of the COVID-19 PHE, in general we proposed to use CY 2019 claims data and the data components related to it in establishing the CY 2022 OPPS. Therefore, we proposed 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 mm² for HCPCS code C2645 for CY 2022.

We received no public comments and are finalizing our proposal, without modification, 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 mm² for HCPCS code C2645 for CY 2022.

Additionally, for CY 2022 and subsequent calendar years, as discussed in Section X.C. of the CY 2022 OPPS/ASC proposed rule, we proposed to establish a Low Volume APC policy for New Technology APCs, clinical APCs, and brachytherapy APCs. For these APCs with fewer than 100 single claims that can be used for ratesetting purposes in the existing claims year, we proposed 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 proposed to calculate the cost for Low Volume APCs based on the greatest of the arithmetic mean cost, median cost, or geometric mean cost. We proposed to designate 5 brachytherapy APCs as Low Volume APCs for CY 2022 as these APCs met our proposed criteria to be designated as a Low Volume APC. In Section X.C. of this final rule with comment period, we are finalizing our proposal to designate 5 brachytherapy APCs as Low Volume APCs for CY 2022. For more information on the brachytherapy APCs we are designating as Low Volume APCs, see Section X.C. of this final rule with comment period.

We continue to invite stakeholders to submit recommendations for new codes to describe new brachytherapy sources. Such recommendations should be directed via email to outpatientpps@cms.hhs.gov 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 one 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 three 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 the CY 2022 OPPS/ASC final rule (which is available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices ).

In the interim final rule with request for comments (IFC) titled, “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 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 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 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:

• Does not contain a procedure described by a HCPCS code to which we have assigned status indicator “T”;
• Contains 8 or more units of services described by HCPCS code G0378 (Hospital observation services, per hour);

• Contains services provided on the same date of service or one 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

• 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, 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:

• Frequency of 25 or more claims reporting the code combination (frequency threshold); and
• Violation of the 2 times rule, as stated in section 1833(t)(2) of the Act and section III.B.2. of this final rule with comment period, 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 CY 2022, we proposed 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 final complexity adjustments, in Addendum J to the CY 2022 OPPS/ASC final rule (which is available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices ).

Addendum J to the CY 2022 OPPS/ASC final 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 the CY 2022 OPPS/ASC final 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 finalized 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 four 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 the CY 2022 OPPS/ASC proposed rule allows stakeholders the opportunity to better assess the impact associated with the proposed assignment of claims with each of the paired code combinations eligible for a complexity adjustment.

Comment: One commenter expressed support of CMS' proposal to maintain existing complexity adjustment code pairs that were in effect for 2021 and to create new complexity adjustments for certain code pairs for CY 2022.

Response: We thank the commenter for their support.

Comment: Several commenters requested that CMS modify or eliminate the established C-APC complexity adjustment eligibility criteria of 25 or more claims reporting the code combination (frequency) and a violation of the 2 times rule in the originating C-APC (cost) to allow additional code combinations to qualify for complexity adjustments. These commenters expressed concern that CMS' methodology for determining complexity adjustments is unnecessarily restrictive, specifically the 25-claim threshold. One commenter also requested that CMS apply the complexity adjustment to all blue light cystoscopy procedures performed with Cysview ®in the HOPD. The specific C-APC complexity adjustments requested by the commenters are listed in Table 1 below.

Several commenters reiterated their request to allow clusters of procedures, consisting of a “J1” code-pair and multiple other associated add-on codes used in combination with that “J1” code-pair to qualify for complexity adjustments, stating that this may allow for more accurate reflection of medical practice when multiple procedures are performed together or there are certain complex procedures that include numerous add-on codes. Commenters also requested that CMS continue to monitor and report on the impact of applying complexity criteria on APC assignments for code combinations within C-APCs.

Response: We appreciate these comments. We note that we did not propose that claims with the code combinations suggested by commenters would receive complexity adjustments because they failed to meet either the cost or frequency criteria. We also note that, at this time, we do not believe changes to the C-APC complexity adjustment criteria are necessary or that we should make exceptions to the criteria to allow claims with the code combinations suggested by the commenters to receive complexity adjustments. As we stated in the CY 2017 OPPS/ASC final rule (81 FR 79582), we believe that the complexity adjustment criteria, which require a frequency of 25 or more claims reporting a code combination and a violation of the 2 times rule in the originating C-APC, are appropriate to determine if a combination of procedures represents a complex, costly subset of the primary service that should qualify for the adjustment and be paid at the next higher paying C-APC in the clinical family. If a code combination meets these criteria, the combination receives payment at the next higher cost C-APC. Code combinations that do not meet these criteria receive the C-APC payment rate associated with the primary “J1” service. As we previously stated in the CY 2020 OPPS/ASC final rule with comment period (84 FR 61161), a minimum of 25 claims is already a very low threshold for a national payment system. Lowering the minimum of 25 claims further could lead to unnecessary complexity adjustments for service combinations that are rarely performed.

As stated in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58843), we do not believe that it is necessary to adjust the complexity adjustment criteria to allow claims that include more than two “J1” procedures or procedures that are not assigned to C-APCs to qualify for a complexity adjustment. As previously mentioned, we believe the current criteria are adequate to determine if a combination of procedures represents a complex, costly subset of the primary service. We will continue to monitor the application of the complexity adjustment criteria.

After consideration of the public comments we received on the proposed complexity adjustment policy, we are finalizing the C-APC complexity adjustment policy for CY 2022 as proposed. We are also finalizing the complexity adjustments proposed without modification.

(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 two years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than two 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 are 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.

We did not receive any comments on this policy. We are finalizing as proposed without modification to continue this exclusion policy.

(3) Additional C-APCs for CY 2022

In the CY 2022 proposed rule, we proposed 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 did not propose to convert any standard APCs to C-APCs in CY 2022, thus we proposed that the number of C-APCs for CY 2022 would be the same as the number for CY 2021, which is 69 C-APCs.

Comment: One commenter requested that CMS designate APC 5372 (Level 2 Urology and Related Services) as a Comprehensive APC, noting that all other Urology and Related Services APCs are C-APCs and multiple procedures within this APC would qualify for complexity adjustments.

Response: We appreciate the commenter's suggestion and will consider it for future rulemaking.

Comment: Several commenters requested that CMS discontinue the C-APC payment policy for all surgical insertion codes required for brachytherapy treatment. The commenters were concerned that the C-APC methodology lacks the charge capture mechanisms to accurately reflect the cost of radiation oncology services, particularly the delivery of brachytherapy for the treatment of cervical cancer. They also stated that they oppose C-APC payment for cancer care given the complexity of coding, use of serial billing, and the potential for different sites of service for the initial surgical device insertion and subsequent treatment delivery or other supportive services. These commenters suggested that CMS assign brachytherapy procedures to traditional APCs, move brachytherapy procedures to higher paying C-APC, or pay separately for preparation and planning services to fully account for the costs associated with these procedures.

Response: We appreciate the comments. The calculations provided by commenters as to the cost of these services do not match how we calculate C-APC costs. We believe that the current C-APC methodology is appropriately applied to these surgical procedures and is accurately capturing costs. We will continue to examine these concerns and will determine if any modifications to this policy are warranted in future rulemaking.

After consideration of the public comments we received, we are finalizing our C-APC policy and the proposed C-APCs as proposed for CY 2022. Table 2 below lists the final C-APCs for CY 2022, all of which were established in past rules. All C-APCs are displayed in Addendum J to this CY 2022 OPPS/ASC final rule with comment period (which is available via the internet at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices ). Addendum J to this final rule with comment period also contains all of the data related to the C-APC payment policy methodology, including the list of complexity adjustments and other information for CY 2022.

c. 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. 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 proposed 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 proposed 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 proposed to set the 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.

We did not receive any public comment on these proposals and are finalizing them as proposed. In particular, we are finalizing our proposal, without modification, 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 are finalizing our proposal to set the payment rate for composite APC 8010 for CY 2022 at the same payment rate that we set for APC 5863, which is the maximum partial hospitalization per diem payment rate for a hospital.

(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 3 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:

• APC 8004 (Ultrasound Composite);
• APC 8005 (CT and CTA without Contrast Composite);
• APC 8006 (CT and CTA with Contrast Composite);
• APC 8007 (MRI and MRA without Contrast Composite); and
• 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 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 proposed 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 proposed 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 the 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 the 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 the CY 2022 OPPS/ASC proposed rule (86 FR 42034 through 42040).

For the 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 the 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 (86 FR 42037 through 42040).

We did not receive any public comments on these proposals. We are finalizing our proposal to continue the use of multiple imaging composite APCs to pay for services providing more than one imaging procedure from the same family on the same date, without modification. Table 3 below lists the HCPCS codes that will be subject to the multiple imaging composite APC policy and their respective families and approximate composite APC final geometric mean costs for CY 2022.

3. 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 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 with comment period (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 proposed no changes to the overall packaging policy previously discussed. We proposed 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.

We did not receive any public comments on the overall OPPS packaging policy and are finalizing our packaging policy as proposed. Specific packaging concerns are discussed in detail in their respective sections throughout this final rule with comment period.

b. ASC Payment System Policy for Non-Opioid Pain Management Drugs and Biologicals That Function as Surgical Supplies

(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 supported 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®, 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) 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 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+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).

On October 24, 2018, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (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 outpatient department (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) of the Act, which requires any adjustments to be made in a budget neutral manner. Section 1833(i)(8) of the Act, 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+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+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+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 through 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) of the Act, 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) of the Act. 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 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 proposed 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 solicited comment as to whether we should expand our current policy that only applies in the ASC setting—to pay separately at ASP+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.

In the CY 2022 OPPS/ASC proposed rule, we stated we were 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 sought 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, in the proposed rule we sought comment on if we should treat products the same depending on the setting, ASC or HOPD. For example, we sought comment on whether products should have the same eligibility requirements to qualify for revised payment in the ASC and the HOPD settings. We also sought comment on how the additional comment solicitations described below, which refer to the ASC setting, could also be applied to the HOPD setting.

Comment: MedPAC commented that while it appreciated CMS's interest in addressing the issue of opioid overuse it continued to support a policy that maintains the packaging of drugs that function as supplies in surgical procedures. MedPAC stated that this policy is contrary to CMS's efforts to increase the size of payment bundles in the OPPS to increase incentives for efficient delivery of care.

Response: We appreciate this feedback. We agree that packaging policies are a fundamental component of the OPPS and ASC payment systems. We strive to balance the importance of our packaging policies with the importance of addressing the opioid epidemic. In this specific scenario, we believe separate payment in the ASC setting for non-opioid pain management drugs and biologicals that function as surgical supplies is appropriate given the financial disincentives we have observed for these products in the ASC setting. As previously discussed, 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.

Comment: Most commenters were in favor of expanding the policy to provide separate payment under the ASC payment system for certain non-opioid pain management drugs that function as surgical supplies to the HOPD setting. Many providers commented that non-opioid pain management therapies are often superior to opioid-based ones in reducing pain, and indicated that they generally would prefer to use non-opioid therapies. However, many stated that payment dictated whether they could use a specific therapy. As such, commenters stated that the pain management therapies available in the ASC setting are not used to the same degree as in the HOPD setting. Commenters stated that although there has not been a drastic decrease in HOPD utilization of non-opioid pain management drugs, the utilization of opioid alternatives could be much higher if separate payment for these products was provided. Similarly, several commenters acknowledged that the disincentives to provide non-opioid pain management drugs in the HOPD setting were not as substantial as the ASC setting; however, according to these stakeholders, there are still financial disincentives to use opioids instead of opioid alternatives in the HOPD setting. A drug manufacturer discussed its view on the disparities in utilization and access to non-opioid pain management therapies in the HOPD setting compared to the ASC setting. Based on this commenter's geo-sociodemographic analysis, they believe that ASC access to their drug outpaced access in the HOPD setting due to CMS payment policies. A few drug manufacturers provided specific data on utilization of their individual products. Omeros, the manufacturer of the drug Omidria, cited that the drug's utilization had, in their view, decreased in the HOPD setting as a result of CMS packaging polices. Many commenters suggested that opioids were more cost effective for their HOPD facilities to use compared to non-opioid pain management drugs due to CMS payment policies. Some commenters suggested that a greater number of surgeries, particularly those with higher acuity and complexity that require pain management drugs, occur in the HOPD setting, compared to the ASC setting. The commenters contended that separate payment for non-opioid pain management drugs in this setting could potentially increase access to these treatments. Therefore, the commenters encouraged CMS to expand this policy to the HOPD setting.

The commenters generally encouraged payment parity across the ASC and HOPD settings in order to enhance site neutrality and prevent a diversion of patients to the ASC setting based solely on the availability of separate payment for non-opioid pain management drugs. MedPAC had concerns that our proposed policy would further distort payment differences between two care settings that are the sites of many of the same services, creating financial incentives for providers to direct patients to one setting of care. Many commenters and providers pointed to the clinical benefit of non-opioid treatments, and encouraged CMS to pay separately, incentivize, or otherwise recognize the value of these drugs in the HOPD setting, regardless of utilization patterns. Commenters provided literature supporting the benefits of non-opioid pain management approaches, including how certain non-opioid pain management products were effective for pain and reduced opioid consumption.

Response: We appreciate the many detailed comments we received from a wide variety of stakeholders in response to our comment solicitation on expanding our non-opioid pain management payment policy to the HOPD setting as well as those regarding the clinical benefit of non-opioid pain management treatments used in their clinical practice.

As discussed in the CY 2022 OPPS/ASC proposed rule, we did not make a proposal to expand this policy to the HOPD setting based on many factors, including our continued claims analysis that demonstrates increasing utilization year after year of these products in the HOPD setting. In the proposed rule, we described our claims analysis for Exparel, a drug for which we have more than five years of reliable claims data. As stated in the proposed rule, even while Exparel was packaged in the HOPD setting, claims data shows that utilization continued to steadily increase year over year. For other drugs described by stakeholders, we found similar increases over years of claims data. We will continue to track the utilization in the HOPD and ASC settings for all of these drugs. However, as Exparel is the only drug that has been not recently been on pass-through and has been packaged in the HOPD setting over the last three years, we believe that Exparel's utilization is a good indicator of whether our payment policies are causing disincentives for non-opioids in the HOPD setting. We have explained in several prior rulemakings, including 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. As previously discussed, we strive to balance the importance of our packaging policies with the importance of addressing the opioid epidemic. In this specific scenario, we believe separate payment in the ASC setting for non-opioid pain management drugs and biologicals that function as surgical supplies is appropriate, given the financial disincentives we have observed for these products in the ASC setting. 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. We have not observed the same financial disincentives in the HOPD setting. We have also not observed conclusive trends that our packaging policies for non-opioid pain management are shifting patients from the HOPD setting to the ASC setting.

After reviewing the public comments received, as described previously, 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. Our goal is to eliminate the disincentive to use non-opioid pain management drugs, rather than to incentivize products in the HOPD setting as some commenters have suggested. At this time, we have not observed any clear and conclusive financial disincentive to use non-opioid pain management drugs over opioids in the HOPD setting. However, based on the comments we received, we will continue to carefully analyze utilization data and engage with stakeholders.

Therefore, for CY 2022, we are finalizing as proposed our proposal to continue to package payment under the OPPS for non-opioid pain management drugs that function as surgical supplies in the performance of surgical procedures in the HOPD setting.

(3) 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 proposed 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 were 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.

Comment: Most commenters supported continuing our policy of separate payment for non-opioid pain management drugs that function as surgical supplies in the ASC setting. Commenters believe continuing separate payment in the ASC setting is essential given the continued overall low utilization of these drugs in the ASC setting and the positive clinical benefit the drugs provide.

Response: We thank commenters for their support for our proposal. In the following sections we discuss in greater detail the specific aspects of the policy that commenters addressed.

Comment: MedPAC expressed reservations regarding our policy to pay ASCs separately for non-opioid pain management drugs that function as supplies. It stated this policy is contrary to CMS's policy efforts to increase the size of payment bundles in order to increase incentives for efficient delivery of care. Additionally, it stated paying separately in the ASC would distort payment differences between the ASC and HOPD settings. Generally, MedPAC supported a policy that maintains the packaging of drugs that function as supplies in surgical procedures, especially in the absence of evidence in peer-reviewed publications indicating that the drug in question reduces the use of opioids.

Response: We appreciate this comment and agree with the importance of maintaining our overarching packaging policies in the OPPS and ASC payment systems. However, given the seriousness of the opioid epidemic, we continue to believe this policy plays an important role in maintaining beneficiary access and enhancing patient care in the ASC setting by eliminating the financial disincentive to use non-opioid pain management drugs that function as surgical supplies over opioids.

Based on public comments received, for CY 2022, we are finalizing our proposal as proposed to continue our current policy to pay separately for non-opioid pain management drugs that function as surgical supplies in the performance of surgical procedures in the ASC setting. We are also finalizing the new additional eligibility criteria we proposed for this policy, as discussed in the following section.

Specifically, for CY 2022, we proposed the following criteria that non-opioid pain management drugs and biologicals that function as surgical supplies would be required to meet to be eligible for separate payment under the ASC payment system in accordance with section 1833(t)(22)(C) of the Act.

Criterion One: FDA Approval and FDA-Approved Indication for Pain Management or Analgesia

We proposed that the drug or biological product must be safe and effective, as determined by FDA. We proposed that the drug must be approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), 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 (the PHS Act). We further proposed 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 be eligible for this policy because FDA reviews new 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 would apply. Given that FDA has an existing and detailed review process already in place, we believe it would be appropriate and administratively efficient to utilize FDA approval as a requirement to ensure that the new drugs and biologicals approved under this policy are safe and effective for their intended use. 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)(A) of the Act, our current policy, and our proposed policy all focus on pain management products. Specifically, section 1833(t)(22)(A) of the Act refers to reviews of opioid and evidence-based non-opioid products for pain management. Therefore, we proposed 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 also allow us to confirm that a drug or biological is, in fact, a non-opioid. Drugs and biologicals that are characterized as opioids or opioid agonists in the labeling for the FDA-approved product would not be eligible for separate payment under this policy.

Comment: Many commenters recommended CMS finalize its proposal to require an FDA-approved indication for pain management or analgesia for a drug or biological to qualify as a pain management product. Numerous commenters believe that this criterion is objective and would provide a transparent requirement for this policy moving forward. Commenters stated that FDA has a thorough and comprehensive process for evaluating drugs for approval and for specific FDA-approved indications. Other commenters did not express outright support for this criterion, but rather said they were not opposed to it. Generally, commenters were in favor of establishing an FDA approval requirement.

Response: We thank commenters for their support. As described in our proposal, we agree with the importance of utilizing FDA approval and an indication for pain management as a criterion for separate payment for eligible non-opioids.

Comment: Some commenters did not support requiring a specific FDA-approved indication for pain management or analgesia because the commenters believed this requirement may limit the number of products to which the policy would apply. One commenter asked us to clarify whether an FDA-approved indication for the treatment of pain would be considered appropriate and satisfy this criterion. One drug manufacturer more generally asked for flexibility in the exact FDA-approved indication. This commenter stated CMS should allow flexibility for a variety of indication statements that demonstrate that a drug mitigates or otherwise alleviates pain. Additionally, this commenter asked CMS to clarify if providing a drug during the pre-operative, post-operative, or intraoperative period could potentially qualify under the proposed policy. Some commenters asked CMS to expand this FDA-approved indication criterion to include anesthesia drugs, drugs used to treat inflammation, or more generally, any drugs that may have pain management properties. An additional commenter suggested limiting eligibility to drugs or biologicals with more restrictive FDA-approved indications, such as those drugs with opioid-sparing pain management indications.

Response: Regarding comments on a specific FDA-approved indication, we believe an FDA-approved indication for pain management or analgesia is appropriate for this policy. Section 1833(t)(22) of the Act required us to assess incentives to use opioids rather than non-opioid products used for pain management. We believe using the FDA-approved indications as a method to determine which drug products are safe and effective for pain management is appropriate. Therefore, we do not believe drugs or biologicals that do not have an FDA—approved indication for pain management or as an analgesic, such as certain anesthesia drugs mentioned by stakeholders, would be appropriate under this policy. We do believe “treatment of pain” as described by one commenter, would be an appropriate indication to satisfy this criterion. In response to the recommendation that we include drugs used to treat inflammation, or more generally, any drugs that may have pain management properties, we are not modifying our proposal to include these types of drugs in the definition of an FDA-approved indication for pain management or analgesia.

Additionally, we remind commenters 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 (83 FR 58855). Additionally, a drug product must meet all other requirements for payment and coverage under Medicare Part B in order to be paid and covered under this policy. We believe including those drugs with FDA-approved indications for pain management or analgesia will capture the appropriate drug products intended for this policy without being so broad as to include drugs that may not be used for pain management or so restrictive as to exclude potentially useful non-opioid pain management products.

Based on our review of public comments, we are finalizing criterion one as proposed, under which the drug or biological product must be safe and effective, as determined by FDA, and that the drug must be approved under a new drug application under section 505(c) of FDCA, 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 PHS Act. We are also finalizing for CY 2022 as part of criterion one the requirement that the drug or biological also have an FDA-approved indication for pain management or analgesia.

Criterion Two: 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. The proposed per-day drug packaging threshold for CY 2022 was $130, and the finalized per-day drug packaging threshold for CY 2022 is $130, as described in V.B.1.a of this final rule with comment period.

As our second criterion, we proposed 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) of the Act if its per-day cost exceeds the drug packaging threshold described in section V.B.1.a. of this final rule with comment period. 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, when the cost of non-opioid drugs and biologicals falls below the packaging threshold of $130 per-day, we believe the drug does not generally have a significant impact on the overall procedure costs; therefore, we believe use of these drugs and biologicals is less likely to be disincentivized by CMS packaging policies. However, when the per-day cost of the drug is above the drug packaging threshold, we believe the cost of these drugs or biologicals is more likely to have 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 with costs above the threshold. We proposed 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 proposed 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 separate payment 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 is appropriate to continue to package drugs that would otherwise qualify for separate payment under this policy where their per-day cost is below the OPPS drug packaging threshold.

Comment: Most commenters supported this criterion. Some commenters stated that they agreed with CMS's rationale that use of drugs and biologicals with per-day costs below the packaging threshold is not generally disincentivized by CMS packaging policies. Commenters generally thought this was a clear, transparent, and objective criterion. Other commenters did not express outright support for this criterion but stated that they were not opposed to it.

Response: We thank commenters for their support of this proposed criterion.

Comment: A few commenters stated that non-opioid pain management drugs that fall below the drug packaging threshold are still expensive relative to opioids, and therefore, the commenters believed CMS should not finalize a cost threshold for this policy. Specifically, the manufacturer of Anjeso (HCPCS code J1738; Injection, meloxicam, 1 mg ), Baudax Bio, supported CMS adopting policies that encourage use of non-opioid pain alternatives. However, they recognized that the per-day cost of their product fell below the drug packaging threshold and disagreed with CMS's proposed criterion two regarding per-day cost, because they indicated that the relative cost of opioids is still less than most non-opioid pain management products. Other commenters recommended that CMS pay for drugs and biologicals with per-day costs that fall below the drug packaging threshold, such as intravenous (IV) acetaminophen.

Response: We thank the commenters for their feedback on this proposed criterion. At this time, we continue to believe that drugs and biologicals with per-day costs below the OPPS drug packaging threshold are not generally disincentivized by CMS packaging policies, as the drug cost is less likely to represent a substantial portion of the payment rate of the primary procedure in which the product is used. This criterion aligns with our policy objective of eliminating financial disincentives to use of non-opioid pain management products.

Based on our rationale described above and feedback from stakeholders, we believe it is appropriate to finalize the second criterion as proposed. For CY 2022, we are finalizing our proposal that a non-opioid pain management drug or biological that functions as a supply in a surgical procedure would only be eligible for separate payment under the ASC payment system if its per-day cost exceeds the drug packaging threshold described in section V.B.1.a. of this final rule with comment period.

In addition, we proposed 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. We proposed 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.

Comment: Commenters requested that CMS determine the payment status of non-opioid drugs and biologicals after pass-through status expires as soon as possible through rulemaking.

Response: We thank commenters for their feedback. We will make payment determinations for applicable drugs in the appropriate calendar year rule. For example, those drugs that may be eligible for separate payment under this policy for the first time in CY 2023 will be discussed during the CY 2023 rulemaking cycle and evaluated against the appropriate eligibility criteria for that year.

Based on stakeholder feedback, we are finalizing as proposed that non-opioid pain management drugs and biologicals that function as supplies in surgical procedures that are already paid separately, or have transitional drug pass-through status under the OPPS, would not be candidates for this policy as they are already paid separately under the OPPS and ASC payment system. We also note that if a product has not received transitional pass-through status in the OPPS and ASC settings, separate payment in the ASC setting through this policy for non-opioid pain management drugs that function as surgical supplies does not preclude the manufacturer from applying for and receiving transitional pass-through status for their drug or biological if the drug or biological meets the criteria for transitional drug pass-through status. Please see section V.A., OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals, of this CY 2022 OPPS/ASC final rule for additional details on transitional pass-through payments.

(4) Regulation Text Changes

We proposed 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 § 416.174. In particular, we proposed to provide in a new § 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 FDCA, under an abbreviated new drug application under section 505(j) of FDCA, or, in the case of a biological product, are licensed under section 351 of the PHS 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 § 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 proposed to amend § 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 § 416.174 are ancillary items that are integral to a covered surgical procedure and for which separate payment is allowed. We also proposed to amend § 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 § 416.174 are not paid an amount derived from the payment rate for the equivalent item or service under the OPPS.

We received no comments on the specific regulation text changes. As we are finalizing the two criteria as proposed, we are also finalizing the corresponding regulation text changes as proposed.

(5) Eligibility for Separate Payment in CY 2022 for Exparel, Omidria, and Other Non-Opioid Drugs or Biologicals 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 in CY 2021 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 proposed that both products would be eligible for separate payment in CY 2022 under our proposed policy. We sought comment on whether there are any other non-opioid drug or biological products that would meet the proposed criteria if finalized. We have included our evaluations of these products based on stakeholder comments in the follow sections.

(a) Eligibility for Separate Payment in CY 2022 for Exparel

We proposed that Exparel ( C9290; Injection, bupivacaine liposome, 1 mg ) 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. As we stated in the CY 2022 OPPS/ASC proposed rule, based on CMS's internal review, we believed Exparel met criterion one. Exparel was approved by FDA with a New Drug Application (NDA #022496) on 10/28/2011. 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”. No component of Exparel is opioid-based. Accordingly, we proposed that Exparel meets criterion one.

As discussed in section (3) above, for criterion two we proposed 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 final rule with comment period. The finalized per-day cost threshold for CY 2022 is $130. Using the methodology described at V.B.1.a. of this final rule with comment period, the per-day cost of Exparel exceeds the $130 per-day cost threshold. Therefore, we proposed that Exparel meets criterion two.

Based on the above discussion, we proposed that Exparel meets criteria 1 and 2, and should receive separate payment under the ASC payment system for CY 2022.

Comment: The manufacturer of Exparel, Pacira BioSciences, supported finalizing both criteria as proposed and urged CMS to finalize the proposal to pay separately for Exparel in the ASC setting. The manufacturer also noted that numerous peer-reviewed studies demonstrate that Exparel can reduce or even replace use of postsurgical opioid pain medication and lead to improved patient outcomes. Several commenters, including a hospital association and surgery associations, also supported CMS's proposal to continue to unpackage and pay separately for Exparel in the ASC setting.

Response: We appreciate the commenters' input. After reviewing the information provided during the public comment period, and as described in our proposal above, we have determined that Exparel meets criterion one for FDA approval and an FDA-approved pain management indication and that the per-day cost of Exparel exceeds the finalized $130 per-day cost threshold, meeting criterion two. Additionally, no component of Exparel is opioid-based.

After consideration of the public comments we received and consistent with the eligibility criteria we are adopting, we are finalizing our proposal that Exparel will continue to receive separate payment under the ASC payment system in CY 2022 as a non-opioid pain management drug that functions as a surgical supply.

(b) Eligibility for Separate Payment for Omidria in CY 2022

We proposed that Omidria (J1097; Phenylephrine 10.16 mg/ml and ketorolac 2.88 mg/ml ophthalmic irrigation solution, 1 ml ) 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 during the proposed rule, we stated that we believed Omidria would meet criterion one. Omidria was approved by FDA with a New Drug Application (NDA #205388) on May 30, 2014. 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”. No component of Omidria is opioid-based. Therefore, we proposed that Omidria would meet proposed criterion one.

Using the methodology described at V.B.1.a. of this final rule with comment period, the per-day cost of Omidria exceeds the $130 per-day cost threshold. Therefore, we proposed that Omidria meets criterion two.

Because we proposed that Omidria meets criteria one and two, we proposed that it should receive separate payment under the ASC payment system for CY 2022.

Comment: The manufacturer of Omidria, Omeros, agreed with CMS's proposal that Omidria would satisfy the proposed criteria for CY 2022 and noted their support for Omidria continuing to receive separate payment in ASC setting. The manufacturer noted that Omidria decreases the need for the opioid fentanyl during surgery and reduces opioids prescribed post operatively, but did not submit literature to support these assertions. One commenter, a hospital association, also supported CMS's proposal to continue to unpackage Omidria in the ASC setting. However, another individual commenter stated their opposition to this proposal, noting that Omidria should be treated as an incidental part of an ophthalmic surgery and not paid for separately, as, in this commenter's view, Omidria does not meaningfully ameliorate the opioid crisis, is not indicated or useful for the treatment of an opioid use disorder, and that separate payment does not provide a clinical benefit for Medicare beneficiaries. Additionally, this commenter noted that ophthalmic surgeons rarely prescribe opioids.

Response: We appreciate the public comments on our proposal. We note that we have not proposed or adopted a requirement that a product must meaningfully ameliorate the opioid crisis or have a clinically significant impact on opioid usage. As such, after reviewing the information provided during the public comment period, and as described in our proposal above, we have determined that Omidria meets finalized criterion one because it is FDA approved and has an FDA-approved pain management indication and meets finalized criterion two because it has a per-day cost that exceeds the $130 per-day cost threshold.

After consideration of the public comments we received and our review of the criteria, we are finalizing the proposal for Omidria to continue to receive separate payment under the ASC payment system as a non-opioid pain management drug that functions as a surgical supply for CY 2022.

(c) Eligibility for Separate Payment in CY 2022 for Other Non-Opioid for Pain Management Drugs and Biologicals

We received comments on the CY 2022 OPPS/ASC proposed rule on additional non-opioid pain management drugs and biologicals that commenters believe would be eligible for separate payment in CY 2022 under our proposed policy. We have included a summary of these comments below as well as our analysis of whether these products meet the final eligibility criteria.

Comment: The manufacturer of Dextenza (J1096; Dexamethasone, lacrimal ophthalmic insert, 0.1 mg ), Ocular Therapeutix, commented that separate payment for Dextenza is necessary in the ASC setting for beneficiary access, as it is frequently used in that setting. The manufacturer requested continued separate payment after Dextenza's pass-through status expires.

Response: Based on CMS's internal review, we believe Dextenza meets criterion one. Dextenza was approved by FDA with a New Drug Application (NDA #208742) on November 30, 2018. Dextenza's FDA-approved indication is as “a corticosteroid indicated for the treatment of ocular pain following ophthalmic surgery”. No component of Dextenza is opioid-based. Accordingly, we believe that Dextenza meets criterion one.

As discussed in section (3) above, for criterion two we proposed 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 final rule with comment period. Using that methodology, the per-day cost of Dextenza exceeds the $130 per-day cost threshold. Therefore, we believe that Dextenza meets criterion two.

We agree that Dextenza meets criteria one and two, and would be eligible to receive separate payment under the ASC payment system as a non-opioid pain management drug that functions as a surgical supply for CY 2022 if it was not already receiving separate payment-in CY 2022 as a pass-through drug. Please see section V.A. “OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals” of this final rule with comment period for additional details on transitional pass-through payments for drugs and biologicals, as well as section X. F. of this final rule with comment period, “Separate Payment in CY 2022 for the Device Category, Drugs, and Biologicals with Transitional Pass-Through Payment Status Expiring between December 31, 2021, and September 30, 2022.”

Comment: The manufacturer of Dexycu (J1095; Injection, dexamethasone 9 percent, intraocular, 1 microgram ), EyePoint Pharmaceuticals, commented that Dexycu should be eligible for separate payment in the ASC setting as a non-opioid pain management drug that functions as a surgical supply. An individual commenter, an ophthalmologist, noted that Dexycu is indicated for the treatment of inflammation following ocular surgery and provided summaries of several studies that discussed Dexycu's utility in controlling pain. Other commenters more broadly suggested that CMS provide separate payment for products that prevent inflammation.

Response: Based on CMS's internal review, we do not believe Dexycu meets criterion one. Dexycu was approved by FDA with a New Drug Application (NDA #208912) on February 9, 2018. Dexycu's FDA-approved indication is as “a corticosteroid indicated for the treatment of postoperative inflammation”. No component of Dexycu is opioid-based. However, Dexycu does not have an FDA-approved indication for pain management or analgesia. Accordingly, we do not believe Dexycu meets criterion one.

As discussed in section II.A.3. of this final rule with comment period, for criterion two we proposed 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 final rule with comment period. Using that methodology, the per-day cost of Dexycu does exceed the $130 per-day cost threshold. Therefore, we believe Dexycu meets criterion two.

After consideration of the public comments we received and our review of the criteria, we have determined that Dexycu does not meet criteria one and, therefore, would not eligible to receive separate payment under the ASC payment system as a non-opioid pain management drug that functions as a surgical supply for CY 2022. Additionally, we note that Dexycu is already receiving separate payment through CY 2022. Please see section V.A. “OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals” of this final rule with comment period for additional details on transitional pass-through payments for drugs and biologicals as well as section X. F. “Separate Payment in CY 2022 for the Device Category, Drugs, and Biologicals with Transitional Pass-Through Payment Status Expiring between December 31, 2021, and September 30, 2022.”

Comment: The manufacturer of Xaracoll, Innocoll Pharmaceuticals, commented that Xaracoll meets the two proposed CMS criteria and qualifies for separate payment as a non-opioid pain management drug that functions as a surgical supply in the ASC setting. The manufacturer also provided additional details regarding the clinical benefit of their product, including discussion of studies in which Xaracoll demonstrated significant pain relief and opioid reduction in open inguinal hernia repair.

Response: We appreciate the commenter's input. Based on CMS's internal review, we believe Xaracoll meets criterion one. Xaracoll was approved by FDA with a New Drug Application (NDA #209511) on August 28, 2020. Regarding the specific FDA-approved indication requirement, Xaracoll is “indicated in adults for placement into the surgical site to produce postsurgical analgesia for up to 24 hours following open inguinal hernia repair”. No component of Xaracoll is opioid-based. Accordingly, we believe that Xaracoll meets criterion one.

As discussed in section II.A.3. of this final rule with comment period, for criterion two we proposed 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 final rule with comment period. Using that methodology, the per-day cost of Xaracoll exceeds the $130 per-day cost threshold. Therefore, we believe that Xaracoll meets criterion two.

After consideration of the public comments we received and our review of the finalized criteria, we have determined that Xaracoll meets criteria one and two, and are approving Xaracoll (C9089; Bupivacaine, collagen-matrix implant, 1 mg ) to receive separate payment under the ASC payment system as a non-opioid pain management drug that functions as a surgical supply for CY 2022.

Comment: The manufacturer of Zynrelef, Heron Therapeutics, stated how Zynrelef meets CMS's proposed criteria for separate payment in the ASC setting and should be receive separate payment in that setting. The manufacturer also provided additional details regarding the clinical benefit of their product, including studies where Zynrelef demonstrated reduced opioid use.

Response: We appreciate the commenter's input. Based on CMS's internal review, we believe Zynrelef meets criterion one. Zynrelef was approved by FDA with a New Drug Application (NDA #211988) on May 12, 2021. Regarding the specific FDA-approved indication requirement, Zynrelef is “indicated in adults for soft tissue or periarticular instillation to produce postsurgical analgesia for up to 72 hours after bunionectomy, open inguinal herniorrhaphy and total knee arthroplasty”. No component of Zynrelef is opioid-based. Accordingly, we believe that Zynrelef meets criterion one.

As discussed in section (3) above, for criterion two we proposed 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 final rule with comment period. Using that methodology, the per-day cost of Zynrelef exceeds the $130 per-day cost threshold. Therefore, we believe that Zynrelef meets criterion two.

After consideration of the public comments we received and our review of the finalized criteria, we have determined that Zynrelef meets criteria one and two, and are approving Zynrelef (C9088; Instillation, bupivacaine and meloxicam, 1 mg/0.03 mg ) to receive separate payment under the ASC payment system as a non-opioid pain management drug that functions as a surgical supply for CY 2022.

Comment: The manufacturer of Anjeso (HCPCS code J1738; Injection, meloxicam, 1 mg ), Baudax Bio, expressed support for policies that encourage the use of non-opioid pain alternatives. In their comment, Baudax Bio discussed the clinical benefits of their product.

Response: We appreciate the commenter's input. Based on CMS's internal review, we believe Anjeso meets criterion one. Anjeso was approved by FDA with a New Drug Application (NDA #210583) on February 20, 2020. Anjeso's FDA-approved indication is “indicated for use in adults for the management of moderate-to-severe pain, alone or in combination with non-NSAID analgesics”. No component of Anjeso is opioid-based. Accordingly, we believe that Anjeso meets criterion one.

As discussed in section II.A.3. of this final rule with comment period, for criterion two we proposed 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 final rule with comment period. Using that methodology, the per-day cost of Anjeso does not exceed the $130 per-day cost threshold. Therefore, we do not believe that Anjeso meets criterion two.

After consideration of the public comments we received and our review of the finalized criteria, we have determined that Anjeso meets criteria one but not criterion two, and would not be eligible to receive separate payment under the ASC payment system as a non-opioid pain management drug that functions as a surgical supply for CY 2022. However, Anjeso remains on transitional pass-through status throughout CY 2022 and accordingly, is already receiving separate payment in the HOPD and ASC settings for CY 2022. Please see section V.A., OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals, of this final rule with comment period for additional details on transitional pass-through payments for drugs and biologicals.

Comment: Several commenters, including hospital and professional associations, recommended separate payment for Ofirmev, IV acetaminophen, stating they believed it decreased use of post-operative opioids.

Response: We appreciate the commenters' input. Based on CMS's internal review, we believe Ofirmev meets criterion one. Ofirmev was approved by FDA with a New Drug Application (NDA #022450) on October 2, 2010. Ofirmev's FDA-approved indication is “management of mild to moderate pain, management of moderate to severe pain with adjunctive opioid analgesics, and reduction of fever”. No component of Ofirmev is opioid-based. Accordingly, we believe that Ofirmev meets criterion one.

As discussed in section (3) above, under criterion two a drug or biological is only eligible for separate payment if its per-day cost exceeds the drug packaging threshold described in section V.B.1.a. of this final rule with comment period. Using the methodology described at V.B.1.a. of this final rule with comment period, the per-day cost of Ofirmev does not exceed the $130 per-day cost threshold. Therefore, we do not believe Ofirmev meets criterion two.

After consideration of the public comments we received and our review of the criteria, we have determined that Ofirmev meets criteria one but not criterion two and is not eligible to receive separate payment under the ASC payment system as a non-opioid pain management drug that functions as a surgical supply for CY 2022.

Comment: Several commenters, including professional and hospital associations, commented that classes of drugs, such as NSAIDS, including IV ibuprofen and IV ketorolac, may reduce opioid usage if CMS paid separately for them. However, they did not request that CMS consider a specific non-opioid product for separate payment in the ASC setting.

Response: We thank commenters for their comments. For both of these products, we did not receive recommendations for a specific product, for a specific FDA approval, or from a specific manufacturer. We note that based on our review of these products, we do believe IV ibuprofen and IV ketorolac products, which have FDA approval and an FDA-approved indication for pain management or as an analgesic, would satisfy criterion one. However, based on our review of these products, using the methodology described at V.B.1.a. of this final rule with comment period, the per-day costs of HCPCS code 1741 ( Injection, ibuprofen, 100 mg) and HCPCS code J1885 ( Injection, ketorolac tromethamine, per 15 mg) do not exceed the packaging threshold for criterion two.

Comment: Commenters requested CMS consider the clinical value of Prialt (HCPCS Code J2278; Injection, ziconotide, 1 microgram ) and Dsuvia, a sufentanil sublingual tablet, for separate payment in the ASC setting

Response: Prialt is not eligible for separate payment under our final policy because it is not a drug that functions as a supply in a surgical procedure and is already receiving separate payment. Dsuvia is not eligible for separate payment under our final policy because it contains an opioid and therefore is not a non-opioid drug. We are not revising our policy to provide separate payment for opioid pain management products for CY 2022.

As previously explained above, we are not modifying the eligibility criteria for our policy to include such products. However, we appreciate these comments and suggestions from stakeholders and will take them into consideration for future rulemaking.

(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 also sought 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 noted in the CY 2022 OPPS/ASC proposed rule that, depending on the public comments we received 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 provided substantial details, explanations, and considerations about these potential criteria. We welcomed input from stakeholders on these and any additional policy modifications or criteria they believe would enhance our proposed policy. We also sought 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.

Comment: A few comments from providers and drug manufacturers discussed additional barriers they faced in providing non-opioid pain management products. One commenter recommended CMS provide education to providers on non-opioid pain medications and to encourage patients to ask their providers about which medications they are being prescribed. One commenter noted that not allowing separate payment for non-opioid products in the HOPD setting limits the expansion of patient access to non-opioid therapies in new geographic areas. Another commenter noted that rural and underserved areas have been disproportionately harmed by opioid addiction and that geography, lack of provider education and training, and payment and coverage for these services may be barriers to treatment in these communities.

Response: We are committed to implementing measures to combat the opioid epidemic. We appreciate stakeholders' comments in response to this solicitation. We will take these comments into consideration for future rulemaking.

Comment: Many commenters appreciated CMS soliciting comment on potential additional criteria in the proposed rule. A few commenters recommended that CMS not finalize additional criteria based on responses to the comment solicitations. Rather, they suggested CMS finalize the two proposed criteria and assess the policy in the future to assess whether additional criteria are warranted.

Response: We thank commenters for their input. We are not finalizing additional criteria or policy modifications based on the comments were received in response to the comment solicitations in the CY 2022 OPPS/ASC proposed rule. Please see the following sections for a summary of the comments received.

(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 a 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 solicited comment on whether specific evidence of reduced utilization should be part of our evaluation and determination as to whether a non-opioid pain management product should qualify for modified 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 also requested comment on whether utilization data requirements should vary based on the newness of a product or its FDA marketing approval date.

Comment: Generally, commenters did not support adding a utilization requirement criterion. Several commenters stated that utilization data was useful in the original analysis to establish the original policy in the ASC setting, but they believe would be inappropriate to require new products to prove they are disincentivized by CMS packaging policies. These commenters noted it would take significant time for this data to be available after a new drug was introduced to the market. Additionally, several comments stated that utilization data is imperfect, as CMS described in the CY 2022 OPPS/ASC proposed rule.

Response: We thank commenters for their feedback on a potential utilization requirement. However, we are not finalizing any policy modifications, including adopting a utilization requirement, for CY 2022. We will take these comments into consideration for future rulemaking.

(b) FDA-Approved 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 one. Therefore, we solicited 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-approved indication for pain management or analgesia, we sought 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 sought 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, when a drug or biological does not have an FDA-approved indication for pain management or analgesia.

Comment: Some commenters were supportive of CMS taking into consideration other factors, such as specialty society endorsements, medical compendia, or inclusion in clinical practice guidelines, as part of the qualifying criteria if an FDA-approved indication for pain management or analgesia was not present. Commenters stated a specific FDA-approved indication may be too restrictive as some products may be used off-label for pain management. A few commenters suggested CMS take an individualized and holistic approach to each drug it evaluates, and therefore, consider association recommendations outside of FDA-approved indications. Commenters thought this would support increased access to drugs for off-label uses.

Response: We appreciate the comments received as a part of this specific comment solicitation; however, for CY 2022, we are not making any policy modifications based on the public comments we received in response to this comment solicitation.

(c) Peer-Reviewed Literature Requirement Comment Solicitation

We note that section 1833(t)(22)(B) of the Act 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. Therefore, we solicited comment as to whether we should only adopt a payment revision for 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 usage associated with the surgical procedure. 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 sought 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 sought comment on whether such decreases in opioid usage should be sustained decreases that continue into the post-operative period.

Additionally, we sought input from commenters as to what they believe the requirements for peer-reviewed literature should be. For example, we solicited 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 asked 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 requested information on how stakeholders would define the standard of care in these circumstances. In the proposed rule we stated, 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 welcomed input from stakeholders about additional aspects of these studies that they believe CMS should focus on for this potential criterion. Additionally, we stated 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 stated in the proposed rule that we believed 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 solicited comment on additional examples or measures that would be beneficial for CMS to take into consideration. Additionally, we sought comment on whether we should require a specific objective measure for this criterion. We also sought input on how to assess whether changes are statistically and clinically significant. We requested 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.

Comment: Many commenters did not support CMS finalizing any additional criteria, including a peer-reviewed literature requirement. A few commenters disagreed that a peer-reviewed literature requirement was necessary as they believed an FDA-approved indication for pain management or analgesia would be sufficient. Several commenters suggested CMS collect, review, and consider peer-reviewed literature, but not explicitly require it.

Response: We appreciate the comments received as a part of this specific comment solicitation; however, for CY 2022, we are not making any policy modifications based on the public comments we received in response to this comment solicitation. We will take these comments into consideration for future rulemaking.

Comment: A few commenters supported CMS requiring peer-reviewed literature that demonstrates that the drug in question reduces opioid use in the post-operative period. One commenter specified which type of literature endpoints would be important to incorporate into our review process. Specifically, one drug manufacturer recommended that CMS require that use of a drug demonstrate a significant reduction in the need for opioids and increase the number of patients who are opioid free in a randomized, well-controlled, head-to-head clinical trial versus an active comparator. A number of commenters requested that CMS provide separate payment for evidence-based, non-opioid pain management drugs. Specifically, in regards to peer-reviewed literature, MedPAC asserted that separately payable status should only be granted when evidence in peer-reviewed publications indicates that the drug in question reduces the use of opioids. Other commenters supported a criterion that requires a product to demonstrate the ability to replace, reduce, or avoid opioid use or the quantity of opioids prescribed.

Response: We thank commenters for their detailed comments. We agree it is important that a non-opioid pain management product serve as an alternative to an opioid, and therefore replace, reduce, or avoid opioid use.

We once again thank commenters for their detailed insights on this comment solicitation; however, for CY 2022, we are not making any policy modifications based on the public comments we received in response to this comment solicitation. We will take these comments into consideration for future rulemaking.

(d) Alternative Payment Mechanisms for Non-Opioid Drugs and Biologicals

As previously discussed, for CY 2022, we proposed to pay separately at ASP+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 criteria. Section 1833(t)(22)(A)(iii) of the Act requires the Secretary to consider the extent to which revisions to 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 sought comment on additional payment mechanisms that may be appropriate aside from separate payment. For instance, we requested 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) of the Act must be applied in a budget neutral manner under section 1833(t)(9)(B) of the Act. We also sought input from stakeholders on any other innovative payment mechanisms for eligible non-opioid drugs and biologicals for pain management.

Comment: Most commenters opposed any other payment methodologies aside from paying separately for non-opioid pain management drugs or biologicals at ASP+6 percent. Several commenters contended that an add-on payment would not be appropriate because this would create differentials in payment across care settings, such as physician offices, and emphasized that stakeholders are more familiar with the ASP payment methodology. Some commenters also emphasized that drugs and biologicals are generally paid at ASP+6 percent when furnished in the physician office setting and encouraged CMS to pay ASP+6 percent under this policy to ensure payment parity across the different treatment settings.

One commenter asked that CMS apply its final payment policy for 340B-acquired drugs, to pay for non-opioid drug products at ASP minus 22.5 percent instead of ASP+ 6 percent. Additionally, one commenter asked that CMS create new CPT codes in order to account for the work associated with opioid-sparing therapies furnished by surgeons.

Response: We appreciate the comments received as a part of this specific comment solicitation; however, for CY 2022, we are not making any policy modifications based on the public comments we received in response to this comment solicitation. We will take these comments into consideration for future rulemaking.

(e) Non-Drug Products

In the CY 2022 OPPS/ASC proposed rule, we stated we were also interested in information on any non-opioid non-drug products that function as surgical supplies that 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 in 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 also sought comment on whether 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 sought comment on whether it is appropriate to require non-drug products to meet the same criteria being proposed for drugs and biologicals. Additionally, we sought 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 sought 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 proposed to require FDA approval with an FDA-approved indication for pain management or analgesia for drugs and biologicals. We sought comment on whether, if the non-drug product is a “device” as defined in section 201(h) of FDCA, the device should have received FDA premarket approval (PMA), grant of a de novo request, 510(k) clearance or meet an exemption from premarket review. Finally, we solicited comment on all aspects of an extension of our current policy to include appropriate products that are not drugs or biologicals.

We also sought comment on 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 solicited 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 sought comment on whether it would be appropriate to subject non-drug products to a cost threshold similar to the one we proposed to apply to drugs and biologicals.

Comment: A few commenters supported CMS exploring a payment adjustment for non-opioid, non-drug items, including items such as devices. Some commenters discussed the benefit of spinal cord stimulators, and one commenter recommended an add-on payment for a narrowly constructed payment category, such as spinal cord stimulators. Commenters also cited the CMS prior authorization policy on spinal cord stimulators as inappropriately creating barriers to access to these devices, as beneficiaries could be prescribed opioids for longer periods of time while waiting for prior authorization to be approved. Commenters recommended CMS provide separate payment for nerve blocks, pain blocks (represented by CPT codes 64415, 64416, 64417, 64445, 64446, 64447, 64448, 64450), joint injections, and neuromodulation.

Some commenters stated that barriers for non-drug items are often more severe in the ASC setting. Commenters also suggested CMS consider payment methodologies for various other non-drug items, including for multi-modal pain management ERAS protocols, physical therapy, acupuncture, massage therapy, ON-Q pain relief system, devices that use ice water, dry needling, THC oil applied topically, and polar ice devices.

Commenters pointed to the opioid-sparing abilities of some of these products. For example, commenters noted that spinal cord stimulators are useful in reducing opioid usage for chronic pain patients. Commenters urged CMS to change payment polices to make spinal cord stimulators a front-line option in combating chronic pain.

Response: We appreciate the responses from commenters on this topic. As discussed in prior rulemaking (85 FR 85899), we have not found compelling evidence for non-drug, non-opioid pain management alternatives that commenters described to warrant separate payment under the OPPS or ASC payment system. For CY 2022, we are not finalizing any policy modifications in response to the comments we received on this comment solicitation. We will take these comments into consideration for future rulemaking.

Comment: Some commenters recommended that criteria similar to those proposed for drug items also apply to non-drug items, including a potential requirement for peer-reviewed literature demonstrating that the product significantly limits or eliminates prescription opioids.

Response: We thank commenters for their feedback regarding potential criteria for non-drug items and how we may incorporate non-drug products into our non-opioid pain management packaging policy in the future. We will take these comments into consideration for future rulemaking.

(f) Coinsurance Waiver Request

Comment: Multiple commenters, including providers and the manufacturer of Prialt, an intrathecal drug, requested CMS waive the 20 percent coinsurance requirement for non-opioid pain management drugs. Specifically, these commenters discussed that waiving coinsurance for non-opioid drugs that are indicated for severe chronic pain in patients requiring intrathecal therapy could bolster patient access

Response: The services described here, including intrathecal therapy, do not meet the statutory requirements process for “additional preventive services” in section 1861(ddd)(1) of the Act that would be subject to coinsurance waiver under 1833(a)(1)(W). Providers may waive coinsurance amounts only if they comply with applicable law, including the Federal Anti-Kickback Statute and the civil monetary penalty provision prohibiting inducements to beneficiaries. We note that the drugs these commenters describe are already paid separately. Additionally, the intrathecal drug, Prialt, frequently described by commenters, does not function as a supply to a surgical procedure. As such, it would not qualify under our current policy to pay separately in the ASC setting for non-opioid pain management drugs and biologicals that function as surgical supplies. However, we appreciate the commenters' input about the potential value of these drugs.

Summary of Finalized Policy

As discussed in the preceding sections, after consideration of the public comments we received, we are finalizing the proposed policy for CY 2022 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, are FDA-approved, have an FDA-approved indication for pain management or as an analgesic, and have a per-day cost above the OPPS/ASC drug packaging threshold for CY 2022. As noted above, we are finalizing the proposed regulation text changes at § 416.164(a)(4) and (b)(6), § 416.171(b)(1), and § 416.174 as proposed. We determined that four products are eligible for separate payment in the ASC setting under our final policy for CY 2022. Future products, or products not discussed in this rulemaking that may be eligible for separate payment under this policy will be evaluated in future notice and comment rulemaking. We will continue to analyze the issue of access to non-opioid pain management alternatives in the OPPS and the ASC settings as part of any subsequent reviews we conduct under section 1833(t)(22)(A)(ii) of the Act, which would be discussed in future notice and comment rulemaking. We will also continue to evaluate whether there are other non-opioid pain management alternatives for which our payment policy should be revised to allow separate payment in future rulemaking. Table 4 below lists the four drugs that meet our finalized criteria and will receive separate payment under the ASC payment system when furnished in the ASC setting for CY 2022.

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 of the CY 2021 OPPS/ASC 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 the CY 2021 OPPS/ASC final rule with comment period. For CY 2022, as we did for CY 2021, we proposed 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 proposed 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 proposed 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 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 proposed 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 proposed to apply the same process using the estimated CY 2022 unscaled relative payment weights rather than scaled relative payment weights. We proposed 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: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html . Click on the link labeled “CY 2022 OPPS/ASC Notice of Proposed Rulemaking”, which can be found under the heading “Hospital Outpatient Prospective Payment System Rulemaking” and open the claims accounting document link at the bottom of the page, which is labeled “2022 NPRM OPPS Claims Accounting (PDF)”.

We proposed 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 proposed to adjust the calculated CY 2022 unscaled relative payment weights for purposes of budget neutrality. We proposed 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 the CY 2022 OPPS/ASC 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 the CY 2022 OPPS/ASC proposed rule (86 FR 42026).

Section 1833(t)(14) of the Act provides the payment rates for certain specified covered outpatient drugs (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 the CY 2022 OPPS/ASC proposed rule (86 FR 42131 through 42133) is included in the budget neutrality calculations for the CY 2022 OPPS.

We did not receive any public comments on the proposed weight scalar calculation. Therefore, we are finalizing our proposal to use the calculation process described in the proposed rule, without modification, for CY 2022. Using updated final rule claims data, we are updating the estimated CY 2022 unscaled relative payment weights by multiplying them by a weight scalar of 1.4416 to ensure that the final CY 2022 relative payment weights are scaled to be budget neutral. The final CY 2022 relative payments weights listed in Addenda A and B of this final rule with comment period (which are available via the internet on the CMS website) were scaled and incorporate the recalibration adjustments discussed in sections II.A.1 and II.A.2 of this final rule with comment period.

B. 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 proposed that the MFP adjustment for the CY 2022 OPPS is 0.2 percentage point. We also proposed that if more recent data become subsequently available after the publication of the CY 2022 OPPS/ASC 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 proposed 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 proposed 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 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 proposed 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 proposed 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 proposed 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 proposed to maintain the current rural adjustment policy, as discussed in section II.E. of the CY 2022 OPPS/ASC proposed rule. Therefore, the proposed budget neutrality factor for the rural adjustment is 1.0000.

We proposed 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 the CY 2022 OPPS/ASC proposed rule. We proposed 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 proposed 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 the 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 estimated 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 the CY 2022 OPPS/ASC proposed rule, we also proposed 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 proposed 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 proposed 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 proposed 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.

Comment: Two commenters request that the OPD fee schedule update factor be larger than the proposed 2.3 percent increase. One commenter cited a MedPAC study that reported for 2019 that the aggregate Medicare margin for inpatient hospital providers was −8.7 percent among all inpatient hospital providers, and that the median Medicare margin was −1 percent for relatively efficient providers. This commenter appeared to request the OPD fee schedule update factor be increased sufficiently to substantially reduce the aggregate margin for hospital providers. The commenter also mentioned that the annual Consumer Price Index was 5.4 percent which was over 3 percentage points higher than the proposed 2.3 percent OPD fee schedule increase. The second commenter, a state hospital association, claimed that unspecified recent payment cuts for outpatient hospital services have hurt the financial position of hospitals in their state. The commenter asks us to identify additional ways to increase hospital payment more than the proposed 2.3 percent OPD fee schedule increase.

Response: The OPD fee schedule update factor is designed to maintain a consistent level of payment for outpatient hospital services in Medicare year over year after taking into account changes in medical inflation and business productivity. In addition, the OPPS conversion factor is not designed to redress payment reductions made in a non-budget neutral manner. The MedPAC study cited by one of the commenters reported, in addition to the aggregate Medicare margin for inpatient hospital providers, that the median margin for Medicare spending for relatively efficient hospitals was around −1 percent for 2019. The same MedPAC study also recommended a 2.0 percent increase in outpatient hospital spending for 2022, which is actually lower than our proposed conversion factor update of 2.3 percent.

The same commenter also suggested that the Consumer Price Index may be a better measure of medical inflation than the hospital market basket index used by CMS. The percentage change in the hospital market basket reflects the average change in the price of goods and services purchased by hospitals in order to provide medical care. A general measure of health care inflation (such as the Consumer Price Index for Medical Care Services) would not be appropriate as it is not specific to hospital medical services and is not reflective of the input price changes experienced by hospitals but rather the inflation experienced by the consumer for their medical expenses.

Comment: Two commenters supported our proposed CY 2022 OPD fee schedule increase factor percentage increase of 2.3 percent.

Response: We appreciate the support of the commenters.

After reviewing the public comments that we received, we are finalizing these proposals with modification. For CY 2022, we proposed to continue previously established policies for implementing the cancer hospital payment adjustment described in section 1833(t)(18) of the Act (discussed in section II.F. of this final rule with comment period). Based on the final rule updated data used in calculating the cancer hospital payment adjustment in section II.F. of this final rule with comment period, the target payment-to-cost ratio for the cancer hospital payment adjustment, which was 0.90 for CY 2021, is also 0.90 for CY 2022. As a result, we are applying a budget neutrality adjustment factor of 1.0000 to the conversion factor for the cancer hospital payment adjustment.

For this CY 2022 OPPS/ASC final rule with comment period, as published in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45214), based on IGI's 2021 second quarter forecast with historical data through the first quarter of 2021, the hospital market basket update for CY 2022 is 2.7 percent and the estimate of the 10-year moving average growth of MFP for FY 2022 is 0.7 percent.

We note that as a result of the modifications in final policy for the CY 2022 wage index we are also including a change to the wage index budget neutrality adjustment so that the final overall budget neutrality factor of 1.0000 would apply for wage index changes. This adjustment is comprised of a 1.0001 budget neutrality adjustment, using our standard calculation of comparing proposed total estimated payments from our simulation model using the final FY 2022 IPPS wage indexes to those payments using the FY 2022 IPPS wage indexes, as adopted on a calendar year basis for the OPPS as well as a 0.9999 budget neutrality adjustment for the final CY 2022 5 percent cap on wage index decreases, requiring application of the 5 percent cap on CY 2021 wages, to ensure that this transition wage index is implemented in a budget neutral manner, consistent with the proposed FY 2022 IPPS wage index policy (86 FR 45552).

As a result of these finalized policies, the OPD fee schedule increase factor for the CY 2022 OPPS is 2.0 percent (which reflects the 2.7 percent final estimate of the hospital inpatient market basket percentage increase with a 0.7 percentage point MFP adjustment). For CY 2022, we are using a conversion factor of $84.177 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 OPD fee schedule increase factor of 2.0 percent for CY 2022, the required wage index budget neutrality adjustment of 1.0000, and the adjustment of−0.32 percentage point of projected OPPS spending for the difference in pass-through spending that results in a conversion factor for CY 2022 of $84.177.

C. 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 the CY 2022 OPPS/ASC proposed rule (86 FR 42048 through 42049).

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 proposed to continue this policy for the CY 2022 OPPS. We referred readers to section II.H. of the CY 2022 OPPS/ASC proposed rule (86 FR 42056 through 42058) for a description and an example of how the wage index for a particular hospital is used to determine payment for the hospital. We did not receive any public comments on this proposal. Accordingly, for the reasons discussed above and in the CY 2022 OPPS/ASC proposed rule, we are finalizing our proposal, without modification, to continue this policy for the CY 2022 OPPS.

As discussed in the claims accounting narrative included with the supporting documentation for this final rule with comment period (which is available via the internet on the CMS website), for estimating APC costs, we are standardizing 60 percent of estimated claims costs for geographic area wage variation using the same FY 2022 pre-reclassified wage index that we 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 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 § 419.43(c)(2) and (3) of our regulations. For 2022, we proposed 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 referred 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 50160 through 50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 53369 through 53370; for FY 2014, 78 FR 50590 through 50591; for FY 2015, 79 FR 49971; for FY 2016, 80 FR 49498; for FY 2017, 81 FR 56922; for FY 2018, 82 FR 38142; for FY 2019, 83 FR 41380; for FY 2020, 84 FR 42312; and for FY 2021, 85 FR 58765. We did not receive any public comments on this proposal. Accordingly, for the reasons discussed above and in the CY 2022 OPPS/ASC proposed rule, we are finalizing our proposal, without modification, to continue to implement the frontier State floor under the OPPS in the same manner as we have since CY 2011.

In addition to the changes required by the Affordable Care Act, we noted in the CY 2022 OPPS/ASC proposed rule (86 FR 42050) that the proposed FY 2022 IPPS wage indexes continue to reflect a number of adjustments implemented in past years, including, but not limited to, reclassification of hospitals to different geographic areas, the rural floor provisions, an adjustment for occupational mix, an adjustment to the wage index based on commuting patterns of employees (the out-migration adjustment), and an adjustment to the wage index for certain low wage index hospitals to help address wage index disparities between low and high wage index hospitals. In addition, we noted that in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25405 through 25407), we proposed to implement section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-2) which reinstates the imputed floor wage index adjustment under the IPPS for hospitals in all-urban states effective for discharges on or after October 1, 2021 (FY 2022) using the methodology described in § 412.64(h)(4)(vi) as in effect for FY 2018. Specifically, section 1886(d)(3)(E)(iv)(I) and (II) of the Act, as added by section 9831 of the American Rescue Plan Act, provides that for discharges occurring on or after October 1, 2021, the area wage index applicable under the IPPS to any hospital in an all-urban State may not be less than the minimum area wage index for the fiscal year for hospitals in that State established using the methodology described in § 412.64(h)(4)(vi) as in effect for FY 2018. We further noted in the FY 2022 IPPS/LTCH PPS proposed rule that, given the recent enactment of section 9831 of Public Law 117-2 on March 11, 2021, there was not sufficient time available to incorporate the changes required by this statutory provision (the reinstatement of the imputed floor wage index) into the calculation of the IPPS provider wage index for the FY 2022 IPPS/LTCH PPS proposed rule, and we stated that we would include the imputed floor wage index adjustment in the calculation of the IPPS provider wage index in the FY 2022 IPPS/LTCH PPS final rule. We noted that CMS posted, concurrent with the issuance of the FY 2022 IPPS/LTCH proposed rule, estimated imputed floor values by state in a separate data file on the FY 2022 IPPS Proposed Rule web page on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index . In addition, we stated in the FY 2022 IPPS/LTCH PPS proposed rule that, based on data available for the FY 2022 IPPS/LTCH PPS proposed rule, the following States would be all-urban States as defined in section 1886(d)(3)(E)(iv)(IV) of the Act, and thus hospitals in such States would be eligible to receive an increase in their wage index due to application of the imputed floor for FY 2022: New Jersey, Rhode Island, Delaware, Connecticut, and Washington, DC. We referred readers to the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25396 through 25417) for a detailed discussion of all proposed changes to the FY 2022 IPPS wage indexes.

A summary of the comments we received regarding the rural floor and the imputed floor for all-urban states and our responses to those comments appear below:

Comment: Some commenters expressed their support for the application of the rural floor policy which included support for the continued exclusion of the wage data of hospitals that have reclassified as rural under § 412.103 when calculating the wage index for the rural floor.

Response: We appreciate the commenters' support for the application of the rural floor policy.

Comment: Some commenters opposed the continued application of a nationwide rural floor budget neutrality adjustment, noting that the policy does nothing more than benefit a few hospitals and exacerbate a downward spiral of the wage index for low wage index hospitals.

Response: We appreciate the commenters' concerns about application of the nationwide rural floor budget neutrality policy. However, as stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56920), for discharges occurring on or after October 1, 2010, for purposes of applying the rural floor, section 3141 of the Affordable Care Act replaced the statewide budget neutrality adjustment policy with the national budget neutrality adjustment policy that was in place during FY 2008. That is, section 3141 required that budget neutrality for the rural floor be applied “through a uniform, national adjustment to the area wage index” instead of within each State beginning in FY 2011 (75 FR 50160).

We continue to believe it is reasonable and appropriate to continue the current policy of applying budget neutrality for the rural floor under the OPPS on a national basis, consistent with the IPPS. We believe that hospital inpatient and outpatient departments are subject to the same labor cost environment, and therefore, the wage index and any applicable wage index adjustments (including the rural floor and rural floor budget neutrality) should be applied in the same manner under the IPPS and OPPS. Furthermore, we believe that applying the rural floor and rural floor budget neutrality in the same manner under the IPPS and OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. In addition, we believe the application of different wage indexes and wage index adjustments under the IPPS and OPPS would add a level of administrative complexity that is overly burdensome and unnecessary. Therefore, we are continuing the current policy of applying budget neutrality for the rural floor under the OPPS on a national basis, consistent with the IPPS.

Comment: Some commenters supported the proposed implementation of the imputed floor wage index policy. However, one commenter opposed the reinstatement of the imputed floor, stating that it exacerbates wage index disparities, but acknowledged that the proposal was in accordance with legislation enacted by Congress. This commenter requested CMS include details by state of the effects of the imputed floor. Commenters both in support and in opposition of the imputed floor policy applauded its implementation without the application of budget neutrality, per section 9831 of the American Rescue Plan Act of 2021. A commenter specifically concurred with CMS' interpretation that the definition of an all-urban state according to section 9831 of the American Rescue Plan Act of 2021 is one in which no hospital receives the rural area wage index.

Response: We appreciate the commenters' support of the proposed implementation of the imputed floor policy, which we note has been finalized in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45176 through 45178). Responding to the commenter opposed to this policy, we underscore that, as the commenter itself pointed out, the imputed floor has been reinstated by statute in section 9831 of the American Rescue Plan Act of 2021. We believe that it is appropriate to apply the imputed floor policy in the OPPS in the same manner as under the IPPS, given the inseparable, subordinate status of the HOPD within the hospital overall.

In response to the commenter's request for details by state of the effects of the imputed floor, we direct the commenter to the data file that CMS posted concurrent with the FY 2022 IPPS/LTCH PPS proposed rule with estimated imputed floor value by state at https://www.cms.gov/files/zip/fy2022-ipps-nprm-imputed-state-floors.zip . Finally, we note that section 9831 of the American Rescue Plan Act of 2021 excluded the imputed floor from the budget neutrality requirement under the IPPS (section 1886(d)(3)(E)(i) of the Act) but did not specify that the same budget neutral treatment also would apply under the OPPS. As a result, the changes related to the reinstatement of the imputed floor would be budget neutralized through the standard OPPS wage index budget neutrality adjustment, as discussed in section II.B. of this final rule with comment period.

For more information about the imputed floor required by section 1886(d)(3)(E)(iv) of the Act, we refer readers to the regulations at § 412.64(e)(1) and (4) and (h)(4) and (5), and the discussion in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45176 through 45178).

In the CY 2022 OPPS/ASC proposed rule (86 FR 42050), we noted that as discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963) and in each subsequent IPPS/LTCH PPS final rule, including the FY 2021 IPPS/LTCH PPS final rule (85 FR 58743 through 58755), the Office of Management and Budget (OMB) issued revisions to the labor market area delineations on February 28, 2013 (based on 2010 Decennial Census data) that included a number of significant changes, such as new Core Based Statistical Areas (CBSAs), urban counties that became rural, rural counties that became urban, and existing CBSAs that were split apart (OMB Bulletin 13-01). This bulletin can be found at: https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf . In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950 through 49985), for purposes of the IPPS, we adopted the use of the OMB statistical area delineations contained in OMB Bulletin No. 13-01, effective October 1, 2014. For purposes of the OPPS, in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66826 through 66828), we adopted the use of the OMB statistical area delineations contained in OMB Bulletin No. 13-01, effective January 1, 2015, beginning with the CY 2015 OPPS wage indexes. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), we adopted revisions to statistical areas contained in OMB Bulletin No. 15-01, issued on July 15, 2015, which provided updates to and superseded OMB Bulletin No. 13-01 that was issued on February 28, 2013. For purposes of the OPPS, in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79598), we adopted the revisions to the OMB statistical area delineations contained in OMB Bulletin No. 15-01, effective January 1, 2017, beginning with the CY 2017 OPPS wage indexes.

On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which provided updates to and superseded OMB Bulletin No. 15-01 that was issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 provided detailed information on the update to the statistical areas since July 15, 2015, and were based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2014 and July 1, 2015. For purposes of the OPPS, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58863 through 58865), we adopted the updates set forth in OMB Bulletin No. 17-01, effective January 1, 2019, beginning with the CY 2019 wage index.

On April 10, 2018, OMB issued OMB Bulletin No. 18-03 which superseded the August 15, 2017 OMB Bulletin No. 17-01. On September 14, 2018, OMB issued OMB Bulletin No. 18-04 which superseded the April 10, 2018 OMB Bulletin No. 18-03. Typically, interim OMB bulletins (those issued between decennial censuses) have only contained minor modifications to labor market delineations. However, the April 10, 2018 OMB Bulletin No. 18-03 and the September 14, 2018 OMB Bulletin No. 18-04 included more modifications to the labor market areas than are typical for OMB bulletins issued between decennial censuses, including some new CBSAs, urban counties that became rural, rural counties that became urban, and some existing CBSAs that were split apart. In addition, some of these modifications had a number of downstream effects, such as reclassification changes. These bulletins established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. For purposes of the OPPS, in the CY 2021 OPPS/ASC final rule with comment period (85 FR 85907 through 85908), we adopted the updates set forth in OMB Bulletin No. 18-04 effective January 1, 2021, beginning with the CY 2021 wage index. For a complete discussion of the adoption of the updates set forth in OMB Bulletin No. 18-04, we refer readers to the CY 2021 OPPS/ASC final rule with comment period.

On March 6, 2020, OMB issued Bulletin No. 20-01, which provided updates to and superseded OMB Bulletin No. 18-04 that was issued on September 14, 2018. The attachments to OMB Bulletin No. 20-01 provided detailed information on the updates to statistical areas since September 14, 2018, and were based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2017 and July 1, 2018. (For a copy of this bulletin, we refer readers to the following website: https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf .) In OMB Bulletin No. 20-01, OMB announced one new Micropolitan Statistical Area, one new component of an existing Combined Statistical Area and changes to New England City and Town Area (NECTA) delineations. As we stated in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25397), after reviewing OMB Bulletin No. 20-01, we determined that the changes in Bulletin 20-01 encompassed delineation changes that would not affect the Medicare IPPS wage index for FY 2022. Specifically, the updates consisted of changes to NECTA delineations and the creation of a new Micropolitan Statistical Area, which was then added as a new component to an existing Micropolitan Statistical Area. The Medicare wage index does not utilize NECTA definitions, and, as most recently discussed in FY 2021 IPPS/LTCH PPS final rule (85 FR 58746), we include hospitals located in Micropolitan Statistical areas in each State's rural wage index. Therefore, consistent with our discussion in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45164), while we are adopting the updates set forth in OMB Bulletin No. 20-01 consistent with our general policy of adopting OMB delineation updates, we note that specific OPPS wage index updates would not be necessary for CY 2022 as a result of adopting these OMB updates. In other words, these OMB updates would not affect any hospital's geographic area for purposes of the OPPS wage index calculation for CY 2022.

For CY 2022, we are continuing to use the OMB delineations that were adopted beginning with FY 2015 (based on the revised delineations issued in OMB Bulletin No. 13-01) to calculate the area wage indexes, with updates as reflected in OMB Bulletin Nos. 15-01, 17-01, 18-04, and 20-01, although as noted above the latter Bulletin did not require any wage area updates.

We noted in the CY 2022 OPPS/ASC proposed rule (86 FR 42051) that, in connection with our adoption in FY 2021 of the updates in OMB Bulletin 18-04, we adopted a policy to place a 5 percent cap, for FY 2021, on any decrease in a hospital's wage index from the hospital's final wage index in FY 2020 so that a hospital's final wage index for FY 2021 would not be less than 95 percent of its final wage index for FY 2020. We referred the reader to the FY 2021 IPPS/LTCH PPS final rule (85 FR 58753 through 58755) for a complete discussion of this transition. As finalized in the FY 2021 IPPS/LTCH PPS final rule, this transition was set to expire at the end of FY 2021. However, as discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25397), given the unprecedented nature of the ongoing COVID-19 PHE, we sought comment in the FY 2022 IPPS/LTCH PPS proposed rule on whether it would be appropriate to continue to apply a transition for the FY 2022 IPPS wage index for hospitals negatively impacted by our adoption of the updates in OMB Bulletin 18-04. For example, we stated that such an extended transition could potentially take the form of holding the FY 2022 IPPS wage index for those hospitals harmless from any reduction relative to their FY 2021 wage index. We further stated that if we were to apply a transition to the FY 2022 IPPS wage index for hospitals negatively impacted by our adoption of the updates in OMB Bulletin 18-04, we also sought comment on making this transition budget neutral under the IPPS, as is our usual practice, in the same manner that the FY 2021 IPPS wage index transition was made budget neutral as discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58755).

A summary of the comments we received regarding a wage index transition policy for 2022 as described above, and our responses to those comments, appear below:

Comment: We received multiple comments strongly recommending CMS extend a transition policy similar to that implemented in FY 2020 and FY 2021 in the IPPS. Multiple commenters, citing the severity and continuing impact of changes related to the OMB updates, the low wage index policy, and the lingering financial burden caused by the COVID-19 PHE, urged CMS to add an additional year of transition for both inpatient hospital and outpatient hospital providers, applied in a budget neutral manner. These commenters stated that given the wide-ranging factors impacting wage index values, it would not be equitable to limit the transition adjustment only to the effects of the revised labor market delineations. The commenters requested the transition be implemented more broadly to all hospitals experiencing large declines in wage index values. Many of these commenters recommended CMS consider making a permanent 5 percent maximum reduction policy to protect hospitals from large year-to-year variations in wage index values as a means to reduce overall volatility.

Multiple commenters requested that CMS extend a hold harmless policy for all hospitals negatively affected by CMS' adoption of revised delineations until OMB releases further revisions predicated on the results of the 2020 decennial census. A commenter recommended a hold-harmless transition be applied specifically to hospitals in CBSAs that were negatively affected by the FY 2021 adoption of revised CBSAs, citing specific CBSAs they believed warranted an additional transition adjustment.

Multiple commenters, while supporting some form of transition adjustment for negatively affected hospitals, requested any such adjustment be made in a non-budget neutral manner. These commenters expressed their preference that any such adjustment should not come at the expense of the providers themselves. Some commenters stated that such a budget neutrality adjustment would disadvantage providers who have increased their wage index values due to a variety of factors.

Response: We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR 45164 through 45165) for a detailed discussion of the wage index transition policy finalized for the FY 2022 IPPS wage index and for responses to these and other comments relating to the wage index transition policy.

As we noted, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45164 through 45165), we finalized a wage index transition policy for the FY 2022 IPPS wage index. Specifically, for hospitals that received the transition in FY 2021, we are continuing a wage index transition for FY 2022 under which we will apply a 5 percent cap on any decrease in the hospital's wage index compared to its wage index for FY 2021 to mitigate significant negative impacts of, and provide additional time for hospitals to adapt to, the CMS decision to adopt the revised OMB delineations (86 FR 45164). We stated that, as discussed in the FY 2021 IPPS/LTCH final rule, we believe applying a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index from the prior fiscal year is an appropriate transition as it provides predictability in payment levels from FY 2021 to the upcoming FY 2022 as well as effectively mitigating any significant decreases in the wage index for FY 2022 (86 FR 45164). We considered and responded to comments requesting that we apply the transition adjustment in FY 2022 to all hospitals with significant reductions in wage index values (not just those that received the transition adjustment in FY 2021), as well as comments recommending a 5-percent cap become a permanent policy for future fiscal years (86 FR 45164 through 45165). In addition, we considered and responded to comments recommending we not apply the transition in a budget neutral manner (86 FR 45165). We stated that for FY 2022, similar to FY 2021, we are applying a budget neutrality adjustment to the standardized amount so that our transition, as previously described, is implemented in a budget neutral manner under our authority in section 1886(d)(5)(I) of the Act (86 FR 45165).

In the CY 2022 OPPS/ASC proposed rule (86 FR 42051 through 42052), we proposed to use the FY 2022 IPPS post-reclassified wage index for urban and rural areas as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment rate for CY 2022. Therefore, as we stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42052), any adjustments for the FY 2022 IPPS post-reclassified wage index, including without limitation any wage index transition policy that may be applied, would be reflected in the final CY 2022 OPPS wage index beginning on January 1, 2022. We continue to believe that using the IPPS post-reclassified wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. For this reason, as discussed later in this section, we are finalizing our proposal to use the FY 2022 IPPS post-reclassified wage index for urban and rural areas as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment rate for CY 2022, which will include the wage index transition policy discussed previously.

CBSAs are made up of one or more constituent counties. Each CBSA and constituent county has its own unique identifying codes. The FY 2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different lists of codes to identify counties: Social Security Administration (SSA) codes and Federal Information Processing Standard (FIPS) codes. Historically, CMS listed and used SSA and FIPS county codes to identify and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS wage indexes. However, the SSA county codes are no longer being maintained and updated, although the FIPS codes continue to be maintained by the U.S. Census Bureau. The Census Bureau's most current statistical area information is derived from ongoing census data received since 2010; the most recent data are from 2015. The Census Bureau maintains a complete list of changes to counties or county equivalent entities on the website at: https://www.census.gov/geo/reference/county-changes.html (which, as of May 6, 2019, migrated to: https://www.census.gov/programs-surveys/geography.html ). In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), for purposes of crosswalking counties to CBSAs for the IPPS wage index, we finalized our proposal to discontinue the use of the SSA county codes and begin using only the FIPS county codes. Similarly, for the purposes of crosswalking counties to CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59260), we finalized our proposal to discontinue the use of SSA county codes and begin using only the FIPS county codes. For CY 2022, under the OPPS, we are continuing to use only the FIPS county codes for purposes of crosswalking counties to CBSAs.

We proposed to use the FY 2022 IPPS post-reclassified wage index for urban and rural areas as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment rate for CY 2022. Therefore, we stated that any adjustments for the FY 2022 IPPS post-reclassified wage index, including, but not limited to, the imputed floor adjustment and any transition that may be applied (as discussed previously), would be reflected in the final CY 2022 OPPS wage index beginning on January 1, 2022. (We referred readers to the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25396 through 25417) and the proposed FY 2022 hospital wage index files posted on the CMS website.) With regard to budget neutrality for the CY 2022 OPPS wage index, we referred readers to section II.B. of the CY 2022 OPPS/ASC proposed rule (86 FR 42048 through 42049). We stated that we continue to believe that using the IPPS post-reclassified wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall.

We refer readers to the discussion of comments on the wage index transition policy for 2022, and our responses to those comments, earlier in this section. We did not receive any additional comments on this proposal and are finalizing it without modification.

Hospitals that are paid under the OPPS, but not under the IPPS, do not have an assigned hospital wage index under the IPPS. Therefore, for non-IPPS hospitals paid under the OPPS, it is our longstanding policy to assign the wage index that would be applicable if the hospital was paid under the IPPS, based on its geographic location and any applicable wage index adjustments. In the CY 2022 OPPS/ASC proposed rule, we proposed to continue this policy for CY 2022, and included a brief summary of the major proposed FY 2022 IPPS wage index policies and adjustments that we proposed to apply to these hospitals under the OPPS for CY 2022. which we have summarized below. We referred readers to the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25396 through 25417) for a detailed discussion of the proposed changes to the FY 2022 IPPS wage indexes.

It has been our longstanding policy to allow non-IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a section 505 out-migration county (section 505 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)). Applying this adjustment is consistent with our policy of adopting IPPS wage index policies for hospitals paid under the OPPS. We note that, because non-IPPS hospitals cannot reclassify, they are eligible for the out-migration wage index adjustment if they are located in a section 505 out-migration county. This is the same out-migration adjustment policy that would apply if the hospital were paid under the IPPS. For CY 2022, we proposed to continue our policy of allowing non-IPPS hospitals paid under the OPPS to qualify for the outmigration adjustment if they are located in a section 505 out-migration county (section 505 of the MMA). Furthermore, we proposed that the wage index that would apply for CY 2022 to non-IPPS hospitals paid under the OPPS would continue to include the rural floor adjustment and any adjustments applied to the IPPS wage index to address wage index disparities. In addition, the wage index that would apply to non-IPPS hospitals paid under the OPPS would include any transition we may finalize for the FY 2022 IPPS wage index as discussed previously.

We did not receive any comments on these proposals and are finalizing them without modification.

For CMHCs, for CY 2022, we proposed to continue to calculate the wage index by using the post-reclassification IPPS wage index based on the CBSA where the CMHC is located. Furthermore, we proposed that the wage index that would apply to CMHCs for CY 2022 would continue to include the rural floor adjustment and any adjustments applied to the IPPS wage index to address wage index disparities. In addition, the wage index that would apply to CMHCs would include any transition we may finalize for the FY 2022 IPPS wage index as discussed above. Also, we proposed that the wage index that would apply to CMHCs would not include the outmigration adjustment because that adjustment only applies to hospitals. We did not receive any comments on these proposals and are finalizing them without modification.

Table 4A associated with the FY 2022 IPPS/LTCH PPS final rule (available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index ) identifies counties eligible for the out-migration adjustment. Table 2 associated with the FY 2022 IPPS/LTCH PPS final rule (available for download via the website above) identifies IPPS hospitals that receive the out-migration adjustment for FY 2022. We are including the outmigration adjustment information from Table 2 associated with the FY 2022 IPPS/LTCH PPS final rule as Addendum L to the CY 2022 OPPS/ASC final rule with the addition of non-IPPS hospitals that will receive the section 505 outmigration adjustment under the CY 2022 OPPS/ASC final rule. Addendum L is available via the internet on the CMS website. We refer readers to the CMS website for the OPPS at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index . At this link, readers will find a link to the final FY 2022 IPPS wage index tables and Addendum L.

D. Statewide Average Default Cost-to-Charge Ratios (CCRs)

In addition to using CCRs to estimate costs from charges on claims for ratesetting, we use overall hospital-specific CCRs calculated from the hospital's most recent cost report to determine outlier payments, payments for pass-through devices, and monthly interim transitional corridor payments under the OPPS during the PPS year. For certain hospitals, under the regulations at 42 CFR 419.43(d)(5)(iii), we use the statewide average default CCRs to determine the payments mentioned earlier if it is not possible to determine an accurate CCR for a hospital in certain circumstances. This includes hospitals that are new, hospitals that have not accepted assignment of an existing hospital's provider agreement, and hospitals that have not yet submitted a cost report. We also use the statewide average default CCRs to determine payments for hospitals whose CCR falls outside the predetermined ceiling threshold for a valid CCR or for hospitals in which the most recent cost report reflects an all-inclusive rate status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 10.11).

We discussed our policy for using default CCRs, including setting the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599) in the context of our adoption of an outlier reconciliation policy for cost reports beginning on or after January 1, 2009. For details on our process for calculating the statewide average CCRs, we refer readers to the CY 2022 OPPS final rule Claims Accounting Narrative that is posted on our website. We proposed to calculate the default ratios for CY 2022 using cost report data from the same set of cost reports we originally used in the CY 2021 OPPS ratesetting, consistent with the broader proposal regarding 2022 OPPS ratesetting discussed in section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190).

We did not receive any public comments on our proposal and are finalizing our proposal, without modification, to calculate the default ratios for CY 2022 using cost report data from the same set of cost reports we originally used in the CY 2021 OPPS ratesetting.

We no longer publish a table in the Federal Register containing the statewide average CCRs in the annual OPPS proposed rule and final rule with comment period. These CCRs with the upper limit will be available for download with each OPPS CY proposed rule and final rule on the CMS website. We refer readers to our website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html ; click on the link on the left of the page titled “Hospital Outpatient Regulations and Notices” and then select the relevant regulation to download the statewide CCRs and upper limit in the Downloads section of the web page.

E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the Act for CY 2022

In the CY 2006 OPPS final rule with comment period (70 FR 68556), we finalized a payment increase for rural sole community hospitals (SCHs) of 7.1 percent for all services and procedures paid under the OPPS, excluding drugs, biologicals, brachytherapy sources, and devices paid under the pass-through payment policy, in accordance with section 1833(t)(13)(B) of the Act, as added by section 411 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). Section 1833(t)(13) of the Act provided the Secretary the authority to make an adjustment to OPPS payments for rural hospitals, effective January 1, 2006, if justified by a study of the difference in costs by APC between hospitals in rural areas and hospitals in urban areas. Our analysis showed a difference in costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, items paid at charges reduced to costs, and devices paid under the pass-through payment policy, in accordance with section 1833(t)(13)(B) of the Act.

In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 68227), for purposes of receiving this rural adjustment, we revised our regulations at § 419.43(g) to clarify that essential access community hospitals (EACHs) are also eligible to receive the rural SCH adjustment, assuming these entities otherwise meet the rural adjustment criteria. Currently, two hospitals are classified as EACHs, and as of CY 1998, under section 4201(c) of Public Law 105-33, a hospital can no longer become newly classified as an EACH.

This adjustment for rural SCHs is budget neutral and applied before calculating outlier payments and copayments. We stated in the CY 2006 OPPS final rule with comment period (70 FR 68560) that we would not reestablish the adjustment amount on an annual basis, but we may review the adjustment in the future and, if appropriate, would revise the adjustment. We provided the same 7.1 percent adjustment to rural SCHs, including EACHs, again in CYs 2008 through 2021. Further, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated the regulations at § 419.43(g)(4) to specify, in general terms, that items paid at charges adjusted to costs by application of a hospital-specific CCR are excluded from the 7.1 percent payment adjustment.

For CY 2022, we proposed to continue the current policy of a 7.1 percent payment adjustment that is done in a budget neutral manner for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, items paid at charges reduced to costs, and devices paid under the pass-through payment policy.

Comment: One commenter requested that CMS make the 7.1 percent rural adjustment permanent. The commenter appreciated the policy that CMS adopted in CY 2019 and reaffirmed in CY 2020 where we stated that the 7.1 percent rural adjustment would continue to be in place until our data support establishing a different rural adjustment percentage. However, the commenter believes that this policy still does not provide enough certainty for rural SCHs and EACHs to know whether they should take into account the rural SCH adjustment when attempting to calculate expected revenues for their hospital budgets.

Response: We thank the commenter for their input. We believe that our current policy, which states that the 7.1 percent payment adjustment for rural SCHs and EACHs will remain in effect until our data show that a different percentage for the rural payment adjustment is necessary, provides sufficient budget predictability for rural SCHs and EACHs. Providers would receive notice in a proposed rule and have the opportunity to provide comments before any changes to the rural adjustment percentage would be implemented.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to continue the current policy of a 7.1 percent payment adjustment that is done in a budget neutral manner for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the passthrough payment policy, and items paid at charges reduced to costs.

F. Payment Adjustment for Certain Cancer Hospitals for CY 2022

1. Background

Since the inception of the OPPS, which was authorized by the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid the 11 hospitals that meet the criteria for cancer hospitals identified in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered outpatient hospital services. These cancer hospitals are exempted from payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), the Congress added section 1833(t)(7), “Transitional Adjustment to Limit Decline in Payment,” to the Act, which requires the Secretary to determine OPPS payments to cancer and children's hospitals based on their pre-BBA payment amount (these hospitals are often referred to under this policy as “held harmless” and their payments are often referred to as “hold harmless” payments).

As required under section 1833(t)(7)(D)(ii) of the Act, a cancer hospital receives the full amount of the difference between payments for covered outpatient services under the OPPS and a “pre-BBA amount.” That is, cancer hospitals are permanently held harmless to their “pre-BBA amount,” and they receive transitional outpatient payments (TOPs) or hold harmless payments to ensure that they do not receive a payment that is lower in amount under the OPPS than the payment amount they would have received before implementation of the OPPS, as set forth in section 1833(t)(7)(F) of the Act. The “pre-BBA amount” is the product of the hospital's reasonable costs for covered outpatient services occurring in the current year and the base payment-to-cost ratio (PCR) for the hospital defined in section 1833(t)(7)(F)(ii) of the Act. The “pre-BBA amount” and the determination of the base PCR are defined at § 419.70(f). TOPs are calculated on Worksheet E, Part B, of the Hospital Cost Report or the Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-2552-10, respectively), as applicable each year. Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality calculations.

Section 3138 of the Affordable Care Act amended section 1833(t) of the Act by adding a new paragraph (18), which instructs the Secretary to conduct a study to determine if, under the OPPS, outpatient costs incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed outpatient costs incurred by other hospitals furnishing services under section 1833(t) of the Act, as determined appropriate by the Secretary. Section 1833(t)(18)(A) of the Act requires the Secretary to take into consideration the cost of drugs and biologicals incurred by cancer hospitals and other hospitals. Section 1833(t)(18)(B) of the Act provides that, if the Secretary determines that cancer hospitals' costs are higher than those of other hospitals, the Secretary shall provide an appropriate adjustment under section 1833(t)(2)(E) of the Act to reflect these higher costs. In 2011, after conducting the study required by section 1833(t)(18)(A) of the Act, we determined that outpatient costs incurred by the 11 specified cancer hospitals were greater than the costs incurred by other OPPS hospitals. For a complete discussion regarding the cancer hospital cost study, we refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 through 74201).

Based on these findings, we finalized a policy to provide a payment adjustment to the 11 specified cancer hospitals that reflects their higher outpatient costs, as discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74202 through 74206). Specifically, we adopted a policy to provide additional payments to the cancer hospitals so that each cancer hospital's final PCR for services provided in a given calendar year is equal to the weighted average PCR (which we refer to as the “target PCR”) for other hospitals paid under the OPPS. The target PCR is set in advance of the calendar year and is calculated using the most recently submitted or settled cost report data that are available at the time of final rulemaking for the calendar year. The amount of the payment adjustment is made on an aggregate basis at cost report settlement. We note that the changes made by section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs are assessed, as usual, after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period. Table 5 displays the target PCR for purposes of the cancer hospital adjustment for CY 2012 through CY 2021.

2. Policy for CY 2022

Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) amended section 1833(t)(18) of the Act by adding subparagraph (C), which requires that in applying § 419.43(i) (that is, the payment adjustment for certain cancer hospitals) for services furnished on or after January 1, 2018, the target PCR adjustment be reduced by 1.0 percentage point less than what would otherwise apply. Section 16002(b) also provides that, in addition to the percentage reduction, the Secretary may consider making an additional percentage point reduction to the target PCR that takes into account payment rates for applicable items and services described under section 1833(t)(21)(C) of the Act for hospitals that are not cancer hospitals described under section 1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality adjustment under section 1833(t) of the Act, the Secretary shall not take into account the reduced expenditures that result from application of section 1833(t)(18)(C) of the Act.

We proposed to provide additional payments to the 11 specified cancer hospitals so that each cancer hospital's final PCR is equal to the weighted average PCR (or “target PCR”) for the other OPPS hospitals, using the most recent submitted or settled cost report data that were available at the time of the development of the proposed rule, reduced by 1.0 percentage point, to comply with section 16002(b) of the 21st Century Cures Act. We did not propose an additional reduction beyond the 1.0 percentage point reduction required by section 16002(b) of the 21st Century Cures Act for CY 2022.

Under our established policy, to calculate the proposed CY 2022 target PCR, we would use the same extract of cost report data from HCRIS used to estimate costs for the CY 2022 OPPS which would be the most recently available hospital cost reports which, in most cases, would be from CY 2020. However, as discussed in section II.A.1.a of the CY 2022 OPPS/ASC proposed rule, given our concerns with CY 2020 claims data as a result of the PHE, we believe a target PCR based on CY 2020 claims and the most recently available cost reports may provide a less accurate estimation of cancer hospital PCRs and non-cancer hospital PCRs than the data used for the CY 2021 rulemaking cycle. Therefore, for CY 2022, we proposed to continue to use the CY 2021 target PCR of 0.89. This proposed CY 2022 target PCR of 0.89 includes the 1.0-percentage point reduction required by section 16002(b) of the 21st Century Cures Act for CY 2022. For a description of the CY 2021 target PCR calculation, we refer readers to the CY 2021 OPPS/ASC final rule with comment period (84 FR 85912 through 85914).

We did not receive any public comments on our proposal and we are finalizing our proposal to continue to use the CY 2021 target PCR of 0.89 for the 11 specified cancer hospitals for CY 2022 without modification.

Table 6 shows the estimated percentage increase in OPPS payments to each cancer hospital for CY 2022, due to the cancer hospital payment adjustment policy. The actual amount of the CY 2022 cancer hospital payment adjustment for each cancer hospital will be determined at cost report settlement and will depend on each hospital's CY 2022 payments and costs. We note that the requirements contained in section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs will be assessed, as usual, after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period.

G. Hospital Outpatient Outlier Payments

1. Background

The OPPS provides outlier payments to hospitals to help mitigate the financial risk associated with high-cost and complex procedures, where a very costly service could present a hospital with significant financial loss. As explained in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66832 through 66834), we set our projected target for aggregate outlier payments at 1.0 percent of the estimated aggregate total payments under the OPPS for the prospective year. Outlier payments are provided on a service-by-service basis when the cost of a service exceeds the APC payment amount multiplier threshold (the APC payment amount multiplied by a certain amount) as well as the APC payment amount plus a fixed-dollar amount threshold (the APC payment plus a certain amount of dollars). In CY 2021, the outlier threshold was met when the hospital's cost of furnishing a service exceeded 1.75 times (the multiplier threshold) the APC payment amount and exceeded the APC payment amount plus $5,300 (the fixed-dollar amount threshold) (85 FR 85914 through 85916). If the cost of a service exceeds both the multiplier threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment amount. Beginning with CY 2009 payments, outlier payments are subject to a reconciliation process similar to the IPPS outlier reconciliation process for cost reports, as discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599).

It has been our policy to report the actual amount of outlier payments as a percent of total spending in the claims being used to model the OPPS. Using CY 2019 claims available for this final rule with comment period, we estimate that we paid approximately 0.89 percent of the total aggregated OPPS payments in outliers for CY 2019. Therefore, for CY 2019, we estimate that we paid 0.11 percentage points below the CY 2019 outlier target of 1.0 percent of total aggregated OPPS payments.

For this final rule with comment period, using CY 2019 claims data and CY 2021 payment rates, we estimate that the aggregate outlier payments for CY 2021 would be approximately 1.07 percent of the total CY 2021 OPPS payments. We provide estimated CY 2021 outlier payments for hospitals and CMHCs with claims included in the claims data that we used to model impacts in the Hospital-Specific Impacts—Provider-Specific Data file on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html .

2. Outlier Calculation for CY 2022

For CY 2022, we proposed to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS. We proposed that a portion of that 1.0 percent, an amount equal to less than 0.01 percent of outlier payments (or 0.0001 percent of total OPPS payments), would be allocated to CMHCs for PHP outlier payments. This is the amount of estimated outlier payments that would result from the proposed CMHC outlier threshold as a proportion of total estimated OPPS outlier payments. We proposed to continue our longstanding policy that if a CMHC's cost for partial hospitalization services, paid under APC 5853 (Partial Hospitalization for CMHCs), exceeds 3.40 times the payment rate for proposed APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the proposed APC 5853 payment rate.

For further discussion of CMHC outlier payments, we refer readers to section VIII.C. of the CY 2022 OPPS/ASC proposed rule.

To ensure that the estimated CY 2022 aggregate outlier payments would equal 1.0 percent of estimated aggregate total payments under the OPPS, we proposed that the hospital outlier threshold be set so that outlier payments would be triggered when a hospital's cost of furnishing a service exceeds 1.75 times the APC payment amount and exceeds the APC payment amount plus $6,100.

We calculated the proposed fixed-dollar threshold of $6,100 using the standard methodology most recently used for CY 2021 (85 FR 85914 through 85916). For purposes of estimating outlier payments for the CY 2022 OPPS/ASC proposed rule, we used the hospital-specific overall ancillary CCRs available in the April 2020 update to the Outpatient Provider-Specific File (OPSF). The OPSF contains provider-specific data, such as the most current CCRs, which are maintained by the MACs and used by the OPPS Pricer to pay claims. The claims that we generally use to model each OPPS update lag by 2 years. However, as discussed in section X.E. of the CY 2022 OPPS/ASC proposed rule, we proposed to use CY 2019 claims in establishing the CY 2022 OPPS.

In order to estimate the CY 2022 hospital outlier payments for the proposed rule, we inflated the charges on the CY 2019 claims using the same inflation factor of 1.20469 that we used to estimate the IPPS fixed-loss cost threshold for the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25718). We used an inflation factor of 1.13218 to estimate CY 2021 charges from the CY 2019 charges reported on CY 2019 claims, applying the charge inflation factor for two years, to estimate CY 2021 hospital outlier payments. The methodology for determining this charge inflation factor is discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 59037 through 59040). As we stated in the CY 2005 OPPS final rule with comment period (69 FR 65844 through 65846), we believe that the use of these charge inflation factors is appropriate for the OPPS because, with the exception of the inpatient routine service cost centers, hospitals use the same ancillary and cost centers to capture costs and charges for inpatient and outpatient services.

As noted in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68011), we are concerned that we could systematically overestimate the OPPS hospital outlier threshold if we did not apply a CCR inflation adjustment factor. Therefore, we proposed to apply the same CCR inflation adjustment factor that we proposed to apply for the FY 2022 IPPS outlier calculation to the CCRs used to simulate the proposed CY 2022 OPPS outlier payments to determine the fixed-dollar threshold. Specifically, for CY 2022, we proposed to apply an adjustment factor of 0.94964 (or 0.974495 * 0.974495) to the CCRs that were in the April 2020 OPSF to trend them forward from CY 2020 to CY 2022. We note that we proposed to use the April 2020 OPSF to address concerns regarding the impact of the PHE on data used in OPPS ratesetting, as discussed in section X.E. of the CY 2022 OPPS/ASC proposed rule. The methodology for calculating the proposed adjustment is discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25717 through 25719).

To model hospital outlier payments for the CY 2022 OPPS/ASC proposed rule, we applied the overall CCRs from the April 2020 OPSF after adjustment (using the proposed CCR inflation adjustment factor of 0.94964 to approximate CY 2022 CCRs) to charges on CY 2019 claims that were adjusted (using the proposed charge inflation factor of 1.20469 to approximate CY 2022 charges). We note that the additional year in the charge inflation factor and CCR inflation factors is a result of the use of claims and OPSF data from a year earlier than the year that we would typically use in a standard ratesetting cycle. We simulated aggregated CY 2021 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiplier threshold constant and assuming that outlier payments would continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payments equaled 1.0 percent of aggregated estimated total CY 2021 OPPS payments. We estimated that a proposed fixed-dollar threshold of $6,100, combined with the proposed multiplier threshold of 1.75 times the APC payment rate, would allocate 1.0 percent of aggregated total OPPS payments to outlier payments. For CMHCs, we proposed that, if a CMHC's cost for partial hospitalization services, paid under APC 5853, exceeds 3.40 times the payment rate for APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 5853 payment rate.

Section 1833(t)(17)(A) of the Act, which applies to hospitals, as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to report data required for the quality measures selected by the Secretary, in the form and manner required by the Secretary under section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to their OPD fee schedule increase factor; that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that will apply to certain outpatient items and services furnished by hospitals that are required to report outpatient quality data and that fail to meet the Hospital OQR Program requirements. For hospitals that fail to meet the Hospital OQR Program requirements, we proposed to continue the policy that we implemented in CY 2010 that the hospitals' costs will be compared to the reduced payments for purposes of outlier eligibility and payment calculation. For more information on the Hospital OQR Program, we refer readers to section XIV. of the CY 2022 OPPS/ASC proposed rule.

Comment: One commenter recommended that, in light of the PHE, CMS should not update the OPPS outlier fixed-dollar threshold at a time when hospitals are struggling financially.

Response: We maintain the target outlier percentage of 1.0 percent of estimated aggregate total payments under the OPPS and have a fixed-dollar threshold so that OPPS outlier payments are made only when the hospital would experience a significant loss for furnishing a particular service. We continue to believe that the 1.0 percent OPPS outlier spending target appropriately mitigates the financial risk associated with exceptionally costly or complex cases. In addition, in a budget neutral system any spending for OPPS outliers would require a corresponding reduction to all other OPPS payments, which would have a universal impact on hospitals because every OPPS payment would be reduced. The fixed-dollar outlier threshold is specifically developed in order to best estimate aggregate outlier payments of 1.0 percent of the OPPS and ensure that outlier payments are directed towards the high cost and complex procedures associated with potential financial risk. Failing to update this outlier threshold would systemically underestimate the amount of OPPS outlier payments and result in OPPS outlier payments in excess of 1.0 percent of aggregate OPPS payments.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS and to use our established methodology to set the OPPS outlier fixed-dollar loss threshold for CY 2022.

3. Final Outlier Calculation

Historically, we have used updated data for the outlier fixed-dollar threshold calculation for the final rule. However, as discussed in section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190) claims and other data that we would typically have used as part of our ratesetting process would have been affected by the PHE. As a result, we proposed to use CY 2019 OPPS claims as part of the CY 2022 OPPS ratesetting process. For purposes of estimating the outlier threshold, we are finalizing our proposal to apply the same CCR inflation adjustment factor that we finalized to apply for the FY 2022 IPPS outlier calculation to the CCRs used to simulate the final CY 2022 OPPS outlier payments to determine the fixed-dollar threshold. As discussed in the FY 2022 IPPS/LTCH PPS final rule with comment period (86 FR 45537 through 45543), there are some changes to the typical charge and CCR inflation factors we would use for outlier estimating purposes as a result of the proposed and final policy to use data prior to the PHE. Ordinarily, we would use updated CCRs of the OPSF and apply an adjustment factor to adjust the CCRs from the most recent update of OPSF. However, as discussed previously, we believe the most recent CCRs in the OPSF may be significantly impacted by the PHE. As a result, and similar to the proposed use of CY 2019 claims in CY 2022 OPPS ratesetting more broadly, we proposed to use OPSF CCRs from the April 2020 OPSF for CY 2022 outlier estimation purposes. The claims and OPSF data are not the most updated data available and therefore to properly update them for the prospective year—CY 2022—we needed to apply an additional year of CCRs and charge inflation. For CY 2022, we are applying the overall CCRs from the April 2020 OPSF file (using the CCR inflation adjustment factor of 0.94964 to approximate CY 2021 CCRs) to charges on CY 2019 claims that were adjusted using a charge inflation factor of 1.20469 to approximate CY 2022 charges. These are the same CCR adjustment and charge inflation factors that were used to set the IPPS fixed-loss cost threshold for the FY 2022 IPPS/LTCH PPS final rule (86 FR 45537 through 45543). We simulate aggregate CY 2022 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiple-threshold constant and assuming that outlier payments will continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until total outlier payments equal 1.0 percent of aggregated estimated total CY 2022 OPPS payments. We estimate that a fixed-dollar amount threshold of $6,175 combined with the multiplier threshold of 1.75 times the APC payment rate, will allocate the 1.0 percent of aggregated total OPPS payments to outlier payments. For CY 2022, we are finalizing a multiplier threshold of 1.75 times the APC payment rate and a fixed-dollar amount threshold of $6,175.

For CMHCs, if a CMHC's cost for partial hospitalization services, paid under APC 5853, exceeds 3.40 times the payment rate the outlier payment will be calculated as 50 percent of the amount by which the cost exceeds 3.40 times APC 5853.

H. Calculation of an Adjusted Medicare Payment From the National Unadjusted Medicare Payment

The basic methodology for determining prospective payment rates for HOPD services under the OPPS is set forth in existing regulations at 42 CFR part 419, subparts C and D. For this final rule with comment period, the payment rate for most services and procedures for which payment is made under the OPPS is the product of the conversion factor calculated in accordance with section II.B. of this final rule with comment period and the relative payment weight determined under section II.A. of this final rule with comment period. Therefore, the national unadjusted payment rate for most APCs contained in Addendum A to this final rule with comment period (which is available via the internet on the CMS website) and for most HCPCS codes to which separate payment under the OPPS has been assigned in Addendum B to this final rule with comment period (which is available via the internet on the CMS website) was calculated by multiplying the final CY 2022 scaled weight for the APC by the CY 2022 conversion factor.

We note that section 1833(t)(17) of the Act, which applies to hospitals, as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to submit data required to be submitted on quality measures selected by the Secretary, in the form and manner and at a time specified by the Secretary, incur a reduction of 2.0 percentage points to their OPD fee schedule increase factor, that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that apply to certain outpatient items and services provided by hospitals that are required to report outpatient quality data and that fail to meet the Hospital OQR Program (formerly referred to as the Hospital Outpatient Quality Data Reporting Program (HOP QDRP)) requirements. For further discussion of the payment reduction for hospitals that fail to meet the requirements of the Hospital OQR Program, we refer readers to section XIV. of this final rule with comment period.

We demonstrate the steps used to determine the APC payments that will be made in a CY under the OPPS to a hospital that fulfills the Hospital OQR Program requirements and to a hospital that fails to meet the Hospital OQR Program requirements for a service that has any of the following status indicator assignments: “J1”, “J2”, “P”, “Q1”, “Q2”, “Q3”, “Q4”, “R”, “S”, “T”, “U”, or “V” (as defined in Addendum D1 to the proposed rule, which is available via the internet on the CMS website), in a circumstance in which the multiple procedure discount does not apply, the procedure is not bilateral, and conditionally packaged services (status indicator of “Q1” and “Q2”) qualify for separate payment. We note that, although blood and blood products with status indicator “R” and brachytherapy sources with status indicator “U” are not subject to wage adjustment, they are subject to reduced payments when a hospital fails to meet the Hospital OQR Program requirements.

Individual providers interested in calculating the payment amount that they will receive for a specific service from the national unadjusted payment rates presented in Addenda A and B to the proposed rule (which are available via the internet on the CMS website) should follow the formulas presented in the following steps. For purposes of the payment calculations below, we refer to the national unadjusted payment rate for hospitals that meet the requirements of the Hospital OQR Program as the “full” national unadjusted payment rate. We refer to the national unadjusted payment rate for hospitals that fail to meet the requirements of the Hospital OQR Program as the “reduced” national unadjusted payment rate. The reduced national unadjusted payment rate is calculated by multiplying the reporting ratio of 0.9804 times the “full” national unadjusted payment rate. The national unadjusted payment rate used in the calculations below is either the full national unadjusted payment rate or the reduced national unadjusted payment rate, depending on whether the hospital met its Hospital OQR Program requirements to receive the full CY 2022 OPPS fee schedule increase factor.

Step 1. Calculate 60 percent (the labor-related portion) of the national unadjusted payment rate. Since the initial implementation of the OPPS, we have used 60 percent to represent our estimate of that portion of costs attributable, on average, to labor. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 through 18497) for a detailed discussion of how we derived this percentage. 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 confirmed that this labor-related share for hospital outpatient services is appropriate.

The formula below is a mathematical representation of Step 1 and identifies the labor-related portion of a specific payment rate for a specific service.

X is the labor-related portion of the national unadjusted payment rate.

X = .60 * (national unadjusted payment rate).

Step 2. Determine the wage index area in which the hospital is located and identify the wage index level that applies to the specific hospital. The wage index values assigned to each area would reflect the geographic statistical areas (which are based upon OMB standards) to which hospitals are assigned for FY 2022 under the IPPS, reclassifications through the Medicare Geographic Classification Review Board (MGCRB), section 1886(d)(8)(B) “Lugar” hospitals, and reclassifications under section 1886(d)(8)(E) of the Act, as implemented in § 412.103 of the regulations. We are continuing to apply for the CY 2022 OPPS wage index any adjustments for the FY 2022 IPPS post-reclassified wage index, including, but not limited to, the rural floor adjustment, a wage index floor of 1.00 in frontier states, in accordance with section 10324 of the Affordable Care Act of 2010, and an adjustment to the wage index for certain low wage index hospitals. For further discussion of the wage index we are applying for the CY 2022 OPPS, we refer readers to section II.C. of this final rule with comment period.

Step 3. Adjust the wage index of hospitals located in certain qualifying counties that have a relatively high percentage of hospital employees who reside in the county, but who work in a different county with a higher wage index, in accordance with section 505 of Pub. L. 108-173. Addendum L to this final rule with comment period (which is available via the internet on the CMS website) contains the qualifying counties and the associated wage index increase developed for the final FY 2022 IPPS wage index, which are listed in Table 2 associated with the FY 2022 IPPS/LTCH PPS final rule and available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html . (Click on the link on the left side of the screen titled “FY 2022 IPPS Final Rule Home Page” and select “FY 2022 Final Rule Tables.”) This step is to be followed only if the hospital is not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the Act.

Step 4. Multiply the applicable wage index determined under Steps 2 and 3 by the amount determined under Step 1 that represents the labor-related portion of the national unadjusted payment rate.

The formula below is a mathematical representation of Step 4 and adjusts the labor-related portion of the national unadjusted payment rate for the specific service by the wage index.

X _a is the labor-related portion of the national unadjusted payment rate (wage adjusted).

X _a = .60 * (national unadjusted payment rate) * applicable wage index.

Step 5. Calculate 40 percent (the nonlabor-related portion) of the national unadjusted payment rate and add that amount to the resulting product of Step 4. The result is the wage index adjusted payment rate for the relevant wage index area.

The formula below is a mathematical representation of Step 5 and calculates the remaining portion of the national payment rate, the amount not attributable to labor, and the adjusted payment for the specific service.

Y is the nonlabor-related portion of the national unadjusted payment rate.

Y = .40 * (national unadjusted payment rate).

Adjusted Medicare Payment = Y + X _a .

Step 6. If a provider is an SCH, as set forth in the regulations at § 412.92, or an EACH, which is considered to be an SCH under section 1886(d)(5)(D)(iii)(III) of the Act, and located in a rural area, as defined in § 412.64(b), or is treated as being located in a rural area under § 412.103, multiply the wage index adjusted payment rate by 1.071 to calculate the total payment.

The formula below is a mathematical representation of Step 6 and applies the rural adjustment for rural SCHs.

Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment * 1.071.

We are providing examples below of the calculation of both the full and reduced national unadjusted payment rates that will apply to certain outpatient items and services performed by hospitals that meet and that fail to meet the Hospital OQR Program requirements, using the steps outlined previously. For purposes of this example, we are using a provider that is located in Brooklyn, New York that is assigned to CBSA 35614. This provider bills one service that is assigned to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage). The CY 2022 full national unadjusted payment rate for APC 5071 is $635.54. The proposed reduced national unadjusted payment rate for APC 5071 for a hospital that fails to meet the Hospital OQR Program requirements is $623.08. This proposed reduced rate is calculated by multiplying the reporting ratio of 0.9804 by the full unadjusted payment rate for APC 5071.

The FY 2022 wage index for a provider located in CBSA 35614 in New York, which includes the proposed adoption of IPPS 2022 wage index policies, is 1.3427. The labor-related portion of the proposed full national unadjusted payment is approximately $512.00 (.60 * $635.54 * 1.3427). The labor-related portion of the proposed reduced national unadjusted payment is approximately $501.97 (.60 * $623.08 * 1.3427). The nonlabor-related portion of the proposed full national unadjusted payment is approximately $254.22 (.40 * $635.54). The nonlabor-related portion of the proposed reduced national unadjusted payment is approximately $249.23 (.40 * $623.08). The sum of the labor-related and nonlabor-related portions of the proposed full national adjusted payment is approximately $766.22 ($512.00 + $254.22). The sum of the portions of the proposed reduced national adjusted payment is approximately $751.20 ($501.97 + $249.23).

We did not receive any public comments on these steps under the methodology that we included in the proposed rule to determine the APC payments for CY 2022. Therefore, we are using the steps in the methodology specified above, as we proposed, to demonstrate the calculation of the final CY 2021 OPPS payments using the same parameters.

I. Beneficiary Copayments

1. Background

Section 1833(t)(3)(B) of the Act requires the Secretary to set rules for determining the unadjusted copayment amounts to be paid by beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of the Act specifies that the Secretary must reduce the national unadjusted copayment amount for a covered OPD service (or group of such services) furnished in a year in a manner so that the effective copayment rate (determined on a national unadjusted basis) for that service in the year does not exceed a specified percentage. As specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective copayment rate for a covered OPD service paid under the OPPS in CY 2006, and in CYs thereafter, shall not exceed 40 percent of the APC payment rate.

Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered OPD service (or group of such services) furnished in a year, the national unadjusted copayment amount cannot be less than 20 percent of the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure (including items such as drugs and biologicals) performed in a year to the amount of the inpatient hospital deductible for that year.

Section 4104 of the Affordable Care Act eliminated the Medicare Part B coinsurance for preventive services furnished on and after January 1, 2011, that meet certain requirements, including flexible sigmoidoscopies and screening colonoscopies, and waived the Part B deductible for screening colonoscopies that become diagnostic during the procedure. For a discussion of the changes made by the Affordable Care Act with regard to copayments for preventive services furnished on and after January 1, 2011 we refer readers to section XII.B. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 72013).

2. OPPS Copayment Policy

For CY 2022, we proposed to determine copayment amounts for new and revised APCs using the same methodology that we implemented beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS final rule with comment period (68 FR 63458).) In addition, we proposed to use the same standard rounding principles that we have historically used in instances where the application of our standard copayment methodology would result in a copayment amount that is less than 20 percent and cannot be rounded, under standard rounding principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in which we discuss our rationale for applying these rounding principles.) The proposed national unadjusted copayment amounts for services payable under the OPPS that would be effective January 1, 2022 are included in Addenda A and B to the proposed rule (which are available via the internet on the CMS website).

As discussed in section XIV.E. of the CY 2022 OPPS/ASC proposed rule and this final rule with comment period, for CY 2022, the Medicare beneficiary's minimum unadjusted copayment and national unadjusted copayment for a service to which a reduced national unadjusted payment rate applies will equal the product of the reporting ratio and the national unadjusted copayment, or the product of the reporting ratio and the minimum unadjusted copayment, respectively, for the service.

We note that OPPS copayments may increase or decrease each year based on changes in the calculated APC payment rates, due to updated cost report and claims data, and any changes to the OPPS cost modeling process. However, as described in the CY 2004 OPPS final rule with comment period, the development of the copayment methodology generally moves beneficiary copayments closer to 20 percent of OPPS APC payments (68 FR 63458 through 63459).

In the CY 2004 OPPS final rule with comment period (68 FR 63459), we adopted a new methodology to calculate unadjusted copayment amounts in situations including reorganizing APCs, and we finalized the following rules to determine copayment amounts in CY 2004 and subsequent years.

• When an APC group consists solely of HCPCS codes that were not paid under the OPPS the prior year because they were packaged or excluded or are new codes, the unadjusted copayment amount would be 20 percent of the APC payment rate.
• If a new APC that did not exist during the prior year is created and consists of HCPCS codes previously assigned to other APCs, the copayment amount is calculated as the product of the APC payment rate and the lowest coinsurance percentage of the codes comprising the new APC.

• If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is equal to or greater than the prior year's rate, the copayment amount remains constant (unless the resulting coinsurance percentage is less than 20 percent).

• If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is less than the prior year's rate, the copayment amount is calculated as the product of the new payment rate and the prior year's coinsurance percentage.

• If HCPCS codes are added to or deleted from an APC and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in a decrease in the coinsurance percentage for the reconfigured APC, the copayment amount would not change (unless retaining the copayment amount would result in a coinsurance rate less than 20 percent).
• If HCPCS codes are added to an APC and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in an increase in the coinsurance percentage for the reconfigured APC, the copayment amount would be calculated as the product of the payment rate of the reconfigured APC and the lowest coinsurance percentage of the codes being added to the reconfigured APC.

We noted in the CY 2004 OPPS final rule with comment period that we would seek to lower the copayment percentage for a service in an APC from the prior year if the copayment percentage was greater than 20 percent. We noted that this principle was consistent with section 1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the national unadjusted coinsurance rate so that beneficiary liability will eventually equal 20 percent of the OPPS payment rate for all OPPS services to which a copayment applies, and with section 1833(t)(3)(B) of the Act, which achieves a 20-percent copayment percentage when fully phased in and gives the Secretary the authority to set rules for determining copayment amounts for new services. We further noted that the use of this methodology would, in general, reduce the beneficiary coinsurance rate and copayment amount for APCs for which the payment rate changes as the result of the reconfiguration of APCs and/or recalibration of relative payment weights (68 FR 63459).

Section 122 of the Consolidated Appropriations Act (CAA) of 2021 (Pub. L. 116-260), Waiving Medicare Coinsurance for Certain Colorectal Cancer Screening Tests, amends section 1833(a) of the Act to 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 refer readers to section X.B., “Changes to Beneficiary Coinsurance for Certain Colorectal Cancer Screening Tests” of this final rule with comment period for the full discussion of this policy.

Comment: One commenter requested that CMS waive the patient coinsurance and deductible for Biomechanical Computed Tomography (BCT) analysis, CPT 0554T to 0558T under the Medicare preventive services benefit 42 CFR 410.152(l)(6). The commenter stated that these codes are considered preventive services for diagnostic screening of osteoporosis and that Change Request (CR) 11392 directed contractors to apply the same rules applied to CPT code 77078 (Computed tomography, bone mineral density study, 1 or more sites, axial skeleton (for example, hips, pelvis, spine)) to these BCT codes.

Response: We disagree with the commenter that the BCT codes are not subject to coinsurance and the Part B deductible at this time. The service described by CPT code 77078 meets the National Coverage Determination (NCD) process for preventive services coverage and subject to its coinsurance and deductible waiver. However, the USPSTF has not changed its current recommendation for bone measurement testing (available here: https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/osteoporosis-screening#fullrecommendationstart ) since 2018. These new BCT codes became effective July 1, 2019, and the services described by these codes are not specifically included in the USPSTF grade B recommendation. Therefore, they do not meet requirements to have beneficiary coinsurance and deductible waived. We note that CMS may add preventive services coverage through the National Coverage Determination (NCD) process if the service meets all of the following criteria: Reasonable and necessary for prevention or early detection of illness or disability, USPSTF recommended with grade A or B, and appropriate for individuals entitled to benefits under Part A or enrolled under Medicare Part B. In the event that the USPSTF updates its recommendation for bone measurement testing to specifically include these services described by the new BCT codes, CMS would reevaluate whether to apply the coinsurance and deductible waiver.

3. Calculation of an Adjusted Copayment Amount for an APC Group

Individuals interested in calculating the national copayment liability for a Medicare beneficiary for a given service provided by a hospital that met or failed to meet its Hospital OQR Program requirements should follow the formulas presented in the following steps.

Step 1. Calculate the beneficiary payment percentage for the APC by dividing the APC's national unadjusted copayment by its payment rate. For example, using APC 5071, $127.11 is approximately 20 percent of the full national unadjusted payment rate of $635.54. For APCs with only a minimum unadjusted copayment in Addenda A and B to the CY 2022 OPPS/ASC proposed rule (which are available via the internet on the CMS website), the beneficiary payment percentage is 20 percent.

The formula below is a mathematical representation of Step 1 and calculates the national copayment as a percentage of national payment for a given service.

B is the beneficiary payment percentage.

B = National unadjusted copayment for APC/national unadjusted payment rate for APC.

Step 2. Calculate the appropriate wage-adjusted payment rate for the APC for the provider in question, as indicated in Steps 2 through 4 under section II.H. of the CY 2022 OPPS/ASC proposed rule. Calculate the rural adjustment for eligible providers, as indicated in Step 6 under section II.H. of the CY 2022 OPPS/ASC proposed rule.

Step 3. Multiply the percentage calculated in Step 1 by the payment rate calculated in Step 2. The result is the wage-adjusted copayment amount for the APC.

The formula below is a mathematical representation of Step 3 and applies the beneficiary payment percentage to the adjusted payment rate for a service calculated under section II.H. of this final rule with comment period, with and without the rural adjustment, to calculate the adjusted beneficiary copayment for a given service.

Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment * B.

Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted Medicare Payment * 1.071) * B.

Step 4. For a hospital that failed to meet its Hospital OQR Program requirements, multiply the copayment calculated in Step 3 by the reporting ratio of 0.9804.

The unadjusted copayments for services payable under the OPPS that will be effective January 1, 2022 are shown in Addenda A and B to this final rule with comment period (which are available via the internet on the CMS website). We note that the national unadjusted payment rates and copayment rates shown in Addenda A and B to this final rule with comment period reflect the CY 2022 OPD fee schedule increase factor discussed in section II.B. of this final rule with comment period.

In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year.

III. OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New and Revised HCPCS Codes

Payments for OPPS procedures, services, and items are generally based on medical billing codes, specifically, HCPCS codes, that are reported on HOPD claims. The HCPCS is divided into two principal subsystems, referred to as Level I and Level II of the HCPCS. Level I is comprised of CPT (Current Procedural Terminology) codes, a numeric and alphanumeric coding system maintained by the American Medical Association (AMA), and consists of Category I, II, and III CPT codes. Level II, which is maintained by CMS, is a standardized coding system that is used primarily to identify products, supplies, and services not included in the CPT codes. HCPCS codes are used to report surgical procedures, medical services, items, and supplies under the hospital OPPS. Specifically, CMS recognizes the following codes on OPPS claims:

• Category I CPT codes, which describe surgical procedures, diagnostic and therapeutic services, and vaccine codes;
• Category III CPT codes, which describe new and emerging technologies, services, and procedures; and

• Level II HCPCS codes (also known as alphanumeric codes), which are used primarily to identify drugs, devices, ambulance services, durable medical equipment, orthotics, prosthetics, supplies, temporary surgical procedures, and medical services not described by CPT codes.

CPT codes are established by the AMA and the Level II HCPCS codes are established by the CMS HCPCS Workgroup. These codes are updated and changed throughout the year. CPT and Level II HCPCS code changes that affect the OPPS are published through the annual rulemaking cycle and through the OPPS quarterly update Change Requests (CRs). Generally, these code changes are effective January 1, April 1, July 1, or October 1. CPT code changes are released by the AMA (via their website) while Level II HCPCS code changes are released to the public via the CMS HCPCS website. CMS recognizes the release of new CPT and Level II HCPCS codes and makes the codes effective (that is, the codes can be reported on Medicare claims) outside of the formal rulemaking process via OPPS quarterly update CRs. Based on our review, we assign the new codes to interim status indicators (SIs) and APCs. These interim assignments are finalized in the OPPS/ASC final rules. This quarterly process offers hospitals access to codes that more accurately describe the items or services furnished and provides payment for these items or services in a timelier manner than if we waited for the annual rulemaking process. We solicit public comments on the new CPT and Level II HCPCS codes, status indicators, and APC assignments through our annual rulemaking process.

We note that, under the OPPS, the APC assignment determines the payment rate for an item, procedure, or service. Those items, procedures, or services not exclusively paid separately under the hospital OPPS are assigned to appropriate status indicators. Certain payment status indicators provide separate payment while other payment status indicators do not. In section XI. “CY 2022 OPPS Payment Status and Comment Indicators” of this final rule with comment period, we discuss the various status indicators used under the OPPS. We also provide a complete list of status indicators and their definitions in Addendum D1 to this final rule with comment period.

1. HCPCS Codes That Were Effective April 1, 2021 for Which We Solicited Public Comments in the CY 2022 OPPS/ASC Proposed Rule

For the April 2021 update, 26 new HCPCS codes were established and made effective on April 1, 2021. These codes and their long descriptors were included in Table 5 of the proposed rule and are now listed in Table 7 of this final rule with comment period. Through the April 2021 OPPS quarterly update CR (Transmittal 10666, Change Request 12175, dated March 8, 2021), we recognized several new HCPCS codes for separate payment under the OPPS. In the CY 2022 OPPS/ASC proposed rule, we solicited public comments on the proposed APC and status indicator assignments for the codes which were listed in Table 5 of this CY 2022 OPPS/ASC proposed rule with comment period.

We did not receive any public comments on the proposed OPPS APC and SI assignments for the new Level II HCPCS codes implemented in April 2021. Therefore, we are finalizing the proposed APC and SI assignments for these codes, as indicated in Table 7.

The status indicator, APC assignment, and payment rate for each HCPCS code can be found in Addendum B to this final rule with comment period. In addition, the complete list of status indicators and corresponding definitions used under the OPPS can be found in Addendum D1 to this final rule with comment period. These new codes that were effective April 1, 2021 were assigned to comment indicator “NP” in Addendum B to the CY 2022 OPPS/ASC proposed rule to indicate that the codes were assigned to an interim APC assignment and that comments would be accepted on their interim APC assignments. Also, the complete list of comment indicators and definitions used under the OPPS can be found in Addendum D2 to this final rule with comment period. We note that OPPS Addendum B, Addendum D1, and Addendum D2 are available via the internet on the CMS website.

2. HCPCS Codes That Were Effective July 1, 2021 for Which We Solicited Public Comments in the CY 2022 OPPS/ASC Proposed Rule

For the July 2021 update, 55 new codes were established and made effective July 1, 2021. The codes and long descriptors were listed in Table 6 of the proposed rule and are now also listed in Table 8 of this final rule with comment period. Through the July 2021 OPPS quarterly update CR (Transmittal 10825, Change Request 12316, dated June 11, 2021), we recognized several new codes for separate payment and assigned them to appropriate interim OPPS status indicators and APCs. In the CY 2022 OPPS/ASC proposed rule, we solicited public comments on the proposed APC and status indicator assignments for the codes implemented on July 1, 2021, all of which are listed in Table 8.

We did not receive any public comments on the proposed OPPS APC and SI assignments for the new Level II HCPCS codes implemented in July 2021 and we are finalizing the proposed APC and SI assignments for these codes, as indicated in Table 8. We note that several of the HCPCS C-codes have been replaced with HCPCS J-codes, effective October 1, 2021. Their replacement codes are listed in Table 8. The final payment rates for these codes can be found in Addendum B to this final rule with comment period.

The status indicator, APC assignment, and payment rate for each HCPCS code can be found in Addendum B to this final rule with comment period. The complete list of status indicators and corresponding definitions used under the OPPS can be found in Addendum D1 to this final rule with comment period. These new codes that were effective July 1, 2021 were assigned to comment indicator “NP” in Addendum B to the CY 2022 OPPS/ASC proposed rule to indicate that the codes were assigned to an interim APC assignment and that comments would be accepted on their interim APC assignments. Also, the complete list of comment indicators and definitions used under the OPPS can be found in Addendum D2 to this final rule with comment period. We note that OPPS Addendum B, Addendum D1, and Addendum D2 are available via the internet on the CMS website.

3. October 2021 HCPCS Codes for Which We Are Soliciting Public Comments in the CY 2022 OPPS/ASC Final Rule With Comment Period

As has been our practice in the past, we incorporate those new HCPCS codes that are effective October 1 in the final rule with comment period, thereby updating the OPPS for the following calendar year, as displayed in Table 7 of the CY 2022 OPPS/ASC proposed rule with comment period and reprinted as Table 9 of this final rule with comment period. These codes are released to the public through the October OPPS quarterly update CRs and via the CMS HCPCS website (for Level II HCPCS codes). For CY 2022, these codes are flagged with comment indicator “NI” in Addendum B to this OPPS/ASC final rule with comment period to indicate that we are assigning them an interim payment status which is subject to public comment. Specifically, the interim SI and APC assignments for codes flagged with comment indicator “NI” are open to public comment in this final rule with comment period, and we will respond to these public comments in the OPPS/ASC final rule with comment period for the next year's OPPS/ASC update.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42068), we proposed to continue this process for CY 2022. Specifically, for CY 2022, we proposed to include in Addendum B to the CY 2022 OPPS/ASC final rule with comment period the new HCPCS codes effective October 1, 2021 that would be incorporated in the October 2021 OPPS quarterly update CR. Also, as stated above, the October 1, 2021 codes are flagged with comment indicator “NI” in Addendum B to this CY 2022 OPPS/ ASC final rule with comment period to indicate that we have assigned the codes an interim OPPS payment status for CY 2022. We are inviting public comments on the interim SI and APC assignments for these codes, if applicable, that will be finalized in the CY 2023 OPPS/ASC final rule with comment period.

4. January 2022 HCPCS Codes

a. New Level II HCPCS Codes for Which We Are Soliciting Public Comments in This CY 2022 OPPS/ASC Final Rule With Comment Period

Consistent with past practice, we are soliciting comments on the new Level II HCPCS codes that will be effective January 1, 2022 of this final rule with comment period, thereby allowing us to finalize the status indicators and APC assignments for the codes in the CY 2023 OPPS/ASC final rule with comment period. Unlike the CPT codes that are effective January 1 and are included in the OPPS/ASC proposed rules, and except for the G-codes listed in Addendum O of the CY 2022 OPPS/ASC proposed rule, most Level II HCPCS codes are not released until sometime around November to be effective January 1. Because these codes are not available until November, we are unable to include them in the OPPS/ASC proposed rules. Consequently, for CY 2022, we proposed to include in Addendum B to this final rule with comment period the new Level II HCPCS codes effective January 1, 2022 that would be incorporated in the January 2022 OPPS quarterly update CR. These codes will be released to the public through the January OPPS quarterly update CRs and via the CMS HCPCS website (for Level II HCPCS codes).

For CY 2022, the Level II HCPCS codes effective January 1, 2022 are flagged with comment indicator “NI” in Addendum B to this final rule with comment period to indicate that we have assigned the codes an interim OPPS payment status for CY 2022. We are inviting public comments on the interim SI and APC assignments for these codes, if applicable, that will be finalized in the CY 2023 OPPS/ASC final rule with comment period.

b. CPT Codes for Which We Solicited Public Comments in the CY 2022 OPPS/ASC Proposed Rule

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be effective January 1. Specifically, for the new/revised CPT codes that we receive in a timely manner from the AMA's CPT Editorial Panel, we finalized our proposal to include the codes that would be effective January 1 in the OPPS/ASC proposed rules, along with proposed APC and status indicator assignments for them, and to finalize the APC and status indicator assignments in the OPPS/ASC final rules beginning with the CY 2016 OPPS update. For those new/revised CPT codes that were received too late for inclusion in the OPPS/ASC proposed rule, we finalized our proposal to establish and use HCPCS G-codes that mirror the predecessor CPT codes and retain the current APC and status indicator assignments for a year until we can propose APC and status indicator assignments in the following year's rulemaking cycle. We note that even if we find that we need to create HCPCS G-codes in place of certain CPT codes for the PFS proposed rule, we do not anticipate that these HCPCS G-codes will always be necessary for OPPS purposes. We will make every effort to include proposed APC and status indicator assignments for all new and revised CPT codes that the AMA makes publicly available in time for us to include them in the proposed rule, and to avoid resorting to use of HCPCS G-codes and the resulting delay in utilization of the most current CPT codes. Also, we finalized our proposal to make interim APC and status indicator assignments for CPT codes that are not available in time for the proposed rule and that describe wholly new services (such as new technologies or new surgical procedures), to solicit public comments in the final rule, and to finalize the specific APC and status indicator assignments for those codes in the following year's final rule.

For the CY 2022 OPPS update, we received the CPT codes that will be effective January 1, 2022 from the AMA in time to be included in the CY 2022 OPPS/ASC proposed rule. The new, revised, and deleted CPT codes can be found in Addendum B to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website). We note that the new and revised CPT codes are assigned to comment indicator “NP” in Addendum B of the CY 2022 OPPS/ASC proposed rule to indicate that the code is new for the next calendar year or the code is an existing code with substantial revision to its code descriptor in the next calendar year as compared to the current calendar year with a proposed APC assignment, and that comments will be accepted on the proposed APC assignment and status indicator.

Further, we note that the CPT code descriptors that appear in Addendum B are short descriptors and do not accurately describe the complete procedure, service, or item described by the CPT code. Therefore, we included the 5-digit placeholder codes and the long descriptors for the new and revised CY 2022 CPT codes in Addendum O to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website) so that the public can adequately comment on our proposed APCs and status indicator assignments. The 5-digit placeholder codes can be found in Addendum O, specifically under the column labeled “CY 2022 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code”. The final CPT code numbers would be included in this final rule with comment period. We also noted that not every code listed in Addendum O is subject to public comment. For the new and revised CPT codes, we requested public comments on only those codes that are assigned comment indicator “NP”.

In summary, in the CY 2022 OPPS/ASC proposed rule, we solicited public comments on the proposed CY 2022 status indicators and APC assignments for the new and revised CPT codes that will be effective January 1, 2022. Because the CPT codes listed in Addendum B appear with short descriptors only, we listed them again in Addendum O to the CY 2022 OPPS/ASC proposed rule with long descriptors. In addition, we proposed to finalize the status indicator and APC assignments for these codes (with their final CPT code numbers) in this final rule with comment period. The proposed status indicator and APC assignment for these codes can be found in Addendum B to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website).

Commenters addressed several of the new CPT codes that were assigned to comment indicator “NP” in Addendum B of the 2022 OPPS/ASC Proposed Rule. We have responded to those public comments in sections III.D. “OPPS APC-Specific Policies” of this final rule with comment period.

Finally, in Table 9, which is a reprint of Table 7 from the CY 2022 OPPS/ASC proposed rule, we summarize our current process for updating codes through our OPPS quarterly update CRs, seeking public comments, and finalizing the treatment of these codes under the OPPS.

B. OPPS Changes—Variations Within APCs

1. Background

Section 1833(t)(2)(A) of the Act requires the Secretary to develop a classification system for covered hospital outpatient department services. Section 1833(t)(2)(B) of the Act provides that the Secretary may establish groups of covered OPD services within this classification system, so that services classified within each group are comparable clinically and with respect to the use of resources. In accordance with these provisions, we developed a grouping classification system, referred to as Ambulatory Payment Classifications (APCs), as set forth in regulations at 42 CFR 419.31. We use Level I (also known as CPT codes) and Level II HCPCS codes (also known as alphanumeric codes) to identify and group the services within each APC. The APCs are organized such that each group is homogeneous both clinically and in terms of resource use. Using this classification system, we have established distinct groups of similar services. We also have developed separate APC groups for certain medical devices, drugs, biologicals, therapeutic radiopharmaceuticals, and brachytherapy devices that are not packaged into the payment for the procedure.

We have packaged into the payment for each procedure or service within an APC group the costs associated with those items and services that are typically ancillary and supportive to a primary diagnostic or therapeutic modality and, in those cases, are an integral part of the primary service they support. Therefore, we do not make separate payment for these packaged items or services. In general, packaged items and services include, but are not limited to, the items and services listed in regulations at 42 CFR 419.2(b). A further discussion of packaged services is included in section II.A.3. of this final rule with comment period.

Under the OPPS, we generally pay for covered hospital outpatient services on a rate-per-service basis, where the service may be reported with one or more HCPCS codes. Payment varies according to the APC group to which the independent service or combination of services is assigned. For CY 2022, we proposed that each APC relative payment weight represents the hospital cost of the services included in that APC, relative to the hospital cost of the services included in APC 5012 (Clinic Visits and Related Services). The APC relative payment weights are scaled to APC 5012 because it is the hospital clinic visit APC and clinic visits are among the most frequently furnished services in the hospital outpatient setting.

2. Application of the 2 Times Rule

Section 1833(t)(9)(A) of the Act requires the Secretary to review, not less often than annually, and revise the APC groups, the relative payment weights, and the wage and other adjustments described in paragraph (2) to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act also requires the Secretary to consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of the APC groups and the relative payment weights. We note that the HOP Panel recommendations for specific services for the CY 2022 OPPS update will be discussed in the relevant specific sections throughout this final rule with comment period.

In addition, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest cost for an item or service in the group is more than 2 times greater than the lowest cost for an item or service within the same group (referred to as the “2 times rule”). The statute authorizes the Secretary to make exceptions to the 2 times rule in unusual cases, such as for low-volume items and services (but the Secretary may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act (FDCA)). In determining the APCs with a 2 times rule violation, we consider only those HCPCS codes that are significant based on the number of claims. We note that, for purposes of identifying significant procedure codes for examination under the 2 times rule, we consider procedure codes that have more than 1,000 single major claims or procedure codes that both have more than 99 single major claims and contribute at least 2 percent of the single major claims used to establish the APC cost to be significant (75 FR 71832). This longstanding definition of when a procedure code is significant for purposes of the 2 times rule was selected because we believe that a subset of 1,000 or fewer claims is negligible within the set of approximately 100 million single procedure or single session claims we use for establishing costs. Similarly, a procedure code for which there are fewer than 99 single claims and that comprises less than 2 percent of the single major claims within an APC will have a negligible impact on the APC cost (75 FR 71832). In this section of the CY 2022 OPPS/ASC proposed rule, for CY 2022, we proposed to make exceptions to this limit on the variation of costs within each APC group in unusual cases, such as for certain low-volume items and services.

For the CY 2022 OPPS update, in the CY 2022 OPPS/ASC proposed rule, we identified the APCs with violations of the 2 times rule. Therefore, we proposed changes to the procedure codes assigned to these APCs in Addendum B to the CY 2022 OPPS/ASC proposed rule. We noted that Addendum B does not appear in the printed version of the Federal Register as part of the CY 2022 OPPS/ASC proposed rule. Rather, it is published and made available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html . To eliminate a violation of the 2 times rule and improve clinical and resource homogeneity, we proposed to reassign these procedure codes to new APCs that contain services that are similar with regard to both their clinical and resource characteristics. In many cases, the proposed procedure code reassignments and associated APC reconfigurations for CY 2022 included in the CY 2022 OPPS/ASC proposed rule are related to changes in costs of services that were observed in the CY 2019 claims data available for CY 2022 ratesetting. Addendum B to the CY 2021 OPPS/ASC proposed rule identified with a comment indicator “CH” those procedure codes for which we proposed a change to the APC assignment or status indicator, or both, that were initially assigned in the July 1, 2021 OPPS Addendum B Update (available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html ).

3. APC Exceptions to the 2 Times Rule

Taking into account the APC changes that we proposed to make for CY 2022, we reviewed all of the APCs to determine which APCs would not meet the requirements of the 2 times rule. We used the following criteria to evaluate whether to propose exceptions to the 2 times rule for affected APCs:

• Resource homogeneity;
• Clinical homogeneity;
• Hospital outpatient setting utilization;
• Frequency of service (volume); and
• Opportunity for upcoding and code fragments.

Based on the CY 2019 claims data available for the CY 2022 proposed rule, we found 23 APCs with violations of the 2 times rule. We applied the criteria as described above to identify the APCs for which we proposed to make exceptions under the 2 times rule for CY 2022, and found that all of the 23 APCs we identified meet the criteria for an exception to the 2 times rule based on the CY 2019 claims data available for the CY 2022 OPPS/ASC proposed rule. We did not include in that determination those APCs where a 2 times rule violation was not a relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS codes assigned to it that have similar geometric mean costs and do not create a 2 times rule violation. Therefore, we only identified those APCs, including those with criteria-based costs, such as device-dependent CPT/HCPCS codes, with violations of the 2 times rule.

We note that, for cases in which a recommendation by the HOP Panel appears to result in or allow a violation of the 2 times rule, we may accept the HOP Panel's recommendation because those recommendations are based on explicit consideration (that is, a review of the latest OPPS claims data and group discussion of the issue) of resource use, clinical homogeneity, site of service, and the quality of the claims data used to determine the APC payment rates.

Table 8 of the CY 2022 OPPS/ASC proposed rule listed the 23 APCs for which we proposed to make an exception under the 2 times rule for CY 2021 based on the criteria cited above and claims data submitted between January 1, 2019 and December 31, 2019, and processed on or before June 30, 2020, and updated CCRs, if available. The proposed geometric mean costs for covered hospital outpatient services for these and all other APCs that were used in the development of the CY 2022 OPPS/ASC proposed rule can be found on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html .

Based on the updated final rule CY 2019 claims data used for this final rule with comment period, we identified the same 23 APCs that appeared in Table 8 of the CY 2022 OPPS/ASC proposed rule.

Comment: We received two comments that agreed with the proposed exceptions identified in Table 8 of the CY 2021 OPPS proposed rule.

Response: We appreciate the commenters' support.

Comment: One commenter requested that CMS adjust the definition of a significant procedure code for cost significance purposes in evaluating the 2 times rule to only require 500 single claims rather than the current requirement of 1,000 single claims.

Response: As stated earlier, in determining whether a 2 times rule violation exists in an APC, we consider only those HCPCS codes that are significant based on the number of claims for the codes. For purposes of identifying significant HCPCS codes to examine for 2 times rule violations, we consider codes that have more than 1,000 single major claims or codes that have both greater than 99 single major claims and contribute at least 2 percent of the single major claims used to establish the APC cost to be significant (75 FR 71832). This longstanding definition of when a HCPCS code is significant for purposes of the 2 times rule was selected because we believe that a subset of 1,000 claims is negligible within the set of approximately 100 million single procedure or single session claims we use for establishing costs. Similarly, a HCPCS code for which there are fewer than 99 single claims and which comprises less than 2 percent of the single major claims within an APC will have a negligible impact on the APC cost. We continue to believe that these definitions remain appropriate and are therefore making no changes in this final rule with comment period.

Comment: One commenter opposed the allowance of a 2 times rule exception for APC 5161 (Level 1 ENT Procedures) in Table 8 of the CY 2021 OPPS proposed rule, based on the current construct of codes included in the APC.

Response: We have reviewed the CY 2019 claims data available for CY 2022 OPPS ratesetting for APC 5161 and believe that this APC remains appropriate as currently structured because it optimizes clinical and resource cost homogeneity. In addition, we note that the 2 times rule violation is based on the cost range of approximately $155.55 for CPT code 31500 (Insert emergency airway) and $315.60 for CPT code 69100 (Biopsy of external ear) between the geometric mean costs for the lowest and highest cost significant codes in the APC. The difference between the geometric mean costs for CPT codes 31500 and 69100 violates the 2 times rule by a minimal amount and does not suggest there is a broader issue with the APC. However, we will continue to monitor the claims data for APC 5161 as they become available.

After considering the public comments we received on proposed APC assignments and our analysis of the CY 2019 costs from hospital claims and cost report data available for this final rule with comment period, we are finalizing our proposals, with some modifications. Specifically, we are finalizing our proposal to except the 23 proposed APCs from the 2 times rule for CY 2022.

Table 10 below lists the 23 APCs that we are excepting from the 2 times rule for CY 2022 based on the criteria described earlier and a review of claims data for dates of service between January 1, 2019, and December 31, 2019, that were processed on or before June 30, 2020. We note that, for cases in which a recommendation by the HOP Panel appears to result in or allow a violation of the 2 times rule, we generally accept the HOP Panel's recommendation because those recommendations are based on explicit consideration of resource use, clinical homogeneity, site of service, and the quality of the claims data used to determine the APC payment rates. The geometric mean costs for hospital outpatient services for these and all other APCs that were used in the development of this final rule with comment period can be found on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices .

C. New Technology APCs

1. Background

In the CY 2002 OPPS final rule (66 FR 59903), we finalized changes to the time period in which a service can be eligible for payment under a New Technology APC. 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.

In the CY 2004 OPPS final rule with comment period (68 FR 63416), we restructured the New Technology APCs to make the cost intervals more consistent across payment levels and refined the cost bands for these APCs to retain two parallel sets of New Technology APCs, one set with a status indicator of “S” (Significant Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC payment) and the other set with a status indicator of “T” (Significant Procedure, Multiple Reduction Applies. Paid under OPPS; separate APC payment). These current New Technology APC configurations allow us to price new technology services more appropriately and consistently.

For CY 2021, there were 52 New Technology APC levels, ranging from the lowest cost band assigned to APC 1491 (New Technology—Level 1A ($0-$10)) to the highest cost band assigned to APC 1908 (New Technology—Level 52 ($145,001-$160,000)). We note that the cost bands for the New Technology APCs, specifically, APCs 1491 through 1599 and 1901 through 1908, vary with increments ranging from $10 to $14,999. These cost bands identify the APCs to which new technology procedures and services with estimated service costs that fall within those cost bands are assigned under the OPPS. Payment for each APC is made at the mid-point of the APC's assigned cost band. For example, payment for New Technology APC 1507 (New Technology—Level 7 ($501-$600)) is made at $550.50.

Under the OPPS, one of our goals is to make payments that are appropriate for the services that are necessary for the treatment of Medicare beneficiaries. The OPPS, like other Medicare payment systems, is budget neutral and increases are limited to the annual hospital market basket increase reduced by the productivity adjustment. We believe that our payment rates reflect the costs that are associated with providing care to Medicare beneficiaries and are adequate to ensure access to services (80 FR 70374).

For many emerging technologies, there is a transitional period during which utilization may be low, often because providers are first learning about the technologies and their clinical utility. Quite often, parties request that Medicare make higher payments under the New Technology APCs for new procedures in that transitional phase. These requests, and their accompanying estimates for expected total patient utilization, often reflect very low rates of patient use of expensive equipment, resulting in high per-use costs for which requesters believe Medicare should make full payment. Medicare does not, and we believe should not, assume responsibility for more than its share of the costs of procedures based on projected utilization for Medicare beneficiaries and does not set its payment rates based on initial projections of low utilization for services that require expensive capital equipment. For the OPPS, we rely on hospitals to make informed business decisions regarding the acquisition of high-cost capital equipment, taking into consideration their knowledge about their entire patient base (Medicare beneficiaries included) and an understanding of Medicare's and other payers' payment policies. We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68314) for further discussion regarding this payment policy.

We note that, in a budget-neutral system, payments may not fully cover hospitals' costs in a particular circumstance, including those for the purchase and maintenance of capital equipment. We rely on hospitals to make their decisions regarding the acquisition of high-cost equipment with the understanding that the Medicare program must be careful to establish its initial payment rates, including those made through New Technology APCs, for new services that lack hospital claims data based on realistic utilization projections for all such services delivered in cost-efficient hospital outpatient settings. As the OPPS acquires claims data regarding hospital costs associated with new procedures, we regularly examine the claims data and any available new information regarding the clinical aspects of new procedures to confirm that our OPPS payments remain appropriate for procedures as they transition into mainstream medical practice (77 FR 68314). For CY 2022, we included the proposed payment rates for New Technology APCs 1491 to 1599 and 1901 through 1908 in Addendum A to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website).

2. Establishing Payment Rates for Low-Volume New Technology Services

Services that are assigned to New Technology APCs are typically new services that do not have sufficient claims history to establish an accurate payment for the services. One of the objectives of establishing New Technology APCs is to generate sufficient claims data for a new service so that it can be assigned to an appropriate clinical APC. Some services that are assigned to New Technology APCs have very low annual volume, which we consider to be fewer than 100 claims. We consider services with fewer than 100 claims annually to be low-volume services because there is a higher probability that the payment data for a service may not have a normal statistical distribution, which could affect the quality of our standard cost methodology that is used to assign services to an APC. In addition, services with fewer than 100 claims per year are not generally considered to be a significant contributor to the APC ratesetting calculations and, therefore, are not included in the assessment of the 2 times rule. As we explained in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58890), we were concerned that the methodology we use to estimate the cost of a service under the OPPS by calculating the geometric mean for all separately paid claims for a HCPCS service code from the most recent available year of claims data may not generate an accurate estimate of the actual cost of the service for these low-volume services.

In accordance with section 1833(t)(2)(B) of the Act, services classified within each APC must be comparable clinically and with respect to the use of resources. As described earlier, assigning a service to a New Technology APC allows us to gather claims data to price the service and assign it to the APC with services that use similar resources and are clinically comparable. However, where utilization of services assigned to a New Technology APC is low, it can lead to wide variation in payment rates from year to year, resulting in even lower utilization and potential barriers to access to new technologies, which ultimately limits our ability to assign the service to the appropriate clinical APC. To mitigate these issues, we determined in the CY 2019 OPPS/ASC final rule with comment period that it was appropriate to utilize our equitable adjustment authority at section 1833(t)(2)(E) of the Act to adjust how we determined the costs for low-volume services assigned to New Technology APCs (83 FR 58892 through 58893). We have utilized our equitable adjustment authority at 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 estimate an appropriate payment amount for low-volume new technology services in the past (82 FR 59281). Although we have used this adjustment authority on a case-by-case basis in the past, we stated in the CY 2019 OPPS/ASC final rule with comment period that we believed it was appropriate to adopt an adjustment for low-volume services assigned to New Technology APCs in order to mitigate the wide payment fluctuations that have occurred for new technology services with fewer than 100 claims and to provide more predictable payment for these services.

For purposes of this adjustment, we stated that we believed that it was appropriate to use up to 4 years of claims data in calculating the applicable payment rate for the prospective year, rather than using solely the most recent available year of claims data, when a service assigned to a New Technology APC has a low annual volume of claims, which, for purposes of this adjustment, we defined as fewer than 100 claims annually. We adopted a policy to consider services with fewer than 100 claims annually as low-volume services because there is a higher probability that the payment data for a service may not have a normal statistical distribution, which could affect the quality of our standard cost methodology that is used to assign services to an APC. We explained that we were concerned that the methodology we use to estimate the cost of a service under the OPPS by calculating the geometric mean for all separately paid claims for a HCPCS procedure code from the most recent available year of claims data may not generate an accurate estimate of the actual cost of the low-volume service. Using multiple years of claims data will potentially allow for more than 100 claims to be used to set the payment rate, which would, in turn, create a more statistically reliable payment rate.

In addition, to better approximate the cost of a low-volume service within a New Technology APC, we stated that we believed using the median or arithmetic mean rather than the geometric mean (which “trims” the costs of certain claims out) could be more appropriate in some circumstances, given the extremely low volume of claims. Low claim volumes increase the impact of “outlier” claims; that is, claims with either a very low or very high payment rate as compared to the average claim, which would have a substantial impact on any statistical methodology used to estimate the most appropriate payment rate for a service. We also explained that we believed having the flexibility to utilize an alternative statistical methodology to calculate the payment rate in the case of low-volume new technology services would help to create a more stable payment rate. Therefore, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58893), we established that, in each of our annual rulemakings, we would seek public comments on which statistical methodology should be used for each low-volume service assigned to a New Technology APC. In the preamble of each annual rulemaking, we stated that we would present the result of each statistical methodology and solicit public comment on which methodology should be used to establish the payment rate for a low-volume new technology service. In addition, we explained that we would use our assessment of the resources used to perform a service and guidance from the developer or manufacturer of the service, as well as other stakeholders, to determine the most appropriate payment rate. Once we identified the most appropriate payment rate for a service, we would assign the service to the New Technology APC with the cost band that includes its payment rate.

For CY 2022, we proposed to continue to utilize our equitable adjustment authority under section 1833(t)(2)(E) of the Act to calculate the geometric mean, arithmetic mean, and median using up to 4 years of claims data to select the appropriate payment rate for purposes of assigning services with fewer than 100 claims per year to a New Technology APC. However, we proposed to utilize our equitable adjustment authority through our proposed universal low volume APC policy described in section X.C. of the CY 2022 OPPS/ASC proposed rule. Our proposed universal low volume APC policy is similar to our current New Technology APC low volume policy with the difference between the two policies being that the universal low volume APC policy would apply to clinical APCs and brachytherapy APCs, in addition to procedures assigned to New Technology APCs, and would use the highest of the geometric mean, arithmetic mean, or median based on up to 4 years of claims data to set the payment rate for the APC. For New Technology APCs with fewer than 100 single claims at the procedure level that can be used for ratesetting, we would apply our proposed methodology for determining a low volume APC's cost, choosing the “greatest of” the median, arithmetic mean, or geometric mean at the procedure level, to apply to the individual services assigned to New Technology APCs and provide the final New Technology APC assignment for each procedure. We proposed to end our separate New Technology APC low volume policy if we adopt the proposed universal low volume APC policy, as it also applies to New Technology APCs as well as clinical and brachytherapy APCs.

We did not receive any comments on our proposal to end our separate New Technology APC low volume policy if we adopt the proposed universal low volume APC policy and we have decided to implement our universal low volume APC policy as described in section X.C. of this final rule with comment period. Therefore, we are implementing our proposal without modification and applying our universal low volume APC policy to procedures assigned to New Technology APCs as well as clinical and brachytherapy APCs.

3. Procedures Assigned to New Technology APC Groups for CY 2022

As we described in the CY 2002 OPPS final rule (66 FR 59902), we generally retain a procedure in the New Technology APC to which it is initially assigned until we have obtained sufficient claims data to justify reassignment of the procedure to a clinically appropriate APC. In addition, in cases where we find that our initial New Technology APC assignment was based on inaccurate or inadequate information (although it was the best information available at the time), where we obtain new information that was not available at the time of our initial New Technology APC assignment, or where the New Technology APCs are restructured, we may, based on more recent resource utilization information (including claims data) or the availability of refined New Technology APC cost bands, reassign the procedure or service to a different New Technology APC that more appropriately reflects its cost (66 FR 59903).

Consistent with our current policy, for CY 2022, we proposed to retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to an appropriate clinical APC. The flexibility associated with this policy allows us to reassign a service from a New Technology APC in less than 2 years if we have not obtained sufficient claims data. It also allows us to retain a service in a New Technology APC for more than 2 years if we have not obtained sufficient claims data upon which to base a reassignment decision (66 FR 59902).

a. Retinal Prosthesis Implant Procedure (APC 1908)

CPT code 0100T (Placement of a subconjunctival retinal prosthesis receiver and pulse generator, and implantation of intra-ocular retinal electrode array, with vitrectomy) describes the implantation of a retinal prosthesis, specifically, a procedure involving the use of the Argus® II Retinal Prosthesis System. This first retinal prosthesis was approved by FDA in 2013 for adult patients diagnosed with severe to profound retinitis pigmentosa. For information on the utilization and payment history of the Argus® II procedure and the Argus® II device prior to CY 2020, please refer to the CY 2021 OPPS final rule (85 FR 85937 through 85938).

For CY 2020, we identified 35 claims reporting the procedure described by CPT code 0100T for the 4-year period of CY 2015 through CY 2018. We found the geometric mean cost for the procedure described by CPT code 0100T to be approximately $146,059, the arithmetic mean cost to be approximately $152,123, and the median cost to be approximately $151,267. All of the resulting estimates from using the three statistical methodologies fell within the same New Technology APC cost band ($145,001-$160,000), where the Argus® II procedure was assigned for CY 2019. Consistent with our policy stated in section III.C.2 of this final rule with comment period, we presented the result of each statistical methodology in the CY 2022 OPPS/ASC proposed rule, and we sought public comments on which method should be used to assign procedures described by CPT code 0100T to a New Technology APC. All three potential statistical methodologies used to estimate the cost of the Argus® II procedure fell within the cost band for New Technology APC 1908, with the estimated cost being between $145,001 and $160,000. Accordingly, we assigned CPT code 0100T in APC 1908 (New Technology—Level 52 ($145,001-$160,000)), with a payment rate of $152,500.50 for CY 2020.

For CY 2021, the number of reported claims for the Argus® II procedure continued to be very low with a substantial fluctuation in cost from year to year. The high annual variability of the cost of the Argus® II procedure continued to make it difficult to establish a consistent and stable payment rate for the procedure. As previously mentioned, in accordance with section 1833(t)(2)(B) of the Act, we are required to establish that services classified within each APC are comparable clinically and with respect to the use of resources. We identified 35 claims reporting the procedure described by CPT code 0100T for the 4-year period of CY 2016 through CY 2019. We found the geometric mean cost for the procedure described by CPT code 0100T to be approximately $148,148, the arithmetic mean cost to be approximately $153,682, and the median cost to be approximately $151,974. All three potential statistical methodologies used to estimate the cost of the Argus® II procedure fell within the cost band for New Technology APC 1908, with the estimated cost being between $145,001 and $160,000, and accordingly, we assigned the Argus II procedure to New Technology APC 1908 for CY 2021.

For 2022, we proposed to utilize our equitable adjustment authority under section 1833(t)(2)(E) of the Act to establish the universal low volume APC policy described in section X.C. of the CY 2022 OPPS/ASC proposed rule. Consistent with this proposed policy, we calculated the geometric mean, arithmetic mean, and median costs using multiple years of claims data to select the appropriate payment rate for purposes of assigning the Argus® II procedure (CPT code 0100T) to a New Technology APC. We proposed to use claims data from CY 2016 through CY 2019, which are the last 4 years of available OPPS claims data that we believe are appropriate for ratesetting, to determine the proposed payment rate for the Argus® II procedure for CY 2022. The claims data are the same 35 claims that were used to determine the payment rate for CPT code 0100T in CY 2021, and the estimates of the geometric mean ($148,148), the arithmetic mean ($153,682), and the median ($151,974) are the same as the estimates for CY 2021. All three potential statistical methodologies used to estimate the cost of the Argus® II procedure are within the cost band for New Technology APC 1908, with the proposed payment rate being between $145,001 and $160,000. Accordingly, we proposed to continue to assign the Argus® II procedure to New Technology APC 1908 for CY 2022.

For our analysis for this final rule with comment period, we identified 35 claims reporting the procedure described by CPT code 0100T for the 4-year period of CY 2016 through CY 2019, which were the same claims analyzed for the CY 2022 OPPS/ASC proposed rule. We found the geometric mean cost for the procedure described by CPT code 0100T to be approximately $148,148, the arithmetic mean cost to be approximately $153,682, and the median cost to be approximately $151,974, which are the same results that we calculated for the proposed rule. All three potential statistical methodologies used to estimate the cost of the Argus® II procedure fall within the cost band for New Technology APC 1908, with the estimated cost being between $145,001 and $160,000.

We received no public comments on our proposal. Therefore, we are finalizing our proposal without modification. We will maintain the assignment of the procedure described by CPT code 0100T in APC 1908 (New Technology—Level 52 ($145,001- $160,000)), with a payment rate of $152,500.50 for CY 2021. We note that the final payment rate includes both the surgical procedure (CPT code 0100T) and the use of the Argus® II device (HCPCS code C1841). Please see Table 11 below for the final OPPS APC and status indicator for the Argus® II procedure (CPT code 0100T) for CY 2022.

b. Administration of Subretinal Therapies Requiring Vitrectomy (APC 1561)

Effective January 1, 2021, CMS established HCPCS code C9770 (Vitrectomy, mechanical, pars plana approach, with subretinal injection of pharmacologic/biologic agent) and assigned it to a New Technology APC based on the geometric mean cost of HCPCS code 67036. For CY 2021, HCPCS code C9770 was assigned to APC 1561 (New Technology—Level 24 ($3001-$3500)). This procedure may be used to describe the administration of CPT code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion vector genomes). This procedure was previously discussed in the CY 2021 OPPS/ASC final rule with comment period (85 FR 85939 through 85940).

CPT code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion vector genomes) is a gene therapy for a rare mutation-associated retinal dystrophy. Voretigene neparvovec-rzyl (Luxturna®), was approved by FDA in December of 2017, and is indicated as an adeno-associated virus vector-based gene therapy indicated for the treatment of patients with confirmed biallelic RPE65 mutation-associated retinal dystrophy. This therapy is administered through a subretinal injection, which stakeholders describe as an extremely delicate and sensitive surgical procedure. The FDA package insert describes one of the steps for administering Luxturna as, “after completing a vitrectomy, identify the intended site of administration. The subretinal injection can be introduced via pars plana.”

Stakeholders, including the manufacturer of Luxturna®, recommended HCPCS code 67036 (Vitrectomy, mechanical, pars plana approach) for the administration of the gene therapy. However, the manufacturer previously contended the administration was not accurately described by any existing codes as HCPCS code 67036 (Vitrectomy, mechanical, pars plana approach) does not account for the administration itself.

CMS recognized the need to accurately describe the unique administration procedure that is required to administer the therapy described by HCPCS code J3398. Therefore, in the CY 2021 OPPS/ASC proposed rule (85 FR 48832), we proposed to establish a new HCPCS code, C97X1 (Vitrectomy, mechanical, pars plana approach, with subretinal injection of pharmacologic/biologic agent) to describe this process. We stated that we believed that this new HCPCS code accurately described the unique service associated with intraocular administration of HCPCS code J3398. We recognized that HCPCS code 67036 represents a clinically similar procedure and process that approximates similar resource utilization that is associated with C97X1. However, we also recognized that it is not prudent for the code that describes the administration of this unique gene therapy, C97X1, to be assigned to the same C-APC to which HCPCS code 67036 is assigned, as this would package the primary therapy, HCPCS code J3398, into the code that represents the process to administer the gene therapy.

Therefore, for CY 2021, we proposed to assign the services described by C97X1 to a New Technology APC with a cost band that contains the geometric mean cost for HCPCS code 67036. The placeholder code C97X1 was replaced by C9770 in this final rule with comment period. For CY 2021, we finalized our proposal to create C9770 (Vitrectomy, mechanical, pars plana approach, with subretinal injection of pharmacologic/biologic agent), and we assigned this code to APC 1561 (New Technology—Level 24 ($3,001-$3,500)) using the geometric mean cost of HCPCS code 67036. See Table 12 for the final descriptor and APC assignment of HCPCS code C9770 for CY 2021.

For CY 2022, we proposed to continue our policy from CY 2021 to assign the services described by HCPCS code C9770 to a New Technology APC with a cost band that contains the geometric mean cost for HCPCS code 67036. We proposed to continue to assign the services described by C9770 to a New Technology APC with a payment band based on the geometric mean cost for HCPCS code 67036 based on its geometric mean cost using CY 2019 claims data for CY 2022. Based on this data, the geometric mean cost of HCPCS code 67036 is $3,434.91. Therefore, we proposed to assign C9770 to the corresponding New Technology APC payment band, APC 1561 New Technology—Level 24 ($3,001-$3,500), with a payment rate of $3,250.50. Refer to Table 12 below for the proposed OPPS APC and status indicator for HCPCS code C9770 for CY 2022.

We received no comment on this proposal. Therefore, we are finalizing our proposal as proposed to continue our policy from CY 2021 to assign the services described by HCPCS code C9770 to a New Technology APC with a cost band that contains the geometric mean cost for HCPCS code 67036. As we proposed to continue to assign the services described by C9770 to a New Technology APC with a payment band based on the geometric mean cost for HCPCS code 67036 based on its geometric mean cost using CY 2019 claims data for CY 2022, we are finalizing this proposal. Based on CY 2019 claims data, the geometric mean cost of HCPCS code 67036 is $3,435.25 Therefore, we will assign C9770 to the corresponding New Technology APC payment band, APC 1561 New Technology—Level 24 ($3,001-$3,500), with a payment rate of $3,250.50. Please see Table 13 below for the final and proposed OPPS APC and status indicator for HCPCS code C9770 for CY 2022.

c. Bronchoscopy With Transbronchial Ablation of Lesion(s) by Microwave Energy (APC 1562)

Effective January 1, 2019, CMS established HCPCS code C9751 (Bronchoscopy, rigid or flexible, transbronchial ablation of lesion(s) by microwave energy, including fluoroscopic guidance, when performed, with computed tomography acquisition(s) and 3-D rendering, computer-assisted, image-guided navigation, and endobronchial ultrasound (EBUS) guided transtracheal and/or transbronchial sampling (for example, aspiration[s]/biopsy[ies]) and all mediastinal and/or hilar lymph node stations or structures and therapeutic intervention(s)). This microwave ablation procedure utilizes a flexible catheter to access the lung tumor via a working channel and may be used as an alternative procedure to a percutaneous microwave approach. Based on our review of the New Technology APC application for this service and the service's clinical similarity to existing services paid under the OPPS, we estimated the likely cost of the procedure would be between $8,001 and $8,500.

In claims data available for CY 2019 for the CY 2021 OPPS/ASC final rule with comment period, there were four claims reported for bronchoscopy with transbronchial ablation of lesions by microwave energy. Given the low volume of claims for the service, we proposed for CY 2021 to apply the policy we adopted in CY 2019, under which we utilize our equitable adjustment authority under section 1833(t)(2)(E) of the Act to calculate the geometric mean, arithmetic mean, and median costs to calculate an appropriate payment rate for purposes of assigning bronchoscopy with transbronchial ablation of lesions by microwave energy to a New Technology APC. We found the geometric mean cost for the service to be approximately $2,693, the arithmetic mean cost to be approximately $3,086, and the median cost to be approximately $3,708. The median was the statistical methodology that estimated the highest cost for the service and provided a reasonable estimate of the midpoint cost of the three claims that have been paid for this service. The payment rate calculated using this methodology fell within the cost band for New Technology APC 1562 (New Technology—Level 25 ($3,501-$4,000)). Therefore, we assigned HCPCS code C9751 to APC 1562 for CY 2021.

For CY 2022, the only available claims for HCPCS code C9751 are from CY 2019. Therefore, we proposed given the low number of claims for this procedure to utilize our equitable adjustment authority under section 1833(t)(2)(E) of the Act to calculate the geometric mean, arithmetic mean, and median costs to calculate an appropriate payment rate for purposes of assigning bronchoscopy with transbronchial ablation of lesions by microwave energy to a New Technology APC, consistent with our proposed universal low volume APC policy. Because we proposed to use the same claims as we did for CY 2021, we found the same values for the geometric mean cost, arithmetic mean cost, and the median cost for CY 2022. Once again, the median was the statistical methodology that estimated the highest cost for the service and provided a reasonable estimate of the midpoint cost of the three claims that have been paid for this service. The payment rate calculated using this methodology falls again within the cost band for New Technology APC 1562 (New Technology—Level 25 ($3,501-$4,000)). Therefore, we proposed to continue to assign HCPCS code C9751 to APC 1562 (New Technology—Level 25 ($3,501-$4,000)), with a proposed payment rate of $3,750.50 for CY 2022.

For our analysis for this final rule with comment period, we again used CY 2019 data, and we identified the same four claims reported for bronchoscopy with transbronchial ablation of lesions by microwave energy that were analyzed for the proposed rule and in CY 2021. Since the same claims were analyzed we received the same values for the geometric mean cost ($2,693), arithmetic mean cost ($3,086), and the median cost ($3,708) as we did for the proposed rule. As before, the median was the statistical methodology that estimated the highest cost for the service and provides a reasonable estimate of the midpoint cost of the three claims that have been paid for this service. The payment rate calculated using this methodology falls again within the cost band for New Technology APC 1562 (New Technology—Level 25 ($3,501-$4,000)).

We did not receive any public comments regarding our proposal. We are finalizing our proposal without modification to continue to assign HCPCS code C9751 to APC 1562 (New Technology—Level 25 ($3,501-$4,000)), with a final payment rate of $3,750.50 for CY 2022. Details regarding HCPCS code C9751 are included in Table 14.

d. Fractional Flow Reserve Derived From Computed Tomography (FFRCT) (APC 1511)

Fractional Flow Reserve Derived from Computed Tomography (FFRCT), also known by the trade name HeartFlow, is a noninvasive diagnostic service that allows physicians to measure coronary artery disease in a patient through the use of coronary CT scans. The HeartFlow procedure is intended for clinically stable symptomatic patients with coronary artery disease, and, in many cases, may avoid the need for an invasive coronary angiogram procedure. HeartFlow uses a proprietary data analysis process performed at a central facility to develop a three-dimensional image of a patient's coronary arteries, which allows physicians to identify the fractional flow reserve to assess whether or not patients should undergo further invasive testing (that is, a coronary angiogram).

For many services paid under the OPPS, payment for analytics that are performed after the main diagnostic/image procedure are packaged into the payment for the primary service. However, in CY 2018, we determined that HeartFlow should receive a separate payment because the service is performed by a separate entity (that is, a HeartFlow technician who conducts computer analysis offsite) rather than the provider performing the CT scan. We assigned CPT code 0503T, which describes the analytics performed, to New Technology APC 1516 (New Technology—Level 16 ($1,401-$1,500)), with a payment rate of $1,450.50 based on pricing information provided by the developer of the procedure that indicated the price of the procedure was approximately $1,500. We did not have Medicare claims data in CY 2019 for CPT code 0503T, and we continued to assign the service to New Technology APC 1516 (New Technology—Level 16 ($1,401-$1,500)), with a payment rate of $1,450.50.

CY 2020 was the first year for which we had Medicare claims data to calculate the cost of HCPCS code 0503T. For the CY 2020 OPPS/ASC final rule with comment period, there were 957 claims with CPT code 0503T of which 101 of the claims were single frequency claims that were used to calculate the geometric mean of the procedure. We planned to use the geometric mean to report the cost of HeartFlow. However, the number of single claims for CPT code 0503T was below the low-volume payment policy threshold for the proposed rule, and this number of single claims was only two claims above the threshold for the New Technology APC low-volume policy for the final rule. Therefore, we decided to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to calculate the geometric mean, arithmetic mean, and median using the CY 2018 claims data to determine an appropriate payment rate for HeartFlow using our New Technology APC low-volume payment policy. While the number of single frequency claims was just above our threshold to use the low-volume payment policy, we still had concerns about the normal cost distribution of the claims used to calculate the payment rate for HeartFlow, and we decided the low-volume payment policy would be the best approach to address those concerns.

Our analysis found that the geometric mean cost for CPT code 0503T was $768.26, the arithmetic mean cost for CPT code 0503T was $960.12, and the median cost for CPT code 0503T was $900.28. Of the three cost methods, the highest amount was for the arithmetic mean. The arithmetic mean fell within the cost band for New Technology APC 1511 (New Technology—Level 11 ($901-$1,000)) with a payment rate of $950.50. The arithmetic mean helped to account for some of the higher costs of CPT code 0503T identified by the developer and other stakeholders that may not have been reflected by either the median or the geometric mean.

For CY 2021, we observed a significant increase in the number of claims billed with CPT code 0503T. Specifically, using CY 2019 data, we identified 3,188 claims billed with CPT code 0503T including 465 single frequency claims. These totals are well above the threshold of 100 claims for a procedure to be evaluated using the New Technology APC low-volume policy. Therefore, we used our standard methodology rather than the low-volume methodology we previously used to determine the cost of CPT code 0503T. Our analysis found that the geometric mean for CPT code 0503T was $804.35, and the geometric mean cost for the service fell within the cost band for New Technology APC 1510 (New Technology—Level 10 ($801-$900)). However, providers and other stakeholders have noted that the FFRCT service costs $1,100 and that there are additional staff costs related to the submission of coronary CT image data for processing by HeartFlow.

We noted that HeartFlow is one of the first procedures utilizing artificial intelligence to be separately payable in the OPPS, and providers are still learning how to accurately report their charges to Medicare when billing for artificial intelligence services (85 FR 85943). This is especially the case for allocating the cost of staff resources between the HeartFlow procedure and the coronary CT imaging services. Therefore, we decided it would be appropriate to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to assign CPT code 0503T to the same New Technology APC in CY 2021 as in CY 2020 in order to provide payment stability and equitable payment for providers as they continue to become more familiar with the proper cost reporting for HeartFlow and other artificial intelligence services. Accordingly, we assigned CPT code 0503T to New Technology APC 1511 (New Technology—Level 11 ($901-$1,000)) with a payment rate of $950.50 for CY 2020, and we continued to assign CPT code 0503T to New Technology APC 1511 for CY 2021.

For CY 2022, we proposed to use claims data from CY 2019 to estimate the cost of the HeartFlow service. Because we are using the same claims data as in CY 2021, these data continue to reflect that providers were learning how to accurately report their charges to Medicare when billing for artificial intelligence services. Therefore, we proposed to continue to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to assign CPT code 0503T to the same New Technology APC in CY 2022 as in CY 2020 and CY 2021: New Technology APC 1511 (New Technology—Level 11 ($901-$1000)), with a payment rate of $950.50 for CY 2022, which is the same payment rate for the service as in CY 2020 and CY 2021.

Comment: The developer of HeartFlow and multiple other commenters stated that CPT code 0503T should not be assigned to New Technology APC 1510. Instead, they suggested that the HeartFlow procedure be assigned to APC 5593 (Level 3 Nuclear Medicine and Related Services) with a payment rate of around $1,270. The developer asserted that even though the payment for APC 5593 is substantially higher than the estimated cost of CPT code 0503T, the cost of the service fits reasonably well with the cost of other procedures assigned to APC 5593. The developer and other commenters also assert that the HeartFlow procedure has enough clinical similarity to other procedures currently assigned to the Nuclear Medicine and Related Services APCs. According to the developer and the other commenters, HeartFlow is comparable to other nuclear medicine procedures that are image analysis tests characterizing organ-specific function. The developer and the other commenters also note that cardiac CT procedures, which are used to identify coronary artery disease, are assigned to the nuclear medicine APC family. Finally, the developer cited two examples of procedures in the OPPS that are assigned to APCs where the procedure in question does not have clinical similarity to the other procedures in the APC.

Response: We disagree with the suggestion that CPT code 0503T should be assigned to APC 5593. As we stated in the CY 2021 OPPS/ASC final rule with comment period (85 FR 85942), the Nuclear Medicine and Related Procedures APCs describe diagnostic and therapeutic procedures, many of them involving imaging, where radiopharmaceuticals and other nuclear materials are critical supplies for the performance of the procedure. In comparison, HeartFlow is a computer algorithm that does not directly take images nor is it used on its own to generate a diagnosis for a patient. Instead, HeartFlow analyzes diagnostic images obtained through other medical procedures and assists with the interpretation of those diagnostic images to determine if a patient has coronary artery disease. We appreciate that there may be a limited number of examples where a procedure may have only a little clinical similarity to other procedures in the same APC, but we attempt to make those situations an exception rather than our regular practice. There is little clinical similarity between the HeartFlow procedure and the procedures currently assigned to the Nuclear Medicine and Related Procedures APCs and we are therefore not assigning CPT code 0503T to APC 5593.

Comment: One commenter, the developer, suggested that, if we decided not to assign CPT code 0503T to a Nuclear Medicine and Related Services APC, that we assign the service to APC 5724 (Level 4—Level 4 Diagnostic Tests and Related Services) with a payment rate of $896.09. The commenter states Heartflow generates critical diagnostic information for the treating physician and an anatomical mapping of FFR values that assists the physician in determining whether an invasive procedure is needed for a patient. Because HeartFlow generates diagnostic information, the commenter believes it can be described as a diagnostic service or a service related to a diagnostic service and can be assigned to APC 5724. The commenter gives examples of software-based services that are already assigned to APC 5724 and notes that the geometric mean cost of CPT code 0503T places the service in the midrange of cost for separately paid services assigned to APC 5724.

Response: We appreciate the commenter's suggestion. However, one of the key reasons we assigned CPT code 0503T to a New Technology APC for CY 2021 and proposed assigning the service again to a New Technology APC for CY 2022, is that we are continuing to seek more cost data for the service before assigning it to a clinical APC. As mentioned earlier, we want to get a better understanding of the cost of HeartFlow as providers become more familiar with reporting and billing for artificial intelligence services. More broadly, we believe we need at least one more year of cost data before assigning HeartFlow to a clinical APC. Our concerns that the CY 2020 claims data and may not represent the outpatient hospital experience in CY 2022 make it challenging to refine or update our payment quality for HeartFlow given the need for additional claims data.

Comment: Several commenters asserted the proposed payment rate for CPT code 0503T is too low and does not reflect their individual hospital's cost to use HeartFlow. Commenters mentioned cost issues, including the $1,100 list price for each individual HeartFlow service and the staff resources involved to transmit data to the HeartFlow analysis facility and review the results of the analyses performed by HeartFlow. Commenters suggested a range of potential payments for a HeartFlow procedure from $1,151 up to $2,100, and they encouraged CMS to use our equitable adjustment authority at section 1833(t)(2)(E) of the Act to establish an OPPS payment rate that would more closely reflect the costs the commenters believe they are incurring to perform the HeartFlow procedure.

Response: For this final rule with comment period, we identified 3,188 claims billed with CPT code 0503T including 465 single frequency claims for CPT code 0503T using claims from CY 2019. Our analysis has found that the geometric mean for CPT code 0503T is $807.58, and the geometric mean cost is lower than the cost band for New Technology APC 1511 New Technology—Level 11 ($901-$1000) where CPT code 0503T is assigned. This result is similar to our results for the proposed rule and the CY 2021 OPPS/ASC final rule, which all used CY 2019 claims data. However, multiple commenters have noted that the FFRCT service costs $1,100 and that there are additional staff costs related to the submission of coronary CT image data for processing by HeartFlow. HeartFlow is one of the first procedures utilizing artificial intelligence to be separately payable in the OPPS, and providers are still learning how to accurately report their charges to Medicare when billing for artificial intelligence services. This is especially the case for allocating the cost of staff resources between the HeartFlow procedure and the coronary CT imaging services. Also, the COVID-19 PHE potentially has affected the quality of the claims and cost data from CY 2020, and we have decided not to use that data to determine the payment rate for CPT code 0503T. That means it is difficult to determine whether the additional costs for HeartFlow that commenters state that their practices are incurring are reflected in the cost data for the service.

Therefore, we believe it is appropriate to continue to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to assign CPT code 0503T to the same New Technology APC in CY 2022 as in CY 2020 and CY 2021 in order to provide payment stability and equitable payment for providers as they continue to become more familiar with the proper cost reporting for HeartFlow and other artificial intelligence services until we can review more recent reliable claims data. As mentioned earlier in this section, CPT code 0503T was assigned to New Technology APC 1511 (New Technology—Level 11 ($901-$1000)) with a payment rate of $950.50 for CY 2020, and we will continue to assign CPT code 0503T to New Technology APC 1511 for CY 2022.

After reviewing all of the public comments, we are finalizing our proposal without modification to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to continue to assign CPT code 0503T to New Technology APC 1511 (New Technology—Level 11 ($901-$1000)) for CY 2022. Refer to Table 15 below for the final OPPS APC and status indicator for CPT code 0503T for CY 2022.

e. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT) Studies (APCs 1522 and 1523)

Effective January 1, 2020, we assigned three CPT codes (78431, 78432, and 78433) that describe the services associated with cardiac PET/CT studies to New Technology APCs. Table 16 lists the code descriptors, status indicators, and APC assignments for these CPT codes. CPT code 78431 was assigned to APC 1522 (New Technology—Level 22 ($2001-$2500)) with a payment rate of $2,250.50. CPT codes 78432 and 78433 were assigned to APC 1523 (New Technology—Level 23 ($2501-$3000)) with a payment rate of $2,750.50. We did not receive any claims data for these services for CY 2021. Therefore, we continued to assign CPT code 78431 to APC 1522 (New Technology—Level 22 ($2001-$2500)) with a payment rate of $2,250.50. Likewise, CPT codes 78432 and 78433 continued to be assigned to APC 1523 (New Technology—Level 23 ($2501-$3000)) with a payment rate of $2,750.50.

For CY 2022, we proposed to use CY 2019 claims data to determine the payment rates for CPT codes 78431, 78432, and 78433. Because these codes did not become active until CY 2020, there are no claims for these three services. Accordingly, we proposed to continue to assign CPT code 78431 to APC 1522 (New Technology—Level 22 ($2001-$2500)) with a payment rate of $2,250.50. Likewise, we proposed that CPT codes 78432 and 78433 would continue to be assigned to APC 1523 (New Technology—Level 23 ($2501-$3000)) with a payment rate of $2,750.50.

Comment: Multiple commenters supported our proposal to assign CPT code 78431 to APC 1522 (New Technology—Level 22 ($2001-$2500)) with a payment rate of $2,250.50, and to assign CPT codes 78432 and 78433 to APC 1523 (New Technology—Level 23 ($2501-$3000)) with a payment rate of $2,750.50. Commenters noted that there were no available claims data for these services as we are using CY 2019 claims data for CY 2022 ratesetting, and these codes did not become active until January 2020.

Response: We appreciate the support of the commenters for our policy. After our review of the public comments, we have decided to implement our proposal without modification. Table 16 lists code descriptors, status indicators, and APC assignments for these CPT codes.

f. V-Wave Medical Interatrial Shunt Procedure (APC 1590)

A randomized, double-blinded, controlled IDE study is currently in progress for the V-Wave interatrial shunt. The V-Wave interatrial shunt is for patients with severe symptomatic heart failure and is designed to regulate left atrial pressure in the heart. All participants who passed initial screening for the study receive a right heart catheterization procedure described by CPT code 93451 (Right heart catheterization including measurement(s) of oxygen saturation and cardiac output, when performed). Participants assigned to the experimental group also receive the V-Wave interatrial shunt procedure while participants assigned to the control group only receive right heart catheterization. The developer of V-Wave was concerned that the current coding of these services by Medicare would reveal to the study participants whether they have received the interatrial shunt because an additional procedure code, CPT code 93799 (Unlisted cardiovascular service or procedure), would be included on the claims for participants receiving the interatrial shunt. Therefore, for CY 2020, we created a temporary HCPCS code to describe the V-wave interatrial shunt procedure for both the experimental group and the control group in the study. Specifically, we established HCPCS code C9758 (Blinded procedure for NYHA class III/IV heart failure; transcatheter implantation of interatrial shunt or placebo control, including right heart catheterization, trans-esophageal echocardiography (TEE)/intracardiac echocardiography (ICE), and all imaging with or without guidance (for example, ultrasound, fluoroscopy), performed in an approved investigational device exemption (IDE) study) to describe the service, and we assigned the service to New Technology APC 1589 (New Technology—Level 38 ($10,001-$15,000)).

We stated in the CY 2021 OPPS/ASC final rule with comment period that we believe that similar resources and device costs are involved with the V-Wave interatrial shunt procedure and the Corvia Medical interatrial shunt procedure (85 FR 85946). Therefore, the difference in the payment for HCPCS codes C9758 and C9760 is based on how often the interatrial shunt is implanted when each code is billed. An interatrial shunt is implanted one-half of the time HCPCS code C9758 is billed. Accordingly, for CY 2021, we reassigned HCPCS code C9758 to New Technology APC 1590, which reflects the cost of having surgery every time and receiving the interatrial shunt one-half of the time when the procedure is performed.

For CY 2022, we are using the same claims data that we did for CY 2021. Because there are no claims reporting HCPCS code C9758, we proposed to continue to assign HCPCS code C9758 to New Technology APC 1590 with a payment rate of $17,500.50 for CY 2022.

Comment: Multiple commenters including the manufacturer supported our proposal to continue to assign HCPCS code C9758 to New Technology APC 1590 with a payment rate of $17,500.50 for CY 2022.

Response: We appreciate the support of the commenters for our proposal. After reviewing the public comments, we are finalizing our proposal without modification. Details about the HCPCS code and its APC assignment are shown in Table 17. The final CY 2022 payment rate for C9758 can be found in Addendum B to this final rule with comment period.

g. Corvia Medical Interatrial Shunt Procedure (APC 1592)

Corvia Medical is currently conducting its pivotal trial for their interatrial shunt procedure. The trial started in Quarter 1 of CY 2017 and is scheduled to continue through CY 2021. On July 1, 2020, we established HCPCS code C9760 (Non-randomized, non-blinded procedure for nyha class ii, iii, iv heart failure; transcatheter implantation of interatrial shunt or placebo control, including right and left heart catheterization, transeptal puncture, trans-esophageal echocardiography (tee)/intracardiac echocardiography (ice), and all imaging with or without guidance (for example, ultrasound, fluoroscopy), performed in an approved investigational device exemption (ide) study) to facilitate the implantation of the Corvia Medical interatrial shunt.

As we stated in the CY 2021 OPPS final rule with comment period, we believe that similar resources and device costs are involved with the Corvia Medical interatrial shunt procedure and the V-Wave interatrial shunt procedure (85 FR 85947). Therefore, the difference in the payment for HCPCS codes C9760 and C9758 is based on how often the interatrial shunt is implanted when each code is billed. The Corvia Medical interatrial shunt is implanted every time HCPCS code C9760 is billed. Therefore, for CY 2021, we assigned HCPCS code C9760 to New Technology APC 1592 (New Technology—Level 41 ($25,001-$30,000)) with a payment rate of $27,500.50. We also modified the code descriptor for HCPCS code C9760 to remove the phrase “or placebo control,” from the descriptor. For CY 2022, we proposed to use the same claims data as in CY 2021 to establish payment rates for services. Therefore, there are no claims for HCPCS code C9760, and we proposed to continue to assign HCPCS code C9760 to New Technology APC 1592.

Comment: Multiple commenters, including the manufacturer, supported our proposal to continue to assign HCPCS code C9760 to New Technology APC 1592.

Response: We appreciate the support of the commenters of our proposal.

Comment: One commenter, the manufacturer, requested that CPT code 0613T (Percutaneous transcatheter implantation of interatrial septal shunt device, including right and left heart catheterization, intracardiac echocardiography, and imaging guidance by the proceduralist, when performed) be assigned to comprehensive APC 5194 (Level 4 Endovascular Procedures) for CY 2022 and assigned a status indicator of “J1”. CPT code 0613T is the CPT code that will be used to report the Corvia Medical interatrial shunt procedure once the Corvia Medical interatrial shunt device associated with the procedure receives approval from the FDA, which the manufacturer believes will occur in CY 2022. Currently, CPT code 0613T is a non-payable service code and is assigned a status indicator of “E1”.

Response: We will assign CPT code 0613T to a payable status indicator and assign the service to a clinically-appropriate APC when the Corvia Medical interatrial shunt device associated with the procedure has received approval from the FDA. OPPS payment policies are updated quarterly through a sub-regulatory process. If the Corvia Medical interatrial shunt device receives FDA approval, we will work to ensure a timely transition for the overall procedure to be reported with CPT code 0613T and end reporting of the service with HCPCS code C9760. We will also work to assign CPT code 0613T to an APC that reflects clinical and resource similarity to CPT code 0613T.

Details about the HCPCS code and its APC assignment are shown in Table 18. The final CY 2022 payment rate for C9760 can be found in Addendum B to this final rule with comment period.

h. Supervised Visits for Esketamine Self-Administration (APCs 1508 and 1511)

On March 5, 2019, FDA approved Spravato^TM (esketamine) nasal spray, used in conjunction with an oral antidepressant, for treatment of depression in adults who have tried other antidepressant medicines but have not benefited from them (treatment-resistant depression (TRD)). Because of the risk of serious adverse outcomes resulting from sedation and dissociation caused by Spravato administration, and the potential for abuse and misuse of the product, it is only available through a restricted distribution system under a Risk Evaluation and Mitigation Strategy (REMS). A REMS is a drug safety program that FDA can require for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks.

A treatment session of esketamine consists of instructed nasal self-administration by the patient, followed by a period of post-administration observation of the patient under direct supervision of a health care professional. Esketamine is a noncompetitive N-methyl D-aspartate (NMDA) receptor antagonist. It is a nasal spray supplied as an aqueous solution of esketamine hydrochloride in a vial with a nasal spray device. This is the first FDA approval of esketamine for any use. Each device delivers two sprays containing a total of 28 mg of esketamine. Patients would require either two (2) devices (for a 56 mg dose) or three (3) devices (for an 84 mg dose) per treatment.

Because of the risk of serious adverse outcomes resulting from sedation and dissociation caused by Spravato administration, and the potential for abuse and misuse of the product, Spravato is only available through a restricted distribution system under a REMS; patients must be monitored by a health care provider for at least 2 hours after receiving their Spravato dose; the prescriber and patient must both sign a Patient Enrollment Form; and the product will only be administered in a certified medical office where the health care provider can monitor the patient. Please refer to the CY 2020 PFS final rule and interim final rule for more information about supervised visits for esketamine self-administration (84 FR 63102 through 63105).

To facilitate prompt beneficiary access to the new, potentially life-saving treatment for TRD using esketamine, we created two new HCPCS G codes, G2082 and G2083, effective January 1, 2020. HCPCS code G2082 is for an outpatient visit for the evaluation and management of an established patient that requires the supervision of a physician or other qualified health care professional and provision of up to 56 mg of esketamine through nasal self-administration and includes 2 hours post-administration observation. HCPCS code G2082 was assigned to New Technology APC 1508 (New Technology—Level 8 ($601—$700)) with a payment rate of $650.50. HCPCS code G2083 describes a similar service to HCPCS code G2082, but involves the administration of more than 56 mg of esketamine. HCPCS code G2083 was assigned to New Technology APC 1511 (New Technology—Level 11 ($901-$1000)) with a payment rate of $950.50.

For CY 2022, we are using CY 2019 claims data to determine the payment rates for HCPCS codes G2082 and G2083. Since these codes did not become active until CY 2020, there are no claims for these two services. Therefore, for CY 2022, we proposed to continue to assign HCPCS code G2082 to New Technology APC 1508 (New Technology—Level 8 ($601-$700)) and to assign HCPCS code G2083 to New Technology APC 1511 (New Technology—Level 11 ($901-$1000)).

Comment: One commenter, the manufacturer, while understanding the rationale for our proposal to use CY 2019 claims data for CY 2022 ratesetting, asked us to take into consideration CY 2020 claims data to finalize payment rates for HCPCS codes G2082 and G2083. The commenter noted that HCPCS codes G2082 and G2083 were not payable in CY 2019, and therefore there is no cost information in the CY 2019 claims data for these two procedures. The commenter also believes that CY 2020 data may show that the cost of G2082 and G2083 is substantially higher than the current New Technology APC assignments for the two services.

Response: We reviewed the available CY 2020 OPPS claims data in response to the request by the commenter for HCPCS codes G2082 and G2083, but we decided that there were not enough data available to determine whether to change the APC assignments for HCPCS codes G2082 and G2083. We would like to review another year of claims data for HCPCS codes G2082 and G2083 to assess the reliability of the cost information for CY 2020 and CY 2021 before using claims data to base our APC assignments for these services. Therefore, we will continue to use the same APC assignments for HCPCS codes G2082 and G2083 for CY 2022 as for CY 2021.

After reviewing the public comments for this proposal, we have decided to implement our proposal without modification to assign HCPCS code G2082 to New Technology APC 1508 and to assign HCPCS code G2083 to New Technology APC 1511. Details about the HCPCS codes and their APC assignments are shown in Table 19. The final CY 2022 payment rate for esketamine self-administration can be found in Addendum B to this final rule with comment period.

i. DARI Motion Procedure (APC 1505)

CPT code 0693T (Comprehensive full body computer-based markerless 3D kinematic and kinetic motion analysis and report) will be effective January 1, 2022. The technology consists of eight cameras that surround a patient. The cameras send live video to a computer workstation that analyzes the video to create a 3D reconstruction of the patient without the need for special clothing, markers or devices attached to the patient's clothing or skin. The technology is intended to guide health care providers on pre and post-operative surgical intervention and on the best course of physical therapy and rehabilitation for patients.

As displayed in Addendum B to the CY 2022 OPPS/ASC proposed rule, we proposed to assign CPT code 0693T to APC 5721 (Level 1 Diagnostics and Related Services) with a proposed payment rate of $143.21. We note that CPT code 0693T was listed as placeholder code 0X60T in OPPS Addendum B of the CY 2021 OPPS/ASC proposed rule.

Comment: One commenter, the manufacturer of the DARI Motion procedure, requested that CMS assign CPT code 0693T to APC 5723 (Level 3 Diagnostics and Related Services) with a payment rate of $498.53. The commenter believed that the payment rate for APC 5721 is inadequate and will create a barrier to patient access.

Response: We appreciate the concerns of the commenter and, for the reasons set forth below, agree that the proposed payment rate for CPT code 0693T may be too low and the procedure should be reassigned to a different APC.

The AMA releases Category III codes in January, for implementation beginning the following July, and in July, for implementation beginning the following January. DARI Motion received a Category III code scheduled for implementation January 1, 2022. Some Category III CPT codes describe services that we have determined are not compatible with an existing clinical APC, yet are appropriately provided in the hospital outpatient setting. In these cases, we may assign the Category III CPT code to what we estimate is an appropriately priced New Technology APC (71 FR 68015). In addition, it should be noted that, with all new codes, CMS's policy has been to assign the service to an APC based on input from a variety of sources, including but not limited to review of the clinical similarity of the service to existing procedures, input from CMS medical advisors, information from interested specialty societies, review of all other information available to us, including information provided to us by the public, whether through meetings with stakeholders or additional information that is mailed or otherwise communicated to us. Based on information from the manufacturer, resources involved for the procedure described by CPT code 0693T appear to be higher than the payment rate for APC 5721 (Level 1 Diagnostics and Related Services). CPT code 0693T is new for CY 2022 and, therefore, we had no claims data available for OPPS ratesetting. Further, based on input from our medical advisors and our understanding of the service, we believe that it is more appropriate to assign the DARI Motion procedure to APC 1505 (New Technology—Level 5 ($301-$400)), for CY 2022. We believe that assigning CPT code 0693T to New Technology APC 1505 will allow CMS to collect claims data before assigning CPT code 0693T to a clinical APC.

Comment: A commenter argued the assignment of CPT code 0693T to APC 5721 would create a 2 times rule violation within the APC based on geometric mean costs. The commenter calculated the 2-times threshold by multiplying the lowest cost significant procedure by 2 and arrived at a 2-times threshold. According to the commenter, the 2-times threshold they calculated for APC 5721 is a lower payment rate than the technology described by CPT code 0693T. The commenter asserted that assigning CPT code 0693T to APC 5721 is a violation of the 2 times rule.

Response: We thank the commenter for their feedback. To clarify, we determine APC 2 times rule violations by considering only those HCPCS codes that are significant based on the number of claims. We note that, for purposes of identifying significant procedure codes for examination under the 2 times rule, we consider procedure codes that have more than 1,000 single major claims or procedure codes that both have more than 99 single major claims and contribute at least 2 percent of the single major claims used to establish the APC cost to be significant (75 FR 71832). CPT code 0693T is new for CY 2022 and, therefore, we had no claims data available for purposes of determining whether a 2 times rule violation occurs based on the code.

In summary, after consideration of the public comments, we are finalizing our proposal with modification, and assigning CPT code 0693T to New Technology APC 1505 (New Technology—Level 5 ($301-$400)), for CY 2022. The final APC assignment and status indicator for CPT code 0693T are found in Table 20. We refer readers to Addendum B of this final rule with comment period or the final payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website.

As we do for all codes, we will reevaluate the APC assignments for CPT code 0693T once we have claims data. We remind hospitals that we review, on an annual basis, the APC assignments for all services and items paid under the OPPS based on the latest claims data.

j. Histotripsy Service (APC 1575)

Histotripsy is a non-invasive, non-thermal, mechanical process that uses a focused beam of sonic energy to destroy targeted cancerous liver tumors. The AMA's CPT Editorial Panel established a new code to describe the service associated with histotripsy, specifically, Category III CPT code, 0686T (Histotripsy (that is, non-thermal ablation via acoustic energy delivery) of malignant hepatocellular tissue, including image guidance), effective July 1, 2021.

As displayed in Addendum B of the CY 2022 OPPS/ASC proposed rule with comment period, for CY 2022, we proposed to assign the new code to APC 5311 (Level 1 Lower GI Procedures) with a payment rate of $814.44 effective January 1, 2022.

Comment: One commenter, the manufacturer of histotripsy, stated that histotripsy is a new technology that delivers short pulses of ultrasound energy, resulting in acoustic cavitation that mechanically destroys the targeted cancerous liver tumors while avoiding damage to intervening or surrounding healthy tissues. The commenter stated that the proposed assignment of CPT code 0686T to APC 5311 (Level 1 Lower GI Procedures) was not clinically or resource cohesive to histotripsy. The commenter reported a list of HCPCS codes currently assigned to APC 5311 and argued that the codes are not clinically or resource similar to histotripsy. The commenter referenced histotripsy's IDE clinical study (G200253-NCT04573881) and provided a description of the histotripsy procedure and a breakdown of the associated resource components. The commenter also provided a cost estimate of each resource, such as the device cost, the associated imaging cost, and total room time. The commenter stated that the total cost for the procedure is $22,782.51 and requested assignment to a New Technology APC 1577 for the histotripsy service.

Response: We appreciate the commenter's input on this new technology. As stated in the CY 2002 OPPS final rule, CMS staff will obtain information on cost from other appropriate sources before making a final determination on the cost of the procedure or service to hospital outpatient facilities (66 FR 59900). We note that for Category A IDE studies, Medicare may not furnish payment for costs associated with the histotripsy device since Category A devices are statutorily excluded from Medicare coverage. Based on our evaluation, for CY 2022, we estimated the cost of histotripsy, after removing the device cost, is within the cost band between $10,001 and $15,000. Accordingly, we believe reassigning CPT code 0686T to APC 1575 (New Technology—Level 38 ($10,001-$15,000)), with a payment rate of $12,500.50, more appropriately reflects the costs for which Medicare may provide payment. We note that we retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to a clinically appropriate APC.

In summary, after consideration of the public comments, we are finalizing our proposal with modifications. Specifically, we are assigning CPT code 0686T to APC 1575 for CY 2022. The final CY 2022 OPPS payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addenda B and D1 are available via the internet on the CMS website.

k. Liver Multiscan Service (APC 1511)

Liver MultiScan is a Software as a medical Service (SaaS) that is intended to aid the diagnosis and management of chronic liver disease, the most prevalent of which is Non-Alcoholic Fatty Liver Disease (NAFLD). It provides standardized, quantitative imaging biomarkers for the characterization and assessment of inflammation, hepatocyte ballooning, and fibrosis, as well as steatosis, and iron accumulation. The SaaS receives MR images acquired from patients' providers and analyzes the images using their proprietary Artificial Intelligence (AI) algorithms. The SaaS then send the providers a quantitative metric report of the patient's liver fibrosis and inflammation. The AMA CPT Editorial Panel established two new codes, specifically, Category III CPT codes 0648T and 0649T for LiverMultiScan effective July 1, 2021, and CMS assigned the Category III CPT code 0648T to APC 5523 (Level 3 Imaging without Contrast) with a status indicator of “S” effective July 1, 2021. We note that CPT code 0649T is packaged per our packaging policy for add-on code procedures. For the complete code descriptors for both codes, refer to Table 21.

For CY 2022, we proposed to assign CPT code 0648T to APC 5523 (Level 3 Imaging without Contrast) with a payment rate of $236.14 effective January 1, 2022, and assign the add-on code, CPT code 0649T, to OPPS status indicator “N” (packaged) to indicate that payment for the add-on service is included in the primary service.

Comment: Several commenters stated that LiverMultiScan is a new technology that represents a breakthrough for the diagnosis and monitoring of chronic parenchymal liver disease that will reduce the number of invasive procedures. The commenters stated that LiverMultiScan is an MRI measure of hepatic steatosis with performance equivalent to liver biopsy and superior to liver fat measures using ultrasound. Some commenters cited that biopsy is the gold standard for diagnosis, but it is not commonly used because of cost, patient discomfort, risk of complications, and possible sampling error. Another commenter stated that LiverMultiScan has excellent diagnostic accuracy for at-risk Nonalcoholic steotohepatitis (NASH), detects changes in response to investigational treatments within a very short timeframe, and predicts clinical outcomes in patients with liver disease as well as liver biopsy. The commenters believe LiverMultiScan improves the management of NAFLD by helping patients connect with their liver health, which encourages these patients to their recommended course of treatment. The commenters stated the assignment of CPT code 0648T to APC 5523 (Level 3 Imaging without Contrast) does not adequately cover the cost of delivering this service and discourages adoption of advanced liver care. The commenters stated that their hospital outpatient cost for the service is between $1,300 to $1,500 (versus approximately $7,000 for a liver biopsy), and they requested assignment of LiverMultiScan to a New Technology APC. One commenter referenced CMS's decision on Heartflow, which was initially packaged and then later recognized as a distinct service. The commenter requested CMS recognize LiverMultiScan as a distinct service.

Response: We appreciate the commenters' feedback on this new technology. We note that before we assign a new service to a New Technology APC, we first perform our own cost analysis and cost estimate. As we stated in the CY 2002 OPPS final rule (66 FR 59900), we do not limit our determination of the cost of the procedure to information suggested by the commenters (or information submitted by the applicant for New Technology applications). To appropriately assign a service to a New Technology APC, our staff will obtain information on cost from other appropriate sources, including acquiring input from our medical advisors on the appropriateness of the service in the hospital outpatient setting, before making a final determination on the cost of the procedure or service. Based on the information provided, we recognize that LiverMultiScan is a new technology that will aid in the management of beneficiaries with NAFLD, which may avoid liver biopsies. We note that liver biopsy remains the current gold standard for diagnosing NASH, determining grade disease severity, and accurately staging fibrosis. Based on our evaluation of the service, we agree with the commenter's suggested reference to Heartflow. That is, we believe that LiverMultiScan and Heartflow share similar characteristics based on the nature of how the service is provided in the hospital outpatient setting. Both LiverMultiScan and Heartflow require the acquisition of radiological images as well as analysis of the images using proprietary AI algorithms to assist clinicians in appropriately diagnosing a patient's medical condition. In addition, our analysis of the estimated cost associated for this service is between $901 and $1,000. Therefore, after further evaluation of the service and the resources required to perform the LiverMultiScan analysis, we believe it is appropriate to assign this service to a New Technology APC, specifically, APC 1511 (New Technology—Level 11 ($901-$1000)), which is the same APC assignment for Heartflow. Accordingly, we are assigning CPT code 0648T to New Technology APC 1511). We note that we retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to a clinically appropriate APC. For CPT code 0649T, an add-on code, we believe that our assignment of the status indicator of “N” is appropriate under 42 CFR 419.2(b). We note that CMS does not create the Category III CPT codes or their descriptors, but we follow an established set of payment policies consistent with our OPPS packaging policy. As stated in section III.A. “OPPS Treatment of New and Revised HCPCS Codes” of this final rule with comment period, CPT codes are established and maintained by the American Medical Association (AMA), and changes to CPT codes should be referred to the AMA.

In summary, after consideration of the public comment, we are finalizing our proposal with modification, to assign CPT code 0648T to New Technology APC 1511 ((New Technology—Level 11 ($901-$1000), for CY 2022. Also, we are finalizing our proposal, without modification, for CPT code 0649T and assigning the code to OPPS status indicator “N” for CY 2022. The final APC assignment and status indicators for CPT codes 0648T and 0649T can be found in OPPS Addendum B. We refer readers to Addendum B of the final rule for the final payment rates for all codes reportable under the OPPS. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and Addendum D1 are available via the internet on the CMS website.

l. Minimally Invasive Glaucoma Surgery (MIGS) (APCs 5491 and 5492)

Prior to CY 2022, extracapsular cataract removal with insertion of intraocular lens was reported using CPT codes describing cataract removal alongside a CPT code for device insertion. Specifically, the procedure was described using CPT codes 66982 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1-stage procedure), manual or mechanical technique (for example, irrigation and aspiration or phacoemulsification), complex, requiring devices or techniques not generally used in routine cataract surgery (for example, iris expansion device, suture support for intraocular lens, or primary posterior capsulorrhexis) or performed on patients in the amblyogenic developmental stage; without endoscopic cyclophotocoagulation) or 66984 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1-stage procedure), manual or mechanical technique (for example, irrigation and aspiration or phacoemulsification); without endoscopic cyclophotocoagulation) and 0191T (Insertion of anterior segment aqueous drainage device, without extraocular reservoir, internal approach, into the trabecular meshwork; initial insertion). For CY 2022, the AMA's CPT Editorial Panel created two new Category I CPT codes describing extracapsular cataract removal with insertion of intraocular lens prosthesis, specifically, CPT codes 66989 and 6691, deleted a Category III CPT code, specifically, CPT code 0191T, describing insertion of anterior segment aqueous drainage device, and created a new Category III CPT code, specifically, CPT code 0671T, describing interior segment aqueous drainage device without concomitant cataract removal. We proposed the following APC assignment:

• CPT code 66989 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1-stage procedure), manual or mechanical technique ( e.g., irrigation and aspiration or phacoemulsification), complex, requiring devices or techniques not generally used in routine cataract surgery ( e.g., iris expansion device, suture support for intraocular lens, or primary posterior capsulorrhexis) or performed on patients in the amblyogenic developmental stage; with insertion of intraocular ( e.g., trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more) to APC 5492 (Level 2 Intraocular Procedures) with a proposed status indicator (SI) of “J1” and proposed payment rate of $4,018.82. We note this code was listed as placeholder code 669X1 in the OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule.

• CPT code 66991 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1 stage procedure), manual or mechanical technique (for example, irrigation and aspiration or phacoemulsification); with insertion of intraocular (for example, trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more) to APC 5492. We note this code was listed as placeholder code 669X2 in the OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule.
• CPT code 0671T (Insertion of anterior segment aqueous drainage device into the trabecular meshwork, without external reservoir, and without concomitant cataract removal, one or more) to APC 5491 (Level 1 Intraocular Procedures) with a proposed SI of “J1” and a proposed payment rate of $2,131.25. We note this code was listed as placeholder code 0X12T in the OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule.

At the August 23, 2021 HOP Panel Meeting, a presenter requested that we reassign CPT codes 66989 and 66991 to APC 5493 (Level 3 Intraocular Procedures) with a proposed payment rate of $7,529.00, and reassign 0671T to APC 5492, citing concerns over a decrease in payment for MIGS between how it is currently coded and how it will be coded beginning January 1, 2022. Based on the discussion during the meeting, the HOP Panel recommended that CMS reassign CPT codes 66989 and 66991 to APC 5493 and reassign 0671T to APC 5492.

Comment: Most commenters opposed the proposed APC assignment for these services and recommended that CMS implement the APC assignments recommended by the HOP Panel. They stated that the proposed APC assignments do not accurately account for the costs associated with MIGS and would result in an overall decrease in payment for MIGS from the current payment rates and that this decrease would negatively impact access to this service. Commenters stated placement in APC 5493 and APC 5492 would better account for the resources associated with performing CPT codes 66989 and 66991, and CPT code 0671T, respectively. Commenters also suggested that CMS could consider assignment of these services to a New Technology APC or create an incremental intraocular APC between APC 5492 and 5493.

Response: We do not believe that the costs associated with performing MIGS are accurately reflected by APC 5493. We note that while APC 5491 (Level 1 Intraocular Procedures) and APC 5492 have 40 or greater separately payable services assigned to them, only one service is assigned to the APCs 5493, 5494, and 5495 (Level 3-5 Intraocular Procedures, respectively). In instances where a single procedure is assigned to an APC, the geometric mean cost and the resulting payment rate is largely based on the geometric mean of the individual service assigned to the APC. However, we note that while only one service is assigned to APC 5493, there are certain complexity adjustments that move certain services assigned to the APC 5492 to APC 5493 when billed concurrently. These changes are also reflected in the claims data we use to develop geometric mean costs and the resulting payment rates. We note that the proposed payment rate for APC 5493 is almost double the payment rate for APC 5492. We also believe that the change in coding for MIGS is significant in that it changes longstanding billing for the service from reporting two separate CPT codes to reporting a single bundled code. Without claims data, and given the magnitude of the coding change, we do not believe we have the necessary information on the costs associated with CPT codes 66989 and 66991 to assign them to a clinical APC at this time. We agree with commenters that reassignment to a New Technology APC will maintain payment accuracy for these services while we collect cost data to support reassignment to the relevant clinical APC. We believe that APC 1526 (New Technology—Level 26 ($4001-$4500)), with a payment rate of $4,250.50, most accurately accounts for the resources associated with furnishing MIGS.

We regard to CPT code 0671T, we note that this code describes insertion of intraocular lens without concurrent cataract removal and would not be billed alongside CPT codes 66989 or 66991. Based on our review of the clinical characteristics of the procedure and input from our medical advisors, we continue to believe that this service is more similar to the other services in APC 5491.

In summary, after consideration of the public comments, we are finalizing the reassignment of CPT codes 66989 and 66991 to APC 1526 and assignment of CPT code 0671T to APC 5491. The final CY 2022 OPPS payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

m. Scalp Cooling (APC 1520)

For July 1, 2021, the CPT Editorial Panel created CPT code 0662T to describe initial measurement and calibration of a scalp cooling device for use during chemotherapy administration to prevent hair loss. For CY 2022, we proposed to assign CPT code 0662T (Scalp cooling, mechanical; initial measurement and calibration of cap) to APC 5732 (Level 2 Minor Procedures) with a proposed payment rate of $34.72.

At the August 23, 2021 HOP Panel Meeting, a presenter requested that we reassign CPT code 0662T to one of the following APCs:

• APC 5054 (Level 4 Skin Procedures) with a proposed payment rate of $1,759.21,
• APC 5055 (Level 5 Skin Procedures) with a proposed payment rate of $3,613.14,
• APC 1519 (New Technology—Level 19 ($1,701-$1,800)) with a proposed payment rate of $1,750.50, or
• APC 1520 (New Technology—Level 20 ($1,801-$1,900)) with a proposed payment rate of $1,850.50

Based on the information presented, the HOP Panel recommended that CMS assign CPT code 0662T to a New Technology APC.

Comment: Commenters encouraged CMS to accept the HOP Panel's recommendation and assign CPT code 0662T to APC 1519 or 1520 or reassign CPT code 0662T to either APC 5054 or 5055. Commenters stated that the cost of the scalp cooling cap itself was around $600 and that the rest of the costs associated with performing the measurement and calibration were around $2,500-$3,000.

Response: Based on the information presented at the HOP Panel meeting, as well as input from our clinical advisors, and analysis of the information provided by the commenters, we believe that the procedure described by CPT code 0662T should be assigned to a New Technology APC. We note that according to Medicare's National Coverage Determination (NCD) policy, specifically, NCD 110.6 (Scalp Hypothermia During Chemotherapy to Prevent Hair Loss), the scalp cooling cap itself is classified as an incident to supply to a physician service, and would not be paid under the OPPS; however, stakeholders have indicated that there are substantial resource costs associated with calibration and fitting of the cap. Based on the estimate of costs provided by the commenter, without taking into account the costs of the cap, the overall cost associated with CPT code 0662T is between $1,900-$2,400, supporting reassignment to New Technology APC 1520. CPT guidance states that CPT code 0662T should be billed once per chemotherapy session, which we interpret to mean once per course of chemotherapy. Therefore, if a course of chemotherapy involves 6 or 18 sessions, HOPDs should report CPT 0662T only once for that 6 or 18 therapy sessions. We note that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS.

In summary, after consideration of the public comments, we are finalizing our proposal with modification. Specifically, we are finalizing assignment of CPT code 0662T to APC New Technology 1520. The final CY 2022 OPPS payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

D. OPPS APC-Specific Policies

1. AccuCinch Ventricular Restoration Procedure

For the July 2021 update, the AMA's CPT Editorial Panel established CPT code 0643T (Transcatheter left ventricular restoration device implantation including right and left heart catheterization and left ventriculography when performed, arterial approach) to describe the AccuCinch device implantation procedure. For CY 2022, we proposed to assign the code to OPPS status indicator “E1” (Items, codes, and services not covered by any Medicare outpatient benefit category; statutorily excluded; not reasonable and necessary) to indicate that the service is not covered by Medicare.

Comment: A commenter requested the reassignment in the status indicator to OPPS status indicator “C” (inpatient-only) since this is the more appropriate assignment for the ventricular restoration therapy based on the complex patient population enrolled in the US clinical trial. The commenter explained that the investigational device, the AccuCinch® Ventricular Restoration System, is currently under evaluation in the CORCINCH-HF pivotal trial (NCT04331769).

Response: Based on our review of the clinical study, input from our medical advisors, as well review of Medicare's coverage policy for this clinical trial, we agree with the commenter. Review of the clinical study indicates that the CORCINCH-HF study ( https://clinicaltrials.gov/ct2/show/NCT04331769 ) is a prospective, randomized, control multicenter clinical study that evaluates the safety and efficacy of the AccuCinch Ventricular Restoration System in patients with heart failure and reduced ejection fraction (HFrEF). Based on the interventional structural heart (SH) technique involved in the procedure, use of an experimental device, and close monitoring of the patient that is required during the intra- and post-op period consistent with the resources available in the hospital inpatient setting, we believe the AccuCinch procedure should be designated as an inpatient-only procedure. We note that the CORCINCH-HF pivotal trial (NCT04331769) was approved by Medicare and meet's CMS' standards for coverage as an Investigation Device Exemption (IDE) study effective November 11, 2020.

In summary, after consideration of the public comment, we are modifying our proposal and revising the status indicator for CPT code 0643T from “E1” to “C” (inpatient-only) for CY 2022. We refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website.

2. Administration of Lacrimal Ophthalmic Insert Into Lacrimal Canaliculus (APC 5694)

HCPCS code J1096 (Dexamethasone, lacrimal ophthalmic insert, 0.1 mg) is a drug indicated “for the treatment of ocular inflammation and pain following ophthalmic surgery.” Stakeholders assert that this drug is administered through CPT code 0356T (Insertion of drug-eluting implant (including punctal dilation and implant removal when performed) into lacrimal canaliculus, each). Stakeholders also state the drug is inserted in a natural opening in the eyelid (called the punctum) and that the drug is designed to deliver a tapered dose of dexamethasone to the ocular surface for up to 30 days. HCPCS code J1096 is currently on pass-through status and assigned to APC 9308 (Dexametha opth insert 0.1 mg) with status indicator “G”. Please see section V.A.5. of this final rule with comment period for further information regarding the pass-through status of J1096. CPT code 0356T is currently assigned to status indicator “Q1”, indicating conditionally packaged payment under the OPPS. Packaged payment applies if a code assigned status indicator “Q1” is billed on the same claim as a HCPCS code assigned status indicator “S”, “T”, or “V”. Accordingly, based on the OPPS assigned status indicator, CPT code 0356T is assigned to payment indicator “N1” in the ASC setting, meaning a packaged service/item. We refer readers to Addendum D1 of this final rule with comment period for a list of OPPS status indicators and their definitions, available via the internet on the CMS website. We also refer readers to Addendum AA for ASC payment indicator assignments and to Addendum DD1 for payment indicator definitions, available via the internet on the CMS website. For CY 2021, CPT code 0356T is assigned to APC 5692 (Level 2 Drug Administration). Effective January 1, 2022, CPT code 0356T will be deleted. CPT code 68841, represented by placeholder code 68XXX in the proposed rule, will become effective on January 1, 2022.

Due to the similarity between CPT code 0356T and CPT code 68841, we proposed to assign CPT code 68841 to the same APC, status indicator, and payment indicator assignments as CPT code 0356T.

Additionally, we note that the manufacturer of the product that is usually administered through 0356T and placeholder code 68XXX, brought the issue of payment of this code to the Advisory Panel on Hospital Outpatient Payment (also known as HOP Panel) in 2021 for CY 2022 rulemaking and requested a new APC placement. The HOP Panel did not make a recommendation to reassign placeholder code 68XXX to a different APC, OPPS status indicator, or ASC payment indicator as suggested by the presenters.

Comment: Commenters asserted that the proposed placeholder code 68XXX is used to describe the administration of Dextenza and the drug insertion procedure is typically performed after the completion of an ophthalmic procedure, such as a cataract, glaucoma, or retina procedure. Commenters state this procedure is typically done in the ASC setting 80 percent of the time, and is performed in the HOPD setting 20 percent of the time.

Several commenters had concerns with continuing the same APC placement of APC 5692 for CPT code 68XXX for CY 2022. Commenters generally advocated for increased payment for this CPT code in the HOPD and ASC settings. Some commenters did not make a specific suggestion as to what the final APC assignment should be, rather they argued the proposed payment was inadequate. However, some commenters made specific recommendations to change the APC assignment to APC 5503 (Level 3 Extraocular, Repair and Plastic Eye Procedures). Commenters felt this would be a more appropriate and fair APC placement due to its resource similarity to procedures in this APC. Commenters frequently cited CPT 66030 (Injection, anterior chamber of eye (separate procedure); medication) and CPT 0X78T (Injection, posterior chamber of eye; medication), which were proposed to be assigned to APC 5491 (Level 1 Intraocular Procedures), as similar procedures to which 68XXX should be compared. However, commenters did recognize that 68XXX represents an extraocular procedure; therefore, they felt APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye Procedures) would be an appropriate alternative APC assignment.

A minority of commenters discussed the proposed status indicator assignment and payment indicator assignment for 68XXX. Some said a “Q1” status indicator was inappropriate, but did not provide an alternative suggestion. One commenter provided an alternate crosswalk for 68XXX and stated that, in their view, 68XXX was clinically similar to CPT Code 68761 (Closure of the lacrimal punctum; by plug, each), which is assigned to APC 5501 (Level 1 Extraocular, Repair and Plastic Eye Procedures), and is assigned to status indicator “T”.

Additionally, a commenter mentioned using available 2020 claims data for 0356T, instead of the zero claims data available using 2019 claims as proposed, which would suggest a higher APC placement.

Several stakeholders commented that the clinical importance of providing HCPCS code J1096 to patients is that it reduces ocular pain, inflammation, and reduces the burden of topical eyedrop application. Additionally, providers stated that they usually perform the procedure to administer Dextenza after the conclusion of ophthalmic surgeries. Commenters believe the procedure is a distinct surgical procedure that requires additional operating room time and resources. Commenters were concerned that the lack of increased or separate payment may reduce access to Dextenza, particularly in the ASC setting.

Response: We thank commenters for their feedback. We note that placeholder code 68XXX will be replaced by CPT code 68841, and we will refer to this code from here on. Based on input from stakeholders, we believe an APC reassignment is appropriate for CY 2022. After careful consideration of the statements from commenters, we analyzed available claims data and similar procedures that approximate the clinical resources associated with CPT code 68841. We agree with a commenter that CPT code 68761 (Closure of the lacrimal punctum; by plug, each) may more appropriately approximate the resources associated with CPT code 68841. We also believe that CPT code 68801 (Dilation of lacrimal punctum, with or without irrigation) represents a clinically similar procedure and would also be an appropriate procedure with which to compare CPT code 68841. Additionally, based on our review of comments, we do not find it appropriate to use the three single frequency claims that are associated with the CY 2020 claims data for CPT code 0356T as a basis for CPT code 68841, as they seem anomalous compared to the 1,543 total frequency claims available in the CY 2020 claims data dataset. Additionally, we do not find it appropriate to use CY 2019 claims data for 0356T as there are zero single frequency claims, 53 total frequency claims, and a zero-dollar geometric mean. Rather, we believe estimating the clinical resources needed for CPT code 68841 through comparison to clinically similar codes is more appropriate for CY 2022.

Based on the CY 2019 claims data available for CY 2022 OPPS ratesetting, the geometric mean cost associated with CPT code 68761 is $211.17 and the geometric mean cost associated with CPT code 68801 is $300.27. Based on these geometric mean costs, we believe assignment of CPT code 68841 to APC 5694 (Level 4 Drug Administration) is appropriate. Additionally, we continue to believe that assignment of CPT code 68841 to an OPPS status indicator “Q1” and an associated ASC payment indicator of “N1”, is appropriate. Commenters have stated that CPT code 68841 is performed during ophthalmic surgeries, such as cataract surgeries. A status indicator “Q1”, conditionally packaged procedure, describes a HCPCS code where the payment is packaged when it is provided with a significant procedure but is separately paid when the service appears on the claim without a significant procedure. Because ASC services always include a surgical procedure, HCPCS codes that are conditionally packaged under the OPPS are generally packaged (payment indictor “N1”) under the ASC payment system. Although stakeholders state this is an independent surgical procedure and should not be packaged into the primary ophthalmic procedure in which the drug and drug administration are associated, based on stakeholder comment regarding clinical patterns as to how the drug is used, we do not agree. We find it appropriate to conditionally package CPT code 68841 based on its clinical use patterns as described by commenters. This is consistent with 42 CFR 419.2(b). The conditional packaging of this code supports our overarching goal to make payments for all services paid under the OPPS and ASC payment system more consistent with those of a prospective payment system and less like those of a per-service fee schedule. We believe that packaging encourages efficiency and is an essential component of a prospective payment system, and that packaging payments for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service is a fundamental part of the OPPS. We therefore believe packaging of CPT code 68841 is appropriate.

After consideration of the public comments, we are finalizing our proposal to assign CPT code 68841 to APC 5694 (Level 4 Drug Administration) with OPPS status indicator “Q1” for CY 2022. In addition, based on the OPPS assignments, we are finalizing an ASC payment indicator of “N1” for CPT code 68841 for CY 2022. Please see Table 22 for the code descriptor, APC assignment, status indicator assignment, and payment indicator assignment for CPT code 68841 for CY 2022.

3. Allergy Testing (APC 5724)

For CY 2022, we proposed to continue to assign CPT code 95004 (Percutaneous tests (scratch, puncture, prick) with allergenic extracts, immediate type reaction, including test interpretation and report, specify number of tests) and CPT code 95044 to APC 5724 (Level 4 Diagnostic Tests and Related Services) with a proposed payment rate of $943.96.

Comment: One commenter expressed concerns with the overall reimbursement for allergy testing, stating that reimbursement has increased dramatically over time for what the commenter asserted was a relatively routine procedure. The commenter recommended that CMS review the payment rates for these services to ensure that they are being accurately reimbursed.

Response: We thank the commenter for their insight and will consider it for future rulemaking.

In summary, after consideration of the public comment, we are finalizing our proposal without modification. Specifically, we are finalizing assignment of CPT codes 95004 and 95044 to APC 5724. The final CY 2022 OPPS payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

4. Blood Not Otherwise Classified (NOC) (APC 9537)

Providers and stakeholders in the blood products field have reported that product development for new blood products has accelerated. There may be several additional new blood products entering the market by the end of by CY 2022, compared to only one or two new products entering the market over the previous 15 to 20 years. To encourage providers to use these new products, providers and stakeholders requested that we establish a new HCPCS code to allow for payment for unclassified blood products prior to these products receiving their own HCPCS code. Under the OPPS, unclassified procedures are generally assigned to the lowest APC payment level of an APC family. However, since blood products are each assigned to their own unique APC, the concept of a lowest APC payment level does not apply in this context.

Starting January 1, 2020, we established a new HCPCS code, P9099 (Blood component or product not otherwise classified) which allows providers to report unclassified blood products. We assigned HCPCS code P9099 to status indicator “E2” (Not payable by Medicare when submitted on an outpatient claim) for CY 2020. We took this action because HCPCS code P9099 potentially could be reported for multiple products with different costs during the same period of time. Therefore, we could not identify an individual blood product HCPCS code that would have a similar cost to HCPCS code P9099, and were not able to crosswalk a payment rate from an established blood product HCPCS code to HCPCS code P9099. Some stakeholders expressed concerns that assigning HCPCS code P9099 to a non-payable status in the OPPS meant that hospitals would receive no payment when they used unclassified blood products. Also, claim lines billed with P9099 are rejected by Medicare, which prevents providers from tracking the utilization of unclassified blood products.

Because of the challenges of determining an appropriate payment rate for unclassified blood products, we stated in the CY 2021 OPPS/ASC proposed rule that we were considering packaging the cost of unclassified blood products into their affiliated primary medical procedure. Although we typically do not package blood products under the OPPS, for unclassified blood products, we stated that we do not believe it is possible to accurately determine an appropriate rate that would apply for all of the products (potentially several, with varying costs) that may be reported using HCPCS code P9099. Packaging the cost of unclassified blood products into the payment for the primary medical service by assigning HCPCS code P9099 a status indicator of “N” would allow providers to report the cost of unclassified blood products to Medicare. Over time, the costs of unspecified blood products would be reflected in the payment rate for the primary medical service if the blood product remains unclassified. However, we stated that we expect that most blood products would seek and be granted more specific coding such that the unclassified HCPCS code P9099 would no longer be applicable. We also explained that we believe that packaging the costs of unclassified blood products would be an improvement over the current non-payable status for HCPCS code P9099 as it would allow for tracking of the costs and utilization of unclassified blood products. We had concerns about this approach because providers would not receive separate payment for the blood products reported with HCPCS code P9099, and providers would have had to wait at least two years for the primary service billed with HCPCS code P9099 to potentially reflect some of the cost of the unclassified product. After considering the other payment options for HCPCS code P9099 and comments from providers and stakeholders, we decided against packaging HCPCS code P9099 for CY 2021.

The CMS HOP Panel and multiple stakeholders suggested another payment alternative to have unclassified blood products paid separately by using a weighted average of the payment rates of all separately payable blood products in the OPPS. The average payment rate would be weighted by the number of units billed for each service in the OPPS. Stakeholders believed a weighted average would be consistent with OPPS policy to provide separate payment for all blood products and would encourage the use of HCPCS code P9099 to track the utilization of unclassified blood products until the new products could receive individual HCPCS codes. Other stakeholders suggested that unclassified blood products be paid either at charges reduced to cost or at reasonable cost to appropriately compensate providers billing unclassified blood products.

We decided against paying for HCPCS code P9099 through either a weighted average payment, charges reduced to cost, or reasonable cost for CY 2021. We had concerns that these payment methods could provide incentives to discourage manufacturers of new blood products from seeking individual HCPCS codes for their products. A weighted average payment would encourage manufacturers of relatively inexpensive unclassified blood products not to seek a HCPCS code for their products because the payment using HCPCS code P9099 for the products would be substantially higher than payment the products would receive once an individual code is established for the blood products. In addition, the level of payment from a weighted average payment may reduce the urgency of manufacturers to seek an individual HCPCS code even for higher-cost products, which would delay our ability to track payment for individual blood products.

After considering our options, we decided for CY 2021 to pay for HCPCS code P9099 by making the blood not otherwise classified code separately payable, assigning it a status indicator of “R”, and paying the code at a rate equal to the lowest paid separately payable blood product in the OPPS, which is P9043 (Infusion, plasma protein fraction (human), 5 percent, 50 ml) with a payment rate of $7.79 per unit. This policy aligns with our overall OPPS policy to pay NOC codes at the lowest available APC rate for a service category, while providing a payment for unclassified blood products when a service is reported on the claim. Our policy also provides incentives for manufacturers to seek individual HCPCS codes for new blood products, which helps us to track the utilization of these new blood products and establish a payment rate for these new products that better reflects their cost. For CY 2022, we proposed to continue our policy that was established in CY 2021 without modification.

Comment: The HOP Panel and multiple commenters have requested that unclassified blood products assigned to HCPCS code P9099 be paid based on reasonable cost and that HCPCS code P9099 be assigned a status indicator of “F” (paid at reasonable cost). Unclassified blood products paid on the basis of reasonable cost would receive payment based on individual invoices submitted by the provider that detail the actual cost of the unclassified blood products for the provider. The commenters believe our current policy severely underpays for most unclassified blood products, which limits the ability of providers to use these new products, and discourages innovation in the blood products field. Commenters assert that the universe of blood products is very heterogeneous with each product having its own APC and payment rate, and our policy that assigns unclassified clinical services HCPCS codes to the lowest-paying APC in a clinical series is not appropriate for the payment of blood products.

Commenters also believe the administrative burdens of submitting claims to receive payment through reasonable cost would encourage blood product manufacturers to classify their unclassified products. Relatedly, two other commenters urged us to reduce administrative burden for providers if we decide to implement reasonable cost payment for HCPCS code P9099.

Response: We have concerns about paying unclassified blood products using reasonable cost and assigning HCPCS code P9099 a status indicator of “F”. Although reasonable cost would likely provide a more granular reflection of the cost of unclassified blood products to providers, there would be no incentive for providers to manage their costs when using unclassified blood products, and no incentives for the manufacturers to seek individual HCPCS codes for the unclassified blood products. We agree with the commenters that the administrative burdens of seeking payment through reasonable cost methodology may provide some incentive to classify currently unclassified blood products. However, we believe that providers will prefer to receive full cost reimbursement for an unclassified blood product rather than risk receiving a prospective payment that could be less than full cost of the blood product if the blood product is classified and assigned a HCPCS code. Finally, we do not support reasonable cost payment for HCPCS code P9099 because the OPPS is a prospective payment system, and we want to limit rather than expand the types of services within the OPPS that do not receive prospective payment.

After reviewing the public comments we received, we have decided to implement our proposal without modification to keep HCPCS code P9099 separately payable with a status indicator of “R”, and pay the code at a rate equal to the lowest paid separately payable blood product in the OPPS, which is P9043 (Infusion, plasma protein fraction (human), 5 percent, 50 ml) with a payment rate of $7.79 per unit. Therefore, we are finalizing our proposal to continue to assign HCPCS code P9099 to APC 9537 (Blood component/product noc) for CY 2022. We appreciate that establishing a fair and equitable payment methodology for HCPCS code P9099 continues to be a challenge, and we plan to explore other possible ideas for the payment of HCPCS code P9099 in future rulemaking.

5. Bone Substitute Material Injection (APC 5113)

For January 1, 2022, the AMA's CPT Editorial Panel established new CPT code 0707T (Injection(s), bone substitute material (for example, calcium phosphate) into subchondral bone defect (that is, bone marrow lesion, bone bruise, stress injury, microtrabecular fracture), including imaging guidance and arthroscopic assistance for joint visualization). We note that CPT code 0707T was listed as placeholder code 0X79T in OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule. For CY 2022, we proposed to assign CPT code 0707T to APC 5111 (Level 1 Musculoskeletal Procedures) with a proposed payment rate of $211.47.

Comment: Commenters did not agree with our proposed APC assignment. Instead, commenters stated that CPT code 0707T should be assigned to APC 5114 (Level 4 Musculoskeletal Procedure) with a proposed payment rate of $6,428.51 based on its clinical and resource homogeneity to the procedures and services in the APC. Commenters stated that 0707T is most clinically similar to Zimmer Biomet's AccuFill BSM procedure, which is the service described by CPT code 29855 (Arthroscopically aided treatment of tibial fracture, proximal (plateau); unicondylar, includes internal fixation, when performed (includes arthroscopy)), and assigned to APC 5114. Commenters stated that the injection of a bone substitute material into a subchondral bone defect is mainly accounted for by two products, Zimmer Biomet's AccuFill BSM and Anika, which range in price from $2,600-$2,800.

Response: We do not agree that CPT code 0707T is comparable to CPT code 29855; however, based on our review of the clinical characteristics of the procedure and input from our medical advisors, we believe CPT code 0707T is more similar to the procedures assigned to APC 5113 (Level 3 Musculoskeletal Procedures) with a proposed payment rate of $2,906.75, and this payment rate better accounts for the cost of the procedure as well as the bone substitute material.

In summary, after consideration of the public comments, we are assigning CPT code 0707T to APC 5113 for CY 2022 based on its resource and clinical similarity to the procedures in APC 5113. The final CY 2022 OPPS payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

As we do every year, we will reevaluate the APC assignment for CPT code 0707T for the next rulemaking cycle. We note that we review, on an annual basis, the APC assignments for all services and items paid under the OPPS.

6. Calculus Aspiration With Lithotripsy Procedure (APC 5376)

For CY 2022, we proposed to assign HCPCS code C9761 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy, with lithotripsy (ureteral catheterization is included) and vacuum aspiration of the kidney, collecting system and urethra if applicable) to APC 5375 (Level 5 Urology and Related Services) with a proposed payment of $4,527.23. HCPCS code C9761 describes the procedure that uses a sterile, single-use aspiration-irrigation catheter that is designed to assist in the removal of stone fragments during standard ureteroscopy. Based on our analysis of the latest CY 2020 claims data for this CY 2022 OPPS/ASC final rule with comment period, our data reveals two single claims for HCPCS code C9761 with a geometric mean cost of $9,342.

Comment: Several commenters expressed concerns that a significant difference between cost and payment prevented hospitals from providing this procedure to their patients. The commenters urged CMS to change the APC assignment of HCPCS code C9761 to APC 5376 (Level 6 Urology and Related Services). The commenters asked that CMS assign HCPCS code C9761 to APC 5376 for two reasons: (1) The current and proposed reimbursement rates for services in APC 5375 are inadequate to pay hospitals appropriately for the costs of furnishing the Steerable Ureteroscopic Renal Evacuation (SURE) procedure; and (2) the clinical characteristics and resources associated with HCPCS code C9761 are similar to codes in APC 5376 than services in APC 5375.

Response: We thank the commenters for their feedback. Based on information from the manufacturer, resources involved for the procedure described by HCPCS code C9761 appear to be higher than for those procedures assigned to APC 5375. At this time, only two CY 2020 claims are available to assist in identifying costs associated with the procedure. The geometric mean cost of $9,342 for the two claims indicate that the cost of HCPCS code C9761 is substantially higher than the proposed payment rate of $4,527.23. However, two claims is not a significant data set; and we have concerns that the costs reported from the two claims for the procedure described by HCPCS code C9761 may not accurately reflect the geometric mean costs of the procedure. We also note that, in the manufacturer's 2020 New Technology APC application, they indicated that an appropriate payment for the procedure described by HCPCS code C9761 would be approximately $5,627.39 and that assignment to New Technology APC 1566 (New Technology—Level 29 ($5,501-$6,000)) would be appropriate. Based on the claims data along with the reported costs associated with the procedure presented to us by the manufacturer, we believe that it is appropriate to assign the procedure described by HCPCS code C9761 to APC 5376 (Level 6 Urology and Related Services), for CY 2022. As we do every year we will reevaluate the APC assignment for CPT code 9761 in the next rulemaking cycle. We remind hospitals that we review, on an annual basis, the APC assignments for all services and items paid under the OPPS based on the latest claims data available to us.

In summary, after consideration of the public comments we received, we are modifying our proposal for the APC assignment of HCPCS code C9761. Instead of assigning this code to APC 5375 (Level 5 Urology and Related Services), for CY 2022, we are reassigning HCPCS code C9761 to APC 5376 (Level 6 Urology and Related Services). Table 23 below lists the final CY 2022 status indicator and APC assignments for the calculus aspiration with lithotripsy procedure. We refer readers to Addendum B to this final rule with comment period for the final payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website.

7. Cardiac Computed Tomography (CT) (APC 5571)

For CY 2022, we proposed to continue to assign the following cardiac CT exam codes to APC 5571 (Level 1 Imaging with Contrast) with a proposed payment rate of $183.30:

• 75572 (Computed tomography, heart, with contrast material, for evaluation of cardiac structure and morphology (including 3d image postprocessing, assessment of cardiac function, and evaluation of venous structures, if performed));
• 75573 (Computed tomography, heart, with contrast material, for evaluation of cardiac structure and morphology in the setting of congenital heart disease (including 3d image postprocessing, assessment of lv cardiac function, rv structure and function and evaluation of venous structures, if performed)); and
• 75574 (Computed tomographic angiography, heart, coronary arteries and bypass grafts (when present), with contrast material, including 3d image postprocessing (including evaluation of cardiac structure and morphology, assessment of cardiac function, and evaluation of venous structures, if performed)).

Comment: Many commenters opposed the assignment of CPT codes 75572, 75573, and 75574 to APC 5571. They stated that the proposed CY 2022 OPPS payment rate for APC 5571 is inadequate to cover the total cost of providing the service.

Commenters stated that they also believe that the resource costs required to perform cardiac CT scans are similar to the tests that are assigned to APC 5573 rather than APC 5571. They noted that the low payment for the test limits patient access, and requested that CMS take action to increase reimbursement to levels in line with the actual testing costs. The commenters requested an APC reassignment for all three codes. Specifically, the commenters suggested reassigning CPT codes 75572 and 75573 to APC 5572 (Level 2 Imaging with Contrast) and CPT code 75574 to APC 5573 (Level 3 Imaging with Contrast). Most of the commenters reported that cardiac CT scans are more resource intensive than other CT and x-ray scans in APC 5571 and expressed concerns that APC-misallocation would suppress utilization for these services.

Response: As we stated in the CY 2021 OPPS final rule with comment period (85 FR 85956), payments under the OPPS are based on our analysis of the latest available claims and cost report data submitted to Medicare. We have many years of claims data for CPT codes 75572, 75573, and 75574. Based on the geometric mean costs for these codes, we do not believe that CPT codes 75572, 75573, and 75574 utilize similar resources as the exams assigned to APC 5572 or APC 5573. We refer readers to the CY 2021 OPPS final rule with comment period for a more detailed discussion of the pricing methodology for CPT codes 75572, 75573, and 75574 (85 FR 85956 through 85959).

In summary, after consideration of the public comments, we are finalizing our proposal, without modification, to assign the cardiac CT exam codes, specifically, CPT codes 75572, 75573, and 75574 to APC 5571. The final CY 2022 OPPS payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

8. Cardiac Magnetic Resonance (CMR) Imaging (APC 5523, 5524, 5572, and 5573)

For CY 2022, we proposed to continue to assign the following cardiac magnetic resonance imaging (MRI) CPT codes to APC 5523, 5524, 5572, and 5573, respectively:

• CPT code 75557 (Cardiac magnetic resonance imaging for morphology and function without contrast material) to APC 5523 (Level 3 Imaging without Contrast) with a proposed payment of $236.14;
• CPT code 75559 (Cardiac magnetic resonance imaging for morphology and function without contrast material; with stress imaging) to APC 5524 (Level 3 Imaging without Contrast) with a proposed payment of $495.76;
• CPT code 75561 (Cardiac magnetic resonance imaging for morphology and function without contrast material(s), followed by contrast material(s) and further sequences) to APC 5572 (Level 2 Imaging with Contrast) with a proposed payment of $377.80; and
• CPT code 75563 (Cardiac magnetic resonance imaging for morphology and function without contrast material(s), followed by contrast material(s) and further sequences; with stress imaging) to APC 5573 (Level 3 Imaging with Contrast) with a proposed payment of $733.76.

Comment: A few commenters expressed concern with the lack of payment stability for cardiac MRI services, specifically, those described by CPT codes 75557, 75559, 75561, and 75563. They indicated that the payments for these codes have decreased in the last several years, and prior to CY 2017, the codes were placed in appropriate APCs. Of significant concern are the payment rates for CPT codes 75561 and 75563, which, according to the commenters, are grouped with services that are not clinically similar. The commenters stated that CPT code 75561 is unlike CT of the abdomen or pelvis or MRI of the neck and spine in APC 5572, and instead, the code should be placed in APC 5573 with comparable services. The commenters further added that CPT code 75563 is labor-intensive and should be assigned to APC 5593 (Level 3 Nuclear Medicine and Related Services).

Response: As stated in the CY 2021 OPPS final rule with comment period, payments under the OPPS are based on our analysis of the latest available claims and cost report data submitted to Medicare. We have many years of claims data for CPT codes 75561 and 75563. Based on the geometric mean costs for these codes, we do not believe that CPT codes 75561 and 75563 utilize similar resources as the exams assigned to APC 5573 or APC 5593. We refer readers to the CY 2021 OPPS final rule with comment period for a more detailed discussion of the pricing methodology for CPT codes 75561 and 75563 (85 FR 85959 through 85960).

In summary, after consideration of the public comments, we are finalizing our proposal, without modification, to assign the cardiac MRI codes, specifically, CPT codes 75561 and 75563 to APCs 5572 and 5573. The final CY 2022 OPPS payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

9. Chimeric Antigen Receptor Therapy (CAR-T) (APCs 5694, 9035, 9194, 9391, 9413, and 9422)

Chimeric Antigen Receptor T-Cell (CAR T-cell) therapy is a cell-based gene therapy in which T-cells are collected and genetically engineered to express a chimeric antigen receptor that will bind to a certain protein on a patient's cancerous cells. The CAR T-cells are then administered to the patient to attack certain cancerous cells and the individual is observed for potential serious side effects that would require medical intervention. We refer readers to previous discussions in the OPPS/ASC final rules with comment period for background regarding the specific CAR T-cell products, in both the CY 2020 OPPS/ASC final rule with comment period (84 FR 61231 through 61234) and the CY 2019 OPPS/ASC final rule with comment period (83 FR 58904 through 58908). In addition, for discussion about CY 2022 OPPS payment policies for separately paid drugs with pass-through status expiring or continuing in CY 2022, please see sections V.A.4. and V.A.5. of this final rule with comment period. The AMA created four Category III CPT codes that are related to CAR T-cell therapy, effective January 1, 2019. As discussed in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58904 through 58908), the CY 2020 OPPS/ASC final rule with comment period (84 FR 61231 through 61234), and the CY 2021 OPPS/ASC final rule with comment period (85 FR 85949 through 85951) we finalized our proposal to assign procedures described by CPT codes 0537T, 0538T, and 0539T to status indicator “B” (Codes that are not recognized by OPPS when submitted on an outpatient hospital Part B bill type (12x and 13x)) to indicate that the services are not paid under the OPPS. The procedures described by CPT codes 0537T, 0538T, and 0539T describe the various steps required to collect and prepare the genetically modified T-cells, and Medicare does not generally pay separately for each step used to manufacture a drug or biological. We also finalized that the procedures described by CPT code 0540T would be assigned status indicator “S” (Procedure or Service, Not Discounted when Multiple) and APC 5694 (Level 4 Drug Administration) for CY 2019, CY 2020, and CY 2021 and made no proposal to change the assignment for CY 2022. Additionally, the National Uniform Billing Committee (NUBC) established CAR T-cell-related revenue codes and a value code to be reportable on Hospital Outpatient Department (HOPD) claims effective for claims received on or after April 1, 2019. We made no specific proposal related to the CAR T-cell preparation codes, as described by CPT codes 0537T, 0538T, 0539T. As listed in Addendum B of the CY 2022 OPPS/ASC proposed rule, we proposed to continue to assign procedures described by these CPT codes, 0537T, 0538T, and 0539T, to status indicator “B” (Codes that are not recognized by OPPS when submitted on an outpatient hospital Part B bill type (12x and 13x)) to indicate that the services are not paid under the OPPS. We proposed to continue to assign CPT code 0540T to status indicator “S” (Procedure or Service, Not Discounted when Multiple) and APC 5694 (Level IV Drug Administration).

Comment: Two commenters opposed our proposal to continue to assign status indicator “B” to CPT codes 0537T, 0538T, and 0539T for CY 2022. One commenter did not have a specific recommendation, but rather suggested CMS take into consideration the complex process and separately recognize the efforts associated with leukapheresis, cell handling, and processing. This commenter additionally mentioned the administrative burden associated with CAR T-cell therapy administration, among other resources that are specific to the process in which CAR-T is processed, manufactured, and then administered.

The other commenter discussed a wide variety of topics related to CAR T-cell therapy and stated that a change in status indicator would be appropriate, with a preference for assigning CPT codes 0537T, 0538T, and 0539T to status indicator “Q1”. This commenter believed that the procedures these CPT codes describe did not represent the steps required to manufacture the CAR T-cell product, as CMS has stated. Generally, this commenter advocated for a change in status indicator as they believed this change is necessary to allow services furnished to the patient to be eligible for payment and for hospitals to be paid appropriately for the services they provide during each step of the CAR T-cell process. This commenter pointed out that a number of patients may receive the preparation procedures, but then fail to receive the final CAR-T product. Accordingly, this commenter asked CMS to release new cost centers and to revise the instructions in MLN Matters Article SE19009 in order to no longer allow hospitals to put outpatient cell collection and process charges occurring more than three days prior to an inpatient stay on inpatient claims or to report cell collection and cell processing charges as part of the product charge.

Response: We thank the commenters for their feedback. CMS does not believe that separate or packaged payment under the OPPS is necessary for the procedures described by CPT codes 0537T, 0538T, and 0539T for CY 2022. The procedures described by CPT codes 0537T, 0538T, and 0539T describe the various steps required to collect and prepare the genetically modified T-cells; and Medicare does not generally pay separately for each step used to manufacture a drug or biological product. Additionally, we note that CAR T-cell therapy is a unique therapy approved as a biologic, with unique preparation procedures, that cannot be directly compared to other therapies or existing CPT codes. We note that the current HCPCS coding for the currently approved CAR T-cell therapies include leukapheresis and dose preparation procedures, as these services are included in the manufacturing of these biologicals. Therefore, payment for these services is incorporated into the drug codes. Please see Table 24 for HCPCS coding for CAR T-cell therapies.

We note that although there is no payment associated with CPT codes 0537T, 0538T, and 0539T for reasons stated previously, these codes can still be reported to CMS for tracking purposes. We thank commenters for their feedback related to our guidance contained in MLN Matters Article SE19009. We are not revising this document at this time as we believe these instructions are consistent with our longstanding policies, but we appreciate the feedback from stakeholders. We believe that the comments in reference to payment for services in settings not payable under the OPPS are outside the scope of the CY 2022 OPPS/ASC proposed rule. Accordingly, we are not revising the existing codes for CAR T-cell therapies to remove leukapheresis and dose preparation procedures, and we are not accepting the recommendations at this time to revise the status indicators for procedures described by CPT codes 0537T, 0538T, and 0539T. We will continue to evaluate and monitor payment for CAR T-cell therapies.

In summary, after consideration of the public comments we received, we are finalizing our proposal to assign status indicator “B” to CPT codes 0537T, 0538T, and 0539T for CY 2022. Additionally, we are continuing our policy from CY 2019 to assign status indicator “S” to CPT code 0540T for CY 2022. Table 25 below shows the final SI and APC assignments for HCPCS codes 0537T, 0538T, 0539T, and 0540T for CY 2022. For more information on CY 2022 OPPS final status indicators, APC assignments, and payment rates for HCPCS codes, including the CAR T-cell drug codes, we refer readers to Addendum B to this final rule with comment period. In addition, the status indicator definitions can be found in Addendum D1 (OPPS Payment Status Indicators for CY 2022) to this final rule with comment period. Both Addendum B and D1 are available via the internet on the CMS website.

10. ClariFix Procedure (APC 5164)

For CY 2022, we proposed to continue to assign HCPCS code C9771 (Nasal/sinus endoscopy, cryoablation nasal tissue(s) and/or nerve(s), unilateral or bilateral)) to APC 5164 Level 4 ENT Procedures. We created HCPCS code C9771 to describe the technology associated with nasal endoscopy with cryoablation of nasal tissues and/or nerves, based on our review of a New Technology APC application submitted by the manufacturer of the technology. HCPCS code C9771 was effective on January 1, 2021.

Comment: We received one comment from the manufacturer requesting that HCPCS code C9771 be reassigned to APC 5165 Level 5 ENT Procedures, which had a proposed CY 2022 OPPS payment rate of $5,218.17. The commenter believed that assigning HCPCS code C9771 to APC 5165 would be more appropriate due to the resource and clinical similarity to the procedures in that APC.

Response: We thank the commenter for their recommendation. After reviewing the comment, and after further evaluation of the procedure, as well as input from our medical advisors, we continue to believe that the current APC assignment for HCPCS code C9771 is appropriate, based on its resource and clinical similarity to the procedures in APC 5164. Therefore, we are not accepting the commenter's recommendation. We remind hospitals that every year we review the APC assignments for all services and items paid under the OPPS. We will reassess the APC assignment for the procedure described by HCPCS C9771 once we have claims data for the code. We note that the first year that claims data will be available for HCPCS code C9771 will be during the CY 2023 rulemaking cycle.

In summary, after consideration of the public comment, we are finalizing our proposal without modification. The final CY 2022 OPPS payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

11. Dilapan-S Cervical Dilation Procedure (APC 5412)

For CY 2022, we proposed to continue to assign CPT code 59200 (Insertion of cervical dilator (for example, laminaria, prostaglandin) (separate procedure)) to APC 5412 (Level 2 Gynecologic Procedures) with a proposed payment rate of $289.30.

Comment: A few commenters requested that CMS reassign CPT code 59200 to APC 5413 (Level 3 Gynecologic Procedures) with a proposed payment rate of $650.81. These commenters state that the cost of Dilapan-S, a cervical softening and dilation device, is not reflected in the payment rate for APC 5412.

Response: For CY 2022, OPPS payments are based on claims submitted between January 1, 2019, through December 31, 2019, that were processed on or before June 30, 2020. Based on our evaluation of the claims data for this final rule with comment period, the geometric mean cost for CPT code 59200 is $456.73, which, while it does fall outside the range of geometric mean costs for APC 5412 ($206.24-$402.55) it does not fall within the range of geometric mean costs for APC 5413 ($516.27-$874.50.) Given that the Dilapan-S device and CPT code 59200 have both existed for a significant period of time, the fact that payment for CPT code 59200 does not reflect the costs of Dilapan-S suggests that this device is not routinely used to furnish CPT code 59200. Furthermore, based on our review of the clinical characteristics of the procedure and input from our medical advisors, we continue to believe that CPT code 59200 is more clinically similar to the other services in APC 5412.

In summary, after consideration of the public comments, we are finalizing our proposal to continue to assign CPT code 59200 to APC 5412. The final CY 2022 OPPS payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

12. Ellipsys System Hemodialysis Arteriovenous Fistula (AVF) Procedure (APC 5194)

For CY 2022, we proposed to continue to assign HCPCS code G2170 to APC 5194 (Level 4 Endovascular Procedures) with a proposed payment rate of $16,484.41.

Comment: Commenters supported this proposal.

Response: We appreciate commenters' support.

In summary, after consideration of the public comments, we are finalizing our proposal without modification. Specifically, we are finalizing our APC proposal to continue to assign HCPCS code G2170 to APC 5194.

The final CY 2022 OPPS payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

13. Esophagogastroduodenoscopy (APC 5331)

For CY 2022, we proposed to continue to assign CPT code 43240 (Esophagogastroduodenoscopy, flexible, transoral; with transmural drainage of pseudocyst (includes placement of transmural drainage catheter[s]/stent[s], when performed, and endoscopic ultrasound, when performed)) to APC 5303 (Level 3 Upper GI Procedures) with a proposed payment rate of $3,160.76.

Comment: One commenter requested the reassignment of CPT code 43240 to APC 5331 (Complex GI Procedures) with a proposed payment rate of $5,159.81. The commenter stated that the geometric mean cost of CPT code 43240 ($5827.94) exceeds the 2 times threshold for APC 5303 and is within the range of the geometric mean costs for APC 5331 ($4,706.48-$6,277.12). Furthermore, the commenter stated that CPT code 43240 is more clinically similar to the services in APC 5331, which includes all other gastroenterology stent placement codes.

Response: Based on our review of the cost data and input from our clinical advisors, we agree that CPT code 43240 would be more appropriately placed in APC 5331 based on its clinical and resource homogeneity to the procedures in the APC. Therefore, we are reassigning CPT code 43240 to APC 5331.

In summary, after consideration of the public comments, we are finalizing the reassignment of CPT code 43240 to APC 5331. The final CY 2022 OPPS payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

14. External Electrocardiogram (ECG) (APCs 5733 and 5734)

For CY 2022, we proposed to continue to assign CPT code 93242 (External ECG recording for more than 48 hours up to 7 days by continuous rhythm recording) to APC 5732 (Level 2 Minor Procedures) with a proposed payment rate of $34.72 and CPT code 93243 (External ECG recording for more than 48 hours up to 7 days scanning analysis with report) to APC 5733 (Level 3 Minor Procedures) with a proposed payment rate of $57.12.

Comment: A few commenters suggested that, based on clinical similarity to CPT codes 93225 (External electrocardiographic recording up to 48 hours by continuous rhythm recording and storage; recording (includes connection, recording, and disconnection)) and 93226 (External electrocardiographic recording up to 48 hours by continuous rhythm recording and storage; scanning analysis with report), which include payment for a holter monitor, CMS should reassign CPT codes 93242 and 93243 to APC 5734 (Level 4 Minor Procedures) with a proposed payment rate of $115.71. Commenters further stated that placement in APC 5734 would be consistent with the placement of the predecessor codes, CPT codes 0296T (External electrocardiographic recording for more than 48 hours up to 21 days by continuous rhythm recording and storage; recording (includes connection and initial recording)) and 0296T (External electrocardiographic recording for more than 48 hours up to 21 days by continuous rhythm recording and storage; scanning analysis with report).

Response: Based on our review of the clinical characteristics of the procedure and input from our medical advisors, we agree with commenters that resources associated with furnishing CPT codes 93242 and 93243 may not be accurately reflected in their current APC assignment. We do not agree with commenters that both codes should be reassigned to APC 5734. We note that the predecessor codes, CPT codes 0296T and 0297T, described 21 days of continuous monitoring, while the current codes, CPT codes 93242 and 93243, describe 7 days of monitoring. We believe that CPT code 93242 shares greater clinical and cost similarities to the services in APC 5733 (Level 3 Minor Procedures), which has a proposed payment rate of $57.12. We agree with commenters, however, the CPT code 93243 does share clinical and cost similarities with the other services in APC 5734.

In summary, after consideration of the public comments, we are finalizing our proposal with modification. Specifically, we are assigning CPT code 93242 to APC 5733 and CPT code 93243 to APC 5734. The final CY 2022 OPPS payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

15. Eye-Movement Analysis Without Spatial Calibration (CPT Code 0615T)

The CPT Editorial Panel established a new CPT code 0615T, effective July 1, 2020, to describe eye-movement analysis without spatial calibration that involves the use of the EyeBOX system as an aid in the diagnosis of concussion, also known as mild traumatic brain injury (mTBI). The EyeBOX is intended to measure and analyze eye movements as an aid in the diagnosis of concussion within one week of head injury in patients 5 through 67 years of age in conjunction with a standard neurological assessment of concussion. A negative EyeBOX classification may correspond to eye movement that is consistent with a lack of concussion. A positive EyeBOX classification corresponds to eye movement that may be present in both patients with or without a concussion.

We included this new code in the July quarterly OPPS update CR (Transmittal 10224, Change Request 11814, dated July 15, 2020). Effective July 1, 2020, we assigned CPT code 0615T to APC 5734 (Level 4 Minor Procedures) with status indicator “Q1” (conditionally packaged).

As displayed in the Addendum B to the CY 2022 ASC/OPPS proposed rule, we proposed to continue to assign 0615T to APC 5734 with status indicator “Q1” and a proposed OPPS payment rate of $115.71 for CY 2022.

Comment: The manufacturer of the EyeBOX resubmitted their comment again this year because they are still concerned that the lack of adequate, separate reimbursement will strongly discourage hospitals from providing this important technology to their patients. The commenter urged CMS to: (1) Change the APC assignment of CPT code 0615T to APC 5722 (Level 2 Diagnostic Tests and Related Services); and (2) change the status indicator for the service to “S” to allow for separate payment under the OPPS. The commenter continues to claim that the proposed reimbursement rate for services in APC 5734 is inadequate to pay hospitals appropriately for the costs of furnishing the EyeBOX test. They assert the EyeBOX test costs hospitals at least $200.00 to provide and the clinical characteristics and resources associated with 0615T are more similar to codes in APC 5722 than services in APC 5734.

Response: We note that OPPS payment rates for the CY 2022 final rule are based on claims submitted between January 1, 2019, through December 31, 2019, that were processed on or before June 30, 2020. Because HCPCS code 0615T was established on July 1, 2020, we did not have claims data available for CY 2022 OPPS ratesetting.

As far as the resource similarity of CPT code 0615T to other eye-related diagnostic tests that are assigned to APC 5722, such as CPT code 92240 (Indocyanine-green angiography (includes multiframe imaging) with interpretation and report, unilateral or bilateral) and CPT code 92242 (Fluorescein angiography and indocyanine-green angiography (includes multiframe imaging) performed at the same patient encounter with interpretation and report, unilateral or bilateral), the EyeBOX test does not involve an injection. Therefore, we continue to believe that the resource costs for CPT code 0615T are not comparable to other eye-related diagnostic tests in APC 5722. Updated CY 2019 claims data for this final rule with comment period indicate that the geometric mean cost of APC 5722 is 257.89, while the geometric mean cost of APC 5734 is $109.88. Based on the lack of claims data, we believe that maintaining assignment of APC 5734 for CPT code 0615T for CY 2022 continues to be appropriate.

Depending on the procedures submitted on the claim, and whether the procedure described by CPT code 0615T is performed with any other services on the same day, the procedure described by CPT code 0615T may be paid separately through an APC (in this case APC 5734) or receive packaged payment when accompanying a more significant procedure that is reported on the claim. Based on the nature of this procedure, which may be performed by itself or with other procedures on the same claim, we believe that the continued assignment of status indicator “Q1” is appropriate for the procedure described by CPT code 0615T.

As we do every year, we will reevaluate the APC assignment for CPT code 0615T for the next rulemaking cycle. We note that we review, on an annual basis, the APC assignments for all services and items paid under the OPPS.

We are finalizing our proposal, without modification, to continue to assign CPT code 0615T to status indicator “Q1” and APC 5734 for CY 2022. The final CY 2022 payment rate for the CPT code can be found in Addendum B to this final rule with comment period (which is available via the internet on the CMS website).

16. FemSelect Enplace Procedure (APC 5415)

For CY 2022, we proposed to continue to assign HCPCS code C9778 (Colpopexy, vaginal; minimally invasive extra-peritoneal approach (sacrospinous)) to APC 5414 Level 4 Gynecologic Procedures. We created HCPCS code C9778 to describe the technology associated with vaginal colpopexy by sacrospinous ligament fixation, based on our review of a New Technology APC application submitted by the manufacturer of the technology. HCPCS code C9778 was effective on July 1, 2021.

Comment: We received many comments from providers and the manufacturer requesting that HCPCS code C9778 be reassigned to APC 5415 Level 5 Gynecologic Procedures, which had a proposed CY 2022 OPPS payment rate of $4,525.49. Commenters stated that the resource cost exceeded the payment provided by APC 5414, and that APC 5415 would be a more appropriate APC assignment.

Response: We thank the commenters for their recommendations. Based on input from our medical advisors, further evaluation of the resources to perform the surgery, and its similarity to existing procedures, we believe that HCPCS code C9778 should be reassigned to APC 5415. Based on our assessment, we believe that the service described by HCPCS code C9778 shares similar resource and clinical characteristics to the procedures included in APC 5415.

In summary, after consideration of the public comments, we are reassigning HCPCS code C9778 to APC 5415 Level 5 Gynecologic Procedures for CY 2022, as shown in Table 26 below. The final CY 2022 OPPS payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

As we do every year, we will reevaluate the APC assignment for HCPCS code C9778 for the next rulemaking cycle. We note that we review, on an annual basis, the APC assignments for all services and items paid under the OPPS. The first year that claims data will be available for HCPCS code C9778 will be during the CY 2023 rulemaking cycle.

17. Hypoglossal Nerve Neurostimulator (HGNS) Procedure (APC 5465)

Effective January 1, 2022, the AMA's CPT Editorial Panel created a new code to describe open implantation of hypoglossal nerve neurostimulator array. For CY 2022, we proposed to assign CPT code 64582 to APC 5465 (Level 5 Neurostimulator and Related Procedures) with a proposed payment rate of $30,208.51. We note that CPT code 64582 was listed as placeholder code 645X1 in OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule.

Comment: One commenter expressed support for the proposed APC assignment.

Response: We thank the commenter for their support.

In summary, after consideration of the public comments, we are finalizing our proposal without modification. Specifically, we are finalizing our APC proposal to assign CPT code 64582 to APC 5465. The final CY 2022 OPPS payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

18. IDx-DR: Artificial Intelligence System To Detect Diabetic Retinopathy (APC 5733)

For CY 2022, we proposed to continue to assign CPT code 92229 (Imaging of retina for detection or monitoring of disease; with point-of care automated analysis with diagnostic report; unilateral or bilateral) to APC 5733 (Level 3 Minor Procedures) with a proposed payment rate of $57.12.

Comment: Some commenters disagreed with the proposed payment amount and requested a revision in the assignment from APC 5733 to APC 5734 (Level 4 Minor Procedures) with a proposed payment rate of $115.71. The commenters reported that the service described by CPT code 92229 is similar to the technical components described by existing CPT code 92250 (Fundus photography with interpretation and report), which was proposed for assignment to APC 5734. They stated that providers previously billed for this service on an interim basis under CPT code 92250. The commenters indicated that APC 5734, which is the APC assigned to the predecessor CPT code 92250, is the more appropriate assignment for CPT code 92229 until sufficient Medicare claims data can be collected by CMS to either retain that assignment or reassign to another APC.

One commenter expressed support for our proposal to continue APC assignment of CPT code 92229 to APC 5733.

Response: As discussed in the CY 2021 OPPS final rule with comment period (85 FR 85962), we do not believe that CPT code 92250, which the commenters reported to be the predecessor code, is similar to the IDx-DR test; otherwise, the placement of the new IDx-DR code would have been close to CPT code 92250. As the commenter did not provide any additional clinical information or cost data, we continue to believe that CPT code 92229 should be assigned to APC 5733.

In summary, after consideration of the public comments, we are finalizing our proposal without modification. Specifically, we are continuing to assign CPT code 92229 to APC 5733. The final CY 2022 payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

19. Intravascular Lithotripsy (IVL) Procedure (APCs 5193 and 5194)

As explained in the CY 2021 OPPS/ASC final rule with comment period, we finalized our proposal to assign HCPCS codes C9764 (Revascularization, endovascular, open or percutaneous, lower extremity artery(ies), except tibial/peroneal; with intravascular lithotripsy, includes angioplasty within the same vessel(s), when performed) and C9765 (Revascularization, endovascular, open or percutaneous, lower extremity artery(ies), except tibial/peroneal; with intravascular lithotripsy, and transluminal stent placement(s), includes angioplasty within the same vessel(s), when performed) to APC 5192 and C9766 (Revascularization, endovascular, open or percutaneous, lower extremity artery(ies), except tibial/peroneal; with intravascular lithotripsy and atherectomy, includes angioplasty within the same vessel(s), when performed) to APC 5193 (85 FR 85975 through 85976). For a detailed discussion on the APC assignments for HCPCS code(s) describing the IVL procedures, we refer readers to the CY 2021 OPPS/ASC final rule with comment period (85 FR 85975 through 85976).

At the August 23, 2021 meeting, the HOP Panel recommended that CMS reassign HCPCS code C9764 to APC 5193 and HCPCS codes C9765 and C9766 to APC 5194, as long as the cost of the IVL device is within 10 percent of other devices currently available.

Comment: Several commenters, including the manufacturer, disagreed with CMS's proposed CY 2022 APC assignments for the IVL service described by HCPCS codes C9764, C9765, and C9766. They argued that, for new procedures that did not have claims in the CY 2019 claims data, current claims data should be used when reviewing for APC placement. The commenter also noted the CY 2020 claims data provided evidence to support their argument that the service described by HCPCS code C9764 is not adequately reimbursed under APC 5192, and recommended reassignment to APC 5193 (Level 3 Endovascular Procedures). Similarly, the commenters indicated that assignment of HCPCS codes C9765 and C9766 to APC 5193 does not provide adequate payment for the service based on 2020 claims data and that those codes should instead be placed in APC 5194 (Level 4 Endovascular Procedures).

Response: In the CY 2022 OPPS/ASC proposed rule, we proposed to use 2019 claims data in the OPPS due to the effects of the PHE on the CY 2020 claims data. As the commenter noted, claims data are not available for HCPCS codes C9764 through C9766 in the CY 2019 claims data, only in CY 2020. As discussed in more detail in section X.E. of this final rule with comment period, we are not using CY 2020 claims data for ratesetting because of data integrity concerns with respect to the broader OPPS; however, based on stakeholder request, we are reviewing the CY 2020 claims data for determining potential APC assignments in cases where CY 2019 claims data did not include any information on new procedures.

Under what would otherwise be the standard ratesetting process, we would typically use CY 2020 claims data submitted for services furnished in CY 2020, that were processed on or before June 30, 2021. Our analysis of that CY 2020 claims data supports reassigning CPT code C9764 to APC 5193 and CPT codes C9765 and C9766 to APC 5194, based on their estimated geometric mean costs. Specifically, our claims data show a geometric mean cost of approximately $11,442.47 for HCPCS code C9764 based on 253 single claims, which is comparable to the geometric mean cost of about $10,258.49 for APC 5193, rather than the geometric mean cost of approximately $5,061.89 for APC 5192. The geometric mean cost of approximately $17,372.02 for HCPCS code C9765 and the geometric mean cost of approximately $19,285.11 for HCPCS code C9766 is also consistent with the costs for significant services in APC 5194, which range between about $10,670.16 (for HCPCS code C9754) to $24,311.10 (for HCPCS code C9767). Based on our analysis of the latest available CY 2020 claims data, we believe that HCPCS codes C9765 and C9766 are more appropriately assigned to APC 5194.

In summary, after consideration of the public comments, we are assigning HCPCS code C9764 to APC 5193 and HCPCS codes C9765 and C9766 to APC 5194. Table 27 below lists the three HCPCS codes for the IVL procedure and their APC and SI assignments for CY 2022. The final CY 2022 OPPS payment rates for the codes can be found in Addendum B of this final rule with comment period. Addendum B is available via the internet on the CMS website.

20. Lixelle Apheresis

Lixelle β2-microglobulin Apheresis Column is indicated for use in the treatment of dialysis‐related amyloidosis (DRA), a disease that affects people with end-stage renal disease (ESRD). DRA is a metabolic disorder from the failure of the kidney to filter and remove β2-microglobulin, typically from chronic hemodialysis (typically 5 years or longer). The Lixelle device is used in an apheresis procedure that selectively removes β2-microglobulin from circulating blood and used pursuant to a physician prescription in conjunction with hemodialysis. It is intended to be used at each hemodialysis session (that is, frequency of treatment is expected to be 3 times per week). In March 2015, FDA approved LIXELLE® as a Class III Humanitarian Use Device (HUD) with an approved Humanitarian Device Exemption (HDE). There are currently no specific HCPCS or CPT code that represent the Lixelle service.

Comment: Two commenters, including the manufacturer of Lixelle apheresis column, requested payment for the procedure under the OPPS. One commenter stated that Lixelle is the only device available for the treatment DRA and that all DRA patients are Medicare beneficiaries. The commenter stated that they have been unable to complete the FDA-required post-approval study as a condition of the HDE, due to difficulty in securing patient enrollment because of lack of CMS payment for the Lixelle apheresis procedure. The commenter stated that CMS should rely upon the HUD program requirements and post-approval clinical studies mandated and approved by FDA for coverage and payment of Lixelle apheresis in the OPPS. The commenter acknowledged that Medicare payment under the ESRD PPS is not possible at this time but stated that payment under the OPPS may be more clinically appropriate. The commenter requested that CMS provide payment under the OPPS because the Lixelle apheresis is not eligible for Medicare payment when furnished in the dialysis facility at this time, and therefore, these treatments (even though technically not “scheduled” or “non-routine”) should be eligible for payment when furnished in the hospital outpatient department under the OPPS. Specifically, the commenter requested that CMS provide payment under the OPPS using the following pathways: (1) By paying for the apheresis procedure used with the Lixelle device through CPT code 36516 (Therapeutic apheresis with extracorporeal immunoadsorption, selective adsorption or selective filtration and plasma reinfusion), proposed to be assigned to APC 5243 (Level 3 Blood Product Exchange and Related Services) for CY 2022, and requiring the use of a modifier or add-on code when the Lixelle apheresis procedure is billed to reduce the payment for the procedure to the payment rate for APC 5242 (Level 2 Blood Product Exchange and Related Services); (2) by allowing payment for the dialysis performed as part of Lixelle apheresis procedure through HCPCS code G0257 (Unscheduled or emergency dialysis treatment for an ESRD patient in a hospital outpatient department that is not certified as an ESRD facility), which is assigned to APC 5401 (Dialysis) for CY 2022, and requiring the use of a modifier or add-on code to provide additional payment beyond that provided for APC 5401; or (3) by creating a HCPCS C code or G code for the Lixelle apheresis procedure and assigning the code to APC 5242 (Level 2 Blood Product Exchange and Related Services).

Response: We appreciate the commenters' input on the Lixelle device and will consider their recommendations for future rulemaking.

21. Low Dose Computed Tomography (LDCT) (APC 5522)

For CY 2022, we proposed to continue to assign CPT code 71271 (Computed tomography, thorax, low dose for lung cancer screening, without contrast material(s)) to APC 5521 (Level 1 Imaging without Contrast) with a proposed payment rate of $83.01.

Comment: Several commenters stated that CPT code 71271 should be reassigned to APC 5523 (Level 3 Imaging without Contrast) with a proposed payment rate of $236.14. These commenters stated that CPT code 71271 should not be in a lower APC than CPT code 71270 (Computed tomography, thorax; without contrast material, followed by contrast material(s) and further sections) given that CPT code 71271 has additional resource costs, such as greater clinical staff time. The commenter noted that we proposed to assign CPT code 71270 to APC 5571 (Level 1 Imaging With Contrast) with a payment rate of $183.30.

Response: The predecessor code to CPT code 71271 was HCPCS code G0297 (Low dose ct (ldct) scan for lung cancer screening) which was assigned to APC 5521. However, in the CY 2021 Physician Fee Schedule final rule, we stated that it was a longstanding CMS policy that the payment for HCPCS code G0297 match the payment rate for CPT code 71250, which we proposed to assign to APC 5522 (Level 2 Imaging without Contrast) with a payment rate of $111.73, as the services are almost identical in terms of clinical similarity and resource costs (85 FR 84621 through 84622). In the interests of preserving the relationship between the predecessor code and CPT code 71250, and based on our review of the clinical characteristics of the procedure and input from our medical advisors, we believe that CPT code 71271 should be reassigned to APC 5522 (Level 2 Imaging without Contrast). We believe that assignment to APC 5522 for both CPT codes 71250 and 71271 accurately reflects the resources associated with performing this service.

In summary, after consideration of the public comments, we are finalizing our proposal, with modification. Specifically, we are reassigning CPT code 71271 to APC 5522. The final CY 2022 payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

22. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APC 5463)

CPT code 0398T (Magnetic resonance image guided high intensity focused ultrasound (mrgfus), stereotactic ablation lesion, intracranial for movement disorder including stereotactic navigation and frame placement when performed) describes MRgFUS procedures for the treatment of essential tremor. We have identified 175 paid claims for CY 2019 with a geometric mean of $12,334.67. CPT code 0398T had been assigned to a New Technology APC for several years. Then, in CY 2021, we reorganized the Neurostimulator and Related Procedures APCs to add a new Level 3 category (APC 5463) that had a geometric mean of approximately $10,950. While the payment rate for APC 5463 was somewhat lower than the geometric mean of CPT code 0398T, it was a reasonable estimate of the cost of MRgFUS for the treatment of essential tremor in a prospective payment system where some services receive more payment than their geometric mean cost, while other services receive less payment than their geometric mean cost. For CY 2022, we proposed continuing to assign CPT code 0398T to APC 5463 with a payment rate of approximately $10,956.33.

Comment: One commenter, the manufacturer, requests a higher paying APC for CPT code 0398T because the current payment rate for APC 5463 (Level 3 Neurostimulator and Related Procedures) of approximately $10,956.33 is substantially lower than the geometric mean cost of the service. According to the commenter, the geometric mean of CPT code 0398T has steadily increased from $10,136 in CY 2018 to $13,907 in CY 2020.

Response: We appreciate the commenter's concerns about the level of payment for CPT code 0398T. However, the OPPS is a prospective payment system and it is expected that any individual service may be paid more or less than the geometric mean cost of the service. The current payment difference between the geometric mean cost of CPT code 0398T and the payment rate for APC 5463 is $1,153.66 ($12,109.99 minus $10,956.33) with the payment rate of APC 5463 equal to $10,956.33. That means there is no violation of the two-times rule to assign CPT code 0398T to APC 5463, and the service is assigned to an APC that covers around 90 percent of the geometric mean cost of the service. Also, CPT code 0398T is grouped with other neurostimulator and related procedures that have clinical and resource similarity to the MRgFUS.

After our review of the public comments, we have decided to implement our proposal without modification to continue to assign CPT code 0398T to APC 5463 (Level 3 Neurostimulator and Related Procedures). The final CY 2022 payment rate for CPT code 0398T can be found in Addendum B to this final rule with comment period, which is available via the internet on the CMS website.

23. Medical Physics Dose (APC 5612)

For CY 2022, we proposed to continue to assign CPT code 76145 (Medical physics dose evaluation for radiation exposure that exceeds institutional review threshold, including report (medical physicist/dosimetrist)) in APC 5611 (Level 1 Therapeutic Radiation Treatment Preparation) with a proposed payment rate of $130.19.

Comment: Several commenters disagreed with the assignment to APC 5611 and requested a reassignment to APC 5724 (Level 4 Diagnostic Tests and Related Services) with a proposed payment rate of $943.96. The commenters stated that the services assigned to APC 5724 require similar resource use as CPT code 76145. Commenters also stated that APC 5724 contains a range of services that are clinically similar to CPT 76145.

Response: Given that we have no claims data for this service, and that APC 5724 does not contain any radiation oncology services, we do not believe that APC 5724 is an appropriate assignment on the basis of clinical similarity or similar costs. However, based on our review of the service associated with CPT code 76145 and input from our medical advisors, we believe that APC code 5612, with a proposed payment rate of $347.44, may be a more appropriate assignment for the code. APC 5612 contains CPT code 77307 (Teletherapy isodose plan; complex (multiple treatment areas, tangential ports, the use of wedges, blocking, rotational beam, or special beam considerations), includes basic dosimetry calculation(s)), which is clinically similar to CPT code 76145 in that CPT code 77307 describes the work of a medical physicist and dosimetrist. Once we have claims data, we will review the APC assignment and determine whether a change is necessary. We note that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS.

In summary, after consideration of the public comments, we are reassigning CPT code 76145 to APC 5612. The final CY 2022 payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

24. MiVu Mucosal Integrity Testing System (APC 5303)

For CY 2022, we proposed to continue to assign HCPCS code C9777 (Esophageal mucosal integrity testing by electrical impedance, transoral (list separately in addition to code for primary procedure)) to OPPS status indicator “N,” to indicate that the payment for HCPCS code C9777 is packaged into the payment for the primary procedure. We created HCPCS code C9777 to describe mucosal integrity testing by electrical impedance, based on our review of a New Technology APC application submitted by the manufacturer of the technology. HCPCS code C9777 was effective on April 1, 2021. Based on the application submitted to CMS and our initial review of the procedure, we believed the MiVu test to be performed with another primary procedure on the same day. Because the MiVu test is always performed as an add-on test to either an esophagoscopy or esophagogastroduodenoscopy, we established a C-code to appropriately describe the add-on component. Under the regulation at 42 CFR 419.2, payment for add-on codes is packaged or conditionally packaged into the payment for the related procedures or services under the OPPS.

Comment: We received several comments from providers and the manufacturer requesting that HCPCS code C9777 be separately reimbursed and reassigned to APC 5303 Level 3 Upper GI Procedures, which had a proposed CY 2022 OPPS payment rate of $3,160.76. Commenters argued that MiVu^TM should be considered the primary procedure, not the esophagoscopy or esophagogastroduodenoscopy and that based on the cost of the device and procedure, the appropriate APC assignment is APC 5303.

Response: We thank the commenters for their recommendations. After further evaluation of procedures performed in conjunction with the MiVu test on the same day, review of the comments, and input from our medical advisors, we believe that modifying the descriptor for the C-code is appropriate. We believe that revising the long descriptor to describe the service of performing both the MiVu test with either an esophagoscopy or esophagogastroduodenoscopy on the same day would ensure accurate tracking and reporting of the service and minimize inappropriate reporting of the services. Consequently, effective January 1, 2022, we are revising the descriptor for HCPCS code C9777 to read “Esophageal mucosal integrity testing by electrical impedance, transoral, includes esophagoscopy or esophagogastroduodenoscopy,” to accurately reflect how the procedure is currently performed in the hospital outpatient setting. With the change in the descriptor for HCPCS code C9777, we are assigning HCPCS code C9777 to APC 5303 based on its resource and clinical homogeneity to the other procedures in the APC. We remind hospitals that because HCPCS code C9777 describes both the MiVu test performed with either an esophagoscopy or esophagogastroduodenoscopy on the same day, HOPDs should not report separate HCPCS codes for the esophagoscopy or esophagogastroduodenoscopy.

In summary, after consideration of the public comments, we are modifying the long descriptor for HCPCS code C9777, as shown in Table 28 below, and reassigning HCPCS code C9777 to APC 5303 (Level 3 Upper GI Procedures) for CY 2022. The final CY 2022 OPPS payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

As we do every year, we will reevaluate the APC assignment for HCPCS code C9777 for the next rulemaking cycle. We note that we review, on an annual basis, the APC assignments for all services and items paid under the OPPS.

25. Musculoskeletal Procedures (APCs 5111 Through 5116)

Prior to the CY 2016 OPPS, payment for musculoskeletal procedures was primarily divided according to anatomy and the type of musculoskeletal procedure. As part of the CY 2016 reorganization to better structure the OPPS payments to utilize prospective payment packages, we consolidated these individual APCs so that they became a general Musculoskeletal APC series (80 FR 70397 through 70398).

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59300), we continued to apply a six-level structure for the Musculoskeletal APCs because doing so provided an appropriate distinction for resource costs at each level and provided clinical homogeneity. However, we indicated that we would continue to review the structure of these APCs to determine whether additional granularity would be necessary.

In the CY 2019 OPPS proposed rule (83 FR 37096), we recognized that commenters had previously expressed concerns regarding the granularity of the current APC levels and, therefore, requested comment on the establishment of additional levels. Specifically, we solicited comments on the creation of a new APC level between the current Level 5 and Level 6 within the Musculoskeletal APC series. While some commenters suggested APC reconfigurations and requests for change to APC assignments, many commenters requested that we maintain the current six-level structure and continue to monitor the claims data as they become available. Therefore, in the CY 2019 OPPS/ASC final rule with comment period, we maintained the six-level APC structure for the Musculoskeletal Procedures APCs (83 FR 58920 through 58921).

Based on the claims data available for the CY 2022 OPPS/ASC proposed rule, we continued to believe that the six-level APC structure for the Musculoskeletal Procedures APC series is appropriate and we proposed to maintain the it for the CY 2022 OPPS update.

Comment: One commenter requested that we assign CPT code 28297 (Correction, hallux valgus (bunionectomy), with sesamoidectomy, when performed; with first metatarsal and medial cuneiform joint arthrodesis, any method) and CPT code 28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint) from APC 5114 to APC 5115. They noted that if these codes were considered cost significant for purposes of the 2 times rule, then these codes would cause 2 times rule violations in APC 5114.

Response: We appreciate the commenter's recommendation regarding the APC assignment of CPT 28297 and 28740. CPT codes 28297 and 28740 are currently assigned to APC 5114 (Level 4 Musculoskeletal Procedures). We note that APC 5114 does not currently have a 2 times rule violation, under the requirements for cost significance as described in section III.B.2. of this final rule with comment period. In addition, we have reviewed the codes' geometric mean cost in both the CY 2019 and CY 2020 claims data available as well as their clinical similarity to other codes within APC 5114 and believe that their current APC assignment continues to be appropriate.

Comment: One commenter supported the proposed assignment of HCPCS code 0627T (Percutaneous injection of allogeneic cellular and/or tissue-based product, intervertebral disc, unilateral or bilateral injection, with fluoroscopic guidance, lumbar; first level) and HCPCS code 0629T (Percutaneous injection of allogeneic cellular and/or tissue-based product, intervertebral disc, unilateral or bilateral injection, with ct guidance, lumbar; first level) to APC 5115. Another commenter supported the proposed assignment of HCPCS code 0627T (Percutaneous injection of allogeneic cellular and/or tissue-based product, intervertebral disc, unilateral or bilateral injection, with fluoroscopic guidance, lumbar; first level) and 0630T (Percutaneous injection of allogeneic cellular and/or tissue-based product, intervertebral disc, unilateral or bilateral injection, with ct guidance, lumbar; each additional level (list separately in addition to code for primary procedure)) to APC 5115.

Response: We appreciate the commenters' support. We note that that the availability of these codes does not mean that the product(s) are legally marketed under the Federal Food, Drug and Cosmetic Act and/or the Public Health Service Act.

Comment: A commenter requested that we allow an exception from the broader proposed OPPS ratesetting process to use the CY 2020 claims data for ratesetting for the musculoskeletal APC series (5111 through 5116). Two commenters also requested that we allow an exception for the use of CY 2020 claims data for CPT code 27130 (Arthroplasty, acetabular and proximal femoral prosthetic replacement (total hip arthroplasty), with or without autograft or allograft), which was removed from the IPO list beginning in CY 2020.

Response: We appreciate the commenters' concerns regarding available data and its use in OPPS ratesetting. However, we note that widespread use of claims data from two different years to set rates for a items and services in a single year could distort the OPPS relative payment weights, which we believe would be inappropriate and unnecessary when claims data from a single year—in this case, 2019—are largely available for ratesetting and using these data generally to set CY 2022 rates allows us to avoid this sort of distortion. As a result, we are establishing a final policy of using CY 2019 claims for establishing the OPPS relative weights but allowing limited use of CY 2020 claims for informational purposes where CY 2019 claims are not otherwise available. For additional detail regarding the use of CY 2019 claims in CY 2022 OPPS ratesetting, please see section X.E. of this final rule with comment period.

After consideration of the comments, we are finalizing the proposed assignment of CPT codes 28297 and 28740 to APC 5114, and the proposed assignment of CPT codes 0627T, 0629T and 0630T to APC 5115 for the CY 2022 OPPS.

26. Non-Highly Enriched Uranium (Non-HEU) Sources (APC 1442)

Radioisotopes are widely used in modern medical imaging, particularly for cardiac imaging and predominantly for the Medicare population. Some of the Technetium-99 (Tc-99m), the radioisotope used in the majority of such diagnostic imaging services, is produced in legacy reactors outside of the United States using highly enriched uranium (HEU).

The United States would like to eliminate domestic reliance on these reactors, and is promoting the conversion of all medical radioisotope production to non-HEU sources. Alternative methods for producing Tc99m without HEU are technologically and economically viable, and conversion to such production has begun. We expect that this change in the supply source for the radioisotope used for modern medical imaging will introduce new costs into the payment system that are not accounted for in the historical claims data.

Therefore, beginning in CY 2013, we finalized a policy to provide an additional payment of $10 for the marginal cost for radioisotopes produced by non-HEU sources (77 FR 68323). Under this policy, hospitals report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium source, full cost recovery add-on per study dose) once per dose along with any diagnostic scan or scans furnished using Tc-99m as long as the Tc-99m doses used can be certified by the hospital to be at least 95 percent derived from non-HEU sources (77 FR 68321).

Comment: Multiple commenters requested that we increase the payment rate for HCPCS add-on code Q9969 from $10 and to make the add-on code permanent. The commenters noted that we have not increased the payment rate for Q9969 since the code was established in CY 2013, and one of the commenters believes that we have made only token efforts to promote the use of non-HEU produced Mo-99, the parent nuclide to Tc-99m.

One of the commenters supported a rate increase to Q9969 to fully reflect the additional cost to providers to obtain non-HEU medical isotopes. The same commenter suggested that if such a cost-analysis could not be done for CY 2022, we should increase the payment for Q9969 by the annual market basket increase for CY 2022 along with a one-time increase to reflect prior increases to the market basket between CY 2013 and CY 2021. Alternatively, the commenter suggested the payment rate could be increased by the change in the drug cost threshold packaging amount between CY 2013 and CY 2022.

Response: We appreciate the information we received from the commenters supporting an increase to the payment rate of $10 for HCPCS code Q9969, especially since the conversion to non-HEU sources for medical isotopes has not been completed by all producers. As discussed in the CY 2013 OPPS/ASC final rule with comment period, we did not finalize a policy to use the usual OPPS methodologies to update the non-HEU add-on payment (77 FR 68317). The purpose of the additional payment is limited to mitigating any adverse impact of transitioning to non-HEU sources, and we believe the add-on is appropriate at this time.

Comment: Multiple commenters supported the current payment amount for HCPCS code Q9969, and they requested that we finalize our proposed payment rate for the add-on.

Response: We appreciate the support of the commenters for the proposed payment rate for HCPCS code Q9969.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to continue the policy of providing an additional $10 payment for radioisotopes produced by non-HEU sources for CY 2022 as represented by HCPCS code Q9969.

27. Nuclear Medicine Services: Single-Photon Emission Computed Tomography (SPECT) Studies (APC 5593)

For CY 2022, we proposed to continue to assign CPT code 78803 (Radiopharmaceutical localization of tumor, inflammatory process or distribution of radiopharmaceutical agent(s) (includes vascular flow and blood pool imaging, when performed); tomographic (spect), single area (eg, head, neck, chest, pelvis), single day imaging)) to APC 5593 (Level 3 Nuclear Medicine and Related Services) with a proposed payment rate of $1,340.84.

Comment: One commenter expressed support for the proposed APC assignment.

Response: We thank the commenter for their support. We note that, based on our analysis of the claims data for this CY 2022 OPPS/ASC final rule with comment period, our data reveals a geometric mean cost of about $529.69 based on 4157 single claims (out of 9451 total claims), which is in line with the geometric mean cost of $1,273.36 for APC 5593.

In summary, after consideration of the public comments, we are finalizing our proposal without modification to assign CPT code 78803 to APC 5593. The final CY 2022 OPPS payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

28. Pathogen Test(s) for Platelets (APC 5733)

For the July 2017 update, the HCPCS Workgroup established HCPCS code Q9987 (Pathogen(s) test for platelets) effective July 1, 2017. This new code and the OPPS APC assignment was announced in the July 2017 OPPS quarterly update CR (Transmittal 3783, Change Request 10122, dated May 26, 2017). Subsequently, HCPCS code Q9987 was deleted on December 31, 2017, and replaced with permanent HCPCS code P9100 (Pathogen(s) test for platelets) effective January 1, 2018. Each of the HCPCS codes were assigned to New Technology APCs for the period of July 2017 through December 2020 with payment rates for the service ranging between $25.50 and $35.50. Starting in January 2021, we decided to assign P9100 to APC 5732 (Level 2 Minor Procedures) with a payment rate of approximately $33.

From July 2017 until 2021, only one type of pathogen test for platelets, rapid bacterial testing, was described by HCPCS code P9100. The estimated cost for a rapid bacterial test was around $30, which has been confirmed through claims data. Starting in 2021, a new type of pathogen test for platelets, culture-based bacterial testing, using large volume delayed sampling (LVDS), was introduced. This culture-based method is used to test for bacterial contamination of leukocyte-reduced apheresis platelets and leukocyte-reduced whole blood platelet concentrates. We do not have claims data describing the cost of the LVDS test. For CY 2022, we proposed to assign HCPCS code P9100 to APC 5732 (Level 2 Minor Procedures with a payment rate of approximately $33, which is the same APC assignment for HCPCS code P9100 as in CY 2021.

Comment: Two commenters requested we increase the payment rate for HCPCS code P9100 by moving the service from APC 5732 (Level 2 Minor Procedures) with payment rate of $32.98 to APC 5733 (Level 3 Minor Procedures) with a payment rate of $54.24. The commenters claim that the cost of the LVDS test is either $75 or $83, depending on which manufacturer's test is used, which is substantially higher than the approximately $30 cost of the rapid bacterial test for platelets. The commenters believe that the proposed payment rate of $32.98 for APC 5732 is too low to adequately compensate hospitals for the share of pathogen tests for platelets using the more expensive culture-based test, using LVDS. Commenters believed assigning HCPCS code P9100 to APC 5733 with a payment rate of $54.24 would better reflect the mixture of costs between culture-based platelet tests using LVDS and rapid bacterial tests.

Response: We agree with the commenters that the payment rate for HCPCS code P9100 should better reflect the resource cost of the anticipated mixture of rapid bacterial platelet tests and culture-based platelet tests, using LVDS, that will be used in CY 2022 to test for bacterial contamination in platelets. Therefore, we support the suggestion of the commenters to reassign HCPCS code P9100 to APC 5733 (Level 3 Minor Procedures) with a payment rate of $54.24.

After reviewing the public comments, we have decided to modify our proposal and reassign HCPCS code P9100 from APC 5732 (Level 2 Minor Procedures) to APC 5733 (Level 3 Minor Procedures) for CY 2022. The final CY 2022 payment rate for HCPCS code P9100 can be found in Addendum B to this CY 2022 OPPS/ASC final rule with comment period which is available via the internet on the CMS website.

29. Pulmonary Rehabilitation (APC 5733)

For CY 2022, the AMA's CPT Editorial Panel created two new codes describing pulmonary rehabilitation services and requested that CMS delete HCPCS code G0424 (Pulmonary rehabilitation, including exercise (includes monitoring), one hour, per session, up to two sessions per day). We proposed to assign CPT code 94625 (Physician or other qualified health care professional services for outpatient pulmonary rehabilitation; without continuous oximetry monitoring (per session)) and CPT code 94626 (Physician or other qualified health care professional services for outpatient pulmonary rehabilitation; with continuous oximetry monitoring (per session)) to APC 5733 (Level 3 Minor Procedures) with a proposed payment rate of $57.12. We note that CPT codes 94625 and 94626 were listed as placeholder codes 946X1 and 946X2, respectively, in OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule.

Comment: Several commenters disagreed with the proposed APC assignment and requested that CMS reassign CPT codes 94625 and 94626 to either APC 5721 (Level 1 Diagnostic Tests and Related Services) with a proposed payment rate of $143.21 or to APC 5771 (Cardiac Rehabilitation) with a proposed payment rate of $119.09. These commenters stated that these APCs better reflected the clinical similarity and costs associated with furnishing these services.

Response: CPT codes 94625 and 94626 do not describe diagnostic tests and so are not clinically similar to the other services in APC 5721. While clinically similar to cardiac rehabilitation services, predecessor HCPCS code G0424 has a geometric mean cost of $45.63 based on 198,132 single claims (out of 199,356 total claims), which is significantly lower than the geometric mean cost of $113.12 for the services in APC 5771. Based on our analysis, we believe that assignment of CPT codes 94625 and 94626 to APC 5733 is appropriate because their costs are consistent with the cost data of the predecessor code. We note that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS. We will consider whether the current APC structure adequately reflects the clinical similarities and costs associated with pulmonary rehabilitation services in future rulemaking.

In summary, after consideration of the public comments, we are finalizing our proposal without modification to assign CPT codes 94625 and 94626 to APC 5733. The final CY 2022 OPPS payment rates for the codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

30. Sclerotherapy (APC 5054)

For CY 2022, we proposed to continue assignment of both CPT codes 36465 (Injection of non-compounded foam sclerosant with ultrasound compression maneuvers to guide dispersion of the injectate, inclusive of all imaging guidance and monitoring; single incompetent extremity truncal vein (for example, great saphenous vein, accessory saphenous vein)) and CPT code 36466 (Injection of non-compounded foam sclerosant with ultrasound compression maneuvers to guide dispersion of the injectate, inclusive of all imaging guidance and monitoring; multiple incompetent truncal veins (for example, great saphenous vein, accessory saphenous vein), same leg) to APC 5054 (Level 4 Skin Procedures) with a proposed payment rate of $1,759.21.

Comment: One commenter disagreed with the proposed assignment of the procedures described by CPT codes 36465 and 36466 to APC 5054 and requested a reassignment to APC 5183 (Level 3 Vascular Procedures), which had a proposed payment rate of $2,937.76. The commenter stated that the per-procedure cost for the Varithena foam sclerosant used in the procedure is $1,054. The commenter stated that APC 5183 is more clinically appropriate and reflects the resources required to perform the procedure. Specifically, the commenter indicated that the procedures described by CPT codes 36465 and 36466 share similar clinical and resource characteristics to the following surgical procedures that are assigned to APC 5183:

• CPT code 36473 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, mechanochemical; first vein treated);
• CPT code 36475 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; first vein treated); and
• CPT code 36478 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, laser; first vein treated).

The commenter also stated that the proposed geometric mean cost of $1,567.45 for 36465 would not be the lowest cost procedure if placed in APC 5183 and that the geometric mean costs of CPT code 36466 would be better aligned with APC 5183.

Response: Based on input from our clinical advisors, we believe that the procedures described by CPT codes 36465 and 36466 are clinically similar to the procedures assigned to APC 5054. We do not believe that the resources used for the procedures described by CPT codes 36465 and 36466 are comparable to the procedures described by CPT codes 36473, 36475, and 36478, which are assigned to APC 5183. We also note that the proposed geometric mean cost of $2,314.25 for CPT code 36466 is greater than the other codes with significant volume in APC 5183 and above the highest geometric mean cost of codes with significant volume in the next lower APC 5182 (Level 2 Vascular Procedures). Consequently, we believe that APC 5054 appropriately reflects the resources and clinical characteristics associated with the procedures described by CPT codes 36465 and 36466. We note that the geometric mean cost for APC 5054 is approximately $1,668.97, which exceeds the cost of the Varithena foam sclerosant ($1,054, as reported by the commenter) used in the procedure. We also note that the geometric mean costs for CPT codes 36465 and 36466 are well within the range of significant costs associated with APC 5054 ($1,402.75-$2,752.68).

Therefore, after consideration of the public comment received, we are finalizing our proposal without modification for assignment of the procedures described by CPT codes 36465 and 36466 to APC 5054. The final CY 2022 OPPS payment rates for the codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

31. Stromal Vascular Fraction (SVF) Therapy

For CY 2022, we proposed to continue assignment of CPT codes 0565T (Autologous cellular implant derived from adipose tissue for the treatment of osteoarthritis of the knees; tissue harvesting and cellular implant creation) and 0566T (Autologous cellular implant derived from adipose tissue for the treatment of osteoarthritis of the knees; injection of cellular implant into knee joint including ultrasound guidance, unilateral) to status indicator “E1”, indicating that these services are not paid by Medicare when submitted on outpatient claims.

Comment: One commenter supported this proposal and indicated that adipose-derived stromal vascular fraction (SVF) therapy for osteoarthritis is an unproven treatment. The commenter stated that FDA has issued several warnings about unproven cellular therapies and regenerative medicines since they offer no proven clinical benefits and may harm patients. The commenter further reported there is no indication for which SVF has been proven to be safe and effective in well-controlled clinical trials. To eliminate abuse by businesses seeking to profit from unproven treatments, the commenter suggested not paying for SVF therapy since unproven therapies create economic burdens on health systems and patients.

Response: We thank the commenter for their support.

In summary, after consideration of the public comment, we are finalizing our proposal without modification to continue assignment of CPT codes 0565T and 0566T to status indicator “E1”. We refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website.

32. Synthetic Resorbable Skin Substitute

The CY 2014 OPPS/ASC final rule with comment period describes skin substitute products as “. . . a category of products that are most commonly used in outpatient settings for the treatment of diabetic foot ulcers and venous leg ulcers . . . [T]hese products do not actually function like human skin that is grafted onto a wound; they are not a substitute for a skin graft. Instead, these products are applied to wounds to aid wound healing and through various mechanisms of action that stimulate the host to regenerate lost tissue.” (78 FR 74930 through 74931). The CY 2014 OPPS/ASC final rule with comment period also described skin substitutes as “. . . a class of products that we treat as biologicals . . .” and mentioned that prior to CY 2014, skin substitutes were separately paid in the OPPS as if they were biologicals according to the ASP methodology (78 FR 74930 through 74931).

The CY 2014 OPPS final rule with comment period did not specifically mention whether synthetic products could be considered to be skin substitute products in the same manner as biological products, because there were no synthetic products at that time that were identified as skin substitute products. Then in 2018, a manufacturer made a request that an entirely synthetic product that it claimed is used in the same manner as biological skin substitutes, receive a HCPCS code that would allow the product to be billed with graft skin substitute procedure codes, including CPT codes 15271 through 15278 and C5271 through C5278, starting in 2019. Initially, the synthetic product was not described as a graft skin substitute product. However, we now believe that both biological and synthetic products could be considered to be skin substitutes for Medicare payment purposes.

This view is supported by a paper referenced in a report we cited in the CY 2014 OPPS/ASC final rule with comment period titled “Skin Substitutes for Treating Chronic Wounds Technology Assessment Report at ES- 2”, which is available on the AHRQ website at: https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/ta/skinsubs/HCPR0610_skinsubst-final.pdf.

That paper, titled “Regenerative medicine in dermatology: biomaterials, tissue engineering, stem cells, gene transfer and beyond” by Dieckmann et al., states that skin substitutes should be divided into two broad categories: Biomaterial and cellular. The paper explains that “. . . biomaterial skin substitutes do not contain cells (acellular) and are derived from natural or synthetic sources . . .” The paper continues by describing biomaterial skin substitutes further: “Synthetic sources include various degradable polymers such as polylactide and polyglycolide. Whether natural or synthetic, the biomaterial provides an extracellular matrix that allows for infiltration of surrounding cells.” The paper by Dieckmann et al. indicates that skin substitute products may be synthetic products as well as biological products.

For CY 2021, we established a policy to include synthetic products in addition to biological products in our description of skin substitutes. Our new description defines skin substitutes as a category of biological and synthetic products that are most commonly used in outpatient settings for the treatment of diabetic foot ulcers and venous leg ulcers. We also retained the additional description of skin substitute products from the CY 2014 OPPS final rule which states “. . . that skin substitute products do not actually function like human skin that is grafted onto a wound; they are not a substitute for a skin graft. Instead, these products are applied to wounds to aid wound healing and through various mechanisms of action they stimulate the host to regenerate lost tissue . . .” (78 FR 74930 through 74931). Finally, our definition of skin substitutes does not include bandages or standard dressings and these items cannot be assigned to either the high cost or low cost skin substitute groups or be reported with either CPT codes 15271 through 15278 or HCPCS codes C5271 through C5278. For CY 2022, we proposed to continue to report synthetic graft skin substitute products using HCPCS code C1849 in the same manner as in CY 2021.

Comment: As previously requested for CY 2021, several commenters requested that we establish product-specific HCPCS codes for synthetic graft skin substitute products and requested that we delete HCPCS code C1849 because the code is not product-specific. The primary reason commenters want product-specific codes for synthetic graft skin substitute is they feel that synthetic products should be assigned to either the high cost or low cost skin substitute group based on the cost of each individual product in a similar manner to biological skin substitute products. Commenters feel that because multiple synthetic graft skin substitute products can be assigned to HCPCS code C1849, there may be some synthetic products that should be in the low cost skin substitute group that will receive payment in the high cost skin substitute group if HCPCS code C1849 is assigned to the high cost group. Commenters also expressed concern about the opposite situation, in which high cost synthetic products would potentially be underpaid if HCPCS code C1849 is assigned to the low cost skin substitute group. Commenters believed the only resolution to these issues with HCPCS code C1849 is to delete the code and replace it with product-specific HCPCS codes for each graft synthetic product so there are not cases of synthetic products being either overpaid or underpaid.

Response: HCPCS code C1849 was established in response to the need to pay for graft skin substitute application services performed with synthetic graft skin substitute products in the OPPS in a manner comparable to how we pay for graft skin substitute application services performed with biological graft skin substitute products. As mentioned earlier in this section, when we established our policy in the CY 2014 OPPS/ASC final rule with comment period to package graft skin substitute products into their associated application procedures (78 FR 74930 through 74931), we did not specifically mention whether synthetic products could be considered skin substitute products in the same manner as biological products. The reason for this was that there were no synthetic products at that time that were identified as skin substitute products.

We note that unless a graft skin substitute product has pass-through status, graft skin substitute products are not paid separately under unique HCPCS or CPT codes in OPPS. However, in CY 2018, a manufacturer requested that CMS develop methodologies to allow synthetic graft skin substitute products to receive payment in the outpatient hospital setting and in the physician office setting. After extensive review, we made the determination to assign the synthetic product in CY 2019 to HCPCS codes A6460 and A6461, which were newly created HCPCS codes to report synthetic, resorbable wound dressings. HCPCS codes A6460 and A6461 are packaged under the OPPS and cannot be assigned to either the high cost or low cost skin substitute group. This meant that graft skin substitute products could not be billed with CPT codes 15271 through 15278 or HCPCS codes C5271 through C5278, even though synthetic graft skin substitute products and biological graft skin substitute products perform the same function and have similar efficacy. We quickly realized that using HCPCS codes A6460 and A6461 would not work to appropriately describe the application of synthetic graft products when used in similar manner to biological graft skin substitute products. Therefore, we needed to consider other approaches to this issue.

Because all skin substitutes, except those with pass-through status, are packaged under the OPPS, we explored solutions that would permit synthetic skin substitute products to be billed with either CPT codes 15271 through 15278 or HCPCS codes C5271 though C5278. We decided to create HCPCS code C1849 to describe any synthetic graft skin substitute product, and we revised the payment logic for the graft skin substitute application procedure codes to allow HCPCS code C1849 to be billed with those procedures. Multiple synthetic graft skin substitute products have now been identified as being described by HCPCS code C1849. We will average the pricing data from the various products to determine an amount for the products described by HCPCS code C1849 to compare against the MUC threshold. This comparison will determine if HCPCS code C1849 should be assigned to the high cost or low cost skin substitute category.

We appreciate the concerns expressed by commenters that one service code for synthetic products could lead to low cost synthetic graft products receiving excess payment if HCPCS code C1849 is assigned to the high cost group, or lead to high cost synthetic graft products being underpaid if HCPCS code C1849 is assigned to the low cost group. We will take these concerns into consideration in future rulemaking.

Comment: One commenter suggested that, if we do not establish product-specific HCPCS codes for each synthetic graft skin substitute product, we delete C1849 and establish two new HCPCS codes in its place. Specifically, the commenter recommended that one HCPCS code would be for high cost synthetic graft skin substitute products and the other HCPCS code would be for low cost synthetic graft skin substitute products. These two payment codes would ensure that all synthetic graft skin substitute products are assigned to the cost group that reflects whether the mean unit cost of any given synthetic graft skin substitute product is above or below the mean unit cost threshold for determining assignment to the high cost or low cost skin substitute group.

Response: We appreciate the suggestion from the commenter. We note that our policy is to allow all synthetic skin substitutes described by C1849 to bill the skin graft application CPT codes for high cost skin substitute products (CPT codes 15271 through 15278). We appreciate the commenters suggestion, which we will consider for future rulemaking.

Comment: One commenter provided suggestions on how we could revise our definition of synthetic graft skin substitute products to reduce the possibility that synthetic dressings or non-resorbable polymeric sheets could be considered synthetic skin substitute products and be reported using HCPCS code C1849.

Response: We thank the commenter for their suggestions. Currently, we do not believe that there is an issue with the definition of synthetic skin substitute products that we established for the CY 2021 OPPS/ASC final rule (85 FR 86064 through 86067). If during future rulemaking we find that synthetic graft products that do not function as skin substitutes are being reported using HCPCS code C1849, we may refer to the commenter's suggestions to help us revise our definition of synthetic graft skin substitute products.

33. Therapeutic Ultrafiltration (APC 5241)

As displayed in Addendum B to the CY 2022 OPPS/ASC proposed rule, we proposed to assign placeholder CPT code 0692T (Therapeutic Ultrafiltration) to SI “E1” to indicate that the code is not payable by Medicare when submitted on outpatient claims (any outpatient bill type) because the service associated with the code is either not covered by any Medicare outpatient benefit category, is statutorily excluded from Medicare payment, or is not reasonable and necessary. We note that CPT code 0692T was listed as placeholder code 057XT in OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule.

Comment: Some commenters reported that the device associated with the CPT code 0692T describing therapeutic ultrafiltration received FDA approval by the U.S. Food and Drug Administration (FDA) in 2020 and requested separate payment for the code. They specifically requested assignment to APC 5242 (Level 2 Blood Product Exchange and Related Services) and SI “S” (Paid under OPPS; separate APC payment). They stated that CPT codes 36511 (Therapeutic apheresis; for white blood cells), and 36514 (Therapeutic apheresis; for plasma pheresis), which are assigned to APC 5242 and SI “S,” can be considered similar to therapeutic ultrafiltration in clinical and resource coherence.

Response: For CY 2022, OPPS payments are based on claims submitted between January 1, 2019, through December 31, 2019, and processed through June 30, 2020. Because CPT code 0692T is a new code that will be effective January 1, 2022, we have no claims data available for ratesetting. However, after further review of the service, we believe that CPT code 0692T shares similar clinical characteristics and resource costs as CPT code 36513 (Therapeutic apheresis; for platelets), which is currently assigned to APC 5241 (Level 1 Blood Product Exchange and Related Services). Therefore, we are assigning CPT code 0692T to APC 5241 and SI “S” for CY 2022. The final payment rate for the code can be found in Addendum B to this final rule with comment period. In addition, the SI definitions can be found in Addendum D1 to this final rule with comment period. Both Addendum B and Addendum D1 are available via the internet on the CMS website.

We note that we review, on an annual basis, the APC assignments for all services and items paid under the OPPS. As a result, we will reevaluate the APC placement for CPT code 0692T for the next rulemaking cycle.

34. Transcatheter Implantation of Coronary Sinus Reduction Device

The Neovasc Reducer System is a novel device implanted into the coronary sinus vein using minimally invasive techniques. The Reducer is implanted by transvenous percutaneous approach from the right or left jugular vein into the coronary sinus. After positioning the balloon catheter at the implantation site, the Reducer is deployed by inflating the balloon catheter until apposition of the vessel wall is achieved. The balloon catheter is then deflated and removed from the coronary sinus, leaving the Reducer permanently inflated. After 6 to 8 weeks the hourglass shaped wire mesh is covered with endothelium and narrowing becomes effective by redistributing blood flow to ischemic areas of the heart.

In 2021, Neovasc received FDA approval for the Investigational Device Exemption (IDE) regarding the COSIRA-II Clinical Trial. COSIRA-II is a randomized, sham-controlled trial investigating the safety and effectiveness of the Reducer for patients suffering from refractory angina. Neovasc has been classified as a Category B device by FDA.

In addition, the AMA's Editorial Panel established a new code, specifically, CPT code 0645T (Transcatheter implantation of coronary sinus reduction device including vascular access and closure, right heart catheterization, venous angiography, coronary sinus angiography, imaging guidance, and supervision and interpretation, when performed), to describe the implantation of a coronary sinus reduction device that is associated with the Neovasc Reducer System. This code was effective July 1, 2021.

For CY 2022, we proposed to assign CPT code 0645T to SI “E1” to indicate that the code is not paid by Medicare when submitted on outpatient claims (any outpatient bill type).

Comment: One commenter, specifically, the manufacturer of the Neovasc Reducer System, requested assignment to either New Technology APC 1576 (New Technology—Level 39 ($15,001-$20,000) with the payment rate of $17,500.50, or New Technology APC 1577 (New Technology—Level 40 ($20,001-$25,000) with the payment rate of $22,500.50, in anticipation of its approval by Medicare for its Category B IDE study. The company stated there are no other surgical procedures that are similar in terms of resource costs and clinical homogeneity that would allow for the Neovasc Reducer System to be assigned to an appropriate clinical APC.

Response: Based on the information presented by the commenter, and our review of the IDE study, we do not believe that it is appropriate to assign a payable status indicator under the OPPS to CPT code 0645T prior to the approval of the Category B IDE study. In addition, the clinical study has not yet met CMS' standards for coverage, nor does it appear on the CMS Approved IDE List, which can be found at this CMS website: https://www.cms.gov/Medicare/Coverage/IDE/Approved-IDE-Studies.html . Because the Neovasc Reducer System has not been approved for Medicare coverage as a Category B IDE, we believe that we should continue to assign CPT code 0645T to status indicator “E1”. If this technology later meets CMS's standards for coverage, we will assess the APC assignment for the code in a future quarterly update and/or rulemaking cycle.

Therefore, after consideration of the public comment, we are finalizing our proposal, without modification, to assign CPT code 0645T to SI “E1”. We refer readers to Addendum D1 to this final rule with comment period for the complete list of the OPPS payment status indicators and their definitions for CY 2022. Addendum D1 is available via the internet on the CMS website.

35. Tympanostomy Using an Automated Tube Delivery System (APC 5163)

For CY 2022, we proposed to continue to assign CPT code 0583T to APC 5163 (Level 3 ENT Procedures) with a proposed payment rate of $1,387.72.

Comment: A few commenters disagreed with our proposed APC assignment. These commenters stated that CPT code 0583T should be reassigned to APC 5164 (Level 4 ENT Procedures) or APC 1523 (New Technology—Level 23 ($2,501-$3,000)) with proposed payment rates of $2,806.94 and $2,750.50, respectively. Commenters stated that CPT code 0583T is clinically similar to CPT code 69421 (Myringotomy including aspiration and/or eustachian tube inflation requiring general anesthesia), which is assigned to APC 5164. Commenters further stated that APC 5164 also includes many other middle ear procedures that involve an incision, revision, repair, and removal of tubes.

Response: We disagree with commenters on the clinical similarity between CPT code 0583T and the other services in APC 5164. For the reasons discussed in the CY 2021 OPPS final rule with comment period (85 FR 85983), based on our review of the procedure and input from our medical advisors, we continue to believe that the surgical procedure described by CPT code 0583T is most similar, in terms of clinical homogeneity and resource cost, to CPT code 69436 (Tympanostomy (requiring insertion of ventilating tube), local or topical anesthesia), which is assigned to APC 5163. Both procedures (as described by CPT codes 0583T and 69436) require ventilating tubes that require anesthesia.

In summary, after consideration of the public comments, we are finalizing our proposal without modification to continue assignment of CPT code 0583T to APC 5163. The final CY 2022 OPPS payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

36. Urology and Related Services (APCs 5371 Through 5378)

For CY 2016, we established the APC reorganization and developed a urology specific series of APCs 5371-5377. Since that time, we have maintained that structure and added an additional level 8, APC 5378 (Level 8 Urology and Related Services). Based on our analysis of the CY 2019 claims available for ratesetting, we proposed to continue the 8 level structure of Urology APCs in the CY 2022 OPPS. We received comments on the CY 2022 OPPS/ASC proposed rule suggesting we revise the APC assignments for the services assigned to the Urology & Related Services APCs. A commenter specifically noted that a reorganization for APCs 5375 through 5376 would be appropriate, but added that there were other adjustments across services within the Urology APCs that could improve the structure of these APCs.

We received several comments on APC reassignments. Below are the comments and our responses.

a. High-Intensity Focused Ultrasound of the Prostate (HIFU) Procedure (APC 5375)

In 2017, CMS received a new technology application for the prostate HIFU procedure and established a new code, specifically, HCPCS code C9747 (Ablation of prostate, transrectal, high intensity focused ultrasound (hifu), including imaging guidance). Based on the estimated cost provided in the new technology application, we assigned the new code to APC 5376 (Level 6 Urology and Related Services) with a payment rate of $7,452.66 effective July 1, 2017. We announced the SI and APC assignment in the July 2017 OPPS quarterly update CR (Transmittal 3783, Change Request 10122, dated May 26, 2017).

For the CY 2018 update, we maintained the assignment of HCPCS code C9747 to APC 5376 with a payment rate of $7,596.26. We note that the payment rates for the CY 2018 OPPS update were based on claims submitted between January 1, 2016 through December 30, 2016, that were processed on or before June 30, 2017. Since HCPCS code C9747 was established on July 1, 2017, we had no claims data for the procedure for use in ratesetting for CY 2018.

However, for the CY 2019 update, based on the latest claims data for the final rule, we revised the APC assignment for HCPCS code C9747 from APC 5376 to APC 5375 with a payment rate of $4,020.54. We note that the payment rates for CY 2019 were based on claims submitted between January 1, 2017 through December 30, 2017, that were processed on or before June 30, 2018. Our claims data showed a geometric mean cost of approximately $5,000 for HCPCS code C9747 based on 64 single claims (out of 64 total claims), which was significantly lower than the geometric mean cost of about $7,717 for APC 5376. We believed that the geometric mean cost for HCPCS code C9747 was more comparable to the geometric mean cost of approximately $4,055 for APC 5375. Consequently, we reassigned the code from APC 5376 to APC 5375 (Level 5 Urology and Related Services) for CY 2019 and C9747 remained in APC 5375 for CY 2020.

For the CY 2021 update, we replaced HCPCS code C9747 with CPT code 55880 (Ablation of malignant prostate tissue, transrectal, with high intensity-focused ultrasound (hifu), including ultrasound guidance) on January 1, 2019. We maintained the assignment of HCPCS code C9747 to APC 5375 with a payment rate of $4,413.90. We note that the payment rates for the CY 2021 OPPS update were based on claims submitted between January 1, 2019 through December 30, 2019, that were processed on or before June 30, 2020. Our claims data showed a geometric mean cost of approximately $5,744,43 for HCPCS code C9747 (CPT code 55880) based on 279 single claims (out of 284 total claims), which was assigned to APC 5375 with a geometric mean cost of about $4,299.81.

For CY 2022, we proposed to continue to assign HCPCS code C9747 to APC 5375 with a proposed payment rate $4,527.23.

Comment: Several commenters requested CPT code 55880 be reassigned to APC 5376 from APC 5375. The commenters argued that the average cost of the HIFU procedure is closer to the APC 5376 proposed payment rate of $8,468.32. Several commenters recommended we assign this procedure to APC 5376 because they believe the service is clinically similar and comparable in terms of resources to cryoablation of the prostate, which is described by CPT code 55873 (Cryosurgical ablation of the prostate (includes ultrasonic guidance and monitoring) and assigned to APC 5376 (Level 6 Urology and Related Services), with a proposed payment rate of $8,468.32. They also stated that the new CPT code 55880 descriptor treats malignant prostate tissue, which requires additional resources relative to its predecessor code descriptor that treated BPH. Some commenters stated that the CY 2019 OPPS reassignment of HCPCS code C9747 to APC 5375 from APC 5376 was due to inaccurate and incomplete claims that did not include the substantial cost of the disposable device required for the procedure and stated that HIFU is a device-intensive procedure. They alleged the underpayment for HIFU discourages hospitals from providing this procedure for Medicare patients because the APC 5375 payment rate does not cover the hospital facility cost for this procedure. They alleged that maintaining the assignment in APC 5375 will deter HOPD facilities from offering the HIFU treatment to Medicare beneficiaries because the payment is insufficient to cover the cost of the procedure. Several commenters argued that the current HIFU payment is a health equity issue because Americans in a lower socio-economic class will have less access to high-quality healthcare. Furthermore, the commenters stated that prostate cancer affects more men of color whose rate of death is almost twice that of non-Hispanic white men.

Response: We review, on an annual basis, the APC assignments for all services and items (including devices) paid under the OPPS based on our analysis of the latest claims data. For CY 2021, based on predecessor HCPCS code C9747, our claims data supported maintaining CPT code 55880 in APC 5375. For CY 2022, based on our analysis of the claims for this CY 2022 OPPS/ASC final rule with comment period, our data shows a geometric mean cost of approximately $5,708 for HCPCS code C9747 based on 279 single claims, which is more comparable to the geometric mean cost of about $4,299 for APC 5375, rather than the geometric mean cost of approximately $8,042 for APC 5376. Although we are not applying the CY 2020 claims data for the CY 2022 ratesetting due to the PHE, we noted that the geometric mean cost associated with HCPCS code C9747 is about $6,654, which is between the geometric means of APC 5375 and APC 5376. Our clinical advisors also acknowledge the clinical and resource similarity between CPT code 55880 and CPT code 55873, both of which are treatment options for prostate cancer. We performed several APC modeling studies on the impact of reassigning a set of codes to better balance the procedures within APC 5375 and 5376, and we found that the reassignment of these codes would impact the payment level of both APC 5375 and 5376.

In summary, after careful consideration of the public comments, and after our analysis of the claims data for this final rule with comment period, we are maintaining the APC assignment for CPT code 55880 in APC 5375, but will consider its reassignment in future rulemaking. The final CY 2022 payment rate for CPT code 55880 can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

b. Rezūm Procedure—Water Vapor Thermotherapy (APC 5373)

In 2018, CMS established a new code, specifically, HCPCS code C9748 (Transurethral destruction of prostate tissue; by radiofrequency water vapor (steam) thermal therapy). Based on its estimated cost, we assigned the new code to APC 5373 (Level 3 Urology and Related Services) with a payment rate of $1,695.68 effective January 1, 2018. We announced the SI and APC assignment in the January 2018 OPPS quarterly update CR (Transmittal 3941, Change Request 10417, dated December 22, 2017).

For the CY 2019 update, we replaced HCPCS code C9748 with CPT 53854 (Transurethral destruction of prostate tissue; by radiofrequency generated water vapor thermotherapy) on January 1, 2019. We maintained the assignment of CPT 53854 (HCPCS code C9748) to APC 5373 with a payment rate of $1,695.57. We note that the payment rates for the CY 2018 OPPS update were based on claims submitted between January 1, 2017 through December 30, 2017, that were processed on or before June 30, 2018. Since HCPCS code C9748 was established on January 1, 2018, we had no claims data for the procedure for use in ratesetting for CY 2019.

For the CY 2020 update, we maintained the assignment of HCPCS code 53854 to APC 5373 with a payment rate of $1,771.35. We note that the payment rates for the CY 2020 OPPS update were based on claims submitted between January 1, 2018 through December 30, 2018, that were processed on or before June 30, 2019. Our claims data showed a geometric mean cost of approximately $1,899.18 for HCPCS code C9748 based on 191 single claims (out of 192 total claims), which was assigned to APC 5373 with a geometric mean of about $1,733.35.

For the CY 2021 update, we maintained the assignment of HCPCS code 53854 to APC 5373 with a payment rate of $1,792.99. We note that the payment rates for the CY 2020 OPPS update were based on claims submitted between January 1, 2019, through December 30, 2019, that were processed on or before June 30, 2020. Our claims data showed a geometric mean cost of approximately $2,414.69 for HCPCS code 53854 based on 751 single claims (out of 752 total claims), which was assigned to APC 5373 with a geometric mean cost of about $1,746.64.

For CY 2022, we proposed to continue to assign HCPCS code 53854 to APC 5373 with a proposed payment rate $1,839.83.

Comment: A commenter requested the reassignment of CPT code 53854 to APC 5374 (Level 4 Urology and Related Services) from APC 5373 (Level 3 Urology and Related Services). The commenter stated the geometric mean costs associated with CPT Code 53854 are significantly higher than either all significant or almost all significant other procedures in APC 5373. The commenter further stated that based on the CY 2019 claims data, CPT code 53854 yields a geometric mean cost of about $2,410 with 751 single frequency claims and suggested the geometric mean cost of CPT code 53854 is much closer to the geometric mean cost of APC 5374, which is approximately $2,996. The commenter cited the year over year increase in geometric cost of 18 percent or $423 from 2019 to 2020. In addition, the commenter stated CPT 53854 is a transurethral procedure for the treatment of benign prostatic hyperplasia (BPH) and is more clinically similar to the two transurethral BPH procedure codes CPT 53850 (Transurethral destruction of prostate tissue; by microwave thermotherapy) and CPT 53852 (Transurethral destruction of prostate tissue; by radiofrequency thermotherapy) assigned to APC 5374.

Response: We appreciate the commenter's input on this subject. Based on our evaluation of the latest claims data for this final rule with comment period, we noted the geometric mean cost associated with CPT code 53854 (HCPCS C9748) increased from $1,899.18 (from the CY 2018 claims data) to $2,412.55 (from the CY 2019 claims data), which represented an approximately 27 percent increase year-over-year. Based on our review, our medical advisors agreed with the commenter that CPT code 53854 is similar to CPT code 53850 and CPT code 53852 in terms of clinical characteristics and resource. We noted that CPT codes 53850 and 53852 represent treatment options for BPH which are assigned to APC 5374 (Level 4 Urology and Related Services) while there are no BPH treatment procedures assigned to APC 5373 with the exception of CPT code 53854.

In summary, after consideration of the public comments, we are finalizing our proposal with modification and reassigning CPT code 53854 to APC 5374 from APC 5373 for CY 2022. The final CY 2022 OPPS payment rate for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website.

37. VisONE Synchronized Diaphragmatic Stimulation (SDS) System

For CY 2022, the CPT Editorial Panel created CPT codes 0674T through 0685T, which are listed in Table 29, to describe the VisONE® Synchronized Diaphragmatic Stimulation^TM (SDS®) System. For CY 2022, we proposed to assign these codes to OPPS SI “E1”, indicating that these services are not paid by Medicare when submitted on outpatient claims. We note these codes were listed as placeholder codes 050XT through 055XT in OPPS Addendum B of the CY 2022 OPPS/ASC proposed rule.

Comment: A commenter reported that the device associated with these codes has been approved for Breakthrough Device Designation by the FDA. The commenter added that they are currently in the process of applying for Medicare national coverage for the clinical trial as a Category B IDE study. The commenter requested that we crosswalk the new codes to the SIs and APC assignments of comparable procedures involving other stimulation technologies so that appropriate hospital outpatient payment may be made in the event the Category B IDE study is approved for Medicare coverage. The commenter listed the comparable codes with the SI and APCs assignments. See Table 30 for SI and APC assignments requested by commenter.

Response: The clinical trial associated with CPT codes 0674T through 0685T does not appear on the CMS Approved IDE List, which can be found at this CMS website: https://www.cms.gov/Medicare/Coverage/IDE/Approved-IDE-Studies.html . While we recognize the commenter's assertion that is was accepted for FDA's Breakthrough Device Designation and that it intends to apply for Medicare coverage as a Category B IDE clinical trial, since the clinical trial associated with these codes has not been approved for Medicare coverage, we believe we should continue to assign CPT codes 0674T through 0685T to SI “E1” for CY 2022. If Medicare approves the clinical trial as a Category B IDE study, we will reassess the SI and APC assignments for the codes.

In summary, after consideration of the public comments, we are finalizing our proposal without modification. Specifically, we are finalizing our continued assignment of CPT code=0674T through 0685T to OPPS SI “E1.”

IV. OPPS Payment for Devices

A. Pass-Through Payment for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and Quarterly Expiration of Device Pass-Through Payments

a. Background

The intent of transitional device pass-through payment, as implemented at § 419.66, is to facilitate access for beneficiaries to the advantages of new and truly innovative devices by allowing for adequate payment for these new devices while the necessary cost data is collected to incorporate the costs for these devices into the procedure APC rate (66 FR 55861). Under section 1833(t)(6)(B)(iii) of the Act, the period for which a device category eligible for transitional pass-through payments under the OPPS can be in effect is at least 2 years but not more than 3 years. Prior to CY 2017, our regulation at § 419.66(g) provided that this pass-through payment eligibility period began on the date CMS established a particular transitional pass-through category of devices, and we based the pass-through status expiration date for a device category on the date on which pass-through payment was effective for the category. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79654), in accordance with section 1833(t)(6)(B)(iii)(II) of the Act, we amended § 419.66(g) to provide that the pass-through eligibility period for a device category begins on the first date on which pass-through payment is made under the OPPS for any medical device described by such category.

In addition, prior to CY 2017, our policy was to propose and finalize the dates for expiration of pass-through status for device categories as part of the OPPS annual update. This means that device pass-through status would expire at the end of a calendar year when at least 2 years of pass-through payments had been made, regardless of the quarter in which the device was approved. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79655), we changed our policy to allow for quarterly expiration of pass-through payment status for devices, beginning with pass-through devices approved in CY 2017 and subsequent calendar years, to afford a pass-through payment period that is as close to a full 3 years as possible for all pass-through payment devices. We also have an established policy to package the costs of the devices that are no longer eligible for pass-through payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates (67 FR 66763).

We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79648 through 79661) for a full discussion of the current device pass-through payment policy.

b. Expiration of Transitional Pass-Through Payments for Certain Devices

As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires that, under the OPPS, a category of devices be eligible for transitional pass-through payments for at least 2 years, but not more than 3 years. Currently, there are 11 device categories eligible for pass-through payment. These devices are listed in Table 31. Below, we detail the expiration dates of pass-through payment status for each of the 11 devices currently receiving device pass-through payment.

The pass-through payment status of the device category for HCPCS code C1823 is scheduled to expire on December 31, 2021. Typically, we would propose to package the costs of the device described by C1823 into the costs related to the procedure with which the device is reported in the hospital claims data for CY 2022. The data for the CY 2022 OPPS proposed rule ratesetting for the procedure reported with C1823 would have been set using CY 2020 outpatient claims data processed through December 31, 2020, however, as described in section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188), due to the effects of the COVID-19 PHE, we proposed to use CY 2019 claims data instead of CY 2020 claims data in establishing the CY 2022 OPPS rates and to use cost report data from the same set of cost reports originally used in final rule 2021 OPPS ratesetting. Therefore, we proposed to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to provide separate payment for C1823 for four quarters of CY 2022 to end on December 31, 2022. This would allow for CY 2021 claims data to inform CY 2023 rate setting for the procedure reported with C1823. This is the only device whose costs would typically be packaged into the related procedure in CY 2022 using CY 2020 claims data for ratesetting and is the only device to which this proposed policy would apply. A full discussion of this finalized policy is included in section X.F. of this CY 2022 OPPS/ASC final rule.

The pass-through payment status of the device category for HCPCS code C1823 will end on December 31, 2021. The pass-through payment status of the device categories for HCPCS codes C1824, C1982, C1839, C1734, and C2596 is set to expire on December 31, 2022. The pass-through payment status of the device category for HCPCS code C1748 is set to expire on June 30, 2023. The pass-through payment status of the device category for HCPCS codes C1052, C1062, and C1825 is set to expire on December 31, 2023 and the pass-through payment status of the device category for HCPCS code C1761 is set to expire on June 30, 2024. Table 31 shows the expiration dates of transitional pass-through payments for these devices.

2. New Device Pass-Through Applications for CY 2022

a. Background

Section 1833(t)(6) of the Act provides for pass-through payments for devices, and section 1833(t)(6)(B) of the Act requires CMS to use categories in determining the eligibility of devices for pass-through payments. As part of implementing the statute through regulations, we have continued to believe that it is important for hospitals to receive pass-through payments for devices that offer substantial clinical improvement in the treatment of Medicare beneficiaries to facilitate access by beneficiaries to the advantages of the new technology. Conversely, we have noted that the need for additional payments for devices that offer little or no clinical improvement over previously existing devices is less apparent. In such cases, these devices can still be used by hospitals, and hospitals will be paid for them through appropriate APC payment. Moreover, a goal is to target pass-through payments for those devices where cost considerations are most likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR 68629). We note that, as discussed in section IV.A.2. of the CY 2022 OPPS/ASC proposed rule (86 FR 42085), we created an alternative pathway in the CY 2020 OPPS/ASC final rule that granted fast-track device pass-through payment under the OPPS for devices approved under the FDA Breakthrough Device Program for OPPS device pass-through payment applications received on or after January 1, 2020. We refer readers to section IV.A.4. of the CY 2022 OPPS/ASC proposed rule for a complete discussion of this pathway.

As specified in regulations at § 419.66(b)(1) through (3), to be eligible for transitional pass-through payment under the OPPS, a device must meet the following criteria:

• If required by FDA, the device must have received FDA marketing authorization (except for a device that has received an FDA investigational device exemption (IDE) and has been classified as a Category B device by FDA), or meet another appropriate FDA exemption; and the pass-through payment application must be submitted within 3 years from the date of the initial FDA marketing authorization, if required, unless there is a documented, verifiable delay in U.S. market availability after FDA marketing authorization is granted, in which case CMS will consider the pass-through payment application if it is submitted within 3 years from the date of market availability;

• he device is determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act; and
• The device is an integral part of the service furnished, is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted (either permanently or temporarily), or applied in or on a wound or other skin lesion.

In addition, according to § 419.66(b)(4), a device is not eligible to be considered for device pass-through payment if it is any of the following: (1) Equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciation assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker).

Separately, we use the following criteria, as set forth under § 419.66(c), to determine whether a new category of pass-through payment devices should be established. The device to be included in the new category must—

• Not be appropriately described by an existing category or by any category previously in effect established for transitional pass-through payments, and was not being paid for as an outpatient service as of December 31, 1996;
• Have an average cost that is not “insignificant” relative to the payment amount for the procedure or service with which the device is associated as determined under § 419.66(d) by demonstrating: (1) The estimated average reasonable cost of devices in the category exceeds 25 percent of the applicable APC payment amount for the service related to the category of devices; (2) the estimated average reasonable cost of the devices in the category exceeds the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent; and (3) the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device exceeds 10 percent of the APC payment amount for the related service (with the exception of brachytherapy and temperature-monitored cryoablation, which are exempt from the cost requirements as specified at § 419.66(c)(3) and (e)); and
• Demonstrate a substantial clinical improvement, that is, substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment.

Beginning in CY 2016, we changed our device pass-through evaluation and determination process. Device pass-through applications are still submitted to CMS through the quarterly subregulatory process, but the applications will be subject to notice and- comment- rulemaking in the next applicable OPPS annual rulemaking cycle. Under this process, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle, while submitters of applications that are not approved upon quarterly review will have the option of being included in the next applicable OPPS annual rulemaking cycle or withdrawing their application from consideration. Under this notice-and-comment process, applicants may submit new evidence, such as clinical trial results published in a peer-reviewed journal or other materials for consideration during the public comment process for the proposed rule. This process allows those applications that we are able to determine meet all of the criteria for device pass-through payment under the quarterly review process to receive timely pass-through payment status, while still allowing for a transparent, public review process for all applications (80 FR 70417 through 70418).

In the CY 2020 annual rulemaking process, we finalized an alternative pathway for devices that are granted a Breakthrough Device designation (84 FR 61295) and receive FDA marketing authorization. Under this alternative pathway, devices that are granted an FDA Breakthrough Device designation are not evaluated in terms of the current substantial clinical improvement criterion at § 419.66(c)(2) for the purposes of determining device pass-through payment status, but do need to meet the other requirements for pass-through payment status in our regulation at § 419.66. Devices that are part of the Breakthrough Devices Program, have received FDA marketing authorization, and meet the other criteria in the regulation can be approved through the quarterly process and announced through that process (81 FR 79655). Proposals regarding these devices and whether pass-through payment status should continue to apply are included in the next applicable OPPS rulemaking cycle. This process promotes timely pass-through payment status for innovative devices, while also recognizing that such devices may not have a sufficient evidence base to demonstrate substantial clinical improvement at the time of FDA marketing authorization.

More details on the requirements for device pass-through payment applications are included on the CMS website in the application form itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html,, in the “Downloads” section. In addition, CMS is amenable to meeting with applicants or potential applicants to discuss research trial design in advance of any device pass-through application or to discuss application criteria, including the substantial clinical improvement criterion.

Comment: One commenter recommended that, for devices with FDA Breakthrough Device designation, CMS remove the requirement that the device prove they are not described by an existing transitional pass-through category. The commenter asserted that FDA Breakthrough Device designation implies that a device is a first of kind in addressing the condition for which it is indicated.

Response: We appreciate the commenter's input but note that we did not propose to eliminate the device category requirement in the CY 2022 OPPS/ASC proposed rule. Moreover, section 1833(t)(6)(B)(ii) requires the Secretary to establish categories of medical devices in a manner such that no medical device is described by more than one category and to promptly establish a new category of medical devices for any new medical devices for which none of the categories in effect or previously in effect is appropriate.

Comment: One commenter asked that CMS provide additional guidance to medical technology innovators to help clarify requirements for demonstrating “substantial clinical improvement” for purposes of transitional pass-through payment eligibility. The commenter stated that greater clarity should be provided in particular with regard to the evidence types and study designs that may be considered in evaluating substantial clinical improvement, including methods beyond randomized clinical trials (RCTs) that would produce evidence sufficient to demonstrate substantial clinical improvement in a shorter period of time and at reduced cost.

Response: We appreciate the commenter's input, but note that this comment is outside the scope of this rulemaking. We refer the commenter to the Device Pass-through application located on the CMS website ( https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf ) for further information regarding what evidence is considered in evaluating substantial clinical improvement of devices.

Comment: One commenter offered their general support for our proposal to approve all eight applications for device pass-through status included in the CY 2022 OPPS/ASC proposed rule. The commenter added that CMS needs to ensure that pass-through payment amounts adequately cover the cost of the device to ensure that Medicare beneficiaries have access to innovative services and reduce facilities' economic burdens. The commenter also believed CMS should refrain from factoring a procedure off-set amount into the calculation of payment for these transitional pass though approved services.

Response: We appreciate the general support for our proposals to approve the applications discussed in the CY 2022 OPPS/ASC proposed rule and the recommendations provided by the commenter. Our determinations on each application are described in detail in the next section. As we have in prior years, CMS continues to evaluate the application of the device offset amount on a case by case basis to ensure the appropriate payment is made for a device on pass-through status. In cases where a device on pass-through status replaces previously existing technologies, we continue to believe it is appropriate to apply the device offset amount.

b. Applications Received for Device Pass-Through Payment for CY 2022

We received eight complete applications by the March 1, 2021 quarterly deadline, which was the last quarterly deadline for applications to be received in time to be included in the CY 2022 OPPS/ASC proposed rule. We received three of the applications in the third quarter of 2020, two of the applications in the fourth quarter of 2020, and three of the applications in the first quarter of 2021. One of the applications was approved for device pass-through payment during the quarterly review process: the Shockwave C² Coronary Intravascular Lithotripsy (IVL) catheter, which received fast-track approval under the alternative pathway effective July 1, 2021. As previously stated, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle. Therefore, the Shockwave C² Coronary Intravascular Lithotripsy (IVL) catheter is discussed in section IV.2.b.1. of this final rule with comment period.

Applications received for the later deadlines for the remaining 2021 quarters (June 1, September 1, and December 1), if any, will be discussed in the CY 2023 OPPS/ASC proposed rule. We note that the quarterly application process and requirements have not changed in light of the addition of rulemaking review. Detailed instructions on submission of a quarterly device pass-through payment application are included on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf.

Discussions of the applications we received by the March 1, 2021 deadline are included below.

1. Alternative Pathway Device Pass-through Applications

We received two device pass-through applications by the March 2021 quarterly application deadline for devices that have received Breakthrough Device designation from FDA and FDA marketing authorization, and therefore are eligible to apply under the alternative pathway. As stated above in section IV.2.a of the CY2022 OPPS/ASC proposed rule, under this alternative pathway, devices that are granted an FDA Breakthrough Device designation are not evaluated in terms of the substantial clinical improvement criterion at § 419.66(c)(2)(i) for purposes of determining device pass-through payment status, but need to meet the other requirements for pass-through payment status in our regulation at § 419.66.

(1) RECELL® System

AVITA Medical submitted an application for a new device category for transitional pass-through payment status for the RECELL® System (RECELL®) for CY 2022. According to the applicant, RECELL® is used to process autologous donor tissue into a cell suspension autograft that is then immediately applied to the surgically prepared acute thermal burn wound.

The applicant stated RECELL® is a stand-alone, single-use, battery-powered device used to process and apply an autologous skin cell suspension. According to the applicant, RECELL® is a Class III medical device indicated for the treatment of acute partial-thickness and full-thickness/mixed depth thermal burn wounds and is not categorized as a skin substitute.

According to the applicant, the autograft procedure utilizing the RECELL® system involves harvesting a small graft from the patient's healthy skin and placing it into the RECELL® System for immediate processing into an autologous skin cell suspension. The applicant asserts that a significantly smaller autograft harvest is needed for procedures involving RECELL® when compared to procedures involving a split-thickness skin graft (STSG) without RECELL®; where typical STSG expansion ranges from 2:1 to 6:1, RECELL® may expand skin by up to 80:1. The applicant adds the entire procedure takes place in the operating room, including surgically preparing the acute burn wound, harvesting the autograft, processing the skin cell suspension through a disaggregation process, and applying the cell suspension autograft to the wound with no culturing in a laboratory.

The applicant described the RECELL® procedure in 27 steps: (1) The autograft site is identified; (2) the patient is anesthetized and prepared; (3) the nurse opens and transfers the sterile RECELL® System to the operative field; (4) a self-test is performed; (5) the nurse prepares and dispenses the enzyme into the incubation well; (6) the buffer solution is drawn and dispensed into the buffering and rinsing well; (7) the RECELL® processing unit is activated to heat the enzyme; (8) a thin epidermal autograft is harvested; (9) the harvested skin graft is placed in the enzyme; (10) the donor graft incubates for 15-20 minutes; (11) the sample is placed dermal side down in the mechanical scraping tray; (12) a scalpel is used to scrape the edges of the skin sample; (13) once ready, the donor skin is rinsed in the buffer solution; (14) the skin is returned to the mechanical scraping tray; (15) buffer is applied to the skin sample; (16) the skin sample is held in place with forceps; (17) the surgeon scrapes the epidermal cells; (18) the buffer syringe is used to rinse the disaggregated skin cells; (19) the surgeon draws up the autologous skin cell suspension from the tray into a syringe; (20) the suspension is then dispensed through the cell strainer to filter the suspension; (21) the filtered autologous skin cell suspension is drawn into a new 10 ml syringe; (22) the cell suspension autograft is prepared; (23) the burn wound is debrided; (24) the primary dressing (non-adherent, non-absorbent, small pore) is fixed or held only at the lower aspect of the burn wound; (25) the cell suspension autograft is applied by either spraying or dripping over the prepared wound bed; (26) after application, the primary dressing is immediately secured over the wound bed; and (27) absorbent and protective dressings are then applied as needed.

The applicant states the autologous skin cell suspension prepared using the RECELL® System contains keratinocytes, fibroblasts and melanocytes. According to the applicant, keratinocytes are the primary cells of the epidermis that are responsible for healing; fibroblasts enable the creation of new extracellular matrix proteins; and melanocytes produce melanin to allow restoration of normal pigmentation. The applicant asserts the unique delivery system allows for broad and even distribution of the cell suspension autograft directly onto a prepared wound surface or in combination with a meshed skin graft.

According to the applicant, there is one commercially available product (Epicel) that is also used to create an autograft from the patient's skin that is then applied to treat acute thermal burns. The applicant's claims regarding the differences between the two products are summarized in the following Table 32:

With respect to the newness criterion at § 419.66(b)(1), RECELL® is part of the FDA Breakthrough Devices Program. The applicant stated that RECELL® received PMA on September 20, 2018. The applicant added that RECELL® is a Class III medical device indicated for the treatment of acute thermal burn wounds in patients 18 years of age and older. We received the application for a new device category for transitional pass-through payment status for RECELL® on August 7, 2020, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comment on whether the RECELL® meets the newness criterion.

Comment: The applicant reiterated that RECELL® received FDA PMA on September 20, 2018.

Response: We appreciate the commenter's input. Because we received the RECELL® pass-through application on August 7, 2020, which is within 3 years of September 20, 2018, the date of FDA premarketing approval, we agree that the RECELL® meets the newness criterion. With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, RECELL® is integral to the service provided, is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted (either permanently or temporarily) or applied in or on a wound or other skin lesion. The applicant also claimed that RECELL® meets the device eligibility requirements of § 419.66(b)(4) because it is not equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. However, given the applicant's description of RECELL® as a device that processes tissue into an autograft, we stated that it appears that the RECELL® system may not be surgically implanted or inserted (either permanently or temporarily) or applied in or on a wound or other skin lesion. We noted that we believed the product of the RECELL® system, the suspension, may be applied on a wound, but we were not certain that this suspension qualifies as a device. We invited public comments on whether RECELL® meets the eligibility criteria at § 419.66(b).

Comment: In response to our concern regarding whether the suspension, that is applied in or on a wound or other skin lesion is the device for purposes of the requirement in § 419.66(b) one commenter stated that FDA approved all components of the RECELL® as a device, and that in order to treat a patient, all components of the RECELL® device are required to treat the patient. Multiple commenters stated the process of harvesting, creating and applying the suspension as one continuous process would not be possible without the device hardware; the hardware and suspension are tightly integrated and there is no treatment without the suspension. Another commenter added that the buffer solution is a component of the RECELL® device, which allows the expansion of the donor skin and provides a suspension mechanism for the skin cells to be applied directly on the patient's burn wound.

Response: We thank the commenters for their input. We have taken this information into consideration in our final determination of whether the device meets the criteria in § 419.66(b)(3) and § 419.66(b)(4), discussed below.

Comment: The applicant asserted that RECELL® is an integral part of the service, which cannot be performed without all device components including the suspension, is used for a single patient only, comes in contact with human tissue and is applied on a wound, and therefore, the applicant believes the RECELL® device meets the criteria in § 419.66(b)(3).

In response to our concern that the device is not applied in or on a wound or other skin lesion, the applicant stated that the RECELL® device is intended to harvest the cells from the patient's own donor skin to create a skin cell suspension which is then applied directly on the debrided and excised burn wound using a syringe fitted with a spray nozzle. According to the applicant, the RES Regenerative Epidermal Suspension (“Suspension”) contains autologous skin cells and buffer solution, a RECELL® device component, which is directly applied in or on a wound. The applicant added that the buffer is a pH neutral solution (sodium lactate) in liquid form that is used to carry, expand, and deliver the harvested skin cells in the RES Suspension for direct application to the burn wound. According to the applicant, RECELL® could not accomplish its intended use as described in its FDA label without the buffer, which is a necessary component of the device. The applicant and another commenter also contended that the Suspension qualifies as a device under FDA's definition, and cited provisions of the Federal Food, Drug, and Cosmetic Act and FDA guidance that they believed supported this position,

Response: We appreciate the additional information from the applicant and commenters. The applicant and commenters indicated that the RECELL® device consists of several components, one of which is the buffer, which is combined with harvested skin cells to create the suspension that is then applied to a wound. Because the buffer, a component of the device, is part of the suspension that is applied in or on a wound, RECELL® meets the eligibility criterion specified at § 419.66(b)(3)). We did not receive any comments in regard to § 419.66(b)(4), whether the device is equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and whether the device is a supply or material furnished incident to a service. Because the applicant asserted that the RECELL® device met the eligibility requirements at § 419.66(b)(4) and we agree, we conclude that the RECELL® device meets this eligibility criterion.

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We stated in the CY 2022 OPPS/ASC proposed rule that we have not yet identified an existing pass-through payment category that describes RECELL®. We invited public comment on whether RECELL® meets the device category criterion.

Comment: The applicant asserted the RECELL® meets the first criterion for establishing a new device category at § 419.66(c)(1) because there are no existing categories established for device TPT that describe the RECELL® device.

Response: We agree there is no existing pass-through payment category that appropriately describes the RECELL® because no current category appropriately describes a device that creates a suspension from an autograft of the patient's skin that is then applied to treat acute thermal burns. Based on this information, we have determined that the RECELL® meets the first eligibility criterion at § 419.66(c)(1).

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines either of the following: (i) That a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (ii) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of FDA's Breakthrough Devices Program and has received FDA marketing authorization. As previously discussed in section IV.2.a above, we finalized the alternative pathway for devices that are granted a Breakthrough Device designation and receive FDA marketing authorization in the CY 2020 OPPS/ASC final rule (84 FR 61295). The RECELL® System has a Breakthrough Device designation and marketing authorization from FDA, and therefore, is not evaluated for substantial clinical improvement. We note that the applicant applied for new technology add-on payment under the alternative pathway for Breakthrough devices, as discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45150 through 45151). While we have determined that the RECELL® device meets the newness criterion for OPPS device pass-through eligibility, in the FY 2022 IPPS/LTCH PPS final rule, we found that the RECELL® device was not within the newness period for FY 2022 for eligibility for new technology add-on payments and was therefore ineligible to receive these payments (86 FR 45151).

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated that RECELL® would be reported with the HCPCS codes listed in the following Table 33:

To meet the cost criterion for device pass-through payment status, a device must pass all three tests of the cost criterion for at least one APC. In the CY 2022 OPPS/ASC proposed rule, we stated that for our calculations, we used APC 5054—Level 4 Skin Procedures, which had a CY 2020 payment rate of $1,622.74 at the time the application was received. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). HCPCS code 15110 had a device offset amount of $13.47 at the time the application was received. According to the applicant, the cost of the RECELL® is $7,500.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $7,500 for RECELL® is 462 percent of the applicable APC payment amount for the service related to the category of devices of $1,622.74 ((7,500/1,622.74) × 100 = 462.2 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe RECELL® meets the first cost significance requirement.

The second cost significance requirement, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $7,500 for RECELL® is 55,679 percent of the cost of the device-related portion of the APC payment amount for the related service of $13.47 (($7,500/$13.47) × 100 = 55,679.3 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe RECELL® meets the second cost significance requirement.

The third cost significance requirement, at § 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $7,500 for RECELL® and the portion of the APC payment amount for the device of $13.47 is 461 percent of the APC payment amount for the related service of $1,622.74 ((($7,500−$13.47)/$1,622.74) × 100 = 461.4 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe RECELL® meets the third cost significance requirement.

We invited public comment on whether the RECELL® meets the device pass-through payment criteria discussed in this section, including the cost criterion for device pass-through payment status.

Comment: One commenter asserted that RECELL® expands the donor skin by up to 80x compared to 2-4x for most autografts, the current standard of care. The commenter stated this is an important treatment option in light of the ongoing COVID-19 pandemic and its drain on the availability of inpatient bed space. The commenter respectfully requested that CMS approve the RECELL® pass-through payment application to make RECELL® available in the outpatient setting. A second commenter offered their general support for approval of RECELL® based on what they believe to be substantial improvements compared to current burn treatments. A third commenter urged CMS to finalize pass-through status for RECELL® so that they could offer the treatment to patients on an outpatient basis.

Response: We thank the commenters for their support and we note that, as explained further below, we are approving RECELL® for device pass-through status beginning in CY 2022.

Comment: The applicant stated that the cost of RECELL® is not insignificant and exceeds 25 percent of the applicable APC amount for the relevant procedures that would be reported with RECELL®. The applicant further stated that the cost of the RECELL® device also exceeds the device-related portion of the applicable APC amount by more than 25 percent for the relevant procedures that would be reported with RECELL®.

Response: After consideration of the public comments we received and our review of the device pass-through application, we have determined that RECELL® meets the requirements for device pass-through payment status described at § 419.66. As stated previously, devices that are granted an FDA Breakthrough Device designation are not evaluated in terms of the current substantial clinical improvement criterion at § 419.66(c)(2)(i) for purposes of determining device pass-through payment status, but must meet the other criteria for device pass-through status, and we believe RECELL® meets those other criteria.

Therefore, effective beginning January 1, 2022, we are finalizing approval for device pass-through payment status for RECELL® under the alternative pathway for devices that have an FDA Breakthrough Device designation and have received FDA marketing authorization.

(2) Shockwave C² Coronary Intravascular Lithotripsy (IVL) Catheter

Shockwave Medical submitted an application for a new device category for transitional pass-through payment status for the Shockwave C² Coronary Intravascular Lithotripsy (IVL) catheter (Coronary IVL Catheter) for CY 2022. The applicant asserts the Coronary IVL Catheter is a proprietary lithotripsy device delivered through the coronary arterial system of the heart to the site of an otherwise difficult to treat calcified stenosis, including calcified stenosis that is anticipated to exhibit resistance to full balloon dilation or subsequent uniform coronary stent expansion. According to the applicant, energizing the lithotripsy device generates intermittent sound waves within the target treatment site, disrupting calcium within the lesion and allowing subsequent dilation of a coronary artery stenosis using low balloon pressure. According to the applicant, the Coronary IVL System is comprised of the following components:

(1) IVL Generator—a portable, rechargeable power source that is capital equipment and reusable.

(2) IVL Connect Cable—a reusable cable used to connect the IVL Generator to the IVL Catheter.

(3) Coronary IVL Catheter—a sterile, single-use catheter that delivers intravascular lithotripsy within the target coronary lesion.

According to the applicant, during a percutaneous coronary intervention (PCI) procedure, the physician determines that a lesion has severe calcification. The applicant states the Coronary IVL Catheter is introduced into the lesion where lithotripsy is delivered to crack the calcification to facilitate the optimal dilatation of the vessel and placement of a coronary stent. The applicant adds that the Coronary IVL Catheter is removed, and the physician then implants a coronary stent to treat the lesion.

The applicant asserts that the Coronary IVL Catheter is different from other devices used during PCI procedures as it delivers localized lithotripsy to crack the calcified lesion prior to the placement of a coronary stent. According to the applicant there are other devices that may be utilized to remove calcium within the vessel (that is, atherectomy), however, these devices utilize some form of cutting or laser to remove or ablate the calcium and can only address the calcium nearest to the vessel lumen. According to the applicant, the Coronary IVL Catheter addresses the calcium within the lumen as well as within the vessel walls.

According to the applicant, the Coronary IVL Catheter is used to treat a subset of patients identified for a PCI procedure to treat their coronary artery disease where approximately 15 percent of lesions in patients being eligible for a PCI procedure have severe calcification. The applicant adds the Coronary IVL Catheter is utilized during PCI procedures and does not replace any devices currently utilized to complete the procedure (for example, guidewires, angioplasty balloons, stent(s), vascular closure, etc.) that are packaged into the APC payment rate. According to the applicant, based on the FDA labeling for the Coronary IVL catheter, it is utilized prior to the placement of a coronary stent.

With respect to the newness criterion at § 419.66(b)(1), the Coronary IVL Catheter received FDA PMA for the Shockwave Intravascular Lithotripsy (IVL) System with Shockwave C2 Coronary Intravascular Lithotripsy (IVL) Catheter on February 12, 2021 and is indicated for lithotripsy-enabled, low-pressure balloon dilatation of severely calcified, stenotic de novo coronary arteries prior to stenting. The Coronary IVL Catheter received FDA Breakthrough Device designation on August 19, 2019, and is indicated for lithotripsy-enabled, low-pressure dilatation of calcified, stenotic de novo coronary arteries prior to stenting. We received the application for a new device category for transitional pass-through payment status for the Coronary IVL Catheter on February 26, 2021, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comment on whether the Coronary IVL Catheter meets the newness criterion.

Comment: One commenter stated that the Coronary IVL Catheter meets the newness criteria.

Response: We thank the commenter for the information.

Comment: In their comment the applicant concurred with CMS' conclusion that Coronary IVL Catheter meets the transitional pass-through criteria and supported CMS finalizing the transitional-pass through status for three years.

Response: Because we received the Coronary IVL Catheter pass-through application on February 26, 2021, which is within 3 years of February 12, 2021, the date of FDA premarketing approval for the device, we agree that the Coronary IVL Catheter meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the Coronary IVL Catheter is integral to the service provided, is used for one patient only, comes in contact with human tissue, and is surgically inserted in a patient until the procedure is completed. The applicant also claimed that the Coronary IVL Catheter meets the device eligibility requirements of § 419.66(b)(4) because it is not equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. In the CY 2022 OPPS/ASC proposed rule, we invited public comments on whether the Coronary IVL Catheter meets the eligibility criteria at § 419.66(b).

Comment: One commenter stated that the regulation at § 419.66(b)(3) is clear that pass-through is not appropriate for “equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1).” The commenter stated we acknowledged in the CY 2022 OPPS/ASC proposed rule that the Shockwave System Generator, which is the “power source” for the Shockwave System, is “capital equipment” with the list price referenced for the Coronary IVL System and not just the Coronary IVL Catheter. Next the commenter stated that the proposed rule does not consider if the Generator, an excluded piece of capital equipment, is the key component of the Coronary IVL System, and contended that CMS did not consider whether the Generator, an excluded piece of capital equipment is a “key therapeutic component” of the Shockwave System, and as such, that the Shockwave System as a whole should not be eligible for device pass-through status.

Response: As we stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42089), Shockwave Medical submitted an application for a new device category for transitional pass-through payment status for the Coronary IVL Catheter, and not for the remainder of the Coronary IVL System, which includes the IVL Cable and Generator. Given that the IVL Cable and Generator are not single-use devices, they are not eligible for device pass-through status. The only part of this device that is eligible for device pass-through status is the Coronary IVL Catheter—a sterile, single-use catheter.

In terms of the commenter's contention that we have not evaluated which portion of the device is the key therapeutic component, we emphasize that the Coronary IVL Catheter is the device for which the applicant submitted an application for device pass-through status. We also note that we consider which portion of a combination product is the key therapeutic or diagnostic component solely for purposes of determining whether implantable biological products should be evaluated as drugs or devices for pass-through payment purposes (74 FR 60476). We do not determine which portion of a combination product is the key therapeutic or diagnostic component for purposes of analyzing a device's eligibility for pass-through status. Nonetheless, if we were to consider the Shockwave Coronary IVL System as a whole, we would conclude that the Coronary IVL Catheter is the key therapeutic component as it is the component in the Shockwave System that is introduced into the lesion where lithotripsy is delivered to crack the calcification to facilitate the optimal dilatation of the vessel and placement of a coronary stent.

Comment: The applicant concurred with CMS' conclusion that the Coronary IVL Catheter meets the transitional pass-through criteria, including the criteria at § 419.66(b), and supported CMS finalizing the transitional-pass through status for the Coronary IVL Catheter for 3 years.

Response: Based on the information we have received and our review of the application, we agree with the applicant that the Coronary IVL Catheter is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted, and therefore meets the requirements in § 419.66(b)(3). We also agree with the commenter that the Coronary IVL Catheter meets the device eligibility requirements of § 419.66(b)(4) because it is not equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. Based on this assessment we have determined that the Coronary IVL Catheter meets the eligibility criteria at § 419.66(b)(3) and (4).

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. The applicant identified five established categories which they believe are not appropriate representatives of the Coronary IVL Catheter: (1) C1714 and C1724, which include devices that use mechanical cutting tools; (2) C1725, which includes balloon angioplasty; (3) C1885, which uses laser, beams of light to break up vessel obstructions; and (4) C2623, which includes a drug coated balloon. We stated in the CY 2022 OPPS/ASC proposed rule that we had not identified an existing pass-through device category that describes Coronary IVL Catheter and we invited public comment on this issue.

Comment: In its comment, the applicant concurred with CMS' conclusion that Coronary IVL Catheter meets the transitional pass-through device category eligibility criteria at § 419.66(c)(1) and supported CMS finalizing transitional pass-through status for three years.

Response: We agree there is no existing pass-through device category that appropriately describes the Coronary IVL Catheter because no current category describes a balloon catheter that generates sonic pressure waves using lithotripsy that can break up calcification in arterial walls. Based on this information, we have determined that the Coronary IVL Catheter meets the eligibility criterion at § 419.66(c)(1).

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines either of the following: (i) That a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (ii) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of FDA's Breakthrough Devices Program and has received FDA marketing authorization. As previously discussed in section IV.2.a above, we finalized the alternative pathway for devices that are granted a Breakthrough Device designation and receive FDA marketing authorization in the CY 2020 OPPS/ASC final rule (84 FR 61295). The Coronary IVL Catheter has a Breakthrough Device designation and marketing authorization from FDA, and therefore, is not evaluated for substantial clinical improvement. We note that the applicant applied for the new technology add-on payment under the alternative pathway for Breakthrough devices as discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45151 through 45153). In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45153), CMS approved the Coronary IVL Catheter for new technology add-on payments.

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the Coronary IVL Catheter meeting the cost significance requirements. The applicant stated that the Coronary IVL Catheter would be reported with the HCPCS codes listed in the following Table 34:

To meet the cost criterion for establishing a device category, a device must pass all three cost criteria for at least one APC. For our calculations for the CY 2022 OPPS/ASC proposed rule, we used APC 5193—Level 3 Endovascular Procedures, which had a CY 2021 payment rate of $10,042.94 at the time the application was received.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost for the Coronary IVL Catheter of $5,640 is 56 percent of the applicable APC payment amount for the service related to the category of devices of $10,042.94 (($5,640/10,042.94) × 100 = 56 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe the Coronary IVL Catheter meets the first cost significance requirement.

The second cost significance requirement, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). HCPCS code 92928 had a device offset amount of $3,607.42 at the time the application was received. The estimated average reasonable cost for the Coronary IVL Catheter of $5,640 is 156 percent of the cost of the device-related portion of the APC payment amount for the related service of $3,607.42 (($5,640/$3,607.42) × 100 = 156 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe that the Coronary IVL Catheter meets the second cost significance requirement.

The third cost significance requirement, at § 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $5,640 for the Coronary IVL Catheter and the portion of the APC payment amount for the device of $3,607.42 is 20 percent of the APC payment amount for the related service of $10,042.94 (($5,640−$3,607.42)/$10,042.94) × 100= 20 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe that the Coronary IVL Catheter meets the third cost significance requirement.

We invited public comment on whether the Coronary IVL Catheter meets the device pass-through payment criteria discussed in this section, including the cost criterion for device pass-through payment status.

Comment: One commenter asserted that CMS' review of the Shockwave System (Coronary IVL) was based on an incorrect CPT/APC pairing and an assessment of charges, not actual costs.

The commenter stated that CMS' analysis is contrary to its own regulation because it did not reference “the applicable APC.” According to the commenter, if APC 5194 (Level 4 Endovascular Procedures) is used to assess the Shockwave System, and not APC 5193 (Level 3 Endovascular Procedures), it is clear that the Shockwave System would not meet any of the three cost criteria. The commenter makes a number of arguments about why it believes APC 5194 is “the applicable APC,” including that that the applicant referenced 92933 (Percutaneous transluminal coronary atherectomy, with intracoronary stent, with coronary angioplasty when performed; single major coronary artery or branch) which the commenter explains maps to APC 5194, not APC 5193. According to the commenter, the applicant is clearly targeting this APC, as the applicant references a targeted population of patients with calcified lesions of approximately 15 percent of patients; this population maps to I25.84 (Coronary atherosclerosis due to calcified coronary lesion) for which a matching percentage of patients links to 92933 (and APC 5194), not 92928 (Percutaneous transcatheter placement of intracoronary stent(s), with coronary angioplasty when performed; single major coronary artery or branch) (and APC 5193). The commenter further asserted that in its development of the Shockwave System, the applicant references coronary orbital atherectomy (OA), which, in fact, breaks up and removes calcium, as occurs in atherectomy. According to the commenter, the applicant's public comments clearly present the Shockwave System as a replacement to atherectomy. The commenter stated that the proposed rule states that the pass-through criteria can be satisfied if “any” APC meets the criteria but refers to the regulation, which states the pass-through cost criteria can be met if “the applicable” APC is used. The commenter contended that it is clear the applicable APC for the Shockwave System is 5194 and not 5193. The commenter added that some stakeholders are under a misconception that, if the Shockwave System is granted pass-through status based on an analysis of the cost criterion using a pairing of 92928 and APC 5153, additional pass-through payments will nevertheless be available when the Shockwave System is billed under APC 5194. The commenter asked CMS to ensure, if the agency confirms its quarterly pass-through determination for the Shockwave System, that appropriate safeguards are in place so that inappropriate payments are not made in connection with APC 5194.

The commenter next asserted that the Shockwave System cost significance test is based on list prices and not costs, is inadequately supported, and is inconsistent with available cost data. According to the commenter, the device cost used in assessing the cost criteria requirement reflects a list price and is contrary to publicly available information on Shockwave System pricing. The commenter stated that there are substantially more C9600 (Percutaneous transcatheter placement of drug eluting intracoronary stent(s), with coronary angioplasty when performed; single major coronary artery or branch) claims ( i.e., 90,889) with drug-eluting stents than 92928 ( i.e., 6,357) with bare metal stents, where the device-related portion is higher. The commenter asserted that CMS did not provide any information in the CY 2022 OPPS/ASC proposed rule about why 92928 was used instead of C9600. The commenter explained that it is not clear to them why CMS chose 92928 instead of C9600 to perform the cost significance calculations for the cost criterion.

The commenter then asserted that CMS, without providing factual support, stated that the average reasonable cost for Coronary IVL is $5,640. According to the commenter, in the IPPS/LTCH final rule (86 FR 44774, 45153) CMS used a value of $5,640 for the Shockwave System, but did not reference the IPPS/LTCH final rule in the CY 2022 OPPS/ASC proposed rule. The commenter went on to explain that CMS based this figure on a cost for the Shockwave System of $4,700 per device × 1.2 devices required per case, and stated that CMS finalized this cost for the System “as a whole” without supporting this calculation except using preliminary information from the applicant. The commenter asserted that, under the Administrative Procedures Act, 5 U.S.C. 553(b), an agency is required, in order to provide stakeholders with reasonable notice and opportunity to comment, to provide the factual basis that supports its proposal; the commenter added that CMS' failure to provide any support for its proposal is precisely the kind of defect in process that courts have repeatedly cautioned against.

According to the commenter, in a published article, citing a Shockwave earnings call, the Shockwave national list price was stated to be $4,700. The commenter asserted that a list price is a charge and not a reflection of actual cost and does not address any discounts, rebates, free goods contingent on a purchase, or other price concessions. The commenter noted that blinded market research revealed prices to some purchasers as low as $4,200 and possibly lower.

Additionally, the commenter noted that in the proposed rule the applicant used a multiplier of 1.2 devices required per case to calculate the $5,640 used in assessing whether the device meets the cost criterion. According to the commenter, such a multiplier is not cited in the proposed rule and was not, therefore, framed appropriately for comment as part of this rulemaking. The commenter added three concerns related to the multiplier: (1) Use of a multiplier magnifies the invalid impact of incorrectly included “equipment” (the Generator) and a reusable item (the Cable) because the Generator and Cable would not be used in more than one case; (2) neither the CY 2022 OPPS proposed rule nor the FY 2022 IPPS/LTCH final rule included data or support for the assertion that 1.2 devices are required per case; and (3) use of a multiplier is not appropriate where, as here, the pass-through regulation requires a “reasonable” estimate of costs and more than one device would be used in less than twenty percent of all cases. The commenter contended that CMS should use medians, rather than averages, because of what the commenter believed was the inaccurate nature of averages in circumstances like these.

Response: We appreciate the additional information provided by the commenter. We disagree with the commenter's assertion that the proposed rule references the incorrect HCPCS/APC pairing. Question D.7. of the device pass-through application states: Using Healthcare Common Procedure Coding System (HCPCS) Level I and/or Level II code(s), list all of the specific procedure(s) and/or services with which the nominated device is used. The applicant for the Coronary IVL Catheter provided a complete list of HCPCS codes with which their device can be billed. CMS evaluated the complete list of HCPCS codes to ensure each code represented a procedure with which the Coronary IVL Catheter could be used. Consistent with our evaluation of every other device pass-through application, we identify the applicable APC with which to evaluate the cost of the device against the cost significance tests at § 419.66(d). There are numerous APCs to which procedures with which the Coronary IVL Catheter can be performed are assigned. As we explained in the CY 2005 OPPS final rule (69 FR 65775), we generally use the lowest APC payment rate applicable for use with the nominated device when we assess whether a device meets the cost significance criterion, thus increasing the probability the device will pass the cost significance test. Furthermore, we disagree with the commenter's assertion that CMS should limit pass-through payments to one APC (5193) versus another (5194). The applicant identified HCPCS codes which CMS agrees align appropriately to both APC 5193 and 5194. Consistent with CMS' policy, we are not limited in applying pass-through payments to only the HCPCS/APC combination that was used in the cost significance test, but rather the entire list of procedures which appropriately represent the technology.

We disagree with the commenter's assertions that the CY 2022 OPPS/ASC proposed rule uses an assessment of charges, as opposed to cost, and failed to give commenters an opportunity to comment. As we stated in the proposed rule, according to the applicant the Coronary IVL System is comprised of the following components: (1) IVL Generator—a portable, rechargeable power source that is capital equipment and reusable; (2) IVL Connect Cable—a reusable cable used to connect the IVL Generator to the IVL Catheter; (3) Coronary IVL Catheter—a sterile, single-use catheter that delivers intravascular lithotripsy within the target coronary lesion. Given that parts one and two are not single-use devices, they are not under consideration for device pass-through status. The only part of this device which is under consideration for device pass-through payments is the Coronary IVL Catheter—a sterile, single-use catheter. According to the applicant, the expected average sales price of each Shockwave C2 Coronary IVL single-use catheter is $4,700. We acknowledge that in the CY 2022 OPPS/ASC proposed rule, we did not state that, per the applicant, the average number of catheters required per case is 1.2 based on the applicant's clinical trial experience; the applicant therefore calculated an expected cost to hospitals on a per-case basis for the Coronary IVL Catheter of $5,640. Based on our analysis, which includes a review by CMS clinical professionals, we agree with the applicant that the average number of catheters required per case is 1.2 and therefore, that a multiplier of 1.2 is appropriate in this situation. We appreciate the commenter identifying this information. We note that regardless of the value used, $4,700 (for one Coronary IVL Catheter per case) or $5,640 (for 1.2 Coronary IVL Catheters per case), the Coronary IVL Catheter meets the cost significance tests at § 419.66(d). Finally, we are clarifying that although the FY 2022 IPPS/LTCH PPS final rule referred to the Shockwave C2 Intravascular Lithotripsy (IVL) System when discussing whether the device met the cost criterion for new technology add-on payments, we considered the cost only of the Coronary IVL Catheter in that determination.

Comment: This same commenter asserts that the proposed rule failed to provide stakeholders with a reasonable opportunity to comment on issues central to the pass-through determination. The commenter asserted that the quarterly, sub-regulatory determination made for pass-through status for the Coronary IVL Catheter is invalid following the Supreme Court's decision in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019). Based on these assertions, the commenter stated that the Coronary IVL Catheter should not be approved for pass-through status and the quarterly determination should be rescinded. The commenter stated that our process of approving applications for device pass-through status on a quarterly basis predates the Supreme Court's decision in Allina and should “appropriately conform to the rulemaking obligations set forth in Allina ”. The commenter concludes that the Shockwave System pass-through determination was invalid and in excess of CMS' authority and it should, therefore, be rescinded.

Response: We disagree with the commenter's assertion that the quarterly determination process is invalid, and that the quarterly, sub-regulatory determination to grant pass-through status for the Coronary IVL Catheter is invalid following Allina. We note that in the CY 2016 OPPS/ASC final rule (80 FR 70417-70418) CMS finalized through notice and comment rulemaking its proposal to revise the application process for device pass-through payments. Specifically, CMS stated that starting in CY 2016 all device pass-through payment applications submitted through the quarterly process would be subject to notice-and-comment rulemaking in the next applicable OPPS annual rulemaking cycle. Furthermore, under the finalized policy, CMS stated that all applications that are approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle, and any information provided by the applicant would be available for consideration during the public comment process for the proposed rule. CMS stated that this process would allow those applications that meet all criteria to receive timely pass-through payment status, while also allowing for a transparent public review process for all applications as part of the next available rulemaking. Finally, we note that the quarterly approval process does not establish or change a substantive legal standard governing the scope of benefits or the payment for services, but only applies substantive legal standards adopted through notice and comment rulemaking to determine whether a particular device should qualify for pass-through status.

Comment: In their public comment, the applicant stated that there are two issues associated with CMS' evaluation and implementation of transitional device pass-through payment status for the Coronary IVL Catheter that they wanted to bring to CMS' attention. In CMS Transmittal 10825, dated June 11, 2021, CMS limited HCPCS code C1761 to being reported with two procedures that describe placement of a coronary stent (HCPCS codes 92928 and C9600). The applicant noted that CMS most recently published Transmittal 10997, dated September 16, 2021, which added four additional HCPCS codes—92933, 92943, C9602, and C9607—that can also be billed in conjunction with HCPCS code C1761 and be eligible for transitional pass-through effective July 1, 2021. The applicant noted that CMS included the device offset associated with these codes when calculating the incremental transitional pass-through payment when HCPCS code C1761 is billed. The applicant believes CMS applied the device offset for HCPCS codes 92933, 92943, C9602, and C9607 as an oversight, and requested that CMS remove the device offset for these codes when calculating the incremental transitional pass-through payment when billed in conjunction with C1761 because, similar to the determination for HCPCS codes 92928 and C9600, no device offset should be implemented as IVL costs are completely additive to the procedure and the devices represented by the device offset in each procedure are still required.

Response: We disagree with the applicant's request to remove the device offset for HCPCS codes 92933, 92943, C9602 and C9607 when calculating the incremental transitional pass-through payment when billed in conjunction with HCPCS code C1761. In the above-identified procedures, the Coronary IVL Catheter is used in lieu of atherectomy to achieve a therapeutic outcome. Therefore, we believe a device offset as identified in Transmittal 10997 dated September 16, 2021 is warranted when HCPCS code C1761 is used in conjunction with these particular procedures.

Comment: The applicant stated that while they agree that Coronary IVL Catheter meets all three cost criteria based on CMS' methodology, they are concerned that the methodology CMS utilizes is not the most appropriate for procedures that require the use of multiple devices. The applicant contends that CMS utilizes the entire device-related portion (DRP) as reported for the applicable procedure instead of evaluating the cost of the new technology relative to the specific devices that it is replacing. The applicant asserted that CMS has removed the device offset for other technologies that have received transitional pass-through payment where new technologies are completely additive to the procedure. The applicant stated that CMS does not utilize a similar methodology when evaluating the three cost criteria. The applicant asserted that this may create an artificially high bar that would make new technology that would otherwise qualify for pass-through status ineligible, which the applicant believes is the case for the Eluvia^TM system. The applicant requested that CMS update its methodology for current and future transitional pass-through applications where multiple devices are utilized.

Response: We thank the applicant for their input in regard to the calculation of the cost significance criterion, which we will take into consideration for future rulemaking. For a more detailed discussion of this issue as it relates to the Eluvia^TM system, please see section IV(a)(2)(b)(3) of this final rule with comment period.

After consideration of the public comments we received and our review of the device pass-through application, we have determined that Coronary IVL Catheter meets the requirements for device pass-through payment status described at § 419.66. As stated previously, devices that are granted an FDA Breakthrough Device designation are not evaluated in terms of the substantial clinical improvement criterion at § 419.66(c)(2)(i) for purposes of determining device pass-through payment status, but must meet the other criteria for device pass-through status, which we believe the Coronary IVL Catheter does.

As specified above, the Coronary IVL Catheter pass-through application was preliminarily approved for transitional pass-through payment under the alternative pathway effective July 1, 2021. We note that in the CY 2022 OPPS/ASC proposed rule we invited public comments on whether the Coronary IVL Catheter should continue to receive transitional pass-through payment under the alternative pathway for devices that are FDA market authorized and that have an FDA Breakthrough Device designation.

We are finalizing our proposal to continue in 2022 device pass-through payment status for the Coronary IVL Catheter under the alternative pathway for devices that have an FDA Breakthrough Device designation and have FDA marketing authorization.

2. Traditional Device Pass-Through Applications

(1) AngelMed Guardian® System

Angel Medical Systems submitted an application for a new device category for transitional pass-through payment status for the AngelMed Guardian® System (the Guardian®) for CY 2022. The applicant asserted that the Guardian® is a proactive diagnostic technology that monitors a patient's heart's electrical activity for changes that may indicate an Acute Coronary Syndrome (ACS) event (that is, STEMI, NSTEMI, or unstable angina) related to blockage of a coronary artery which prevents the heart muscle from receiving sufficient oxygen. The Guardian® is a device implanted in the upper left chest and connects to an active fixation intracardiac lead attached to the apex of the right ventricle. The applicant asserts the Guardian® consists of an implantable medical device (IMD) which is composed of the header with an antenna for communication and the can with circuitry, radio, vibratory motor, and battery. According to the applicant, the Guardian® system also includes an external device that communicates with the IMD and provides redundant patient notification using auditory and visual alarms. Lastly, the applicant states the Guardian® system includes a physician programmer, a capital device, used to program the IMD and download cardiac data captured by the IMD.

According to the applicant, the Guardian® system relies upon the gold standard of changes to the ST-segment of a patient's heartbeat to diagnose a heart attack. According to the applicant, the Guardian® system uses an intracardiac lead to sense cardiac data and proprietary machine learning algorithms to assess acute changes to the ST-segment on a continuous, real-time basis. The applicant asserts these changes are compared to a patient's normal baseline reference that is computed over the prior twenty-four hours of monitored heart activity. According to the applicant, if the Guardian® detects a statistically abnormal acute change relative to this baseline, it notifies the patient to the potential ACS event by providing an alarm: The implanted device will vibrate, and the external device will flash and beep. According to the applicant, patients are instructed to seek urgent medical assistance when the system activates, even in the absence of ACS symptoms.

According to the applicant, the Guardian® system implantation will typically be an outpatient procedure and, following 10-14 days, is programmed in the physician office. The applicant asserts the patient undergoes training on the Guardian® and has follow-up visits every six months to review the device data. The applicant states that the emergency alarm is intended to be used as an adjunct to symptoms; in the absence of an emergency alarm patients are instructed not to ignore symptoms of an ACS event. The applicant asserts that while current technologies detect and provide therapy for cardiac medical conditions related to abnormal heart rate and rhythm, the AngelMed Guardian® system is the only FDA- approved technology for providing detection and patient notification of ACS events so that patients more reliably and urgently seek medical care.

With respect to the newness criterion at § 419.66(b)(1), the AngelMed Guardian® system first received FDA 510(k) clearance on April 9, 2018 under PMA number P150009. The manufacturers received a Category B Investigational Device Exemption (IDE) as of January 27, 2020 for the use of the device in their continued access study, AngelMed for Early Recognition and Treatment of STEMI (ALERTS). According to the applicant, the device is anticipated for US market availability in quarter three of 2021. We received the application for a new device category for transitional pass-through payment status for the Guardian® system on February 28, 2021, which is within 3 years of the date of the initial FDA marketing authorization. We solicited public comment in the CY 2022 OPPS/ASC proposed rule on whether the Guardian® system meets the newness criterion.

Comment: The applicant reasserted that the Guardian® meets the newness criterion at § 419.66(b)(1) as the application was submitted within 3 years of FDA approval.

Response: We appreciate the commenter's input and agree that because we received the application for the Guardian® on February 28, 2021, which was within 3 years of the FDA premarketing approval on April 9, 2018, the Guardian® meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the Guardian® is integral to the service provided, is used for one patient only, comes in contact with human tissue, and is surgically inserted temporarily. The applicant also claimed that the Guardian® meets the device eligibility requirements of § 419.66(b)(4) because it is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. We invited public comments in the CY 2022 OPPS/ASC proposed rule on whether the Guardian® meets the eligibility criteria at § 419.66(b).

Comment: The applicant stated the Guardian® meets the eligibility criteria at § 419.66(b)(3) and 419.66(b)(4) as the Guardian® is used for one patient only, comes in contact with human tissue, and is surgically inserted.

Response: Based on the information we have received and our review of the application, we agree with the applicant that the device is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted. We also agree with the commenter that the Guardian® meets the device eligibility requirements of § 419.66(b)(4) because it is not equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. Based on this assessment we have determined that the Guardian® meets the eligibility criterion at § 419.66(b)(3) and (4).

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We stated in the CY 2022 OPPS/ASC proposed rule that we have not yet identified an existing pass-through payment category that describes the Guardian®. We invited public comment on whether the Guardian® meets the device category criterion.

Comment: The applicant asserted the Guardian® meets the first criterion for establishing a new device category, at § 419.66(c)(1), as no existing categories or categories previously in effect appropriately describe the technology.

Response: We agree there is no existing pass-through payment category that appropriately describes the Guardian® because no current or previously in effect category describes a device that provides detection of ACS events and notification to a patient. Based on this information, we have determined that the Guardian® meets the eligibility criterion at § 419.66(c)(1).

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines either of the following: (i) That a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (ii) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of FDA's Breakthrough Devices Program and has received FDA marketing authorization.

The applicant stated that the Guardian® represents a substantial clinical improvement over existing technologies. With respect to this criterion, the applicant asserted that the Guardian® offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable or offers the ability to diagnose a medical condition earlier in a patient population than is currently possible and this earlier diagnosis results in better outcomes. In support of this claim the applicant submitted two published articles, the first by Gibson et al. and the second by Holmes et al.

The first study is a randomized control trial with 907 subjects who were implanted with the Guardian® system and randomized 1:1 to either active or deactivated alarms. According to the authors, all subjects received education regarding the importance of minimizing symptom-to-door time in the presence of chest pain or ischemic equivalents, regardless of alarm status. The authors state that patients were not blinded to their randomization status. After randomization patients returned for follow-up visits at 1, 3, 6, and every six months thereafter. In all patients, the Guardian® system captured electrogram data up to 24 hours before and 8 hours after a triggered alarm for later review. According to the authors, the primary safety endpoint was the absence of system-related complications that required a system revision or invasive intervention to resolve in at least 90 percent of subjects through six months. The primary efficacy endpoint was a composite of: (1) Cardiac or unexplained death; (2) new Q-wave MI; and (3) detection-to-presentation time >2 h for a documented coronary occlusion event. Electrocardiogram (ECG) tracings were obtained prior to implantation, at randomization, at 1, 3, and 6 months, and at every emergency presentation to evaluate for a Q-wave MI not present at baseline. An exploratory dual baseline ECG analysis was performed, according to the authors, because Q-waves may be transient between implantation and randomization. The dual baseline ECG analysis evaluates for the presence of new Q waves across subsequent ECGs. At the start of the trial, 456 patients were identified as controls and 451 as treated; at 6 months, 446 controls remained and 437 treated remained. The authors stated that subject enrollment ceased after 900 subjects were randomized and therefore an alpha penalty of 0.25 was taken for the interim look at event rates after 600 subjects.

According to the authors, the control and treatment groups were well matched at baseline. The primary safety endpoint was met with 96.7 percent freedom (posterior probability >0.999) with a total of 31 system-related complications in 30 (3.3 percent) subjects with infections being the predominant cause of complications. The authors stated that ACS events occurrence was low. At 7, 30, 50, 70, and 90 days there were no statistical differences between the control and treated groups on the primary composite efficacy endpoint. At each time interval, the treated group had lower rates of the primary endpoint than the control group. Statistical differences were observed between treated and control groups in the dual baseline ECG exploratory analysis particularly at 50, 70, and 90 days after a confirmed occlusive event favoring the treated group. At the pre-specified 7-day look back window, the median time from the Guardian® notification to arrival at a medical facility was 51 minutes for the treated subjects as compared to 30.6 hours for control subjects (Pr [pt < pc] >0.999). Subject arrival within 2 hours of a detected and confirmed coronary occlusion occurred in 85 percent (29 of 34) of the treatment group compared with only 5 percent of the control group, with the majority of patients in the control arm presenting after 7 days. However, the authors asserted that despite a numerical reduction in new Q-wave MI using single and dual baseline ECGs at any of the pre-specified look-back windows, the posterior probability of superiority did not reach statistical significance. The applicant added that 22 percent (42/193) of the confirmed ACS events were detected due to Emergency Department (ED) visits prompted by alarms in the absence of symptoms; that silent MIs typically account for approximately 30 percent of all MIs and are historically associated with increased rates of morbidity and mortality.

The second article expanded on the previously discussed study with a post hoc analysis of two coprimary efficacy endpoints: Superiority of positive predictive value (PPV) and noninferiority of false positive rate for ED visits prompted by alarms compared to symptoms-only. According to the authors, these primary endpoints were assessed by comparing ED visits for an Alarms OFF group (control subjects during the randomized 6-month period) to those of an Alarms ON group (including both the treatment subjects during the first 6 months and all implanted patients beyond 6 months with alarms activated). The authors stated the expanded analysis adjudicated ED visits into either true or false-positive ACS events based on independent review of cardiac test data. The authors stated that the annual rate for Clinical Events Committee (CEC)-adjudicated ACS events was 0.151 (33 of 218.15) in the Alarms OFF group and 0.124 (193 of 1,557.64) in the Alarms ON group. In the Alarms OFF group, of the 181 ED visits, the CEC adjudicated 33 (18 percent) as ACS events (MI = 22 [67 percent]; unstable angina (UA) 1/4 11 [33 percent]), with the remaining visits adjudicated as due to either stable CAD or indeterminate etiology. The median symptom-to-door time for Alarms OFF ACS events was 8.0 h (95 percent confidence interval [CI]: 3.2 to 47.5 h). In Alarms ON subjects, of the 970 ED visits, the CEC adjudicated 193 (20 percent) as ACS events, with the remainder classified as stable CAD, indeterminate events, and/or a false-positive alarm. Of the 193 ACS events, 89 events (46 percent) were prompted by alarms (with or without symptoms; MI 1/4 40 [45 percent]; UA 1/4 49 [55 percent]). The remaining 104 visits (54 percent) were prompted by symptoms only (MI 1/4 60 [58 percent]; UA 1/4 44 [42 percent]). An overall median arrival time of 1.7 h was found for the Alarms ON group composite including all 3 prompt types for ED arrival (alarms only, alarms þ symptoms, or symptoms only), which was significantly shorter than the 8.0 h delay of the Alarms OFF group (p < 0.0001). The applicant asserts that the Guardian® system allows patients with asymptomatic ACS events to respond to the ED faster with a median pre-hospital delay of 1.4 hours.

The applicant further asserts that the Guardian® system offers more rapid beneficial resolution of the disease process treated because of the use of the device. According to the applicant, the Guardian® system increases the likelihood that a patient will correctly seek medical care for an ACS event in a timely manner that reduces pre-hospital delay and associated risk of heart damage (for example, larger infarct size, ejection fraction decrement) and associated downstream sequelae. More specifically, the applicant asserts that based on the results of the second discussed study, the Guardian® system Alarms ON group showed reduced pre-hospital delays, with 55 percent (95 percent confidence interval [CI]: 46 percent to 63 percent) of Emergency department visits for ACS events <2 hours compared with 10 percent (95 percent CI: 2 percent to 27 percent) in the Alarms OFF group (p < 0.0001). The applicant adds that results were similar when restricted to myocardial infarction (MI) events. The applicant states the median pre-hospital delay for MI was 12.7 hours for Alarms OFF compared to 1.6 hours in Alarms ON subjects (p < 0.0089) as reported in Holmes et al. (2019). The applicant asserts that it is clinically recognized, due to numerous lines of evidence, that shorter total ischemia time is associated with better outcomes for ACS events. The applicant asserts that prompt responsiveness to symptoms and decreased pre-hospital delay is a universally understood benefit which improves the health outcomes of ACS events. According to the applicant, the American Heart Association (Mission Lifeline), American College of Cardiology (Door to Balloon (D2B) Alliance), Society for Angiographic Intervention (Seconds Count^TM program) and the National Heart, Lung, and Blood Institute have organized task forces and launched national programs with the goal of improving patient awareness and response to symptoms which are indicative of potential ACS events and reducing total ischemia time (that is, prehospital delay and in-hospital delay) to improve outcomes.

The applicant next asserts the device offers more rapid beneficial resolution of the disease process because the use of the Guardian® system, as compared to the standard of care relying on symptoms alone, being in the Alarm ON group was associated with a reduction in the rate of new onset of left ventricular dysfunction.

Lastly the applicant asserts the use of the Guardian® system will decrease the number of future hospitalizations or physician visits. According to the applicant, the Guardian® system reduces the annual false positive rate (FPR) of Emergency Department visits (that is, spurious ED visits where no ACS is found) by 26 percent. The applicant states that the FPR for all alarms on emergency visits was 0.499 per patient-year compared to 0.678 for alarms off (p < 0.001).

Based on the evidence submitted with the application, we have the following observations. Much of the claims for substantial clinical improvement are derived from two primary studies identified by the applicant and discussed above. We note that the first study (Gibson et al. 2019) did not demonstrate statistically significant superiority of the intervention during the pre-determined study window. The authors noted a lower than expected frequency of events and the study was terminated early, two factors which may have affected these results. The results from the second study are based entirely on a post hoc analysis of data from the first article. We note that the findings presented are valuable but we sought comment on whether a post hoc analysis provides sufficient evidence to support the claim of substantial clinical improvement. Furthermore, we note that the primary efficacy endpoint was a composite of three outcomes. We are not certain that this endpoint is an appropriate measure with which to evaluate substantial clinical improvement among patients experiencing ACS events. We invited public comments on whether the Guardian® system meets the substantial clinical improvement criterion.

Comment: Many commenters offered support for the approval of the Guardian®. Numerous commenters noted that according to published studies a reduction in ischemic time is associated with less cardiac damage and better outcomes for ACS events; these commenters asserted that the Guardian® brought patients to the emergency room earlier and more reliably, which resulted in better outcomes. Some commenters stated that the two studies submitted by the applicant and described in the CY 2022 OPPS/ASC proposed rule support the finding of a substantial clinical improvement. Some commenters noted that detection of silent MI enables the diagnosis of a medical condition that is currently undetectable, which the commenters believe is a substantial clinical improvement. Many commenters stated that the use of the Guardian® will reduce unnecessary medical utilization, will be beneficial particularly for those who experience silent myocardial infarction, and will prevent cardiac deaths. Many commenters offered patient stories that in their opinion showed that the Guardian® offers an improvement over existing treatment options. Multiple commenters noted that the Guardian® offers patients positive mental health outcomes given a reduction in experience anxiety in high-risk ACS patients. Additionally, multiple commenters stated that the total false positive rate for the ALERTS ON group was statistically less than that of the ALERTS OFF group.

One commenter stated they have been using the Guardian® for more than ten years, that the device is a valuable addition to diagnostic capabilities, and that in many cases it reduces health care utilization. A second commenter stated this technology represents a significant improvement to detecting myocardial infarction promptly. One commenter who described their experience seeing the exam prevent multiple cardiac catheterizations noted the exam is invaluable to modern medicine and that a reduction in reimbursement would threaten its realization in the appropriate context. Another commenter noted that almost all patients requested replacement of the Guardian® when it reached end of battery life, which is indicative of its safety and effectiveness.

Response: We thank the commenters for additional information to support their belief that the Guardian® device is a substantial clinical improvement over devices in existing categories or other available treatments.

Comment: The applicant asserted the Guardian® meets the second criterion for establishing a new device category, at § 419.66(c)(2), by providing a substantial clinical improvement over existing therapies because the Guardian® “has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury compared to the benefits of a device or devices in a previously established category or other available treatment”.

The applicant pointed out that in the CY 2022 OPPS/ASC proposed rule we stated that the positive predictive value (PPV), false positive rate (FPR), and Silent myocardial infarction (MI) endpoints were reported in the “second study” (that is, Holmes et al.). The applicant clarified that Gibson et al. reported on both the original study analysis and the Expanded analysis, including the PPV, FPR, and Silent MI endpoints; Holmes et al. reported on pre-hospital delays and their distribution as a function of both prompt (alarm only, alarm + symptom, symptom only) and group (Alarms On vs Alarms OFF).

In response to our concerns about the primary endpoints lacking statistical significance the applicant stated both AngelMed and FDA have expressed the position that the results of the ALERTS study are best assessed using the lens that statistical significance of primary endpoints should be assessed with respect to the totality of the data. The applicant stated the endpoint analyses requested by FDA for primary endpoints during its evaluation of the study data (for example, event based or crossover analysis) reached statistical significance. The applicant added as an example that an event-based analyses of the composite primary endpoints of the original study reached statistical significance when multiple events within patients were counted, rather than relying upon a patient-based analysis in which each patient could only be counted once. According to the applicant, since multiple events may occur in a single patient, they believe that the primary endpoint data is also valid and more accurately and realistically reflects Medicare patient experiences. The applicant added that the non-primary endpoint of sustained left ventricular ejection fraction (LVEF), which was independent of the primary endpoint measures, was statistically superior (Gibson et al. 2019, p. 1924). The applicant added that the Expanded analysis was explicitly designed to address the event rate seen in the original study design by leveraging the post-randomization data to derive a dataset covering an approximately three times larger study interval, which according to the applicant, greatly increased the number of events and statistical power. The applicant concluded that while not all endpoints reached statistical significance, AngelMed believes that the totality of the data supports substantial clinical improvement.

In response to our concerns about post-hoc validity, the applicant believes the Expanded analysis supports substantial clinical improvement for a number of reasons. The applicant acknowledged as noted by Gibson et al., some post-hoc analyses were done in the original analysis but that the Expanded analysis was not post-hoc. The applicant asserted the Expanded analysis was a pre-specified analysis proposed by FDA, and agreed upon by AngelMed, that was completed using data both from the original randomized period and a large amount of data from the post-randomization period. While the post-randomization data was captured with the same rigor and predefined procedures as the randomization period, the Expanded analysis increased the pool of data from less than 450 years to 1,500 years. The applicant explained that this approach was adopted by FDA and AngelMed specifically with the aim of greatly increasing the number of endpoint events and maximizing the statistical power of the Expanded analysis for the new endpoints, new definition of acute coronary syndrome (ACS), etc. The applicant added that the Expanded analysis used a new analysis protocol which resulted in data which were analyzed to obtain new, distinct, and meaningful endpoints that used clearer measurements than the ALERTS design.

Lastly, the applicant responded to our concerns regarding appropriate measure[s] with which to evaluate substantial clinical improvement. The applicant reasserted that the original analysis used a composite primary efficacy endpoint of three outcomes that provided an initial assessment of the technology. The applicant asserted that the individual components of the primary efficacy endpoint for arrival times and new Q-waves were consistently in favor of the Guardian® with arrival times reaching significance. The applicant stated, as CMS noted, in the original ALERTS analysis “at the pre-specified 7-day look back window, the median time from the Guardian® notification to arrival at a medical facility was 51 minutes for the treated subjects as compared to 30.6 hours for control subjects (Pr [pt < pc] >0.999)” (86 FR 42092). The applicant added these results should be combined with the Expanded analysis endpoints, which used new measures that reflected a better understanding by FDA and AngelMed for how best to evaluate the real-world impact of the Guardian System, when assessing substantial clinical improvement. The applicant asserted that more specifically, the co-primary endpoints ( i.e., PPV and FPR) reflected real-world performance measures that were suggested by FDA and that more accurately demonstrate, and provide a complementary view of, the clinical benefit than the composite endpoints of the original ALERTS design.

The applicant asserted that the main topics of interest for the Expanded analysis were the alarms in terms of frequency and accuracy, and how the subjects responded ( e.g., distribution of patient pre-hospital delay for each of the different prompts: Alarm + symptom; alarms only; or, symptom only). According to the applicant the Expanded analysis not only assessed device performance but also the behavior of the individual subjects in the Alarms ON group prompted by the alarms, symptoms or both. The applicant contended that the combination of the original study endpoints and Expanded analysis endpoints are the correct measures since these are able to show substantial clinical improvement according to multiple device pass-through criteria the ability to diagnose a medical condition that is currently undetectable, diagnose a medical condition earlier in a patient population then is currently available, decrease future hospitalizations, and improve patient outcomes.

The applicant asserted that all the ALERTS data consistently showed compelling and statistically significant reduction in pre-hospital delays in the Alarms ON group compared to the Alarms OFF group. According to the applicant, reduced total ischemic time is a correct measure for assessing substantial clinical improvement since it is a universal axiom that decreased delay decreases the associated risk of heart damage ( e.g., larger infarct size, ejection fraction decrement); the applicant asserted that shorter total ischemic time is associated with better outcomes for ACS events. That is why, according to the applicant, multiple national agencies, including ACC, SCAI, AMA and NHLBI, have created programs specifically focused on reducing time to treatment for ACS events and have used time-based metrics as their sole assessment of provider quality for ACS care. For these reasons the applicant believes that the combination of original and Expanded analysis results provides clear evidence of substantial clinical improvement for high-risk ACS patients experiencing ACS events.

Response: We appreciate the additional information provided by the commenters. In the proposed rule, we articulated tour concern about the sufficiency of a post-hoc analysis. In their public comment the applicant asserted that while some post-hoc analyses were performed, the expanded analysis was a pre-specified analysis proposed by FDA. We further appreciate the clarification from the applicant that the expanded analysis increased the number of endpoint events. Given the additional endpoints evaluated in the expanded analysis that specifically show faster visits for real events while not increasing unnecessary emergency department visits, we agree that the Guardian® system meets the substantial clinical improvement criterion at § 419.66(c)(2).

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated that the Guardian® would be reported with the HCPCS codes listed in the following Table 35:

To meet the cost criterion for device pass-through payment status, a device must pass all three tests of the cost criterion for at least one APC. For our calculations for the CY 2022 OPPS/ASC proposed rule, we used APC 5222—Level 2 Pacemaker and Similar Procedures, which had a CY 2021 payment rate of $8,152.58 at the time the application was received. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). HCPCS code 0527T was assigned to APC 5222 and had a device offset amount of $1,598.72 at the time the application was received.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost for the Guardian® is 126 percent of the applicable APC payment amount for the service related to the category of devices of $8,152.58 ((10,250/8,153) * 100 = 125.7 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe the Guardian® meets the first cost significance requirement.

The second cost significance requirement, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). We stated in the CY 2022 OPPS/ASC proposed rule that the estimated average reasonable cost for the Guardian® is 641 percent of the cost of the device-related portion of the APC payment amount for the related service of $1,598.72 ((10,250/1,599) * 100 = 641.0 percent). Therefore, we stated that we believe that the Guardian® meets the second cost significance requirement.

The third cost significance requirement, at § 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. We stated in the CY 2022 OPPS/ASC proposed rule that the difference between the estimated average reasonable cost for the Guardian® and the portion of the APC payment amount for the device of $1,598.72 is 106 percent of the APC payment amount for the related service of $8,152.58 (((10,250−1,599)/8,153) * 100 = 106.1 percent). Therefore, we explained that we believe that the Guardian® meets the third cost significance requirement. In the CY 2022 OPPS/ASC proposed rule we invited public comment on whether the Guardian® meets the device pass-through payment criteria, including the cost criterion for device pass-through payment status.

Comment: The applicant stated the Guardian® meets the three cost criteria at § 419.66(d), consistent with CMS' analysis.

Response: We appreciate the applicant's input and agree that the Guardian® meets the cost criterion for device pass-through payment status.

After considering the public comments we received and our review of the device pass-through application, we have determined that the Guardian® system meets the criteria for device pass-through. Therefore, we are finalizing approval for device pass-through payment status for the Guardian® system effective beginning January 1, 2022.

(2) BONEBRIDGE Bone Conduction Implant System

MED-EL Corporation submitted an application for a new device category for transitional pass-through payment status for the BONEBRIDGE Bone Conduction Implant System (hereinafter referred to as the BONEBRIDGE) by the March 2021 quarterly deadline for CY 2022. The BONEBRIDGE is a transcutaneous, active auditory osseointegrated device that replaces the function of the damaged outer or middle ear and can help people for whom hearing aids are ineffective or not recommended. According to the applicant, the device consists of a bone conduction implant and electronics components, and an externally worn audio processor. The bone conduction implant is called the BONEBRIDGE Bone Conduction Implant (BCI 602) and the externally worn audio processor is called the SAMBA 2 Audio Processor. The BCI 602 consists of two main sections, the coil section and the transducer section. The BCI 602 consists of a magnet surrounded by the receiver coil, the transition, the Bone Conduction Floating Mass Transducer (BC-FMT), and the electronics package in a hermetic housing. The SAMBA 2 Audio Processor is 30.4 mm x 36.4 mm x 10.2 mm and weighs 9.3g, including the battery and magnet (strength 1). It has an 18-band digital equalizer, 18 independent compression channels, and an audio frequency range of 250 Hz to 8kHz. The audio processor is powered by a non-rechargeable 675 zinc-air button cell with a nominal 1.4-volt supply and 600mA-Hrs of capacity offering the user up to 133 hours (8 to 10 days) on a single battery.

The applicant stated that the bone conduction implant is surgically attached to the skull, is subcutaneous, and is connected to the external audio processor by transcutaneous magnetic attraction. The external audio processor picks up sound from the environment and converts those sounds to a radiofrequency (RF) signal that can be transmitted across the skin to the implant. The implant converts the signal to controlled vibrations which are conducted via the skull and perceived as sound. More specifically, the applicant stated that the BCI 602 is activated by placing the external audio processor over the magnet of the BCI 602. The signal and the energy to drive the BC-FMT are transferred via an inductive link to the internal coil, and then relayed to the BC-FMT. The BC-FMT transduces the signal into mechanical vibrations, which are conducted to the skull via the cortical titanium screws. These vibrations stimulate the auditory system through the bone conduction pathway to allow the patient to hear.

With respect to the newness criterion at § 419.66(b)(1), FDA granted a de novo request classifying the BONEBRIDGE as a Class II device under section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act on July 20, 2018. The BONEBRIDGE is indicated for use in the following patients: (1) Patients 12 years of age or older; and (2) patients who have a conductive or mixed hearing loss and still can benefit from sound amplification. The pure tone average (PTA) bone conduction (BC) threshold (measured at 0.5, 1, 2, and 3 kHz) should be better than or equal to 45 dB HL; (3) Bilateral fitting of the BONEBRIDGE is intended for patients having a symmetrically conductive or mixed hearing loss. The difference between the left and right sides' BC thresholds should be less than 10 dB on average measured at 0.5, 1, 2, and 3 kHz, or less than 15 dB at individual frequencies; (4) Patients who have profound sensorineural hearing loss in one ear and normal hearing in the opposite ear (that is, single-sided deafness or “SSD”). The pure tone average air conduction hearing thresholds of the hearing ear should be better than or equal to 20 dB HL (measured at 0.5, 1, 2, and 3 kHz); (5) The BONEBRIDGE for SSD is also indicated for any patient who is indicated for an air conduction contralateral routing of signals (AC CROS) hearing aid, but who for some reason cannot or will not use an AC CROS. Prior to receiving the device, it is recommended that an individual have experience with appropriately fit air conduction or bone conduction hearing aids. We received the application for a new device category for transitional pass-through payment status for the BONEBRIDGE on December 10, 2020, which is within 3 years of the date of the initial FDA marketing authorization. In the CY 2022 OPPS/ASC proposed rule, we invited public comments on whether the BONEBRIDGE meets the newness criterion.

We did not receive any comments in regard to whether the BONEBRIDGE meets the newness criterion at § 419.66(b)(1). Because we received the BONEBRIDGE application on December 10, 2020, which is within 3 years of the FDA premarketing approval date of July 20, 2018, which is within 3 years, we have concluded that the BONEBRIDGE meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the BONEBRIDGE is integral to the service provided, is used for one patient only, comes in contact with human skin and is surgically implanted or inserted. The applicant also claimed that the BONEBRIDGE meets the device eligibility requirements of § 419.66(b)(4) because it is not equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service.

Additionally, the BONEBRIDGE is not subject to the hearing aid exclusion at § 411.15(d)(1). The BONEBRIDGE Bone Conduction Implant (BCI 602) component is an osseointegrated implant, surgically attached to the skull that converts a radiofrequency signal from an external audio processor to controlled vibrations which are conducted via the skull to the cochlea. Therefore, we explained in the CY 2022 OPPS/ASC proposed rule that we believe the BONEBRIDGE meets the criterion at § 411.15(d)(2)(i) and is not subject to the hearing aid exclusion. In accordance with the Medicare Benefit Policy Manual, Chapter 16 “General Exclusions from Coverage,” section 100, certain devices that produce perception of sound by replacing the function of the middle ear, cochlea or auditory nerve are payable by Medicare as prosthetic devices. These include osseointegrated implants, that is, devices implanted in the skull that replace the function of the middle ear and provide mechanical energy to the cochlea via a mechanical transducer. We believe the BONEBRIDGE device meets the criteria for this benefit category. We invited public comments on whether the BONEBRIDGE meets the eligibility criteria at § 419.66(b) as well as the criterion at § 411.15(d)(2)(i).

Comment: One commenter agreed with CMS that BONEBRIDGE is not subject to the hearing aid exclusion at § 411.15(d)(1).

Response: We did not receive any comments on whether the BONEBRIDGE meets the eligibility criteria at § 419.66(b)(3) or § 419.66(b)(4). We agree with the applicant that the BONEBRIDGE device meets the criteria of § 419.66(b). We believe discussion concerning § 411.15(d)(2)(i) is beyond the scope of the discussion here.

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996.

The applicant stated that the previous device category, L8690 (Auditory osseointegrated device, includes all internal and external components), which was in effect from January 1, 2007 through December 31, 2008 does not appropriately describe the BONEBRIDGE. The applicant stated that at the time the category was established, BONEBRIDGE did not exist and the devices described by the category included auditory osseointegrated implant (AOI) devices or bone-anchored hearing aids (BAHAs). The applicant claimed that AOI devices and BAHAs are distinct from the BONEBRIDGE because they are implant systems composed of an external sound processor connected via a percutaneous abutment to a titanium implant that is implanted in the skull. In these devices, the titanium implant protrudes through the skin creating a titanium post, which directly attaches to an external sound processor. The system replaces the function of the middle ear by transmitting mechanical energy from the external transducer/sound processor directly to the titanium implant to the cochlea thereby resulting in better hearing. The applicant stated that the titanium abutment used by percutaneous systems permanently pierce the skin to allow the sound processor to transmit sound and create vibrations within the skull that stimulate the nerve fibers of the inner ear. The applicant also stated that in the percutaneous systems, the external component (sound processor) receives and processes the sound and generates the vibrations.

The applicant claimed that the BONEBRIDGE is a new technology compared to the AOI devices and BAHAs and unlike these devices, it does not use a percutaneous abutment. The applicant described BONEBRIDGE as an active, transcutaneous device that consists of a completely implanted transducer and electronics components, and an externally worn audio processor. The active implant is surgically attached to the skull, is subcutaneous, and is connected to the external audio processor by transcutaneous magnetic attraction. The external audio processor picks up sound from the environment and converts those sounds to a radiofrequency (RF) signal that can be transmitted across the skin to the implant. The implant converts the signal to controlled vibrations, which are conducted via the skull and perceived as sound. The applicant proposed the device pass-through category descriptor “Auditory osseointegrated device, transcutaneous, with implanted transducer and radiofrequency link to external sound processor” and suggested that L8690 be revised to read, “Auditory osseointegrated device, percutaneous, includes all internal and external components”. The applicant stated that the Cochlear Osia®2 System, which also submitted a device pass-through application for CY 2022, would also be described by the proposed additional category.

Web stated in the CY 2022 OPPS/ASC proposed rule that we believe that the BONEBRIDGE is described by L8690 —Auditory osseointegrated device, includes all internal and external components. The applicant has noted differences between the BONEBRIDGE and the devices that were described by L8690, specifically percutaneous, auditory osseointegrated devices, regarding the connection between the implanted transducer and the external audio processor (percutaneous abutment vs. transcutaneous magnetic attraction). However, we believe that there is a similar mechanism of action for all these devices specifically, vibratory stimulation of the skull to stimulate the receptors in the cochlea (inner ear). Further, we believe that the broad descriptor for L8690 of “Auditory osseointegrated device, includes all internal and external components” includes the applicant's device.

In the CY 2022 OPPS/ASC proposed rule, we invited public comment on whether the BONEBRIDGE meets the device category criterion.

Comment: One commenter stated they do not support CMS' position that the BONEBRIDGE and Osia® 2 system should not be granted a new category, because these devices take much longer to implant surgically than percutaneous bone conduction implants, they are active sound processors, and they work differently than percutaneous devices like the BAHA or Oticon implants.

Another commenter who also disagreed with CMS that the BONEBRIDGE and Osia® 2 system are adequately described by L8690 stated that the BONEBRIDGE and Osia® 2 system are transcutaneous hearing implants, and that CMS should create a new HCPCS code that describes both the procedure and the implant for these devices. The commenter expressed their disappointment in what they described as CMS' continual resistance to conduct rulemaking specifically on Middle Ear Implants (MEIs) because they believe CMS should hear the opinions of clinical experts, physicians, and Medicare beneficiaries regarding the appropriateness of classifying MEIs as prosthetic implants.

A different commenter supported CMS' conclusion in the proposed rule that BONEBRIDGE and Cochlear Osia® are appropriately described by a pass-through category previously in effect

Two commenters stated that CMS must support the inclusion of middle ear implants in the prosthetic category. The commenters asserted that not including these devices denies beneficiaries access to all FDA-approved hearing prosthetics and discourages in new technology for the hearing impaired.

Response: We appreciate the input provided by these commenters. We have taken this information into consideration in our determination of the eligibility criterion at § 419.66(c)(1), discussed below. We note some of the comments, those addressing hearing prosthetics, are outside of the scope of this rule.

Comment: The applicant stated that BONEBRIDGE is not appropriately described by the previous device category L8690, “Auditory osseointegrated device, includes all internal and external components”. The applicant asserted that even though the mechanism of action is the same (that is, replacing the function of the middle ear by transmitting mechanical energy from the external transducer/audio processor to the cochlea), there are significant differences between BONEBRIDGE and the devices described by the previous category of L8690, “Auditory osseointegrated device, includes all internal and external components” that enable BONEBRIDGE to furnish a substantial clinical improvement over existing technology. According to the applicant, L8690 was established in 2007 at a time when the technology to fully implant a transducer did not exist; the devices for which L8960 was established were percutaneous passive devices.

According to the applicant, FDA created a new device classification for active implantable bone conduction hearing systems in response to BONEBRIDGE's application in 2018 (21 CFR 874.3340) which is specifically for active systems as opposed to passive systems (21 CFR 874.3300). According to the applicant, FDA's description of active implantable bone conduction is that the transducer is implanted and the description of the technical method refers to the transcutaneous nature of the technology. The applicant stated that while they recognize that FDA and CMS classify devices differently for different purposes, they believe that the way FDA classifies bone conduction implants reinforces why CMS should distinguish active implantable bone conduction devices from passive, percutaneous systems for purposes of transitional pass-through payment status.

The applicant asserted that CMS has modified broadly worded device categories to recognize technological advances within a device class and to grant transitional pass-through payment status to the newer technologies. According to the applicant, in the neurostimulator category, the original descriptor of HCPCS code C1767 was “Generator, neurostimulator (implantable).” The applicant asserted that CMS modified this descriptor to “Generator, neurostimulator (implantable), non-rechargeable” to create a new device category and grant transitional pass-through payment status for rechargeable neurostimulators described by HCPCS codes C1820 (Generator, neurostimulator (implantable), with rechargeable battery and charging system) and C1822 (Generator, neurostimulator (implantable), high frequency, with rechargeable battery and charging system). The applicant added that CMS previously recognized differences in transluminal angioplasty catheters to support transitional pass-through payment status (for example, C2623, C1885, and C1725). The applicant asserted the new pass-through device category code should specifically describe active devices, which are those that have a fully implanted transducer attached transcutaneously to the external audio processor. The applicant suggested: CXXXX (Active auditory osseointegrated device, transcutaneous, requires implanted transducer and radiofrequency link to external sound processor). The applicant further suggested that CMS could refine L8960 to ( Passive auditory osseointegrated device, percutaneous or transcutaneous, includes all internal and external components (new language underlined)). The applicant concluded that effective on January 1, 2022 there will be new and revised CPT codes that differentiate the surgical procedures for osseointegrated implants by the type of attachment (for example, 69X50 (Implantation, osseointegrated implant, skull; with magnetic transcutaneous attachment to external speech processor), 69X51 (Revision/replacement (including removal of existing device), osseointegrated implant, skull; with magnetic transcutaneous attachment to external speech processor)), 69717 (Revision/replacement (including removal of existing device), osseointegrated implant, skull; with percutaneous attachment to external speech processor), and 69X51 (Revision/replacement (including removal of existing device), osseointegrated implant, skull; with magnetic transcutaneous attachment to external speech processor).

Response: After consideration of the public comments we received, we agree there is no existing pass-through payment category that appropriately describes the BONEBRIDGE. The BONEBRIDGE device consists of an external processor that receives sound pressure energy and converts this to a radiofrequency signal which communicates with a surgically implanted subcutaneous transducer/actuator which is osseointegrated into the skull with screws. The transducer/actuator converts this signal to mechanical vibrations that are transmitted to the skull and inner ear. As stated by the applicant, when the existing pass-through category, Auditory osseointegrated device (L8690), was issued in 2007, the technology to implant the transducer/actuator did not exist. Based on this information, we have determined that the BONEBRIDGE meets the eligibility criterion at § 419.66(c)(1). Due to the similarity between the devices, we refer the reader to section IV(A)(2)(b)(4) of this rule for a similar discussion of the Osia®2 system.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines either of the following: (i) That a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (ii) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of FDA's Breakthrough Devices Program and has received FDA marketing authorization. With respect to the substantial clinical improvement criterion, the applicant stated that the BONEBRIDGE represents a substantial clinical improvement because it provides a reduced rate of device-related complications and a more rapid beneficial resolution of the disease process treated because of the use of the device compared to currently available treatments. The applicant submitted six studies to support these claims. The applicant also submitted references for four retrospective case studies of complications with percutaneous devices, specifically BAHAs, including infections, pain, soft tissue hypertrophy, loss of osseointegration, and need for further surgery. These studies did not involve the applicant's device.

In support of the claim that the BONEBRIDGE reduced the rate of device-related complications compared to currently available treatments, the applicant submitted a white paper that reviewed the literature reporting on safety outcomes in bone conduction implants authored by the manufacturer of the BONEBRIDGE, MED-EL. The review included five products used to treat conductive hearing loss, mixed hearing loss or single side deafness, which were either percutaneous systems that had an abutment that permanently pierced through the skin or transcutaneous systems without permanent skin penetration. The authors further defined the products as either active or passive, depending on the placement of the vibrating (or active) device component. According to the authors, active bone conduction systems, the active device component, is located within the implantable part of the system. According to the authors, passive bone conduction systems, the vibrating device component, is located outside of the skull.

The literature review compared the safety outcomes of the BAHA Connect and the Ponto, (passive, percutaneous systems,) the BONEBRIDGE, (an active, transcutaneous systems), and the Sophono Alpha and the BAHA Attract, (passive, transcutaneous systems). In total, 156 studies were included in the literature review. There were seven studies with 234 patients reported on the Ponto, thirteen studies with 175 patients reported on the BONEBRIDGE, twelve publications with 143 patients reported on the Sophono Alpha, seven studies reported on the BAHA Attract system with 114 patients, and 117 studies reported on the BAHA Connect system with a total of 6,965 patients. Of all reported adverse events, 38 percent were major and 62 percent were minor. Major adverse events reported in the review included revision surgery, explantation, removal at patient request, implant loss, implant device failure, skin revision surgery or skin infection. Minor adverse events included skin infections, soft tissue reactions, and healing difficulties. The results showed that 9.8 percent of patients using the BONEBRIDGE system experienced an adverse event (major or minor), compared to 68.4 percent of BAHA Attract patients, 46.9 percent of Sophono Alpha patients, 44.0 percent of Ponto system patients and 51.7 percent of BAHA Connect patients. When comparing the percentage of patients who experienced a major adverse event, 2.9 percent of BONEBRIDGE patients had a major adverse event compared to 1.8 percent of BAHA Attract patients, 4.2 percent of Sophono Alpha patients, 5.1 percent of Ponto system patients, and 21.1 percent of BAHA Connect patients.

To support the claim that the BONEBRIDGE reduced the rate of device-related complications compared to currently available treatments, the applicant also submitted a systematic review of the current literature on safety, efficacy and subjective benefit after implantation with the BONEBRIDGE device. The systematic review assessed 39 publications and included randomized controlled trials, clinical controlled trials and cohort studies, case series and case reports investigating subjective and objective outcomes. In the 39 publications included in the review, 487 participants were evaluated; 303 participants had conductive hearing loss, 67 participants had mixed hearing loss, and 53 participants had single-sided deafness. The mean age of the patients in the included studies was 35.6±16.9 years. Using the guidelines available from the Cochrane Collaboration, a search strategy and review protocol was developed using PubMed (MEDLINE) and Cochrane databases to identify all publications on the BONEBRIDGE from 2012 to October 31, 2018. The researchers excluded studies that assessed a device or treatment other than the BONEBRIDGE, did not include human participants, focused on a type of hearing loss other than the losses that BONEBRIDGE is indicated for (that is, conductive hearing loss, mixed hearing loss or single-sided deafness), did not report on safety or performance/quality of life data, were not related to hearing loss or treatment thereof, lacked sufficient information for evaluation, and included overlapping samples.

The outcomes extracted from the studies were assessed via meta-analysis. The safety of the device was assessed by collecting information on complications during surgery and adverse events in the postoperative period. Of the 39 identified studies, there were 25 studies that reported on safety during a mean period of 11.7 months (range 3-36 months). The reported complications were categorized into minor and major complications, with a major complication described as requiring surgical attention leading to revision surgery or explantation. Minor complications included skin edema or erythema, skin infections, and hematomas. Out of 286 ears implanted with the device, there were no complications in 259 ears (90.6 percent). Minor complications occurred in 22 ears (7.7 percent) over a cumulative period of reported mean follow-up of 12.7 years (mean: 11.7 months ± 4.5). Major complications occurred in three studies comprising five ears (1.7 percent).

The applicant submitted an additional study by Schmerber, et al. to support the claim that the BONEBRIDGE reduced the rate of device-related complications compared to currently available treatments. The study of 28 participants was a multicenter, prospective study with intra-subject measurements with the purpose of the study to validate the safety and efficacy of the BONEBRIDGE 12 months after implementation. The study included nine university hospitals, seven in France and two in Belgium. Sixteen participants with conductive or mixed hearing loss with bone-conduction hearing thresholds under the upper limit of 45 dB HL for each frequency from 500 to 4000 Hz, and 12 participants with SSD (contralateral hearing within normal range) were enrolled in the study. Three of the 28 participants (with mixed or conductive hearing loss) did not complete the study; one requested that the device be removed (due to “severe psychological problems”) and two were lost to follow up. The skin safety of the participants was evaluated by the surgeon who implanted the device up to 12 months post-operatively using an ordinal scale (“very good”, “good”, “acceptable”, “bad skin condition”) and a visual analogue scale (between 1 and 10 from “very bad” to “excellent”) to rate cutaneous tolerance. In the study, no complications or device failures occurred, no revision surgery was necessary and no skin injury was reported. The scoring was judged as `excellent' or `good' for all subjects (n = 25), corresponding to scores 8 to 10 on the scale. No complication (0 percent) was observed [95 percent confidence interval = (0 percent-14.9 percent)]. The authors stated that there was a lower rate of complications for the BONEBRIDGE device compared to percutaneous systems, like the BAHA, whose complication rate was up to 24 percent in a large series of 602 ears and a revision surgery rate of 12 percent.

The applicant also submitted a study by Siegel et al. as evidence to support the claim that the BONEBRIDGE reduced the rate of device-related complications compared to currently available treatments. The study was a retrospective review that included 37 adult patients with conductive/mixed hearing loss who met the indications for use and were implanted with BONEBRIDGE over a 5-year period from April 2013 to May 2018. Patient charts were reviewed for surgical outcomes and complications over the 6-year period. The mean time of follow-up was 32 months (range: 9-71 months). There were no events of surgical complications in the patients included in the study, specifically no instances of dural injury, cerebrospinal fluid (CSF) leak, or intracranial bleeding. There were also no skin complications and no postoperative symptoms of tinnitus/vertigo or dizziness.

In support of the assertion that the use of BONEBRIDGE resulted in a more rapid beneficial resolution of the disease process compared to currently available treatments, the applicant also referenced the Magele et al., and Siegel et al. studies as well as a study conducted by Yang et al.

As previously noted, the Magele et al. study assessed 39 publications that included 487 participants; 303 participants had conductive hearing loss, 67 participants had mixed hearing loss, and 53 participants had single-sided deafness. Functional gain was available for analysis from 14 articles and was measured as the difference between unaided and aided (with the BONEBRIDGE) warble tone thresholds. On average, functional gain of 32.7 dB ±16dB was observed. Overall, the results showed a 30.89 dB (95 percent CI 27.53 dB-34.24 dB) improvement at speech presentation level; for the 30 conductive hearing loss patients, the improvement was 39.48 dB (95 percent CI 35.25 dB−43.71 dB); for the mixed hearing loss group, the improvement was 29.08 dB (95 percent CI 26.32 dB—31.83 dB) and the improvement was 28.94 dB (95 percent CI 16.92 dB—40.96 dB) for the 10 subjects with single-sided deafness.

The applicant also noted the study by Siegel et al. to support the claim that the use of BONEBRIDGE resulted in a more rapid beneficial resolution of the disease process compared to currently available treatments. As previously stated, in this study, 37 adult patients with conductive/mixed hearing loss who met the indications for use were implanted with BONEBRIDGE over a 6-year period. The patients' charts were reviewed for surgical outcomes and complications over the 6-year period. Preoperative air conduction (AC), preoperative bone conduction (BC), and 3-month postoperative aided thresholds were recorded. Speech perception was assessed using two different tests, consonant-nucleus-consonant (CNC) words and AzBio sentences. Pure-tone averages (PTAs; measured at 0.5, 1.0, 2.0 and 3.0 kHz), air-bone gap (ABG), and functional gain (FG) were calculated. The preoperative air-bone gap was calculated as the difference between AC thresholds and BC thresholds of the implanted ear. The postoperative ABG was calculated as the difference between the preoperative BC and postoperative BONEBRIDGE aided thresholds measured at 3 months postoperatively. Functional gain was calculated as the difference between preoperative AC thresholds and BONEBRIDGE aided thresholds measured 3 months postoperatively.

The results of this study showed audiological improvement in the 37 patients with a functional gain (averaged over 4 frequencies, 500 kHz to 3000 kHz) of 40.3 dB (±19.0 dB) for air conduction 3 months postoperatively. The difference between the average air to bone conduction gap fell from 44.9 dB preoperative to 4.6 dB three months after surgery. The postoperative air conduction thresholds for the 21 patients with mixed hearing loss ranged between 30-40 dB and the air conduction thresholds for the 16 patients with conductive hearing loss ranged between 20-30 dB. For patients with mixed hearing loss, nearly a full ABG closure was achieved at all frequencies by 3 months postoperatively.

In the same study, speech perception testing was available for 21 patients (57 percent). At activation, mean speech perception results for CNC words (13 patients) and AzBio sentences (14 patients) were 79 and 93 percent, respectively. At six months postoperatively, CNC words (17 patients) and AzBio sentences (21 patients) were 81 and 93 percent, respectively. The authors stated that the results of the study were comparable with what has been accomplished using traditional percutaneous conduction devices and passive transcutaneous bone conduction devices.

Lastly, to support the claim that the use of the BONEBRIDGE resulted in a more rapid beneficial resolution of the disease process, the applicant submitted a study that compared the use of the BONEBRIDGE with a non-implantable bone conduction hearing aid (BCHA). This single center, prospective study involved 100 patients in Beijing, China with bilateral congenital microtia-atresia (CMA). The patients had a mean age of 11.9 ± 6.0 years old at the time the BONEBRIDGE was implanted. All patients had worn the passive bone anchored hearing aid for at least a year prior to the implantation of the BONEBRIDGE and patients were tested an average of 25 weeks after surgery. Measured outcomes in the study included sound field thresholds (SFT), functional gain (FG) [aided threshold minus the unaided threshold], word recognition, speech reception thresholds (SRT), preoperative and postoperative bone and air conduction and patient subjective satisfaction. Bone conduction of pure tones at any frequency did not change significantly from preoperative to postoperative testing. The mean bone-conduction pure-tone threshold (PTA) before implantation was 8.7 ± 6.1 dB HL and after surgery was 8.9 ± 5.6 dB HL (p > .745, paired t-test). Furthermore, bone conduction did not significantly change at any frequency after surgery (p > .05, t-test). The mean SFT of the BONEBRIDGE (61.6 ± 7.1 dB HL) was significantly higher than the BCHA (31.3 ± 6.1 dB HL) (paired t-test, p < .001) and the SFT was significantly better with BONEBRIDGE at 500, 1000, 2000, and 4000 Hz sound frequencies (paired t-test, p < .002). Further, the FG of the BONEBRIDGE (31.2 ± 9.5 dB HL) was significantly better than the FG of the BCHA (26.5 ± 10.3 dB HL) (paired t-test, p < .001). The FG measured at 250 Hz in the two aided conditions had less improvement compared to other frequencies (p < .001). A comparison of BCHA and BONEBRIDGE resulted in a significant difference in word recognition (68.0 percent for monosyllabic words and 79.0 percent for disyllabic words with the BCHA vs. 78.0 percent for monosyllabic and 84.0 percent for disyllabic words with the BONEBRIDGE) in favor of the BONEBRIDGE (p < .001).

Regarding the applicant's evidence of substantial clinical improvement, we noted in the CY 2022 OPPS/ASC proposed rule that the studies submitted did not involve a direct comparison to other currently available treatments, namely percutaneous or passive, transcutaneous auditory osseointegrated devices. Therefore, we explained that it was difficult to determine whether the BONEBRIDGE provided a substantial clinical improvement over existing devices. We also indicated that the studies submitted included a small number of participants which may affect the generalizability of the data provided in support of the device.

In the white paper by MED-EL, the authors compared the complication rates associated with various studies that differed by design, population characteristics and follow-up time. We explained in the CY 2022 OPPS/ASC proposed rule we are not confident that differences seen or elucidated by the applicant are due to the differences in treatments or instead due to differences in study characteristics. Additionally, although the overall, both major and minor, adverse event ratio was significantly lower for the BONEBRIDGE device (9.8 percent) versus other bone conduction hearing devices in the study, we noted that when comparing the percent of patients who experienced a major adverse event, BONEBRIDGE patients had a major adverse event (2.9 percent) that was more comparable to other devices included in the paper. With regard to the Yang et al. study, given the young age of the patients and the congenital nature of the hearing loss being treated, we stated in the proposed rule that we are concerned that these results may not be generalizable to the Medicare population, which tends to be significantly older in age and potentially less likely to have hearing loss related to congenital causes. We invited public comments on whether BONEBRIDGE meets the substantial clinical improvement criterion.

Comment: The applicant submitted a comment in response to CMS' concerns regarding the lack of direct comparison to existing technology; differences in adverse events; and small number of study participants in the studies submitted to illustrate that BONEBRIDGE meets the substantial clinical improvement criterion. In response to CMS' concern about a direct comparison to existing technology, the applicant stated that direct head-to-head trials are not necessary or appropriate in this situation. According to the applicant, differences in the devices make a blinded randomized controlled trial impossible. The applicant asserted that while a non-blinded randomized trial would be possible, it is unclear what additional data would be gained from that approach because the applicant believed the pass-through application already contained extensive, robust, and definitive data to support that BONEBRIDGE is a substantial clinical improvement over existing technologies. The applicant asserted that enrolling patients in a head-to-head trial in which the primary difference is expected to be adverse events associated with one treatment arm is extremely challenging.

The applicant stated that the studies on BONEBRIDGE that were submitted with the pass-through application are primarily controlled case series and case reports. The applicant asserted that because the submitted studies used measures of device performance and adverse events that are consistent with studies of other devices, they allowed for direct comparison between different devices which demonstrate that BONEBRIDGE represents a substantial improvement over other bone conduction technology by achieving comparable performance in hearing improvement with fewer adverse events.

In regard to CMS' concerns about differences in adverse events, the applicant agreed with CMS that the occurrence of both overall and minor adverse event ratio was significantly lower for BONEBRIDGE than other devices but disagreed with CMS' characterization of the major adverse event rate. The applicant stated that major adverse events are far less common across all devices, including BONEBRIDGE, than minor events.

Next the applicant responded to CMS' concern that the small number of study participants could affect the generalizability of the data provided and that, because of the young age of the patients and the congenital nature of the hearing loss being treated, the study results may not be generalizable to the Medicare population. The applicant stated that BONEBRIDGE is indicated for patient who are 12 years or older, with conductive or mixed hearing loss and still can benefit from sound amplification, and who have profound sensorineural hearing loss in one ear and normal hearing in the opposite ear ( i.e., single-sided deafness or “SSD”). The applicant stated that the study sample sizes (and overall number of patients in those studies) are consistent with the anticipated number of implantations. The applicant stated that while the typical BONEBRIDGE patient is expected to be under age 65, several studies included patients of Medicare age and the experience of those patients was consistent with overall experience. The applicant concluded that the studies are generalizable to the Medicare population and reflective of expected results in the indicated population generally. Lastly, the applicant asserted the otologic community has accepted and adopted active transcutaneous devices as the standard of care for implanted bone conduction devices.

Response: We appreciate the additional information from commenters' about the BONEBRIDGE device but note that none of the commenters provided new empirical evidence that demonstrates that BONEBRIDGE is a substantial clinical improvement over existing treatment options. Based on our review of the study evidence, the only purported differences between BONEBRIDGE and predicate technologies relate to the major and minor adverse events from the respective technologies. Based on the information we have, it appears that while there is a difference amongst the rates of minor adverse event incidence favoring BONEBRIDGE, patients had a major adverse event occurrence (2.9 percent) that was comparable to other devices included in the provided evidence. While the incidence of minor adverse events ( e.g., skin infections, soft tissue reactions, and healing difficulties) may benefit BONEBRIDGE, we believe these are less impactful on patient outcomes as compared to the incidence of major adverse events ( e.g., revision surgery, explantation, removal at patient request, implant loss, implant device failure, skin revision surgery or skin infection) which is comparable to previous technologies. We maintain our concerns listed in the proposed rule, that the studies submitted included a small number of participants which may affect the generalizability of the data provided in support of the device, and the applicant's comparison of outcome data across multiple studies as opposed to direct comparisons controlling for confounding variables. Because of these reasons, we do not believe that BONEBRIDGE represents a substantial clinical improvement relative to existing therapies currently available. After consideration of the public comments we received and our review of the device pass-through application, we are not approving BONEBRIDGE for transitional pass-through payment status in CY 2022 because the product does not meet the substantial clinical improvement criterion. Because we have determined that BONEBRIDGE does not meet the substantial clinical improvement criterion, we are not evaluating whether the device meets the cost criterion.

(3) Eluvia^TM Drug-Eluting Vascular Stent System

Boston Scientific Corporation submitted an application for device pass-through status for the Eluvia^TM Drug-Eluting Vascular Stent System (the Eluvia^TM system) for CY 2022. According to the applicant, the Eluvia^TM system is a combination product composed of an implantable endoprosthesis, a non-bonded freely dispersed drug layer (a formulation of paclitaxel contained in a polymer matrix), and a stent delivery system indicated for the treatment of symptomatic de novo or restenotic lesions in the native superficial femoral artery (SFA) and/or proximal popliteal artery (PPA).

According to the applicant, the Eluvia^TM system stent is a laser-cut self-expanding stent composed of nickel titanium alloy with radiopaque markers made of tantalum on the proximal and distal ends. The applicant states that the 6-French delivery system is a triaxial design with an outer shaft to stabilize the stent delivery system, a middle shaft to protect and constrain the stent, and an inner shaft to provide a guidewire lumen. The delivery system is compatible with 0.035 inch (0.89mm) guidewires and is offered in two working lengths (75 and 130 cm).

According to the applicant, peripheral artery disease (PAD) occurs when fatty or calcified material (plaque) builds up in the walls of the arteries and makes them narrower, thus restricting blood flow. The applicant asserts that when this occurs, the muscles in the legs cannot get enough blood and oxygen, especially during exertion such as exercise or walking. According to the applicant, the main symptoms of PAD are pain, burning sensation, or general discomfort in the muscles of the feet, calves, or thighs. As the disease progresses, plaque accumulation may significantly reduce blood flow through the arteries, resulting in claudication and increasing disability, with severe cases often leading to amputation of the affected limb. The applicant states that according to the Centers for Disease Control and Prevention approximately 8.5 million people age 40 and older in the United States have PAD, including 6-26 percent of individuals older than age 60. According to the applicant, PAD disproportionately affects African American and American Indian populations and nonrevascularized lower extremity PAD is among the most common causes of lower extremity amputation.

According to the applicant, the Eluvia^TM system is designed to restore blood flow in the peripheral arteries above the knee, specifically the superficial femoral artery and proximal popliteal artery. The applicant states that the stent features a unique drug-polymer combination intended to facilitate sustained elution of the drug paclitaxel that can prevent narrowing (restenosis) of the vessel. The applicant adds that restenosis is often the cause of pain and disability for patients diagnosed with PAD.

The applicant asserts that no other endovascular technologies that are approved for the treatment of PAD provide sustained elution of a drug over at least 12 months to prevent restenosis. According to the applicant, two of the most common endovascular treatments for PAD are angioplasty and stenting. The applicant states that following an intervention within the SFA or PPA, these arteries elicit a healing response that leads to restenosis starting with inflammation, followed by smooth muscle cell proliferation and matrix formation. According to the applicant, because of the unique mechanical forces in the SFA and PPA, the restenotic process can continue well beyond 12 months from the initial intervention. The applicant asserts the Eluvia^TM system is designed to elute anti-restenotic drug paclitaxel beyond 12 months, which is longer than the two-month duration of drug applied from drug-coated balloons and the drug-coated stent Zilver PTX.

With respect to the newness criterion at § 419.66(b)(1), the Eluvia^TM system received FDA PMA on September 18, 2018. The application for a new device category for transitional pass-through payment status for the Eluvia^TM system was received on February 26, 2021, which is within 3 years of the date of the initial FDA approval or clearance. In the CY 2022 OPPS/ASC proposed rule we invited public comments on whether the Eluvia^TM system meets the newness criterion.

Comment: The applicant stated that the Eluvia^TM system application was submitted within three years of regulatory approval and therefore meets the newness criterion for transitional device pass-through eligibility.

Response: We appreciate the commenter's input. and agree that the Eluvia^TM system meets the newness criterion because we received its device pass-through application on February 26, 2021, which is within 3 years of the September 18, 2018, the date of FDA PMA.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the Eluvia^TM system is integral to the service provided, is used for one patient only, comes in contact with human tissue, and is surgically impacted or inserted. The applicant also claimed that the Eluvia^TM system meets the device eligibility requirements of § 419.66(b)(4) because it is not equipment, an instrument, apparatus, implement, or items for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. In the CY 2020 OPPS/ASC final rule with comment period, we stated that we determined that the Eluvia^TM system device meets the eligibility criteria at § 419.66(b)(3) and (4) in response to a pass-through application that the applicant submitted on November 15, 2018 (84 FR 61286). Because the applicant submitted a new application for device pass-through status for the Eluvia^TM system, we again invited public comments on whether the Eluvia^TM system continues to meet the eligibility criteria at § 419.66(b(3) and (4).

Comment: The applicant stated that the Eluvia^TM system continues to meet the transitional pass-through eligibility criteria at § 419.66(b)(3) and (4) as CMS initially concluded in the CY 2020 OPPS/ASC final rule with comment period.

Response: We agree with the applicant and continue to believe that the Eluvia^TM system meets the eligibility criteria at § 419.66(b)(3) and (4).

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We stated that we have not identified an existing pass-through payment category that describes the Eluvia^TM system. The applicant proposed a category descriptor for the Eluvia^TM system of “Stent, non-coronary, polymer matrix, minimum 12-month sustained drug release, with delivery system.” Previously, we invited public comment and subsequently determined that the Eluvia^TM system device meets the device category eligibility criterion. For a complete discussion of comments received, please see the CY 2020 OPPS/ASC final rule with comment period (84 FR 61286 through 61287). We invited public comments on whether the Eluvia^TM system continues to meet this criterion.

Comment: One commenter, a manufacturer of a competing product stated that CMS has reviewed drug-eluting vascular stents in the past and determined they fell into an already existing pass-through payment category. The commenter stated that in August of 2002, CMS concluded that coronary drug-eluting stents were described by existing pass-through device categories C1874 (Stent, coated/covered, with delivery system) and C1875 (Stent, coated/covered, without delivery system). The commenter stated that at the time drug eluting stents were coated with paclitaxel and the same polymer currently used on the Eluvia^TM system. The commenter stated that in 2012, Zilver PTX DES was denied pass-through payment status and quotes a letter received from CMS which stated, “. . . the outpatient clinical review team believes that the Zilver PTX Stent is appropriately described by previously active device pass-through category C1874, Stent, coated/covered, with delivery system. This category describes drug-eluting stents.” According to the commenter, FDA has grouped the Eluvia^TM system and Zilver PTX DES into the same product code:

“NIU: Stent, Superficial Femoral Artery, Drug-Eluting—a metal scaffold with a drug coating placed via a delivery catheter into the SFA to maintain the lumen. The drug coating is intended to inhibit restenosis. Class III; Cardiovascular Review Panel.”

The commenter asserted that both devices are self-expanding nitinol stents coated with the drug paclitaxel. The commenter further asserted that the Eluvia^TM system's underlying stent platform and delivery system is the same as Boston Scientific's Innova self-expanding stent (an uncoated stent for treating the superficial femoral artery); the drug paclitaxel is the same drug used on the Zilver PTX DES and earlier generation coronary drug-eluting stents; and the polymers used in the Eluvia^TM system coating are the same polymers as those used in the Xience V and Promus Element coronary stents. The commenter stated that this history precludes the establishment of a new device category for the Eluvia^TM system.

Response: We appreciate the information provided by the commenter and have taken this into consideration in making our determination of § 419.66(c)(1), discussed below.

Comment: The applicant stated that in the CY 2020 OPPS/ASC proposed rule CMS stated that no existing device category describes the Eluvia^TM system and that since that time no new categories that would describe the system have been established.

Response: We appreciate the information submitted by the commenters. Given the additional information provided by commenters CMS is concerned that the applicant's proposed long descriptor of `Stent, non-coronary, polymer matrix, minimum 12-month sustained drug release, with delivery system” may not suitably differentiate the Eluvia^TM system from Zilver PTX. Specifically, given that CMS has previously determined that coronary drug-eluting stents were described by existing pass-through device categories C1874 (Stent, coated/covered, with delivery system) and C1875 (Stent, coated/covered, without delivery system), that FDA has classified the Eluvia^TM system and Zilver PTX into the same product code, and finally that CMS previously denied pass-through status to Zilver PTX, stating that it is appropriately described by previously active device pass-through category C1874 (Stent, coated/covered, with delivery system), we believe the same pass-through category code C1874 appropriately describes the Eluvia^TM system. We note that HCPCS code C1874 is agnostic to the length of time a drug is released and therefore encapsulates the Eluvia^TM system's proposed long descriptor. Further, we do not believe it is appropriate for a discussion of substantial clinical improvement, i.e., the length of time a drug release is maintained, to be the primary motivating determinant in a determination of whether a device meets the device category criterion in § 419.66(c)(1).

After consideration of the public comments we received, we conclude there is an existing pass-through payment category or pass-through category previously in effect that appropriately describes the Eluvia^TM system. Based on this information, we have determined that the Eluvia^TM system does not meets the eligibility criterion at § 419.66(c)(1).

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With respect to this criterion, the applicant claims the Eluvia^TM system provides a substantial clinical improvement over existing technologies for the following reasons: (1) The Eluvia^TM system achieves superior primary patency; (2) the Eluvia^TM system achieves reduced lesion revascularization, leading to a reduced rate of subsequent therapeutic interventions at one year and a statistically significant reduction of target lesion revascularization (TLR) at 2 years; (3) the Eluvia^TM system decreases the number of future hospitalizations or physician visits; (4) the Eluvia^TM system reduces hospital readmission rates; (5) the Eluvia^TM system reduces the rate of device-related complications; and (6) the Eluvia^TM system achieves similar functional outcomes and quality of life index values while associated with half the rate of TLRs.

Many of the assertions made by the applicant are derived from the IMPERIAL trial which is reported in three citations supplied by the applicant. We discuss results from the MAJESTIC study and then these publications from the IMPERIAL study to provide context for the assertions made by the applicant.

The first article, by Müller-Hülsbeck et al., discusses the three-year results of the MAJESTIC study, the first-in-human prospective, single-arm, multicenter, clinical trial involving 57 patients with symptomatic lower limb ischemia and lesions in the superficial femoral artery or proximal popliteal artery. Patients who were treated with the Eluvia^TM system were followed for a 3-year time period during which they took acetylsalicylic acid as an antiplatelet therapy. At 24 months, patients received a duplex ultrasound, ankle-brachial index, and Rutherford classification at a clinical visit. At 36 months patients completed a telephone or clinical visit which included adverse event and antiplatelet medication assessments. The authors report that long-term results from the MAJESTIC study of the Eluvia^TM system continue to demonstrate good technical and clinical outcomes (assessed through 2 years) and a low reintervention rate (through 3 years).

The second article, by Gray et al., discusses the IMPERIAL trial, a prospective randomized (2:1) (the Eluvia system vs. Zilver PTX), single-blind, non-inferiority study in 465 patients with symptomatic lower-limb ischemia manifesting as claudication with atherosclerotic lesions in the native superficial femoral artery or proximal popliteal artery across 65 centers and multiple countries. Of the 465 patients enrolled, 309 were assigned to the Eluvia^TM system and 156 were assigned to Zilver PTX. The authors state the overall sample size in the randomized trial was selected to preserve adequate statistical power for non-inferiority testing of the primary efficacy and safety endpoints at a prespecified, one-sided significance level of 5 percent for each, without adjustment for multiplicity.

The authors state baseline demographic, clinical, and angiographic characteristics were similar between the two study groups, indicative of successful randomization. The primary efficacy endpoint of the trial was primary vessel patency at 12 months which was a binary endpoint based on a duplex ultrasound peak systolic velocity ratio of 2.4 or lower in the absence of clinically driven target lesion revascularization or bypass of the target lesion. Secondary endpoints at 12 months were technical success, procedural success, adverse events, stent integrity, major adverse events, and clinical outcomes. The authors note that the funder of the study was involved in study design, data collection, data analysis, data interpretation, and writing of the report. To identify statistically meaningful results for the non-inferiority test, the authors used a test such as the Farrington-Manning method, to estimate the lower bound for the 95 percent CI of the difference between treatment groups. According to the authors, if this lower bound was greater than the non-inferiority margin of -10 percent, the Eluvia^TM system would be considered non-inferior to Zilver PTX in terms of device efficacy. For all other statistical comparisons, the authors used a p value of less than 0.05 as indicative of a significant difference.

According to the authors, the primary non-inferiority analyses were done when 409 patients (276 in the Eluvia group and 133 in the Zilver PTX group) had completed 12 months of follow-up or had a primary efficacy or safety endpoint event. Primary patency was observed for 231 (87 percent) of 266 patients in the Eluvia system group and for 106 (82 percent) of 130 patients in the Zilver PTX stent group (difference 5.3 percent [one-sided lower bound of 95 percent CI -0.66]; p < 0.0001). 259 (95 percent) of 273 patients in the Eluvia group and 121 (91 percent) of 133 patients in the Zilver PTX group had not had a major adverse event at 12 months (difference 3.9 percent [one-sided lower bound of 95 percent CI -0.46]; p < .0.0001). According to the authors, superiority of the Eluvia system over Zilver PTX (primary patency in 86.8 percent vs. 77.5 percent, respectively, p = 0.0144) was met in the post-hoc analysis of 12 month primary patency data in the full-analysis cohort. The authors summarize by stating the proportions of patients with stent thrombosis or clinically driven target lesion revascularisation in the Eluvia stent group were about half those in the Zilver PTX group while both groups showed improvements in clinical symptoms and walking function and the occurrence of stent fracture was low.

The third article, by Golzar et al, discusses the one-year follow up of the single-arm long lesion substudy portion of the IMPERIAL trial. Fifty patients were enrolled in the study where 20 patients had diabetes, 16 were current smokers, 35 had moderately or severely calcified lesions, and 16 lesions were total occlusions. To be eligible, patients needed a lesion ranging from 140 mm to 190 mm which required two overlapping Eluvia stents. At 12 months, no deaths, stent thrombosis, or target limb amputation had occurred. The primary patency rate was 87.0 percent at 12 months which exceeded the 60 percent performance goal. Forty-three patients (91 percent) had Rutherford category improvement without the need for TLR. The authors concluded that one year patency with the Eluvia^TM system was independent of lesion length.

The fourth article, by Müller-Hülsbeck et al., discusses the two-year follow up to the IMPERIAL trial. The authors found that through 24 months, the patency rates and Rutherford category improvements were largely sustained, with a significantly lower clinically driven TLR rate for Eluvia versus Zilver PTX at 2 years. At 2 years the TLR rate for patients treated with Eluvia was 12.7 percent as compared to patients treated with Zilver PTX at 20.1 percent (P = 0.0495). As with the previous citation, both study arms show sustained clinical improvement (that is improvement in Rutherford classification by one or more categories as compared with baseline and without TLR) of 84.4 percent for patients treated with Eluvia and 78.2 percent for patients treated with Zilver PTX (p = 0.140). For all-cause mortality, Eluvia (7.1 percent) and Zilver PTX (8.3 percent) did not statistically differ (p = 0.6649). The authors conclude that the IMPERIAL trial provides support for the benefit of drug-eluting treatment in this population.

According to the applicant, the Eluvia system achieves superior primary patency compared to Zilver PTX. The applicant states that, based on the IMPERIAL trial, the Eluvia system demonstrated superior primary patency over Zilver PTX, 86.8 percent vs. 77.5 percent, respectively (p=0.0144), based on pre-specific post-hoc analysis. The applicant further states that at 12 months, the Eluvia system had greater primary patency than Zilver PTX at 88.5 percent vs. 79.5 percent, respectively (p=0.0119). According to the applicant, these results are consistent with the 96.4 percent primary patency rate at 12 months in the MAJESTIC study, the single-arm first-in-human study of the Eluvia system. Furthermore, in regard to this point, the applicant asserts among patients 65 and older, the primary patency rate in the Eluvia system was 92.6 percent compared to 75.0 percent in Zilver PTX (p=0.0386). Lastly, the application states that among 50 patients with an average lesion length of 162.8 mm (long lesions), each treated with two Eluvia stents, there was a 12 month primary patency of 87 percent and a TLR of 6.5 percent.

According to the applicant, the Eluvia system reduced subsequent therapeutic interventions at one year and reduced target lesion revascularization at two years. Based on the IMPERIAL trial, the applicant asserts the Eluvia system achieved a substantial reduction in re-intervention with a target lesion revascularization (TLR) of 4.5 percent compared to 9.0 percent (p=0.0672) in the Zilver PTX group. The applicant states that at two years the Eluvia system had a statistically significantly lower rate of TLRs than Zilver PTX of 12.7 percent vs. 20.1 percent, respectively (p=0.0495). The applicant notes that the published analysis presented in this application has a slightly different clinically-driven TLR rate at 2 years than internal analysis provided in the Eluvia CY 2020 device pass-through application (12.7 percent and 20.1 percent (p=0.0495) vs. 12.9 percent and 20.5 percent (p=0.0472), respectively). We note that the applicant provides a table which compares TLR rates between the Eluvia^TM system and Zilver PTX by all patients 65 and older, U.S. patients 65 and older, and patients with diabetes.

The applicant asserts that patients treated with the Eluvia^TM system required fewer days of hospital care than in the Zilver PTX group. According to the applicant, patients treated with the Eluvia^TM system had fewer days in the hospital as compared to Zilver PTX for all adverse events (13.9 vs. 17.7 respectively), TLR (2.8 vs. 7.1 respectively), and procedure and device-related adverse events (2.7 vs. 4.5 respectively). We note that statistical significance was not assessed.

The applicant asserts that patients treated with the Eluvia system had reduced hospital readmission rates compared to those treated with Zilver PTX at 12 months at 3.9 percent and 7.1 percent respectively (p=0.1369).

The applicant asserts that while rates of adverse events were similar in total between treatment arms in the IMPERIAL trial, device-related adverse-events were reported in 8 percent of patients treated with the Eluvia system as compared to 14 percent of patients treated with Zilver PTX.

Lastly, the applicant asserts that the Eluvia system is able to achieve similar functional outcomes to Zilver PTX while associated with half the rate of TLRs. The applicant states while functional outcomes appear similar between the Eluvia Stent System and Zilver PTX groups at 12 months, these improvements for the Zilver PTX group are associated with twice as many TLRs to achieve similar EQ-5D index values. The applicant provides multiple tables which show similar improvements in walking, distance, speed, stair climbing, and health-related quality of life (EQ-5D) between the Eluvia^TM system and Zilver PTX.

For a complete discussion of the applicant's previous submission regarding substantial clinical improvement please see the CY 2020 OPPS/ASC final rule with comment period (84 FR 61287 through 61292). We note that we did not approve the Eluvia^TM system for CY 2020 transitional device pass-through payment due to the potential increased long-term mortality signal that FDA was evaluating at the time. We further note that in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58657), we discussed the FDA August 7, 2019 update, which concluded that the benefits of paclitaxel-coated devices (for example, reduced reinterventions) should be considered in individual patients along with potential risks (for example, late mortality) as well as for individual patients judged to be at particularly high risk for restenosis and repeat femoropopliteal interventions, clinicians may determine that the benefits of using a paclitaxel-coated device outweigh the risk of late mortality. The applicant asserted that the Eluvia^TM system has demonstrated substantial clinical improvement over Zilver PTX in the IMPERIAL trial to include no increase in all-cause mortality. In response to this new information, we no longer have concerns regarding the increased long-term mortality signal we described in the CY 2020 OPPS/ASC final rule with comment period.

In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61289) we noted that the IMPERIAL study, which showed significant differences in primary patency at 12 months, was designed for noninferiority and not superiority. Therefore, we were concerned that results showing primary patency at 12 months may not be valid given the study design. In response, the applicant stated that a non-inferiority study is consistent with accepted research methodology and is typical of many head-to-head trials of medical devices. For the complete discussion of this issue, please see the CY 2020 OPPS/ASC final rule with comment period (84 FR 61290).

In the CY 2022 OPPS/ASC proposed rule, we invited public comments on whether the Eluvia^TM Drug-Eluting Vascular Stent System meets the substantial clinical improvement criterion.

Comment: One commenter, a manufacturer of a competitor device, asserted that Eluvia^TM does not meet the substantial clinical improvement criterion. The commenter asserted that the MAJESTIC study is inadequate to demonstrate substantial clinical improvement as use of a single arm study to support this criterion is problematic due to the small (n=57) and highly selective patient population ( e.g., lesion length limited to a maximum of 11 cm). Further, the commenter stated that despite a very high primary patency rate of 96.4 percent at 12 months the rate drops substantially to 77.9 percent at just 25 months, which suggests the potential of late catch-up phenomenon as previously observed with other polymer-coated peripheral DES. The commenter added that the target lesion revascularization (TLR) rate appears to double each year ( i.e., quadruple from year 1 to year 3), increasing from 3.6 percent at 1 year to 7.2 percent at 2 years to 14.7 percent at 3 years.

The commenter next asserted that errors in the data analysis have been reported in scientific meetings and require a correction of the 1-year publication and results; the commenter also asserted that other publications also require a correction. The commenter stated that patency results are inconsistently presented and also contended that the primary endpoint of the 12-month patency study (n=409) indicate primary patency of 86.8 percent (231/266) for Eluvia vs. 81.5 percent (106/130) for Zilver PTX with the subsequent post-hoc analysis showing a larger difference of 86.8 percent (243/280) for Eluvia^TM vs. 77.5 percent (110/142) for Zilver PTX. The commenter asserted that the post-hoc analysis represents an additional 14 Eluvia^TM and 12 Zilver PTX patients; the commenter notes that the results for the final 12 Zilver PTX patients added to the post-hoc analysis appear to be outliers who had significantly worse outcomes than the primary patient cohort (patency 77.5 percent [110/142] in primary cohort vs. 33.3 percent [4/12] in post-hoc cohort, p=0.002) and raises doubt about the poolability of the data between these two cohorts.

The commenter also asserted that in the most recently presented 2-year results (with data correction), there is no significant difference in patency between Eluvia and Zilver PTX at 2 years (83.0 percent vs. 77.1 percent, p=0.10, not significant). The commenter contended that based on these results a claim of superior primary patency cannot be maintained. The commenter was concerned by the claim of “highest reported” two-year primary patency, stating: (1) The modified definition of primary patency is inconsistent across multiple studies, (example, the Zilver PTX randomized trial and the IMPERIAL trial) which limits appropriate comparability; (2) the second Zilver PTX randomized trial, which had a higher 2-year primary patency rate of 83.4 percent compared with 83.0 percent for the Eluvia^TM system, was excluded from the comparison; and (3) the claim of superiority requires head-to-head comparative studies or at a minimum an attempt to account for differences between compared studies.

The commenter next asserted that the long-term safety of the Eluvia^TM system has not been demonstrated due to: (1) A lack of long-term safety data; (2) multiple reports noting the presence of aneurysmal degeneration, peri-stent inflammation, or negative late lumen loss associated with the Eluvia^TM system,; (3) the total dose and not just the density must be considered; (4) paclitaxel is released directly to the target lesion by the Zilver PTX DES and not by the Eluvia^TM system; (5) avoiding use of a polymer, if possible, is a preferred stent design; and (6) long-term paclitaxel release may not be necessary or desired.

Another commenter stated that the Eluvia^TM system meets the substantial clinical improvement criterion because CMS already concluded the same in the FY 2022 IPPS/LTCH final rule for new technology add-on payment.

Response: We appreciate the information provided by the commenters and have taken this into consideration when making our determination of the substantial clinical improvement criterion, discussed below.

Comment: The applicant submitted a comment in support of the substantial clinical improvement criterion. The applicant stated that in the CY 2022 OPPS/ASC proposed rule CMS referenced the FY 2021 IPPS/LTCH final rule (85 FR 58657) and stated that CMS no longer has concerns about the long-term mortality signal. The applicant further stated that in the FY 2021 IPPS/LTCH final rule, CMS determined that the Eluvia^TM system represents a substantial clinical improvement over existing technologies. The applicant added that despite the assessment in the FY 2021 IPPS/LTCH final rule, in the CY 2022 OPPS/ASC proposed rule, CMS asked for input regarding whether the Eluvia^TM system meets the substantial clinical improvement criterion, even raising concerns that CMS agreed were not an issue in the discussion of its NTAP decision. The applicant asserted that the regulations governing the substantial clinical improvement criterion for NTAP and for transitional device pass-through status are nearly identical. The applicant asserted that in its discussion of substantial clinical improvement for the Eluvia^TM system under the IPPS NTAP application, CMS found that the Eluvia^TM system met the criterion based on the following endpoints: Superior primary patency; reduced rate of subsequent therapeutic interventions; decreased future hospitalizations and physician visits; reduced hospital readmission rates; reduced rate of device-related complications; and similar functional outcomes and EQ-5D index values with half the rate of target lesion revascularizations (TLRs). The applicant added that these endpoints are clinically meaningful for all patients with PAD and not just for those in the inpatient setting. The applicant asserted that there is no evidence-based rationale that would lead CMS to a reach a different conclusion regarding substantial clinical improvement for the Eluvia^TM system for transitional device pass-through status versus NTAP. The applicant added that there is no difference in the indicated patient population for the Eluvia^TM system based on site of service, which is determined by physicians based on the totality of a patient's condition.

Response: We appreciate the additional information provided by the commenters. We note in the FY 2021 IPPS/LTCH final rule (85 FR 58657) CMS determined that the Eluvia^TM system met the substantial clinical improvement criterion after consideration of the comments received and for the reasons discussed, including the improved outcomes shown in the IMPERIAL and MAJESTIC trials as well as the updated August 7, 2019 FDA guidance in regard to paclitaxel-coated devices. As we stated in the FY 2021 IPPS/LTCH final rule, the applicant provided the following two-year results from the IMPERIAL global randomized controlled clinical trial, comparing the Eluvia^TM system to Zilver® PTX®:

• The Eluvia^TM system maintains higher primary patency than Zilver® PTX® at 2 years, 83.0 percent compared to 77.1 percent. The applicant contended that guidelines recognize the importance of primary patency in assessing the efficacy of peripheral endovascular therapies.

• The Eluvia^TM system's 2-year primary patency is the highest reported in a superficial femoral artery US pivotal trial for a drug-eluting stent or drug coated balloon. Per the applicant, the 2-year primary patency results are consistent with the 2-year TLR results released earlier in 2019. According to the applicant, the Eluvia^TM system sustained a statistically significant reduction in TLR at 2 years compared to Zilver PTX, 12.9 percent vs. 20.5 percent (p = 0.0472).

• In a subgroup analysis of patients 65 years and older (Medicare population), the primary patency rate in the Eluvia^TM system stent group is 92.6 percent, compared to 75.0 percent for the Zilver® PTX® stent group (p=0.0386).

One commenter identified potential issues with the data used to evaluate the Eluvia^TM system for substantial clinical improvement. In spite of the information presented by the commenter, we concur with the assessment discussed in the FY 2021 IPPS/LTCH final rule and the applicant's additional clarification concerning the specific endpoints for which they believe the Eluvia^TM system meets the substantial clinical improvement criterion. We note one commenter takes issue with two of the above points that CMS relied upon in the FY 2021 IPPS/LTCH final rule in its determination of substantial clinical improvement, ( e.g. the higher primary patency, the 2-year primary patency being the “highest reported”, and the target lesion revascularization rate). However, based upon the data and comments received we note that the Eluvia^TM system group maintained a higher primary patency rate than the Zilver® PTX® stent group (92.6 percent vs. 75.0 percent, p < 0.05) in the subgroup analysis of patients 65 years and older. Given this information and the information provided by the applicant and commenters in their comments, we agree that the Eluvia^TM system meets the substantial clinical improvement criterion at § 419.66(c)(2).

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated that Eluvia^TM system would be reported with the HCPCS codes in the following Table 36:

To meet the cost criterion for device pass-through payment status, a device must pass all three tests of the cost criterion for at least one APC. For our calculations, we used APC 5193—Level 3 Endovascular Procedures, which had a CY 2021 payment rate of $10,042.94 at the time the application was received. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). HCPCS code 37226 had a device offset amount of $4,843.71 at the time the application was received.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of the Eluvia^TM system is 56 percent of the applicable APC payment amount for the service related to the category of devices of $10,042.94 ((5,645/10,042.94) × 100 = 56.2 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we believe the Eluvia^TM system meets the first cost significance requirement.

The second cost significance requirement, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost for the Eluvia^TM system is 117 percent of the cost of the device-related portion of the APC payment amount for the related service of $4,843.71 ((5,645/4,843.71) × 100 = 116.5 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we do not believe that the Eluvia^TM system meets the second cost significance requirement.

The third cost significance requirement, at § 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost for the Eluvia^TM system and the portion of the APC payment amount for the device of $4,843.71 is 8 percent of the APC payment amount for the related service of $10,042.94 (((5,645−4,843.71)/10,042.94) × 100 = 7.98 percent). Therefore, we stated in the CY 2022 OPPS/ASC proposed rule that we do not believe that the Eluvia^TM system meets the third cost significance requirement.

We invited public comments on whether the Eluvia^TM system meets the device pass-through payment criteria discussed in this section, including the cost criterion for device pass-through payment status.

Comment: A manufacturer of a competitor device and a second commenter agreed that based on calculations included in the CY 2022 OPPS/ASC proposed rule for the second and third cost significance tests, the Eluvia^TM system does not meet the cost significance requirements for device pass-through payment.

A third commenter stated that in response to the CY 2021 OPPS/ASC proposed rule they noted that a device that meets the newness and substantial clinical improvement criteria for transitional pass-through payment may only replace some of the devices included in the device-related portion (DRP).

Multiple commenters asserted that the Eluvia^TM system meets the cost criteria for transitional device pass-through status. The commenters stated that the current methodology of the cost significance criterion uses a single number, which includes all devices utilized in a particular procedure. The commenters explained that since the DRP contains all devices for respective claims, the DRP is artificially high as a benchmark for the Eluvia^TM system since it only replaces one stent in the procedure. The commenters concluded that as a result of this issue, the Eluvia^TM system does not meet the cost criteria because the average sales price of the device is not sufficient to account for all the other devices included in the DRP, and not just the stent it is replacing.

Response: We appreciate the information provided by the commenters and have taken this into consideration in making our final determination of the cost significance criterion discussed below.

Comment: The applicant agreed that the Eluvia^TM system meets the first cost test. Regarding the second and third cost significance tests, the applicant stated that CMS overestimated the DRP used in the cost significance tests. According to the applicant, when calculating the OPPS payment for a procedure that uses a pass-through device, CMS has an established policy of only subtracting (as the DRP) the cost of those devices that are replaced by the transitional pass-through device. The applicant asserted that the payment policy methodology for calculating the DRP should also be applied to the calculating cost significance for the cost criteria.

The applicant asserted of the cost significance tests that the first question addresses the cost of the transitional pass-through device relative to total payment, whereas the second two questions address cases where the transitional pass-through device would replace device costs currently reflected in the associated procedure payment amount. The applicant offered three scenarios concerning candidate devices and the DRP: (1) A candidate device may replace all or nearly all of the devices that are accounted for in the DRP of the related procedures ( e.g., neurostimulators); (2) a candidate device may replace only some of the devices included in the DRP ( e.g., the Eluvia^TM system); and (3) a candidate device may not replace any of the devices included in the DRP ( e.g., a single-use endoscope). According to the applicant, CMS' calculation of the DRP to include all the devices used in the related procedure overestimates the DRP in the latter two scenarios. The applicant asserted that because of this novel technologies that otherwise meet the transitional pass-through criteria would fail the cost significance tests since they will be compared to the cost of all devices used in a procedure and manufacturers may establish higher device prices to exceed an inflated DRP.

The applicant asserted that CMS' current approach to calculating the DRP is contrary to the intent of the TPT program, which is to recognize the costs associated with novel, clinically beneficial technologies that are not yet incorporated into the procedural cost calculation with temporary, separate device-related payment until the new device cost is reflected in rate setting data. The applicant added, the intent of the DRP in the cost significance test is to compare the cost of the pass-through candidate device to the costs of the device(s) that the pass-through candidate device would replace and not to compare the costs of the candidate device to the total costs of all devices used in a procedure to include those that are unrelated and not replaced by the candidate device.

Next the applicant stated that in its discussion of the pass-through device offset policy for OPPS payment in the CY 2004 Outpatient Prospective Payment System (OPPS) Final Rule, CMS stated, “Beginning with the implementation of the 2002 OPPS update (April 1, 2002), we deduct from the pass-through payments for the identified devices an amount that offsets the portion of the APC payment amount that we determine is associated with the device, as required by section 1833(t)(6)(D)(ii) of the Act.” The applicant continued, “We will apply an offset to a new device category only when we are able to determine that an APC contains costs associated with the new device. We will also continue our existing methodology for determining any offset amount if we find that device costs associated with a new device category are packaged into the APCs. We will include information about any applicable offset in the transmittal we issue to announce information regarding the new category”.

The applicant stated that on at least two occasions, CMS has referenced the above-stated policy in decisions not to apply a device offset when calculating payment for pass-through devices. The applicant cited two instances where they believe CMS has chosen to not apply a device offset, first with C2623 (Drug coated angioplasty balloon) and C1748 (Single use [disposable] endoscope). According to the applicant, with these two decisions, CMS has acknowledged that it does not consider the cost of devices that are not replaced by the pass-through device when calculating the pass-through payment amount. The applicant asserted that given these decisions and the associated payment policy, CMS has not only shown that it has the authority to define the DRP calculation methodology, but it has also established a precedent for defining the DRP as only those devices that are replaced by the pass-through device. The applicant stated that it is therefore inconsistent for CMS to apply a different DRP methodology in the cost test for devices seeking transitional pass-through payment.

According to the applicant the prior precedents and this inconsistency are central to the application of the TPT cost significance test for the Eluvia^TM system. The applicant stated that as requested in their 2018 transitional pass-through application submission, they again ask CMS to consider only the cost of those devices replaced by the Eluvia^TM system when calculating the DRP for CPT Code 37226 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed). According to the applicant the average femoral, popliteal stent placement procedure (CPT 37226) includes ancillary (non-stent) device costs of $2,311.26 and average stent device costs of $3,406.93. The applicant asserts then that a more appropriate comparison is of the Eluvia^TM system to the $3,406.93 in average stent device costs. The applicant contends that the non-stent devices should not be considered in the DRP utilized in the 3-part cost significance test because the Eluvia^TM system is not replacing these costs associated with the non-stent devices. The applicant concluded that should the $3,406.93 be used as the DRP, then the Eluvia^TM system passes the second and third cost significance tests at approximately 166 percent and 22 percent, respectively.

Response: As we stated above in section IV.2.a. of this final rule with comment period, to be eligible for device pass-through payments a device must have an average cost that is not “insignificant” relative to the payment amount for the procedure or service with which the device is associated as determined under § 419.66(d). Since the CY 2017 OPPS/ASC final rule (81 FR 79648 through 79649), CMS has described the manner in which it evaluates device pass-through applicants against the cost significance criterion at § 419.66(d). Per the applicant, CMS has stated in prior rules that we will deduct from the pass-through payments for a device an amount that offsets the portion of the APC payment amount that we determine is associated with the device. Once a device is approved for pass-through payments CMS appropriately applies this rationale to determine the payment rate for devices with pass-through status. However, except in rare circumstances, CMS has consistently applied the full device offset amount associated with the applicable APC used to evaluate the cost significance tests at § 419.66(d). In this manner we believe we are identifying devices whose average cost is not “insignificant”.

In reference to the prior precedents identified by the applicant (C2623 and C1748) where CMS determined to not apply an offset we disagree with the applicant's conclusion that these situations apply to the Eluvia^TM system and the request for a partial device offset. In some cases, CMS determines that none of the costs of a new device are included in the applicable APC. For example, in the CY 2021 OPPS/ASC final rule (85 FR 85994), CMS determined for the EXALT^TM Model D Single-Use Duodenoscope that the costs associated with the device were not already reflected in the device portions of APCs 5303 (Level 3 Upper GI Procedures) or 5331 (Complex GI Procedures) because there were no single-use duodenoscopes on the market previously so no operating cost data associated with such devices could be included in the historical OPPS claims data. Additionally, none of the costs associated with the device were reflected in the device portions of the applicable APCs. This is similarly reflected in the CMS transmittal 10541 dated December 31, 2020 where CMS stated, “we have determined that the costs associated with C1748 are not already reflected in APCs 5303 or 5331”.

In its comment to CMS, the applicant asserts that the Eluvia^TM system replaces a portion of the previous related devices and not all of previous related devices. This is further evidenced by the applicant's request for a partial device-related portion (that is, device offset) of $3,406.93. CMS has historically used a full device offset related to the applicable APC in the majority of cases when assessing the cost criterion; to our knowledge CMS has never utilized a partial device offset in this manner. If CMS desired to change the cost criterion evaluation it must do so through notice and comment rulemaking to provide ample notice and an opportunity for public comment. Therefore, we do not believe the use of a partial device offset, as the applicant has requested, would be consistent with CMS' application of the cost significance criterion specified at § 419.66(d). Because the applicant did not meet the second and third cost significance tests, we do not believe the Eluvia^TM system meets the cost significance criterion specified at § 419.66(d).

After consideration of the public comments we received and our review of the device pass-through application, we are not approving the Eluvia^TM system for transitional pass-through payment status in CY 2022 because the product does not meet the cost significance criterion.

(4) Cochlear^TM Osia® 2 System

Cochlear Americas submitted an application for a new device category for transitional pass-through payment status for the Cochlear^TM Osia® 2 System (hereinafter referred to as the Osia® 2 System) by the December 2020 quarterly deadline for CY 2022. The Osia® 2 System is a transcutaneous, active auditory osseointegrated device that replaces the function of the middle ear by providing mechanical energy to the cochlea. According to the applicant, the device consists of four components including: (1) An external sound processor, the Osia 2 Sound Processor; (2) the Osia OSI200 Implant Piezo Power^TM transducer; (3) the BI300 osseointegrated implant for anchoring and single point transmission; and (4) a fixation screw for attaching the OSI200 implant to the BI300 implant which is implanted in the skull.

The external sound processor captures environmental sounds and converts the sound signal into a digital signal transmitted as a radiofrequency. The external sound processor also contains a magnet and a battery (rechargeable 675 zinc air button 1.4Volt; 600 mA-hrs capacity). The magnets couple the external and internal components across the skin. The transducer (Piezo Power^TM) detects the radiofrequency signals after they pass through the intact skin and transforms the signal to vibrations, which are then transmitted to the bone-implanted fixation screw. The screw vibrates the skull bone (temporal portion) which stimulates the cochlea (inner ear) to transmit the information to the brain so that the vibrations are perceived as sounds. The implanted portion is 7.2 cm x 3 cm x 0.49 cm. The system has a fitting range of 55 dB sensory neural hearing loss. The applicant stated that unlike hearing aids, which make sounds louder, an auditory osseointegrated device, such as the Osia® 2 System can improve clarity of hearing and improve hearing at higher frequencies.

With respect to the newness criterion at § 419.66(b)(1), the Osia® 2 System received FDA 510(k) clearance on November 15, 2019, based on a determination of substantial equivalence to a legally marketed predicate device. The Osia® 2 System is intended for the following patients and indications: (1) Patients 12 years of age or older; (2) patients who have a conductive or mixed hearing loss and still can benefit from sound amplification. The pure tone average (PTA) bone conduction (BC) threshold (measured at 0.5, 1, 2, and 3 kHz) should be better than or equal to 55 dBHL; (3) Bilateral fitting of the Osia® 2 System is intended for patients having a symmetrically conductive or mixed hearing loss. The difference between the left and right sides' BC thresholds should be less than 10 dB on average measured at 0.5, 1, 2, and 3 kHz, or less than 15 dB at individual frequencies; (4) patients who have profound sensorineural hearing loss in one ear and normal hearing in the opposite ear (that is, single-sided deafness or “SSD”). The pure tone average air conduction hearing thresholds of the hearing ear should be better than or equal to 20 dB HL (measured at 0.5, 1, 2, and 3 kHz). The Osia® 2 System for SSD is also indicated for any patient who is indicated for an air-conduction contralateral routing of signals (AC CROS) hearing aid, but who for some reason cannot or will not use an AC CROS. Prior to receiving the device, it is recommended that an individual have experience with appropriately fitted air conduction or bone conduction hearing aids.

We received the application for a new device category for transitional pass-through payment status for the Osia® 2 System on December 1, 2020, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comments on whether the Osia® 2 System meets the newness criterion.

Comment: The applicant asserted that the Osia® 2 system is new because it received FDA clearance on November 15, 2019 and its predicate device received FDA clearance on July 3, 2019, both of which are within 3 years of December 1, 2020, the date on which we received the device pass-through application for the Osia® 2 System. The applicant asserted that the predicate to these devices, the BONEBRIDGE System, received FDA authorization on July 20, 2018 which is also within the newness period for transitional pass-through status.

Response: We appreciate the applicant's input and agree that the Osia® 2 system meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the Osia® 2 System is integral to the service provided, is used for one patient only, comes in contact with human skin, and is surgically implanted or inserted. The applicant also claimed that the Osia® 2 System meets the device eligibility requirements of § 419.66(b)(4) because it is not equipment, an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. We invited public comments on whether the Osia® 2 System meets the eligibility criteria at § 419.66(b).

We did not receive public comments in regard to whether the Osia® 2 system meets the eligibility criteria at § 419.66(b)(3) or § 419.66(b)(4), therefore we agree with the applicant that the Osia® 2 system meets the criteria of § 419.66(b).

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996.

The applicant stated that the Osia® 2 System differs significantly from the devices that were included in the previous category for auditory osseointegrated devices (L8690—Auditory osseointegrated device, includes all internal and external components) which was effective from effective from January 1, 2007 through December 31, 2008. The applicant claimed that the devices that were described by this category include a transducer/actuator and sound processor that is worn externally with the transducer/actuator connected to the skull by a percutaneous post or abutment that penetrates the skin. In these devices, the sound processor converts sound into a digital signal which the transducer/actuator converts to vibrations that are transmitted to the skull through the abutment. The vibrations are transmitted directly to the inner ear and are reproduced as sound.

The applicant stated that the Osia® 2 System is distinct from devices with a percutaneous connection between the transducer and the sound processor because the transducer/actuator for the Osia® 2 system is surgically implanted and has a magnetic transcutaneous attachment to the external sound processor. The applicant also claimed that the percutaneously coupled osseointegrated devices included in the previous device pass-through category convert sound to mechanical vibrations in the external sound processor/actuator, then transmit the vibrations to the internal components. The applicant claimed that the Osia® 2 system instead converts the sound to mechanical vibrations after it has reached the internal components. The applicant claimed that the technology to fully implant the transducer/actuator did not exist when the previous device pass-through category was established. The applicant proposed the device pass- through category descriptor “Auditory osseointegrated device, including implanted transducer/actuator with radiofrequency link to external sound processor”. The applicant stated that the BONEBRIDGE Bone Conduction Implant System, which also submitted a device pass-through application for CY 2022 and is described in this section under number (2) above, would also be described by the proposed additional category.

We stated in the CY 2022 OPPS/ASC proposed rule that we believe that the Osia® 2 system is described by L8690—Auditory osseointegrated device, includes all internal and external components. The applicant has noted differences between the Osia® 2 system and the devices that were described by L8690, specifically percutaneous, auditory osseointegrated devices, regarding the connection between the implanted transducer and the external audio processor (percutaneous abutment vs. transcutaneous magnetic attraction) however, we believe that there is a similar mechanism of action for all these devices specifically, vibratory stimulation of the skull to stimulate the receptors in the cochlea (inner ear). Further, we believe that the broad descriptor for L8690 of “Auditory osseointegrated device, includes all internal and external components” includes the applicant's device. In the CY 2022 OPPS/ASC proposed rule, we invited public comment on whether the Osia® 2 system meets the device category criterion.

Comment: We received multiple comments addressing § 419.66(c)(1) for both BONEBRIDGE and the Osia® 2 system. One commenter stated they do not support CMS' position that the BONEBRIDGE and Osia® 2 system should not be granted a new category, because these devices take much longer to implant surgically than percutaneous bone conduction implants, they are active sound processors, and they work differently than percutaneous devices like the BAHA or Oticon implants.

Another commenter who also disagreed with CMS that the BONEBRIDGE and Osia® 2 system are adequately described by L8690 stated that the BONEBRIDGE and Osia® 2 system are transcutaneous hearing implants, and that CMS should create a new HCPCS code that describes both the procedure and the implant because both are new. The commenter expressed their disappointment in what they described as CMS' continual resistance to conduct rulemaking specifically on Middle Ear Implants (MEIs) because they believe CMS should hear the opinions of clinical experts, physicians, and Medicare beneficiaries regarding the appropriateness of classifying MEIs as prosthetic implants.

A different commenter stated their support for CMS' conclusion in the proposed rule that BONEBRIDGE and Cochlear Osia® are appropriately described by a pass-through category previously in effect.

Two commenters stated that CMS must support the inclusion of middle ear implants in the prosthetic category. The commenters asserted that not including these devices denies beneficiaries access to all FDA-approved hearing prosthetics and discourages in new technology for the hearing impaired.

Response: We appreciate the input provided by these commenters. We have taken this information into consideration in our determination of the eligibility criterion at § 419.66(c)(1), discussed below. We note some of the comments, those addressing hearing prosthetics, are outside of the scope of this rule. Please refer to the above section (2) BONEBRIDGE where we summarize these comments in full.

Comment: One commenter stated that the pass-through category identified by CMS, L8690, does not provide an accurate description of the Osia® 2 system as it does not account for several material differences that exist between Osia (and other active auditory osseointegrated implant (AOI) systems) and the devices intended to be described by L8690. The commenter asserted that the mechanism by which the vibrations are generated and reach the skull are entirely different, which is reflected by the FDA device classification. The commenter asserted that L8690, developed in 2007, could not account for active devices.

Response: We appreciate the information provided by the commenter and have taken this into account in our determination of the § 419.66(c)(1) eligibility criterion, discussed below.

Comment: The applicant stated that L8690 does not describe active, transcutaneous systems like Osia® 2 and BONEBRIDGE. First, the applicant stated that L8690 did not extend to active, transcutaneous active osseointegrated implants (AOIs) when it was created in 2007 because the only osseointegrated implant at that time was passive and percutaneous. Second, the applicant, responding to CMS' statement, “that there is a similar mechanism of action for all these devices . . .” , stated that the mechanism by which the vibrations are generated and reach the skull are entirely different and can affect safety, clinical outcomes, and patient quality of life. The applicant asserted that the active nature of the Osia® 2 system, which diminishes skin-related complications associated with percutaneous devices and at the same time improves audiological outcomes, differs from passive systems which involve the transmission of mechanical vibrations from the external components to the internal components. As opposed to previous technologies, the applicant asserted that active systems incorporate a new mechanism of action that sends digital signals from the external sound processor to the internal components, which then convert a digital signal to a vibration directly at the point of bone contact, eliminating the need for percutaneous attachment. The applicant stated that although both active and passive systems ultimately generate a vibration to stimulate the cochlea, the way they do so and where the vibration is generated are entirely different. The applicant added that FDA created a new device classification for active implantable bone conducting hearing systems in response to BONEBRIDGE's application in 2018 (21 CFR 874.3340), which is specifically for active systems as opposed to that for passive systems (21 CFR 874.3300). The applicant stated that while they recognize that FDA and CMS classify devices differently for different purposes, they believe that the way FDA classifies bone conduction implants reinforces why CMS should distinguish active implantable bone conduction devices from passive, percutaneous systems for purposes of transitional device pass-through payment status.

The applicant next stated that in other situations, CMS has modified broadly worded device categories to recognize technological advances within a device class. The applicant noted that the descriptor for HCPCS code C1767—“Generator, neurostimulator (implantable)”—was modified to “Generator, neurostimulator (implantable), non-rechargeable” to create a new device pass-through category for HCPCS codes C1820 (Generator, neurostimulator (implantable), with rechargeable battery and charging system) and C1822 (Generator, neurostimulator (implantable), high frequency, with rechargeable battery and charging system).

Response: After consideration of the public comments we received, we agree there is no existing pass-through payment category that appropriately describes the Osia® 2 system. The Osia® 2 system device consists of an external processor that receives sound pressure energy and converts this to a radiofrequency signal which communicates with a surgically implanted subcutaneous transducer/actuator via a stud. The transducer/actuator converts this signal to mechanical vibrations that are transmitted to the skull and inner ear. As stated by the applicant, when the existing pass-through category, Auditory osseointegrated device (L8690), was issued in 2007, the technology to implant the transducer/actuator did not exist. Based on this information, we have determined that the Osia® 2 system meets the eligibility criterion at § 419.66(c)(1). Due to the similarity between the devices, we refer the reader to section IV(A)(2)(b)(2) of this rule for a similar discussion of the BONEBRIDGE.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines either of the following: (i) That a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (ii) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of FDA's Breakthrough Devices Program and has received FDA marketing authorization. With respect to the substantial clinical improvement criterion, the applicant stated that the Osia® 2 system represents a substantial clinical improvement because it provides a reduced rate of device-related complications compared to currently available treatments. The applicant submitted five references to retrospective case series that studied the long-term complications associated with percutaneous osseointegrated bone conduction hearing devices, specifically bone-anchored hearing aids. The applicant stated that complications associated with bone-anchored hearing aids include irritation and/or infection of the skin surrounding the abutment, skin flap necrosis, wound dehiscence, bleeding or hematoma formation, soft tissue overgrowth and persistent pain. Additionally, the applicant also submitted five references to clinical studies and case series involving the use of transcutaneous osseointegrated bone conduction hearing devices. Of these five references, three of these studies involved the use of the BONEBRIDGE device and have been previously discussed in this section, one study that involved the use of the BAHA Attract device, and one study that involved the use of the Osia® system, an earlier version of the Osia® 2 system.

In support of their claim that the Osia® 2 system reduced the rate of device-related complications compared to currently available treatments, the applicant submitted a multicenter prospective within-subject study conducted at five centers in Europe, Australia, and USA. This study investigated clinical performance, safety, and benefit of the Osia® system and included 51 adult subjects with mixed and conductive hearing loss (MHL/CHL, n = 37) and single-sided sensorineural deafness (SSD, n = 14). In regard to safety outcomes, patients experienced the following minor adverse events including pain (n = 7), numbness (n = 1), vertigo (n = 3), swelling (n = 3), tension implant site (n = 1), warmth at the SP site (n = 3), headache (n = 3), hematoma/bleeding (n = 2). One participant developed an implant-site infection three days after implantation, which subsequently developed into skin necrosis and dehiscence. The implant had to be removed 55 days after implantation.

In the CY 2022 OPPS/ASC proposed rule, we expressed concern that the applicant did not submit studies that involved the use of the Osia® 2 system to demonstrate substantial clinical improvement of the device. The applicant submitted one study that investigated the Osia® system that utilizes an earlier model of the device. We explained in the proposed rule that we were concerned that the evidence of substantial clinical improvement submitted by the applicant did not directly compare the Osia® 2 system to other currently available treatments, namely percutaneous or passive, transcutaneous auditory osseointegrated devices. Therefore, in the CY 2022 OPPS/ASC proposed rule we explained that we were concerned that we are unable to determine a substantial clinical improvement of the Osia 2 system as compared to existing devices. We stated that we would be interested in any additional studies that involve the use of the Osia® 2 system and compare the device to other currently available auditory osseointegrated devices. We invited public comments in the CY 2022 OPPS/ASC proposed rule on whether the Osia® 2 system meets the substantial clinical improvement criterion.

Comment: In response to our concerns about whether the Osia® 2 system meets the substantial clinical improvement criterion, one commenter stated that head-to-head comparisons are not a requirement for transitional pass-through status. The commenter added that because the Osia® 2 System and its predecessor system are substantially similar as determined by FDA, the clinical evidence for the predecessor system applies equally to the Osia® 2 System. The commenter asserted that the clinical evidence submitted by the applicant, as described by CMS in the CY 2022 OPPS/ASC proposed rule, supports that the Osia® 2 System is a substantial clinical improvement compared to percutaneous systems.

Response: We thank the commenter for the information and have taken it into consideration in our determination of whether the Osia® 2 System meets the substantial clinical improvement, discussed below.

Comment: The applicant submitted a comment in support of its position that the Osia® 2 System meets the substantial clinical improvement criterion. The applicant contended, based on the discussion in the CY 2022 OPPS/ASC proposed rule, that CMS does not appear to be concerned that there is insufficient evidence to conclude that active/transcutaneous systems are a substantial clinical improvement over passive/percutaneous systems. Rather, the applicant believes our concerns relate to the fact that evidence was submitted for Osia® 1 and not Osia® 2.

In response to CMS' concerns, the applicant stated that first, head-to-head trials are not a requirement for demonstrating substantial clinical improvement for purposes of qualifying for transitional pass-through device—status and would not be appropriate in this situation. First, the applicant stated that enrolling patients in a head-to-head trial in which the primary difference is expected to be adverse events associated with one treatment arm is extremely challenging, and it is unclear what additional data would be gained, particularly since the nature and frequency of device-related complications between passive percutaneous and transcutaneous devices is established and commonly reported in the literature. Second, the applicant stated that clinical studies involving the first Osia® device are applicable to the Osia® 2 System because the devices are substantially equivalent and only minor differences exist between the two versions of the device. The applicant notes that the FDA 510(k) clearance for the Osia® 2 system expressly noted clinical performance data did not reveal significant differences in hearing performance between either system and did not raise new issues of safety or effectiveness.

Next the applicant discussed two studies that involve the Osia® 2 system. The first study reported the surgical and audiological experience with the Osia 2 System based on a U.S. nationwide controlled market release (CMR) conducted between December 9, 2019 and February 14, 2020 involving 23 surgeons who performed 44 operations on 43 recipients. The applicant noted that no device-related complications were reported and five complications not associated with the Osia® 2 system were reported that were all successfully resolved. According to the applicant, the authors concluded that the Osia® 2 system, “. . . represents an important advance in hearing implant technology. Utilizing innovative digital piezoelectric stimulation, this active auditory osseointegrated implant (OSI) delivers high-power output and improved high frequency gain for optimizing speech perception while maintaining safety and engendering high patient satisfaction.”

The second study is a systematic review that, according to the applicant, provides evidence of substantial clinical improvement for both the Osia® and Osia® 2 systems. According to the applicant, the authors reported their findings from reviewing adverse event reports associated with active transcutaneous bone conduction implants (atBCls) in the Manufacturer and User Facility Device Experience (MAUDE) database of FDA. According to the applicant, after removing irrelevant reports and duplicates, 83 MDRs describing 91 adverse events (patient injuries and device malfunctions) were analyzed, all of which occurred postoperatively. The applicant asserted that the five most comment types of events, device malfunctions leading to a lack of conduction or hearing (n=26, 29 percent), infections (n=14, 15 percent), device malfunctions of intermittent or reduced hearing (n=12, 13 percent), and pain and wound formation (n=9 or 10 percent), accounted for 77 percent of all events reported. The applicant asserted that device malfunctions were predominantly associated with BONEBRIDGE (93 percent of all device malfunctions reported), while patient injuries such as infections were more commonly reported for Osia® (67 percent of all reported injuries). According to the applicant, the authors concluded that complications observed with active transcutaneous BCI use are similar to those with passive transcutaneous BCIs.

In regard to evidence submitted with their application, the applicant stated commonly reported adverse events which include ear inflammations, dizziness, and headache, are clearly not related to the implantation. Based on reported events in a comparison between the Osia® system and the Baha Connect System the applicant asserted that it is clear that the Osia® System has significantly lower rates of implantation-related adverse events than the passive/percutaneous system.

Response: We thank the applicant for their submission and the additional information provided. Because of the overlap between comments for the Osia® 2 system and BONEBRIDGE, we direct readers to section (IV)(2)(b)(2)(2) of this final rule with comment period.

We appreciate the commenters' responses on the Osia®2 system application. We disagree with the applicant's comment that commonly reported adverse events which include ear inflammations, dizziness, and headache, are clearly not related to the implantation. We note, the term “dizziness” can be used to explain a variety of symptoms that can include weakness, lightheadedness, unsteadiness and vertigo, and an argument against causality may be reasonable. “Headache”, however, is pain affecting the head or face. To dismiss a possible connection between the skull implantation procedure and a complaint of post-procedure headache does not seem reasonable.

While new evidence was submitted by the applicant which attempts to address substantial clinical improvement for the Osia® 2 system, we are unable to conclude that the device meets the substantial clinical improvement criterion. Specifically, we note that the results of a meta-analysis are informative, however without controlling for the differences across studies (for example, study design, sampling technique, etc.) we are unable to determine if the treatment effects seen are due to the Osia® 2 system or due to differences in study design. In regard to commenter's suggestion that a head-to-head analysis not being required for an assessment of substantial clinical improvement, we agree in part. While it may be the case that a direct head-to-head comparison may not always be feasible or appropriate, we acknowledge that this is the ideal manner in which to address comparisons between one technology and another. For example, CMS utilized meta-analyses and historical controls as evidence of substantial clinical improvement when robust critical efforts have been made to account for variations in study design ( i.e., confounding) in the former and comprehensive reviews to establish the validity of the latter. In regard to the second study discussed in the applicant's comment, we note that the small sample size of 43 recipients and 44 procedures may not be generalizable to a larger Medicare beneficiary population. Therefore, we are unable to determine a substantial clinical improvement of the Osia® 2 system as compared to existing devices.

After consideration of the public comments and additional information we have received, we are not approving the Osia® 2 system for transitional pass-through payment status in CY 2022 because the product does not meet the substantial clinical improvement criterion. Because we have determined that the Osia® 2 system does not meet the substantial clinical improvement criterion, we have not evaluated the cost criterion.

(5) Pure-Vu® System

Motus GI submitted an application for a new device category for transitional pass-through payment status for the Pure-Vu® System (Pure-Vu®) for CY 2022. The applicant asserted that the Pure-Vu® System helps to avoid aborted and delayed colonoscopy procedures due to poor visualization of the colon mucosa by creating a unique High Intensity, Pulsed Vortex Irrigation Jet that consists of a mixture of air and water to break-up fecal matter, blood clots, and other debris, and scrub the walls of the colon while simultaneously removing the debris through two suction channels. The applicant stated that the suction channels have a sensor to detect the formation of a clog in the channels, triggering the system to automatically purge and then revert to suction mode once the channel is clear. According to the applicant, this combination of the agitation of the fluid in the colon via the pulsed vortex irrigation and simultaneous removal of the debris allows the physician to visualize the colon and achieve a successful colonoscopy or other advanced procedure through the colonoscope even if the patient is not properly prepped and has debris either blocking the ability to navigate the colon or covering the colon wall obscuring the mucosa and any pathology that may be present. The applicant asserted that the constant volume suction pumps do not cause the colon to collapse, which allows the physician to continue to navigate the colon while cleansing and avoids the need to constantly insufflate the colon, which may be required with other colonoscopy irrigation systems.

The applicant stated that the Pure-Vu® System is comprised of a workstation that controls the function of the system, a disposable oversleeve that is mounted on a colonoscope and inserted into the patient, and a disposable connector with tubing (umbilical tubing with main connector) that provides the interface between the workstation, the oversleeve, and off the shelf waste containers.

The applicant explained that the workstation has two main functions: Cleansing via irrigation and evacuation, and acting as the user interface of the system. The applicant explained that the irrigation into the colon is achieved by an electrical pump that supplies pressurized gas (air) and a peristaltic pump that supplies the liquid (water or saline). According to the applicant, the pressurized gas and liquid flow through the “main connector” and are mixed upon entry into the umbilical tubing that connects to the oversleeve. The applicant explained that the gas pressure and flow are controlled via regulators and the flow is adjusted up or down depending on the cleansing mode selected. The applicant stated that a foot pedal connected to the user interface activates the main functions of the system so that the user's hands are free to perform the colonoscope procedure in a standard fashion.

The applicant stated that the evacuation mode (also referred to as suction) removes fecal matter and fluids out of the colon. The applicant noted that the evacuation function is active during cleansing so that fluid is inserted and removed from the colon simultaneously. The applicant explained that the evacuation pumps are designed in a manner that prevents the colon from collapsing when suctioning, which facilitates the ability to simultaneously irrigate and evacuate the colon. According to the applicant, during evacuation, the system continuously monitors the pressure in the evacuation channels of the oversleeve and if the pressure drops below pre-set limits the pumps will automatically reverse the flow. The applicant explained that the clog sensor triggers the system to automatically purge the material out of the channel and back into the colon where it can be further emulsified by the Pulsed Vortex Irrigation Jet, and then automatically reverts back into evacuation mode once the channel is cleared. The applicant stated that the evacuation (suction) that drains fecal matter and fluids out of the colon is generated by peristaltic pumps that can rotate in both directions, either to evacuate fluids and fecal matter from the colon through the evacuation tubes and into a waste container, or while in the reverse direction, to purge the evacuation tubes. The applicant claimed the suction created by this type of pump creates a constant volume draw of material from the colon and therefore prevents the colon from collapsing rapidly. According to the applicant, purging of evacuation tubes may be activated in two ways: The purging cycle is automatically activated when low pressure is noted by the evacuation-line sensor (it is also activated for the first 0.5 seconds when evacuation is activated to make sure the line is clear from the start); or a manual purge may be activated by the user by pushing the “manual purge” button on the foot pedal. The applicant claimed the pressure-sensing channel is kept patent by using an air perfusion mechanism where an electrical pump is used to perfuse air through the main connector and into the oversleeve, while the sensor located in the workstation calculates the pressure via sensing of the channel.

The applicant explained the Pure-Vu® System is loaded over a colonoscope and that the colonoscope with the Pure-Vu® Oversleeve is advanced through the colon in the same manner as a standard colonoscopy. The applicant stated that the body of the oversleeve consists of inner and outer sleeves with tubes intended for providing fluid path for the cleansing irrigation (2X), the evacuation of fluids (2X), the evacuation sensor (1X) and that the flexible head is at the distal end of the oversleeve and is designed to align with the colonoscope's distal end in a consistent orientation. The applicant explained that the distal cleansing and evacuation head contains the irrigation ports, evacuation openings, and a sensing port. According to the applicant, the system gives the physician the control to cleanse the colon as needed based on visual feedback from the colonoscope to make sure they have an unobstructed view of the colon mucosa to detect and treat any pathology. The applicant noted that since the Pure-Vu® System does not interfere with the working channel of the colonoscope, the physician is able to perform all diagnostic or therapeutic interventions in a standard fashion with an unobstructed field of view.

With respect to the newness criterion at § 419.66(b)(1), the Pure-Vu® System first received FDA 510(k) clearance on September 22, 2016 under 510(k) number K60015. Per the applicant, this initial device was very cumbersome to set up and required direct support from the company and therefore was not viable for a small company with limited resources to market the device. The applicant noted that the initial device could have been sold starting on January 27, 2017 when the first device came off the manufacturing line. Per the applicant, the device was allocated for clinical evaluations but 10 institutions throughout the country did purchase the device outside of any true clinical study, mostly based on the fact that physicians wanted to try the product prior to committing to a clinical trial. The applicant further noted that minor modifications were made to the Pure-Vu® System in additional 510(k) clearances dated December 12, 2017 and June 21, 2018. The current marketed Pure-Vu® System was then granted 510(k) clearance on June 6, 2019 under 510(k) number K191220. Per the applicant, this clearance changed the entire set-up of the device, redesigned the user interface, and reduced the size, among other changes. According to the applicant, this updated version was commercially available as of September 19, 2019.

Comment: In response to CMS' summary, the applicant stated that the Pure-Vu® System Generation 1 (Gen 1) received FDA 510(k) clearance in September 2016. The applicant added that the Gen 1 version of the system was used to gather clinical data using disposables sold at a discounted rate to one institution and five institutions in 2017 and 2018, respectively. According to the applicant, after receiving feedback from providers concerning the Gen 1 system, the company decided not to make the Gen 1 product available to the market. According to the applicant, the Generation 2 (Gen 2) version of the Pure-Vu® System obtained FDA 510(k) clearance in June 2019. The applicant clarified that no application for the Gen 1 device was submitted for pass-through payment in the outpatient setting and asserted that since only a few institutions purchased the device, the cost burden of the Gen 1 system is not factored into the current marketplace. The applicant stated that the Gen 2 version is the product for which the applicant is seeking transitional device pass-through status.

Response: We appreciate the commenter's input and agree that the Pure-Vu® System meets the newness criterion because we received its device pass-through application on September 1, 2020, which is within 3 years of the June 21, 2018, the date of FDA PMA.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, Pure-Vu® is integral to the service provided, is used for one patient only, comes in contact with human tissue, and is surgically inserted temporarily. The applicant also claimed that Pure-Vu® meets the device eligibility requirements of § 419.66(b)(4) because it is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. We invited public comments on whether Pure-Vu® meets the eligibility criteria at § 419.66(b).

We did not receive any comments on whether Pure-Vu® meets the eligibility criteria at § 419.66(b)(3) or § 419.66(b)(4). We agree with the applicant that Pure-Vu® device meets the criteria of § 419.66(b).

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We stated in the CY 2022 OPPS/ASC proposed rule that we have not identified an existing pass-through payment category that describes Pure-Vu®. We invited public comment on whether Pure-Vu® meets the device category criterion.

We did not receive any comments on whether Pure-Vu® meets the eligibility criteria at § 419.66(c)(1). We continue to believe that Pure-Vu® device meets the criteria of § 419.66(c)(1) because we have not identified an existing pass-through payment category that describes Pure-Vu®.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines either of the following: (i) That a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (ii) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization. The applicant stated that Pure-Vu® represents a substantial clinical improvement over existing technologies. With respect to this criterion, the applicant submitted studies that examined the impact of Pure-Vu® on endoscopic hemostasis outcomes, rebleeding occurrence, and mortality. We note that the applicant has applied for and was denied the New Technology Add-on Payment in the FY 2022 IPPS/LTCH proposed rule (86 FR 25299 through 25304).

According to the applicant, the Pure-Vu® System offers the ability to achieve rapid beneficial resolution of the disease process treatment by achieving rapid and full visualization of the colon, which will improve diagnostic yield and the effectiveness of treatment of diseases of the bowel. The applicant claimed that Pure-Vu® is indicated for use in emergent issues such as acute lower gastrointestinal (GI) bleeding, unknown abdominal pain, foreign body removal, chronic disease management, and preventive medicine such as screening and surveillance. The applicant states these procedures are typically performed using a colonoscope to visualize the colon and provide a conduit to deliver therapeutic treatments. According to the applicant, the current standard of care requires the colon to be cleansed to ensure the success of any procedure. The applicant asserts that in the case where pre-procedural preparations are not adequate to achieve proper visualization, current technology provides limited ability to remove debris from the colon during the procedure to facilitate the process. The applicant states that regardless of indication, the bowel preparation remains the constant across patients who may have a wide range of comorbidities which may limit patient tolerability. According to the applicant the consumption of a purgative and the dietary restriction to be on clear liquids for approximately 24 hours can be problematic for the diabetic and elderly populations.

In support of its application, the applicant submitted three outpatient clinical studies to demonstrate the Pure-Vu® System's capability to convert patients to adequate preparation where preparation was previously inadequate and the visualization was poor based on the Boston Bowel Preparation Scale (BBPS). In the first study, Perez J., et al. conducted an outpatient prospective pilot study using the Pure-Vu® System. The study observed 50 patients with poorly prepared colons undergoing colonoscopy at two outpatient clinical sites in Spain and Israel, respectively. The applicant claimed study patients underwent a reduced bowel preparation consisting of the following: No dried fruits, seeds, or nuts starting 2 days before the colonoscopy, a clear liquid diet starting 18 to 24 hours before colonoscopy, and a split dose of 20mg oral bisacodyl. The study found the number of patients with an adequate cleansing level (BBPS≥2 in each colon segment) increased significantly from 31 percent (15/49) prior to use of the Pure-Vu System (baseline) to 98 percent (48/49) after use of the Pure-Vu® System ( P < 0.001), with no serious adverse events reported.

In the second study provided by the applicant, van Keulen, et al. also conducted a single-arm, prospective study on 47 patients with a median age of 61 years in the outpatient setting in the Netherlands using the Pure-Vu® System. Within the study, cecal intubation was achieved in 46/47 patients. This multicenter feasibility study found that the Pure-Vu® System significantly improved the proportion of patients with adequate bowel cleansing from 19.1 percent prior to the use of the Pure-Vu® System to 97.9 percent after its use ( P < 0.001) and median BBPS score (from 3.0 [IQR 0.0-5.0] to 9.0 [IQR 8.0-9.0]).

In the third study provided by the applicant that directly evaluated the Pure-Vu® System in a clinical setting, Bertiger G., et al. performed a United States-based single center, prospective, outpatient study investigating regimes of reduced outpatient bowel preparations, which included low doses of over-the-counter laxatives, and eliminating the typical 24 hour clear liquid diet restriction, which was replaced by a low residue diet the day before the procedure. In this study, 46 of a possible 49 patients received a colonoscopy, 8 of which took the over-the-counter laxative (“MiraLAX arm”), 21 patients ingested two doses of 7.5oz Magnesium Citrate (MgC) each taken with 19.5oz of clear liquid (“Mag Citrate 15oz arm”), and 18 patients ingested 2 doses of 5oz MgC taken with 16oz of clear liquid (“Mag Citrate 10oz arm”). Of the 46 subjects, 59 percent were males and there was a mean age of 61±9.48 years. The study found that each of the 3 study arms revealed significant differences in BBPS score between the baseline preparation and post-cleansing via Pure-Vu®. All the preparation regimens resulted in inadequately prepped colons. Comparing the mean BBPS rating for both pre- and post- Pure-Vu® use, the MiraLAX arm was inferior ( P < 0.05) to both Mag Citrate arms. For the MiraLAX arm, the mean BBPS Score improved from 1.50 to 8.63. For the Mag Citrate 15oz arm, the mean BBPS score improved from 3.62 to 8.95. For the Mag Citrate 10oz arm, the mean BBPS Score improved from 4.76 to 9.0.

The applicant also provided a self-sponsored, U.S.-based, multicenter, prospective, single arm study in the inpatient setting, analyzing 94 patients, 65 of which (68 percent) had a GI bleed. Of the 94 patients (41 percent females/59 percent males), the mean age was 62 years. According to the applicant, the study's primary endpoint was the rate of improved bowel cleansing level from baseline to after use of the Pure-Vu® System per colon segment using the BBPS. The BBPS score was recorded for each colorectal segment (left colon, transverse colon, and right colon segments) both prior to (baseline) and after colon cleansing with the Pure-Vu® System. An adequate cleansing level was a priori defined as a BBPS ≥2 in all evaluated colon segments. The study found that in 79 of the 94 patients (84 percent), the physician was able to successfully diagnose or rule out a GI bleed in the colon per the patients' colonoscopy indication using only the Pure-Vu® System. The analysis showed statistically significant visualization improvement in each colon segment after Pure-Vu® use with a mean BBPS score in the descending colon, sigmoid, and rectum of 1.74 pre-Pure-Vu® use and 2.89 post-Pure-Vu® use ( P < 0.001); in the transverse colon of 1.74 pre-Pure-Vu® use and 2.91 post Pure-Vu® use ( P < 0.001); and the ascending colon and cecum of 1.50 pre-Pure-Vu® use and 2.86 post Pure-Vu® use ( P < 0.001). The study found only 2 percent of cases where the diagnosis could not be achieved due to inadequate preparation. Overall, the 84 (89.4 percent) patients that received the Pure-Vu® System within the study improved BBPS scores from 38 percent (95 percent CI 28, 49) to 96 percent (95 percent CI 90, 99) in segments evaluated. The study noted one procedure related perforation which required surgical repair, and the patient was discharged 48 hours post operatively and recovered fully.

In addition to the previously discussed studies, the applicant also submitted two case studies to highlight the various clinical presentations of lower gastrointestinal bleed (LGIB) with the use of the Pure-Vu® System. In the first case, the applicant described a patient with a history of scleroderma and chronic constipation who was referred for a surveillance colonoscopy after a prior endoscopic mucosal resection due to a large polyp. The applicant states this was the patient's third colonoscopy in twelve months due to a history of poor preparation in the prior exams. Despite an aggressive prep regime, the applicant states the patient still had solid stool and debris throughout the colon. The applicant states the Pure-Vu® system was used extensively and the physician was able to fully cleanse the colon during which the physician was able to uncover a poorly defined over 1 cm sessile serrated polyp that could not be appreciated before cleansing with Pure-Vu®. The applicant states a successful polypectomy was performed.

In the second case, the applicant described a patient presenting with hemorrhagic shock and acute kidney injury six days after a colonoscopy where nine polyps were removed, including two polyps greater than 2 cm. The applicant states angiographic control of the bleeding was not considered because of the patient's acute kidney injury with a rising creatinine. According to the applicant, the physician elected to use Pure-Vu® to immediately exam the patient without any preparation doing a bedside colonoscopy in the ICU. The applicant states, the physician was able to cleanse the colon, locate the source of the bleed and create hemostasis by placing two clips on the bleed. According to the applicant, the entire colon was visualized to confirm there were no other sources of bleeding, the physician was able to downgrade the patient out of the ICU that same day, and the patient was discharged from the hospital the following day.

The applicant concludes that based on the provided evidence, Pure-Vu® has the ability to improve adenoma detection rates which can reduce the rate of colorectal cancer (CRC) and diagnose and treat emergent patients in a more expeditious fashion by removing the need to have successful pre-procedural preparation that can take time and be very burdensome to the most needy and fragile patients. According to the applicant, Pure-Vu® can minimize the number of aborted and early repeat colonoscopies that carry inherent risks and add unnecessary costs to the healthcare system.

Based on the evidence submitted with the application, we explained in the CY 2022 OPPS/ASC proposed rule that we have the following observations. While the studies provided in support of the Pure-Vu® System measure improvement of bowel preparation using the BBPS, the applicant did not provide data indicating that the improved BBPS directly leads to improved clinical outcomes (for example, reduction of blood loss in LGIB or reduction of missed polyps) based on use of the Pure-Vu® System. Additionally, we noted that the applicant has not provided any studies comparing the efficacy of the Pure-Vu® System to other existing methods or products for irrigation in support of its claims that the product is superior at removing debris from the colon while simultaneously preventing the colon from collapsing, allowing use of the working channel, or improving outcomes. Furthermore, we noted that many of the provided studies were based on small sample sizes, which may affect the quality and reliability of the data provided in support of the technology.

In addition, we noted in the CY 2022 OPPS/ASC proposed rule that it is unclear whether this device would have less utility in the outpatient setting as compared to the inpatient setting, given that patients will typically have time to adequately prepare for scheduled outpatient procedures. We further noted that this device may not be broadly applicable in the outpatient setting and are solicited comment on situations in which this device would have a substantial clinical benefit for patients or subpopulations of patients. For instance, in the outpatient setting, we explained that we are not certain that it would be appropriate to use this device in the case of a patient with a poorly prepared bowel as opposed to simply rescheduling the appointment.

Lastly, we noted that the Helmut et al. study noted one procedure-related perforation which required surgical repair and we invited public comments regarding the concern of procedure-related perforation. Based upon the evidence presented, we invited public comments on whether the Pure-Vu® meets the substantial clinical improvement criterion.

Comment: One commenter stated that Pure-Vu® is a unique device with the ability to potentially change a patient's course of care due to its ability to create high-quality colonoscopies in patients that are unable to fully prep for an exam. The commenter stated that they want to make sure that patients who suffer from functional GI and motility disorders which affect the lower GI tract can get the surveillance and care that they need and Pure-Vu® can directly impact this. The commenter asserted there is a direct correlation between being able to provide a high-quality colonoscopy where the more the colon mucosa can be observed and the ability to better diagnose patients.

Response: We appreciate the information provided by the commenter and have taken this into consideration in making our final determination, discussed below.

Comment: In support of the substantial clinical improvement criterion, the applicant submitted a comment. The applicant responded to CMS' concerns in the proposed rule related to the Boston Bowel Preparation Score (BBPS) and stated that this is a measure of the amount of the colon mucosa that can be visualized and is independent of a particular technology or method used to clear fecal matter or debris. The applicant asserted that if significant areas of the colon tissue cannot be visualized due to retained debris, the endoscopist will miss any pathology covered. The applicant stated that this is especially critical as sessile serrated adenomas are pre-cancerous flat lesions that do not protrude from the colon wall making them impossible to detect in the presence of debris. According to the applicant, multiple publications validating the BBPS as a reliable measurement to predict adenoma and/or polyps have been published, for example: The polyp detection percentage in inadequate (BBPS 0, 1) and adequate (BBPS 2, 3) colon prep were 6 percent and 27 percent (p < 0.0001), respectively and, the polyp detection rate was 40 percent for patients with a BBPS score >5 compared to 24 percent for patients with a BBPS score of <5 (p < 0.02) with an increased percentage of recommendation for repeat procedures in the later group. The applicant further described the Aronchick scale and the Ottawa score which are other validated methods available to assess colon visualization. According to the applicant, these cited studies were based on current standard of care for performing colonoscopy. The applicant stated that despite use of the current standard of irrigation and suction through the working channel of a colonoscope, these patients continued to have inadequate bowel preparation over 7 percent. The applicant asserted that to the extent there is a reduction in the number of patients that have an inadequate/poor preparation, as noted by a low BBPS score, the endoscopist will improve the overall adenoma detection rate.

According to the applicant, there is a clear relationship between adenoma detection rates to the risk of receiving a diagnosis of an interval cancer as evidenced in an evaluation of 314,872 patients. Citing the article, the applicant states that, “The risk of interval cancer decreased approximately linearly with increasing adenoma detection rates, without evidence of a threshold effect within the observed range of rates. With adenoma detection rate modeled as a continuous variable, each 1.0 percent increase in the rate predicted a 3.0 percent decrease in the risk of interval cancer (hazard ration, 0.97;95 percent CI, 0.96 to 0.98).” According to the applicant, this study shows the clinical benefit to the patient population with low adenoma detection rates due to inadequate preparation, especially in high risk colorectal cancer patients who present with GI bleeding or a positive screening test, may be significant.

The applicant next responded to CMS' concerns about the sample sizes from the studies used in support of Pure-Vu®. In response, the applicant performed a meta-analysis of the four studies which were performed at different centers with different investigators to minimize the bias of any physician or institution. According to the applicant, for outpatient studies, the overall rate of adequate colonoscopy preparation was 99.4 percent compared to 25.3 percent for baseline; and the overall difference was 74.1 percent (95 percent CI = 60.3 percent, 87.8 percent; p < 0.0001); the inpatient study had a lower overall success rate in the Pure-Vu® System (86.2 percent) but the impact of the Pure-Vu® was still dramatic with the overall rate of adequate colonoscopy preparation of 95.0 percent compared to 28.2 percent for baseline; and the overall difference was 66.8 percent (95 percent CI = 55.5 percent, 78.0 percent; p < 0.0001).

Next the applicant responded to CMS' concern that the benefit of Pure-Vu® in the outpatient setting may be limited because patients have more time to prepare for the colonoscopy. According to the applicant, there are many patients that the physician may pre-procedurally deem ready for the examination but upon insertion of the colonoscope the patient is found to be inadequately prepared to receive a quality examination. The applicant stated that, rather than terminate the procedure at this point, an endoscopist can remove the colonoscope and load the Pure-Vu® and complete the examination. The applicant added that in the studies used in the meta-analysis, Pure-Vu® was able to convert inadequate preparation to adequate even in patients with a BBPS of 0 in one or more segments of the colon while the patient was on the table and under sedation, thereby avoiding another procedure. The applicant asserted that in addition to the risks associated with a repeat procedure, approximately 54 percent of patients do not come back for the repeat examination which places these patients at a higher risk for CRC. The applicant added that since history of inadequate preparation is one of the main indicators of poor preparation along with advanced age, those with motility issues, patients allergic to the PEG (key ingredient in the purgatives) and those with comorbidities there is no guarantee the follow-up colonoscopy will be successful.

Next the applicant addressed CMS' concern that there was no data to support that Pure-Vu® minimizes the colon collapsing during suctioning of debris while allowing use of the working channel of the scope. The applicant asserted that the provision of a pulsed mixture of air and fluid to break up and facilitate removal of adherent films of fecal matter from the mucosal lining of the colon, at a much higher energy level than irrigation through a scope, allows the endoscopist to simultaneously suction the debris, which is not possible through a scope with only one working channel. The applicant stated, the simultaneous action of pumping water and air into the colon while suctioning out debris inherently reduces the likelihood that the colon will collapse.

Lastly, in response to CMS' concern related to one procedure-related perforation, the applicant stated that this study focused on the inpatient population which is known to be at higher risk for perforation than the outpatient population. The applicant stated that this patient was discharged 48 hours post operatively and fully recovered with no additional clinical sequelae. The applicant asserted that inpatient cases undergoing colonoscopy are a high risk for perforation with a rate of approximately 1 in 500, which is more than two times higher than the outpatient population. The applicant stated that since the Helmut paper they have developed the Gen 2 Pure-Vu® and have received no adverse reports in the last 18 months even with increased utilization across multiple institutions.

Response: We appreciate the comment in support of the clinical benefits of the Pure-Vu® system. As we stated in the FY 2022 IPPS/LTCH final rule (86 FR 45056), we continue to have concerns regarding the substantial clinical improvement criterion. In response to commenters' assertion that there is a direct correlation to being able to provide high-quality colonoscopy where the more the colon mucosa can be observed and the ability to better diagnose patients, we agree but are aware that correlation is not causation. While these data are correlated, without data testing this relationship (for example, the Pure-Vu® system and patient outcomes such as adenoma detection rates), we cannot be certain this relationship is true and not spurious or mediated by other factors. We note the further input provided by the applicant concerning the validity of the BBPS and agree that this is likely a well validated scoring tool. However, we remain concerned that the studies provided in support of the Pure-Vu® System measure improvement of bowel preparation using the BBPS but do not provide data indicating that the improved BBPS directly leads to improved clinical outcomes. In addition, the studies did not demonstrate outcomes in the emergent situations the Pure-Vu® System is intended to address. While an additional study provided by the applicant in their comment indicated a general link between improved BBPS and advanced adenoma detection rates, we note that the study occurred in patients undergoing screening colonoscopy, and did not include the use of the Pure-Vu® system. We also remain concerned about the lack of studies comparing the Pure-Vu® System to other existing methods or products for irrigation in support of its claims that the product is superior at removing debris from the colon while simultaneously preventing the colon from collapsing, allowing use of the working channel, or improving outcomes.

After consideration of the public comments we received and our review of the device pass-through application, we are not approving the Pure-Vu® system for transitional pass-through payment status in CY 2022 because the product does not meet the substantial clinical improvement criterion. Because we have determined that the Pure-Vu® system does not meet the substantial clinical improvement criterion, we are not evaluating whether the device meets the cost criterion.

(6) Xenoscope^TM

Xenocor Inc. submitted an application for a new device category for transitional pass-through payment status for the Articulating Xenoscope Laparoscope (hereinafter referred to as the Xenoscope^TM) by the March 2021 quarterly deadline for CY 2022. The applicant described the Xenoscope^TM as a disposable laparoscope which consists of a high-definition camera chip on the tip of a composite shaft, paired with led lights with a handle comprised of a clamshell design and made with molded plastic. The applicant stated that the Xenoscope^TM provides visualization in the abdominal and thoracic cavities through small, minimally invasive incisions for diagnostic and therapeutic laparoscopic procedures in a similar fashion to established, reusable versions of laparoscopes. It is paired with an image processing unit, the Xenobox, that can plug into any HD monitor to display anatomy in the abdomen, pelvis or chest. The Xenobox uses pre-installed firmware that is upgradable.

The applicant claimed that the Xenoscope^TM is the first disposable laparoscope. The applicant also claimed that the use of the Xenoscope^TM reduces the number of cords in the operating room, eliminates intraoperative fogging and associated image compromise and eliminates up-front capital expenditures associated with reusable laparoscopes.

With respect to the newness criterion, the Xenoscope^TM received FDA 510(k) clearance on January 27, 2020, based on a determination of substantial equivalence to a legally marketed predicate device. The Xenoscope^TM is indicated for use in diagnostic and therapeutic procedures for endoscopy and endoscopic surgery within the thoracic and peritoneal cavities including the female reproductive organs. We received the application for a new device category for transitional pass-through payment status for the Xenoscope^TM on August 6, 2020, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comments in the CY 2022 OPPS/ASC proposed rule on whether the Xenoscope^TM meets the newness criterion.

We did not receive any comments with respect to the newness criterion.

We agree with the applicant that the Xenoscope^TM meets the newness criterion because we received its device pass-through application on August 6, 2020, which is within 3 years of January 27, 2020, the date of FDA 510(k) clearance.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the use of the Xenoscope^TM is integral to the service, is used for one patient only, comes in contact with human skin, and is surgically implanted or inserted into the patient. Specifically, the applicant explained that the Xenoscope^TM is plugged into the Xenobox image processing unit (which is connected to an HD monitor and an A/C power source). A surgeon then makes a small incision and a trocar (tube-like device with a seal to maintain abdominal pressure) is inserted to gain access to the body cavity. The Xenoscope^TM is then inserted through the trocar in order to provide a full view of the anatomy for diagnostic and therapeutic procedures.

The applicant also claimed the Xenoscope^TM meets the device eligibility requirements of § 419.66(b)(4) because it is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. We invited public comments on whether the Xenoscope^TM meets the eligibility criteria at § 419.66(b).

We did not receive any comments in regard to the eligibility criteria at § 419.66(b). We agree with the applicant and believe that the Xenoscope^TM meets the eligibility criterion at § 419.66(b)(3) and (4).

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. The applicant described the Xenoscope^TM as disposable laparoscope. The applicant reported that it does not believe that the Xenoscope^TM is described by an existing category and requested category descriptor “Single-use laparoscopes.” The applicant also stated that the currently existing category, C1748—Endoscope, single-use (that is, disposable), upper gi, imaging/illumination device (insertable), did not describe this device because it is limited to single-use duodenoscopes inserted orally, to reach the small intestine versus minimally invasive abdominal surgery (laparoscopy). We stated in the CY 2022 OPPS/ASC proposed rule that we have not identified an existing pass-through payment category that is applicable to the Xenoscope^TM . We invited public comment on whether the Xenoscope^TM meets the device category criterion.

We did not receive any comments in regard to the eligibility criteria at § 419.66(c). We continue to believe that the Xenoscope^TM meets the eligibility criterion at § 419.66(c)(1) because we have not identified an existing pass-through payment category that is applicable to the Xenoscope^TM .

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines either of the following: (i) That a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (ii) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization.

With respect to the substantial clinical improvement criterion, the applicant stated that the Xenoscope^TM provides a substantial clinical improvement over reusable laparoscopes because of its single-use nature. Specifically, the applicant claimed that because the Xenoscope^TM is a disposable, single-use device, the Xenoscope^TM provides for less risk of scope-related cross-contamination and infection from improperly handled or reprocessed scopes compared to traditional laparoscopy.

The applicant also claimed that the Xenoscope^TM includes a fog-free scope and provides a substantial clinical improvement over currently available laparoscopes which, according to the applicant, fog often, and can put patients at risk for surgical errors and more time under anesthesia. Additionally, the applicant claimed that the Xenoscope^TM reaches 104 degrees Fahrenheit at the tip, eliminating risk of patient burns and drape fires associated with hotter Xenon bulbs used in currently available laparoscopes.

Lastly, that applicant stated that there can be significant economic benefits through the use of the Xenoscope^TM due to the processing costs and up-front capital expenditures required for reusable laparoscopes.

In support of the assertion that the Xenoscope^TM reduces the risk of cross-contamination from improperly cleaned reusable laparoscopic instruments, the applicant referenced two articles. The first article was published in 2002 and describes the problem of surgical site infection (SSI), the Centers for Disease Control (CDC) guidelines for SSI, and some cases of SSI related to improper cleaning of reusable laparoscopic instruments. The article also discusses practices to avoid these infections. The applicant also submitted a draft of a manuscript titled “Novel Laparoscopic System for Quality Improvement and Increased Efficiency” that summarizes some of the evidence that laparoscopy, in general, is superior to open surgical approaches in terms of pain management and infection risk.

In support of the claim that the Xenoscope^TM eliminates the risk of patient burns and drape fires associated with Xenon bulbs used by currently available laparoscopes, the applicant submitted two articles. The first was an article published in 2011 that discusses the problem of laparoscopic related burn injuries and a potential solution using Active Electrode Monitoring (AEM). AEM instruments reportedly use a “shielded and monitored” design to prevent the risk of stray energy burn injury from insulation failure and capacitive coupling. According to the article, the AEM technology is currently licensed by Intuitive Surgical's da Vinci® Surgical Systems. The applicant does not compare the Xenoscope^TM to AEM technology in terms of burn injury reduction. The second article examined the variation and extent of thermal injuries that could be induced by laparoscopic light sources to porcine tissue. In the study, the maximum temperature at the tip of the optical cable varied between 119.5 degrees C and 268.6 degrees C. When surgical drapes were exposed to the tip of the light source, the time to char was 3-6 seconds. The degree and volume of injury increased with longer exposure times, and significant injury was recorded with the optical cable 3 mm from the skin.

In support of the claim that there could be significant economic benefits realized through the use the Xenoscope^TM compared to reusable laparoscopes, the applicant also referenced the manuscript entitled “Novel Laparoscopic System for Quality Improvement and Increased Efficiency”. In this study, a three-page survey was created to collect data regarding laparoscope-related practices and costs. The survey was completed by three different institutions, including an ambulatory surgery center (ASC), a rural hospital and a suburban hospital. The sites provided the capital equipment cost required at the time of purchase at their facility which ranged from $837,184 to $2,786,348. The average cost per use for one surgical procedure involving a reusable laparoscope was $1,019.24 across the three institutions.

We stated in the CY 2022 OPPS/ASC proposed rule that we are concerned that the application and the articles submitted as evidence of substantial clinical improvement discuss potential adverse effects from laparoscopic procedures, but do not appear to directly show any clinical improvement that result from the use of the Xenoscope^TM . The applicant has provided evidence which seems to rely on indirect inferences from other sources of data. The articles provided did not involve the clinical use of the Xenoscope^TM and did not compare the device to an appropriate comparator, such as a reusable laparoscope. Therefore, we stated that it is difficult to determine whether the Xenoscope^TM offers substantial clinical improvement over standard, reusable laparoscopes based on the information provided. In order to demonstrate substantial clinical improvement over currently available treatments, we consider supporting evidence, preferably published peer-reviewed clinical trials, that shows improved clinical outcomes, such as reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process compared to the standard of care.

We invited public comment on whether the Xenoscope^TM meets the substantial clinical improvement criterion.

Comment: One commenter stated their opposition to the use of HCPCS code 58570 (Tlh uterus 250 g or less) in conjunction with the Xenoscope^TM . The commenter stated that multiple searches in PubMed did not produce evidence of use or clinical improvement for gynecologic laparoscopic procedures, including HCPCS code 58570 (Tlh uterus 250 g or less). The commenter asserted that Obstetrician-gynecologists and gynecologic oncologists are the primary billers of 58570 and employ laparoscopy for many other surgeries such as tubal ligation and hysterectomy, positioning them as potential high-utilizers of new devices such as the Xenoscope^TM . The commenter stated their concern for the unintended consequences of promoting the payment of a device for which a substantial clinical improvement in gynecologic surgery is undetermined.

Response: We appreciate the input from the commenter and we have noted the lack of data demonstrating evidence of use or clinical improvement for gynecologic laparoscopic procedures. We refer the commenter to our final response and determination regarding the substantial clinical improvement criterion below for a discussion of this concern. However, we note that the indication for use as stated by the FDA in the 510(k) clearance letter is, “The Articulating Xenoscope^TM is intended to be used in diagnostic and therapeutic procedures for endoscopy and endoscopic surgery within the thoracic and peritoneal cavities including the female reproductive organs.” Given the role of the FDA in defining device indications, we believe the device is appropriately described by HCPCS 58570.

Comment: A commenter representing Xenocor, Inc. stated that the safety profile for patients could be improved in the following ways: (1) Cross-contamination for the Xenoscope^TM is not possible; (2) the Xenoscope^TM has a top temperature of 129 degrees Fahrenheit where one of the most frequent causes of operating room fires and burns are traditional, reusable laparoscopes which often exceed 350 degrees Fahrenheit; (3) the Xenoscope^TM 's composite shaft is non-conductive which avoids risks with traditional laparoscopes which can arc stray current when using monopolar electrocautery where the scope acts as an antenna and burns adjacent structures; and (4) the Xenoscope^TM eliminates fog and sees better through smoke and steam than any currently marketed resuables.

We also received multiple comments stating general support for the Xenoscope^TM . Two of the commenters stated that the Xenoscope^TM reaches a temperature of 129 °F, as opposed to the 350 °F reached by light cords which can cause burns or patient injury, is fully shielded and will not cause stray energy burns or arcing issues that exist with other like products, its single-use nature ensures complete sterility and consistent image quality due to the new out of the box feature with each use, and the fog-free picture helps to ensure a consistent clear visualization of critical anatomy.

One commenter stated the benefits of the Xenoscope^TM are critical to both patient safety and cost control. Another commenter stated that having a disposable scope would enable surgery to be done more easily in a wider variety of places while also eliminating many problems associated with traditional scopes. Another commenter added that the ability to use Xenoscope^TM with any USB enabled video device obviates the need for expensive auxiliary light sources, video drivers, etc.

Response: We thank the commenters for their input. We agree that improved patient safety and a reduction in complications are clinical outcomes that may represent a substantial clinical improvement. However, we remain concerned that we did not receive any data to demonstrate improved outcomes using the Xenoscope^TM . Further, we remain concerned that the applicant did not provide any comparison to existing technologies such as reusable scopes to demonstrate an improvement in clinical outcomes. Lastly, we note that the cost effectiveness of a technology does not substantially improve the diagnosis or treatment of a disease and therefore is not relevant to the discussion of substantial clinical improvement.

After consideration of the public comments we received and our review of the device pass-through application, we are not approving the Xenoscope^TM for transitional pass-through payment status in CY 2022 because the product does not meet the substantial clinical improvement criterion. Because we have determined that the Xenoscope^TM does not meet the substantial clinical improvement criterion, we are not evaluating whether the device meets the cost criterion.

B. Device-Intensive Procedures

1. Background

Under the OPPS, prior to CY 2017, device-intensive status for procedures was determined at the APC level for APCs with a device offset percentage greater than 40 percent (79 FR 66795). Beginning in CY 2017, CMS began determining device-intensive status at the HCPCS code level. In assigning device-intensive status to an APC prior to CY 2017, the device costs of all the procedures within the APC were calculated and the geometric mean device offset of all of the procedures had to exceed 40 percent. Almost all of the procedures assigned to device-intensive APCs utilized devices, and the device costs for the associated HCPCS codes exceeded the 40-percent threshold. The no cost/full credit and partial credit device policy (79 FR 66872 through 66873) applies to device-intensive APCs and is discussed in detail in section IV.B. of the CY 2022 OPPS/ASC proposed rule (86 FR 42112 through 42114). A related device policy was the requirement that certain procedures assigned to device-intensive APCs require the reporting of a device code on the claim (80 FR 70422) and is discussed in detail in section IV.B.3 of the CY 2022 OPPS/ASC proposed rule (86 FR 42114). For further background information on the device-intensive APC policy, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70421 through 70426).

a. HCPCS Code-Level Device-Intensive Determination

As stated earlier, prior to CY 2017, under the device-intensive methodology we assigned device-intensive status to all procedures requiring the implantation of a device that were assigned to an APC with a device offset greater than 40 percent and, beginning in CY 2015, that met the three criteria listed below. Historically, the device-intensive designation was at the APC level and applied to the applicable procedures within that APC. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658), we changed our methodology to assign device-intensive status at the individual HCPCS code level rather than at the APC level. Under this policy, a procedure could be assigned device-intensive status regardless of its APC assignment, and device-intensive APC designations were no longer applied under the OPPS or the ASC payment system.

We believe that a HCPCS code-level device offset is, in most cases, a better representation of a procedure's device cost than an APC-wide average device offset based on the average device offset of all of the procedures assigned to an APC. Unlike a device offset calculated at the APC level, which is a weighted average offset for all devices used in all of the procedures assigned to an APC, a HCPCS code-level device offset is calculated using only claims for a single HCPCS code. We believe that this methodological change results in a more accurate representation of the cost attributable to implantation of a high-cost device, which ensures consistent device-intensive designation of procedures with a significant device cost. Further, we believe a HCPCS code-level device offset removes inappropriate device-intensive status for procedures without a significant device cost that are granted such status because of their APC assignment.

Under our existing policy, procedures that meet the criteria listed in section IV.B.1.b. of the CY 2022 OPPS/ASC proposed rule (86 FR 42112 through 42114) are identified as device-intensive procedures and are subject to all the policies applicable to procedures assigned device-intensive status under our established methodology, including our policies on device edits and no cost/full credit and partial credit devices discussed in sections IV.B.3. and IV.B.4. of the CY 2022 OPPS/ASC proposed rule, respectively (86 FR 42114 thorough 42115).

b. Use of the Three Criteria To Designate Device-Intensive Procedures

We clarified our established policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR 52474), where we explained that device-intensive procedures require the implantation of a device and additionally are subject to the following criteria:

• All procedures must involve implantable devices that would be reported if device insertion procedures were performed;
• The required devices must be surgically inserted or implanted devices that remain in the patient's body after the conclusion of the procedure (at least temporarily); and
• The device offset amount must be significant, which is defined as exceeding 40 percent of the procedure's mean cost.

We changed our policy to apply these three criteria to determine whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66926), where we stated that we would apply the no cost/full credit and partial credit device policy—which includes the three criteria listed previously—to all device-intensive procedures beginning in CY 2015. We reiterated this position in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), where we explained that we were finalizing our proposal to continue using the three criteria established in the CY 2007 OPPS/ASC final rule with comment period for determining the APCs to which the CY 2016 device intensive policy will apply. Under the policies we adopted in CYs 2015, 2016, and 2017, all procedures that require the implantation of a device and meet the previously described criteria are assigned device-intensive status, regardless of their APC placement.

2. Device-Intensive Procedure Policy for CY 2019 and Subsequent Years

As part of our effort to better capture costs for procedures with significant device costs, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58944 through 58948), for CY 2019, we modified our criteria for device-intensive procedures. We had heard from stakeholders that the criteria excluded some procedures that stakeholders believed should qualify as device-intensive procedures. Specifically, we were persuaded by stakeholder arguments that procedures requiring expensive surgically inserted or implanted devices that are not capital equipment should qualify as device-intensive procedures, regardless of whether the device remains in the patient's body after the conclusion of the procedure. We agreed that a broader definition of -device-intensive procedures was warranted, and made two modifications to the criteria for CY 2019 (83 FR 58948). First, we allowed procedures that involve surgically inserted or implanted single-use devices that meet the device offset percentage threshold to qualify as device-intensive procedures, regardless of whether the device remains in the patient's body after the conclusion of the procedure. We established this policy because we no longer believe that whether a device remains in the patient's body should affect a procedure's designation as a device-intensive procedure, as such devices could, nonetheless, comprise a large portion of the cost of the applicable procedure. Second, we modified our criteria to lower the device offset percentage threshold from 40 percent to 30 percent, to allow a greater number of procedures to qualify as device-intensive. We stated that we believe allowing these additional procedures to qualify for -device-intensive status will help ensure these procedures receive more appropriate payment in the ASC setting, which will help encourage the provision of these services in the ASC setting. In addition, we stated that this change would help to ensure that more procedures containing relatively high-cost devices are subject to the device edits, which leads to more correctly coded claims and greater accuracy in our claims data. Specifically, for CY 2019 and subsequent years, we finalized that—device-intensive procedures will be subject to the following criteria:

• All procedures must involve implantable devices assigned a CPT or HCPCS code;
• The required devices (including single-use devices) must be surgically inserted or implanted; and
• The device offset amount must be significant, which is defined as exceeding 30 percent of the procedure's mean cost (83 FR 58945).

In addition, to further align the device-intensive policy with the criteria used for device pass-through payment status, we finalized, for CY 2019 and subsequent years, that for purposes of satisfying the device-intensive criteria, a device-intensive procedure must involve a device that:

• Has received FDA marketing authorization, has received an FDA investigational device exemption (IDE), and has been classified as a Category B device by FDA in accordance with §§ 405.203 through 405.207 and 405.211 through 405.215, or meets another appropriate FDA exemption from premarket review;
• Is an integral part of the service furnished;
• Is used for one patient only;
• Comes in contact with human tissue;
• Is surgically implanted or inserted (either permanently or temporarily); and
• Is not either of the following:

(a) Equipment, an instrument, apparatus, implement, or item of the type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or

(b) A material or supply furnished incident to a service (for example, a suture, customized surgical kit, scalpel, or clip, other than a radiological site marker) (83 FR 58945).

In addition, for new HCPCS codes describing procedures requiring the implantation of devices that do not yet have associated claims data, in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658), we finalized a policy for CY 2017 to apply device-intensive status with a default device offset set at 41 percent for new HCPCS codes describing procedures requiring the implantation or insertion of a device that did not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures. This default device offset amount of 41 percent was not calculated from claims data; instead, it was applied as a default until claims data were available upon which to calculate an actual device offset for the new code. The purpose of applying the 41-percent default device offset to new codes that describe procedures that implant or insert devices was to ensure ASC access for new procedures until claims data become available.

As discussed in the CY 2019 OPPS/ASC proposed rule and final rule with comment period (83 FR 37108 through 37109 and 58945 through 58946, respectively), in accordance with our policy stated previously to lower the device offset percentage threshold for procedures to qualify as device-intensive from greater than 40 percent to greater than 30 percent, for CY 2019 and subsequent years, we modified this policy to apply a 31-percent default device offset to new HCPCS codes describing procedures requiring the implantation of a device that do not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures. In conjunction with the policy to lower the default device offset from 41 percent to 31 percent, we continued our current policy of, in certain rare instances (for example, in the case of a very expensive implantable device), temporarily assigning a higher offset percentage if warranted by additional information such as pricing data from a device manufacturer (81 FR 79658). Once claims data are available for a new procedure requiring the implantation or insertion of a device, device-intensive status is applied to the code if the HCPCS code-level device offset is greater than 30 percent, according to our policy of determining—device-intensive status by calculating the HCPCS code-level device offset.

In addition, in the CY 2019 OPPS/ASC final rule with comment period, we clarified that since the adoption of our policy in effect as of CY 2018, the associated claims data used for purposes of determining whether or not to apply the default device offset are the associated claims data for either the new HCPCS code or any predecessor code, as described by CPT coding guidance, for the new HCPCS code. Additionally, for CY 2019 and subsequent years, in limited instances where a new HCPCS code does not have a predecessor code as defined by CPT, but describes a procedure that was previously described by an existing code, we use clinical discretion to identify HCPCS codes that are clinically related or similar to the new HCPCS code but are not officially recognized as a predecessor code by CPT, and to use the claims data of the clinically related or similar code(s) for purposes of determining whether or not to apply the default device offset to the new HCPCS code (83 FR 58946). Clinically related and similar procedures for purposes of this policy are procedures that have little or no clinical differences and use the same devices as the new HCPCS code. In addition, clinically related and similar codes for purposes of this policy are codes that either currently or previously describe the procedure described by the new HCPCS code. Under this policy, claims data from clinically related and similar codes are included as associated claims data for a new code, and where an existing HCPCS code is found to be clinically related or similar to a new HCPCS code, we apply the device offset percentage derived from the existing clinically related or similar HCPCS code's claims data to the new HCPCS code for determining the device offset percentage. We stated that we believe that claims data for HCPCS codes describing procedures that have minor differences from the procedures described by new HCPCS codes will provide an accurate depiction of the cost relationship between the procedure and the device(s) that are used, and will be appropriate to use to set a new code's device offset percentage, in the same way that predecessor codes are used. If a new HCPCS code has multiple predecessor codes, the claims data for the predecessor code that has the highest individual HCPCS-level device offset percentage is used to determine whether the new HCPCS code qualifies for device-intensive status. Similarly, in the event that a new HCPCS code does not have a predecessor code but has multiple clinically related or similar codes, the claims data for the clinically related or similar code that has the highest individual HCPCS level device offset percentage is used to determine whether the new HCPCS code qualifies for device-intensive status.

As we indicated in the CY 2019 OPPS/ASC proposed rule and final rule with comment period, additional information for our consideration of an offset percentage higher than the default of 31 percent for new HCPCS codes describing procedures requiring the implantation (or, in some cases, the insertion) of a device that do not yet have associated claims data, such as pricing data or invoices from a device manufacturer, should be directed to the Division of Outpatient Care, Mail Stop C4-01-26, Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850, or electronically at outpatientpps@cms.hhs.gov . Additional information can be submitted prior to issuance of an OPPS/ASC proposed rule or as a public comment in response to an issued OPPS/ASC proposed rule. Device offset percentages will be set in each year's final rule.

As discussed in section X.E of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190), given our concerns regarding CY 2020 data as a result of the COVID-PHE, we proposed to use CY 2019 claims data to establish CY 2022 prospective rates. While we continue to believe CY 2019 represents the best full year of claims data for ratesetting, we believe our policy of temporarily assigning a higher offset percentage if warranted by additional information would provide a more accurate device offset percentage for certain procedures. Specifically, for procedures that were assigned device-intensive status, but were assigned a default device offset percentage of 31 percent or a device offset percentage based on claims from a clinically-similar code in the absence of CY 2019 claims data, we proposed to assign a device offset percentage for such procedures based on CY 2020 data if CY 2020 claims information is available. While we believe that CY 2019 claims data is a better basis for CY 2022 OPPS rates overall, because we have specifically noted that we would consider using more recent data than the data available for ratesetting in a given year to determine device offset percentages for services that do not have any claims data in the year used for ratesetting, we believe it would be consistent with this policy for us to use CY 2020 claims data to determine the device offset percentage for services that meet the above criteria.

For CY 2022, our proposal would assign device offset percentages using CY 2020 claims data to the following 11 procedures:

• 0266T (Implantation or replacement of carotid sinus baroreflex activation device; total system (includes generator placement, unilateral or bilateral lead placement, intra-operative interrogation, programming, and repositioning, when performed));
• 0414T (Removal and replacement of permanent cardiac contractility modulation system pulse generator only);
• 0511T (Removal and reinsertion of sinus tarsi implant);
• 0587T (Percutaneous implantation or replacement of integrated single device neurostimulation system including electrode array and receiver or pulse generator, including analysis, programming, and imaging guidance when performed, posterior tibial nerve);
• 0600T (Ablation, irreversible electroporation; 1 or more tumors per organ, including imaging guidance, when performed, percutaneous);
• 0614T (Removal and replacement of substernal implantable defibrillator pulse generator);
• 66987 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1-stage procedure), manual or mechanical technique (for example, irrigation and aspiration or phacoemulsification), complex, requiring devices or techniques not generally used in routine cataract surgery (for example, iris ansion device, suture support for intraocular lens, or primary posterior capsulorrhexis) or performed on patients in the amblyogenic developmental stage; with endoscopic cyclophotocoagulation);
• 66988 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1 stage procedure), manual or mechanical technique (for example, irrigation and aspiration or phacoemulsification); with endoscopic cyclophotocoagulation);
• C9757 (Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, foraminotomy and excision of herniated intervertebral disc, and repair of annular defect with implantation of bone anchored annular closure device, including annular defect measurement, alignment and sizing assessment, and image guidance; 1 interspace, lumbar);
• C9765 (Revascularization, endovascular, open or percutaneous, lower extremity artery(ies), except tibial/peroneal; with intravascular lithotripsy, and transluminal stent placement(s), includes angioplasty within the same vessel(s), when performed); and
• C9767 (Revascularization, endovascular, open or percutaneous, lower extremity artery(ies), except tibial/peroneal; with intravascular lithotripsy and transluminal stent placement(s), and atherectomy, includes angioplasty within the same vessel(s), when performed).

Comment: Many commenters supported our proposal to establish the CY 2022 device offset percentage using CY 2020 claims data for device-intensive procedures with no claims in the CY 2019 claims data. One commenter requested that we use CY 2020 claims where CY 2020 claims volume is greater than CY 2019 claims volume. Another commenter requested that we apply the greater of the device offset percentage when comparing CY 2019 claims with CY 2020 claims.

Response: We thank the commenters for their support. We are not accepting the recommendation to apply data from CY 2020 claims where CY 2020 claims volume is greater than CY 2019 claims volume or to apply the greater of the device offset percentage when comparing CY 2019 claims with CY 2020 claims. Specifically, as discussed in section X.E of this final rule with comment period, we continue to believe CY 2019 represents the best full year of claims data for ratesetting. Therefore, we believe our proposal provides a more accurate device offset percentage only for certain device-intensive procedures that had no claims data in CY 2019 and for which the device offset percentage would otherwise be based on the default percentage or a similar procedure code's device offset percentage. Comment: Many commenters requested that we set the device offset percentage for several new procedures using the predecessor code's device offset percentage based on CY 2019 claims data. These procedures include:

• The predecessor CPT code 0191T in assigning the device offset percentage for CPT code 66989 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1-stage procedure), manual or mechanical technique (for example, irrigation and aspiration or phacoemulsification), complex, requiring devices or techniques not generally used in routine cataract surgery (for example, iris expansion device, suture support for intraocular lens, or primary posterior capsulorrhexis) or performed on patients in the amblyogenic developmental stage; with insertion of intraocular (for example, trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more);

• The predecessor CPT code 0191T in assigning the device offset percentage for CPT code 66991 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1 stage procedure), manual or mechanical technique (for example, irrigation and aspiration or phacoemulsification); with insertion of intraocular (for example, trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more);
• The predecessor CPT code 0191T in assigning the device offset percentage for CPT code 0671T (Insertion of anterior segment aqueous drainage device into the trabecular meshwork, without external reservoir, and without concomitant cataract removal, one or more);
• The predecessor CPT code 0548T in assigning the device offset percentage for CPT code 53451 (Periurethral transperineal adjustable balloon continence device; bilateral insertion, including cystourethroscopy and imaging guidance);
• The predecessor CPT code 0549T in assigning the device offset percentage for CPT code 53452 (Periurethral transperineal adjustable balloon continence device; unilateral insertion, including cystourethroscopy and imaging guidance); and
• The predecessor HCPCS code C9752 in assigning the device offset percentage for CPT code 64628 (Thermal destruction of intraosseous basivertebral nerve, including all imaging guidance; first 2 vertebral bodies, lumbar or sacral).

Additionally, at the August 23, 2021 HOP Panel Meeting, a presenter requested that we use the predecessor CPT code 64568 in assigning the device offset percentage for CPT code 64582 (Open implantation of hypoglossal nerve neurostimulator array, pulse generator, and distal respiratory sensor electrode or electrode array). Based on the information presented at the meeting, the HOP Panel recommended we use CPT code 64568 to assign the device offset percentage for CPT code 64582.

Response: We agree with the commenters and the HOP Panel's recommendation. We note that we inadvertently did not apply the device offset percentage to several new HCPCS codes where claims data for a predecessor code was available. Therefore, we are revising the device offset percentage for these procedures for this final rule with comment period using CY 2019 claims data from these procedures' predecessor codes.

Comment: A number of commenters recommended we assign device-intensive status to CPT codes 0627T (Percutaneous injection of allogeneic cellular and/or tissue-based product, intervertebral disc, unilateral or bilateral injection, with fluoroscopic guidance, lumbar; first level) and 0630T (Percutaneous injection of allogeneic cellular and/or tissue-based product, intervertebral disc, unilateral or bilateral injection, with ct guidance, lumbar; each additional level (list separately in addition to code for primary procedure)).

Response: We appreciate the commenters' recommendation. As we stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42113), we finalized, for CY 2019 and subsequent years, that for purposes of satisfying the device-intensive criteria, a device-intensive procedure must involve a device that “has received FDA marketing authorization, has received an FDA investigational device exemption (IDE), and has been classified as a Category B device by FDA in accordance with §§ 405.203 through 405.207 and 405.211 through 405.215, or meets another appropriate FDA exemption from premarket review.” The products involved when reporting CPT code 0627T and 0630T that the commenter believed should necessitate a device intensive designation do not meet this requirement. Therefore, we are not accepting the commenters' recommendations and are not granting device-intensive status to these codes.

Comment: One commenter requested that we assign HCPCS code C9778 (Colpopexy, vaginal; minimally invasive extra-peritoneal approach (sacrospinous)) device-intensive status as this procedure meets our device-intensive criteria.

Response: After further review, we agree with the commenter that HCPCS code C9778 meets our criteria for device-intensive status. We are accepting the commenter's recommendation and assigning a default device offset percentage of 31 percent to HCPCS code C9778 for CY 2022.

Comment: One commenter recommended assigning CPT code 66179 (Aqueous shunt to extraocular equatorial plate reservoir, external approach; without graft) as device-intensive as the procedure's device offset percentage is 32.78 percent in Addendum P to the CY 2022 OPPS/ASC proposed rule, which exceeds our 30-percent threshold for device-intensive status.

Response: We have reviewed this procedure code with our medical officers and have determined that this procedure satisfies all of our device-intensive criteria. In particular, we agree with the commenter that this procedure involves an implantable single-use device and that the device meets the requirements for the procedure to receive device-intensive assignment.

Comment: Commenters requested that we assign device-intensive status to:

• CPT code 0499T (Cystourethroscopy, with mechanical dilation and urethral therapeutic drug delivery for urethral stricture or stenosis, including fluoroscopy, when performed);
• CPT code 58674 (Laparoscopy, surgical, ablation of uterine fibroid(s) including intraoperative ultrasound guidance and monitoring, radiofrequency);
• CPT code 50590 (Lithotripsy, extracorporeal shock wave);

• CPT code 59200 (Insertion of cervical dilator ( e.g., laminaria, prostaglandin) (separate procedure));

• CPT code 66174 (Transluminal dilation of aqueous outflow canal; without retention of device or stent);
• CPT code 66175 (Transluminal dilation of aqueous outflow canal; with retention of device or stent);
• CPT code 93571 (Intravascular doppler velocity and/or pressure derived coronary flow reserve measurement (coronary vessel or graft) during coronary angiography including pharmacologically induced stress; initial vessel (list separately in addition to code for primary procedure); and
• HCPCS code C9757 (Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, foraminotomy and excision of herniated intervertebral disc, and repair of annular defect with implantation of bone anchored annular closure device, including annular defect measurement, alignment and sizing assessment, and image guidance; 1 interspace, lumbar).

Response: Based on CY 2019 claims data available for this final rule with comment period, the procedures requested by commenters do not have device offset percentages that exceed the 30-percent threshold required for device-intensive status and, therefore, are not eligible to be assigned device-intensive status under the OPPS.

Comment: Some commenters submitted invoices and requested a greater device offset amount and greater device offset percentage to reflect the invoice price of a particular device. Other commenters also recommended utilizing invoice prices to establish device offset percentages for procedures with low or no claims volume or to correct situations commenters contend reflect underreported device costs attributable to hospital confusion when reporting HCPCS code C1889 (Implantable/insertable device, not otherwise classified).

Response: While we appreciate the recommendations and additional information submitted by commenters, we are not applying the invoice prices submitted by commenters to establish the device offset amount and device offset percentage for these procedures. None of the invoice prices that were submitted suggest that we should apply our policy of temporarily applying a higher device offset percentage if warranted by additional information. As we have stated in previous rulemaking (85 FR 86015), this policy of temporarily assigning a higher device offset percentage should be applied in rare instances, such as using CY 2020 claims data in light of the COVID-19 PHE or where a device has an extremely abnormal cost and, in the absence of claims data, may be significantly underpaid under our policy to apply a default device offset percentage for the procedure that involves such device.

Additionally, it would be inappropriate to apply a higher device offset percentage or increase the payment rate in the ASC setting simply because a device's invoice price is greater than the procedure's device offset amount. Our packaging policies are intended to promote the efficient use of resources both in the HOPD as well as ASC setting and these policies include the packaging of medical devices. While we provide separate transitional pass-through payments for devices for the cost of devices approved for transitional pass-through status, as we stated previously, the intent of transitional pass-through status for devices is to facilitate access for beneficiaries to the advantages of truly innovative devices by allowing for adequate payment for these new devices while the necessary cost data is collected. We believe it would be inappropriate to provide a similar method of calculating payment solely based on a device's cost or invoice price for devices that are not approved for transitional pass-through status.

Lastly, we have heard concerns from stakeholders regarding hospitals' coding decisions for particular devices. Specifically, stakeholders have contended that hospitals do not report HCPCS code C1889 for a particular insertable device as the NUBC billing guidelines recommend that such HCPCS code crosswalk to revenue code 0278—Other Implants—and this revenue code would be inappropriate for the costs attributable to devices that are insertable and not implantable. While we understand stakeholder concerns regarding accurate device cost reporting, we expect hospitals to adhere to the guidelines of correct coding and append the correct device code to the claim when applicable. However, while we do not believe additional guidance from CMS or adjustment to the device offset calculation to exclude certain claims is warranted at this time, we will continue to monitor this issue going forward.

After reviewing the public comments we received, we are finalizing our proposal to assign a device offset percentage based on CY 2020 data if CY 2020 claims information is available, for procedures that were assigned device-intensive status, but, because CY 2019 claims data is not available, would otherwise be assigned a default device offset percentage of 31 percent or a device offset percentage based on claims from a clinically-similar code. Based on updated data for this CY 2022 OPPS/ASC final rule with comment period, we are applying device offset percentages from 2020 claims data to 14 procedures. These include the 11 procedures described previously plus three additional procedures that were assigned default device offset percentages for CY 2021 and have available device offset percentages from CY 2020 claims data:

• CPT code 0519T (Removal and replacement of wireless cardiac stimulator for left ventricular pacing; pulse generator component(s) (battery and/or transmitter));

• CPT code 0618T (Insertion of iris prosthesis, including suture fixation and repair or removal of iris, when performed; with secondary intraocular lens placement or intraocular lens exchange); and

• HCPCS code C9761 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy, with lithotripsy (ureteral catheterization is included) and vacuum aspiration of the kidney, collecting system and urethra if applicable).

Additionally, in this final rule with comment period, we are correcting the device offset percentages for several new device-intensive procedures to reflect available claims data from predecessor codes.

The full listing of the final CY 2022 device-intensive procedures can be found in Addendum P to the CY 2022 OPPS/ASC final rule with comment period (which is available via the internet on the CMS website). Further, our claims accounting narrative contains a description of our device offset percentage calculation. Our claims accounting narrative for this final rule with comment period can be found under supporting documentation for the CY 2022 OPPS/ASC final rule on our website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html .

3. Device Edit Policy

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66795), we finalized a policy and implemented claims processing edits that require any of the device codes used in the previous device-to-procedure edits to be present on the claim whenever a procedure code assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC final rule with comment period (the CY 2015 device-dependent APCs) is reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70422), we modified our previously existing policy and applied the device coding requirements exclusively to procedures that require the implantation of a device that are assigned to a device-intensive APC. In the CY 2016 OPPS/ASC final rule with comment period, we also finalized our policy that the claims processing edits are such that any device code, when reported on a claim with a procedure assigned to a device-intensive APC (listed in Table 42 of the CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)) will satisfy the edit.

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 through 79659), we changed our policy for CY 2017 and subsequent years to apply the CY 2016 device coding requirements to the newly defined device-intensive procedures. For CY 2017 and subsequent years, we also specified that any device code, when reported on a claim with a—device-intensive procedure, will satisfy the edit. In addition, we created HCPCS code C1889 to recognize devices furnished during a device-intensive procedure that are not described by a specific Level II HCPCS Category C-code. Reporting HCPCS code C1889 with a device-intensive procedure will satisfy the edit requiring a device code to be reported on a claim with a device-intensive procedure. In the CY 2019 OPPS/ASC final rule with comment period, we revised the description of HCPCS code C1889 to remove the specific applicability to device-intensive procedures (83 FR 58950). For CY 2019 and subsequent years, the description of HCPCS code C1889 is “Implantable/insertable device, not otherwise classified”.

We did not propose any changes to this policy for CY 2022.

Comment: Some commenters recommended that we reinstate specific device-to-procedure edits. One commenter recommended we reinstate specific device-to-procedure edits for arthroplasty procedures and another commenter recommended we reinstate specific device edits for C-code device-intensive procedures. One commenter contended that the removal of specific device-to-procedure edits has contributed to erosion in accuracy in the data highlighted by certain procedures having device offset percentages that are nearly 100 percent of the procedures' costs.

Response: As we stated in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66794), we continue to believe that the elimination of device-to-procedure edits and procedure-to-device edits is appropriate due to the experience hospitals now have in coding and reporting these claims fully. More specifically, for the most costly devices, we believe the C-APCs reliably reflect the cost of the device if charges for the device are included anywhere on the claim. We note that, under our current policy, hospitals are still expected to adhere to the guidelines of correct coding and append the correct device code to the claim when applicable. We also note that, as with all other items and services recognized under the OPPS, we expect hospitals to code and report their costs appropriately, regardless of whether there are claims processing edits in place.

Additionally, we have not observed any increase in frequency of procedures with device offset percentages that are nearly 100 percent; and we do not believe the absence of device-to-procedure edits has precipitated an erosion in accuracy of our device cost statistics. Procedures with extremely significant device offset percentages of greater than 90 percent can be attributed to procedures with little claims volume as well as extremely significant device costs and not the absence of device-to-procedure edits. Therefore, we are not accepting the commenters' recommendations to reinstate device-to-procedure edits.

4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial Credit Devices

a. Background

To ensure equitable OPPS payment when a hospital receives a device without cost or with full credit, in CY 2007, we implemented a policy to reduce the payment for specified device-dependent APCs by the estimated portion of the APC payment attributable to device costs (that is, the device offset) when the hospital receives a specified device at no cost or with full credit (71 FR 68071 through 68077). Hospitals were instructed to report no cost/full credit device cases on the claim using the “FB” modifier on the line with the procedure code in which the no cost/full credit device is used. In cases in which the device is furnished without cost or with full credit, hospitals were instructed to report a token device charge of less than $1.01. In cases in which the device being inserted is an upgrade (either of the same type of device or to a different type of device) with a full credit for the device being replaced, hospitals were instructed to report as the device charge the difference between the hospital's usual charge for the device being implanted and the hospital's usual charge for the device for which it received full credit. In CY 2008, we expanded this payment adjustment policy to include cases in which hospitals receive partial credit of 50 percent or more of the cost of a specified device. Hospitals were instructed to append the “FC” modifier to the procedure code that reports the service provided to furnish the device when they receive a partial credit of 50 percent or more of the cost of the new device. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for more background information on the “FB” and “FC” modifiers payment adjustment policies (72 FR 66743 through 66749).

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 75007), beginning in CY 2014, we modified our policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit. For CY 2013 and prior years, our policy had been to reduce OPPS payment by 100 percent of the device offset amount when a hospital furnishes a specified device without cost or with a full credit and by 50 percent of the device offset amount when the hospital receives partial credit in the amount of 50 percent or more of the cost for the specified device. For CY 2014, we reduced OPPS payment, for the applicable APCs, by the full or partial credit a hospital receives for a replaced device. Specifically, under this modified policy, hospitals are required to report on the claim the amount of the credit in the amount portion for value code “FD” (Credit Received from the Manufacturer for a Replaced Device) when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device. For CY 2014, we also limited the OPPS payment deduction for the applicable APCs to the total amount of the device offset when the “FD” value code appears on a claim. For CY 2015, we continued our policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit and to use the three criteria established in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68072 through 68077) for determining the APCs to which our CY 2015 policy will apply (79 FR 66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), we finalized our policy to no longer specify a list of devices to which the OPPS payment adjustment for no cost/full credit and partial credit devices would apply and instead apply this APC payment adjustment to all replaced devices furnished in conjunction with a procedure assigned to a device-intensive APC when the hospital receives a credit for a replaced specified device that is 50 percent or greater than the cost of the device.

b. Policy for No Cost/Full Credit and Partial Credit Devices

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 through 79660), for CY 2017 and subsequent years, we finalized a policy to reduce OPPS payment for device-intensive procedures, by the full or partial credit a provider receives for a replaced device, when a hospital furnishes a specified device without cost or with a full or partial credit. Under our current policy, hospitals continue to be required to report on the claim the amount of the credit in the amount portion for value code “FD” when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device.

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 75007), we adopted a policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit by the lesser of the device offset amount for the APC or the amount of the credit. We adopted this change in policy in the preamble of the CY 2014 OPPS/ASC final rule with comment period and discussed it in subregulatory guidance, including Chapter 4, Section 61.3.6 of the Medicare Claims Processing Manual. Further, in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86017 through 86018, 86302), we made conforming changes to our regulations at § 419.45(b)(1) and (2) that codified this policy.

We did not propose any changes and we did not receive any public comments related to our policies regarding payment for no cost/full credit and partial credit devices in CY 2022.

5. Payment Policy for Low-Volume Device-Intensive Procedures

In CY 2016, we used our equitable adjustment authority under section 1833(t)(2)(E) of the Act and used the median cost (instead of the geometric mean cost per our standard methodology) to calculate the payment rate for the implantable miniature telescope procedure described by CPT code 0308T (Insertion of ocular telescope prosthesis including removal of crystalline lens or intraocular lens prosthesis), which is the only code assigned to APC 5494 (Level 4 Intraocular Procedures) (80 FR 70388). We noted that, as stated in the CY 2017 OPPS/ASC proposed rule (81 FR 45656), we proposed to reassign the procedure described by CPT code 0308T to APC 5495 (Level 5 Intraocular Procedures) for CY 2017, but it would be the only procedure code assigned to APC 5495. The payment rates for a procedure described by CPT code 0308T (including the predecessor HCPCS code C9732) were $15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The procedure described by CPT code 0308T is a high-cost device-intensive surgical procedure that has a very low volume of claims (in part because most of the procedures described by CPT code 0308T are performed in ASCs). We believe that the median cost is a more appropriate measure of the central tendency for purposes of calculating the cost and the payment rate for this procedure because the median cost is impacted to a lesser degree than the geometric mean cost by more extreme observations. We stated that, in future rulemaking, we would consider proposing a general policy for the payment rate calculation for very low-volume device-intensive APCs (80 FR 70389).

For CY 2017, we proposed and finalized a payment policy for low-volume device-intensive procedures that is similar to the policy applied to the procedure described by CPT code 0308T in CY 2016. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through 79661), we established our current policy that the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC be calculated using the median cost instead of the geometric mean cost, for the reasons described previously for the policy applied to the procedure described by CPT code 0308T in CY 2016. For CYs 2019 through 2021, we continued our policy of establishing the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC by using the median cost instead of the geometric mean (85 FR 86019).

As discussed in further detail in Section X.C of the CY 2022 OPPS/ASC proposed rule (86 FR 42181 through 42185), we proposed to establish a universal low volume APC policy for clinical APCs, brachytherapy APCs, and New Technology APCs with fewer than 100 single claims in the claims data used for ratesetting (for CY 2022 rates, this is proposed to be the CY 2019 claim data). For APCs designated as low volume APCs (those with fewer than 100 single claims in the claims year) under our proposed policy, we proposed to establish a payment rate using the highest of the median cost, arithmetic mean cost, or the geometric mean cost. In conjunction with our new, broader low volume APC proposal for clinical APCs, brachytherapy APCs, and New Technology APCs, we proposed to eliminate our payment policy for low-volume device-intensive procedures for CY 2022 and subsequent calendar years. Currently, CPT code 0308T is the only code subject to our low-volume device-intensive policy. Given that our proposed universal low volume APC policy would utilize a greater number of claims and provide additional cost metric alternatives for ratesetting than our existing low-volume device-intensive policy, we believe that the cost and ratesetting issues previously discussed with respect to CPT code 0308T would be appropriately addressed under our broader universal low volume APC proposal.

We did not receive any public comments on our proposal to eliminate our payment policy for low-volume device-intensive procedures and address low-volume, device-intensive procedures through our broader proposal to designate low volume APCs among eligible clinical APCs, brachytherapy APCs, and New Technology APCs and we are finalizing our proposal without modification. Public comments related to our proposed Low Volume APC policy are discussed in section X.C (Low Volume Policy for Clinical and Brachytherapy APCs) of this final rule with comment period.

V. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals

A. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals

1. Background

Section 1833(t)(6) of the Act provides for temporary additional payments or “transitional pass-through payments” for certain drugs and biologicals. Throughout the proposed rule, the term “biological” is used because this is the term that appears in section 1861(t) of the Act. A “biological” as used in the proposed rule includes (but is not necessarily limited to) a “biological product” or a “biologic” as defined under section 351 of the PHS Act. As enacted by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this pass-through payment provision requires the Secretary to make additional payments to hospitals for: current orphan drugs for rare diseases and conditions, as designated under section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs and biologicals and brachytherapy sources used in cancer therapy; and current radiopharmaceutical drugs and biologicals. “Current” refers to those types of drugs or biologicals mentioned above that are hospital outpatient services under Medicare Part B for which transitional pass-through payment was made on the first date the hospital OPPS was implemented.

Transitional pass-through payments also are provided for certain “new” drugs and biologicals that were not being paid for as an HOPD service as of December 31, 1996, and whose cost is “not insignificant” in relation to the OPPS payments for the procedures or services associated with the new drug or biological. For pass-through payment purposes, radiopharmaceuticals are included as “drugs.” As required by statute, transitional pass-through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the drug as a hospital outpatient service under Medicare Part B. Proposed CY 2022 pass-through drugs and biologicals and their designated APCs are assigned status indicator “G” in Addenda A and B to the proposed rule (which are available via the internet on the CMS website).

Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through payment amount, in the case of a drug or biological, is the amount by which the amount determined under section 1842(o) of the Act for the drug or biological exceeds the portion of the otherwise applicable Medicare OPD fee schedule that the Secretary determines is associated with the drug or biological. The methodology for determining the pass-through payment amount is set forth in regulations at 42 CFR 419.64. These regulations specify that the pass-through payment equals the amount determined under section 1842(o) of the Act minus the portion of the APC payment that CMS determines is associated with the drug or biological.

Section 1847A of the Act establishes the average sales price (ASP) methodology, which is used for payment for drugs and biologicals described in section 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP methodology, as applied under the OPPS, uses several sources of data as a basis for payment, including the ASP, the wholesale acquisition cost (WAC), and the average wholesale price (AWP). In the proposed rule, the term “ASP methodology” and “ASP-based” are inclusive of all data sources and methodologies described therein. Additional information on the ASP methodology can be found on our website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html .

The pass-through application and review process for drugs and biologicals is described on our website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html .

2. Transitional Pass-Through Payment Period for Pass-Through Drugs, Biologicals, and Radiopharmaceuticals and Quarterly Expiration of Pass-Through Status

As required by statute, transitional pass-through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the drug or biological as a hospital outpatient service under Medicare Part B. Our current policy is to accept pass-through applications on a quarterly basis and to begin pass-through payments for newly approved pass-through drugs and biologicals on a quarterly basis through the next available OPPS quarterly update after the approval of a drug's or biological's pass-through status. However, prior to CY 2017, we expired pass-through status for drugs and biologicals on an annual basis through notice-and-comment rulemaking (74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79662), we finalized a policy change, beginning with pass-through drugs and biologicals newly approved in CY 2017 and subsequent calendar years, to allow for a quarterly expiration of pass-through payment status for drugs, biologicals, and radiopharmaceuticals to afford a pass-through payment period that is as close to a full 3 years as possible for all pass-through drugs, biologicals, and radiopharmaceuticals.

This change eliminated the variability of the pass-through payment eligibility period, which previously varied based on when a particular application was initially received. We adopted this change for pass-through approvals beginning on or after CY 2017, to allow, on a prospective basis, for the maximum pass-through payment period for each pass-through drug without exceeding the statutory limit of 3 years. Notice of drugs whose pass-through payment status is ending during the calendar year will continue to be included in the quarterly OPPS Change Request transmittals.

Comment: One commenter commended CMS for continuing the policy to provide for quarterly expiration of pass-through payment status, which allows a pass-through period that is as close to a full 3 years as possible.

Response: We thank the commenter for their input and support of this policy, which was adopted in the CY 2017 OPPS/ASC final rule (81 FR 79654 through 79655).

3. Drugs and Biologicals With Expiring Pass-Through Payment Status in CY 2021

There are 25 drugs and biologicals whose pass-through payment status will expire during CY 2021, as listed in Table 37. Most of these drugs and biologicals will have received OPPS pass-through payment for 3 years during the period of April 1, 2018, through December 31, 2021. In accordance with the policy finalized in CY 2017 and described earlier, pass-through payment status for drugs and biologicals newly approved in CY 2017 and subsequent years will expire on a quarterly basis, with a pass-through payment period as close to 3 years as possible. With the exception of those groups of drugs and biologicals that are always packaged when they do not have pass-through payment status (specifically, anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including diagnostic radiopharmaceuticals, contrast agents, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure), our standard methodology for providing payment for drugs and biologicals with expiring pass-through payment status in an upcoming calendar year is to determine the product's estimated per day cost and compare it with the OPPS drug packaging threshold for that calendar year (which is proposed to be $130 for CY 2022), as discussed further in section V.B.1. of the CY 2022 OPPS/ASC proposed rule (86 FR 42127 through 42148). We proposed that if the estimated per day cost for the drug or biological is less than or equal to the applicable OPPS drug packaging threshold, we would package payment for the drug or biological into the payment for the associated procedure in the upcoming calendar year. If the estimated per day cost of the drug or biological is greater than the OPPS drug packaging threshold, we proposed to provide separate payment at the applicable ASP-based payment amount (which is proposed at ASP+6 percent for non-340B drugs for CY 2022, as discussed further in section V.B.2. of the CY 2022 OPPS/ASC proposed rule (86 FR 42132).

We did not receive any public comments regarding our proposals. Therefore, we are adopting these proposals as final for CY 2022 without modification. Refer to Table 37 for the list of drugs and biologicals for which pass-through payment status will expire between March 31, 2021 and December 31, 2021. The packaged or separately payable status of each of these drugs or biologicals is listed in Addendum B of the CY 2022 OPPS/ASC final rule (which is available via the internet on the CMS website).

4. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through Payment Status Expiring in CY 2022

We proposed to end pass-through payment status in CY 2022 for 26 drugs and biologicals. These drugs and biologicals, which were approved for pass-through payment status between April 1, 2019, and January 1, 2020, are listed in Table 28 of the CY 2022 OPPS/ASC proposed rule (86 FR 42121 through 42122). The APCs and HCPCS codes for these drugs and biologicals, which have pass-through payment status that will end by December 31, 2022, are assigned status indicator “G” in Addenda A and B to the CY 2022 OPPS/ASC proposed rule (which are available via the internet on the CMS website).

Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for pass-through drugs and biologicals (the pass-through payment amount) as the difference between the amount authorized under section 1842(o) of the Act and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is associated with the drug or biological. For 2022, we proposed to continue to pay for pass-through drugs and biologicals at ASP+6 percent, equivalent to the payment rate these drugs and biologicals would receive in the physician's office setting in CY 2022. We proposed that a $0 pass-through payment amount would be paid for pass-through drugs and biologicals that are not policy-packaged as described in section V.B.1.c. (86 FR 42120) under the CY 2022 OPPS because the difference between the amount authorized under section 1842(o) of the Act, which is proposed at ASP+6 percent, and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is appropriate, which is proposed at ASP+6 percent, is $0.

In the case of policy-packaged drugs (which include the following: Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including contrast agents, diagnostic radiopharmaceuticals, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure), we proposed that their pass-through payment amount would be equal to ASP+6 percent for CY 2022 minus a payment offset for the portion of the otherwise applicable OPD fee schedule that the Secretary determines is associated with the drug or biological as described in section V.A.6. of the CY 2022 OPPS/ASC proposed rule (86 FR 42126). We proposed this policy because, if not for the pass-through payment status of these policy-packaged products, payment for these products would be packaged into the associated procedure.

We proposed to continue to update pass-through payment rates on a quarterly basis on the CMS website during CY 2022 if later quarter ASP submissions (or more recent WAC or AWP information, as applicable) indicate that adjustments to the payment rates for these pass-through payment drugs or biologicals are necessary. For a full description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632 through 68635).

For CY 2022, consistent with our CY 2021 policy for diagnostic and therapeutic radiopharmaceuticals, we proposed to provide payment for both diagnostic and therapeutic radiopharmaceuticals that are granted pass-through payment status based on the ASP methodology. As stated earlier, for purposes of pass-through payment, we consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or therapeutic radiopharmaceutical receives pass-through payment status during CY 2022, we proposed to follow the standard ASP methodology to determine the pass-through payment rate that drugs receive under section 1842(o) of the Act, which is proposed at ASP+6 percent. If ASP data are not available for a radiopharmaceutical, we proposed to provide pass-through payment at WAC+3 percent (consistent with our proposed policy in section V.B.2.b. of the CY 2022 OPPS/ASC proposed rule (86 FR 42132)), the equivalent payment provided to pass-through drugs and biologicals without ASP information. Additional detail on the WAC+3 percent payment policy can be found in section V.B.2.b. of the CY 2022 OPPS/ASC proposed rule. If WAC information also is not available, we proposed to provide payment for the pass-through radiopharmaceutical at 95 percent of its most recent AWP. Refer to Table 38 below for the list of drugs and biologicals with pass-through payment status expiring during CY 2022.

5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through Payment Status Continuing in CY 2022

We proposed to continue pass-through payment status in CY 2022 for 46 drugs and biologicals. These drugs and biologicals, which were approved for pass-through payment status with effective dates beginning between April 1, 2020, and January 1, 2022, are listed in Table 39. The APCs and HCPCS codes for these drugs and biologicals, which have pass-through payment status that will continue after December 31, 2022, are assigned status indicator “G” in Addenda A and B to the CY 2022 OPPS/ASC proposed rule (which are available via the internet on the CMS website).

Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for pass-through drugs and biologicals (the pass-through payment amount) as the difference between the amount authorized under section 1842(o) of the Act and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is associated with the drug or biological. For 2023, we proposed to continue to pay for pass-through drugs and biologicals at ASP+6 percent, equivalent to the payment rate these drugs and biologicals would receive in the physician's office setting in CY 2022. We proposed that a $0 pass-through payment amount would be paid for pass-through drugs and biologicals that are not policy-packaged as described in section V.B.1.c. under the CY 2022 OPPS because the difference between the amount authorized under section 1842(o) of the Act, which is proposed at ASP+6 percent, and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is appropriate, which is proposed at ASP+6 percent, is $0. In the case of policy-packaged drugs (which include the following: Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including contrast agents, diagnostic radiopharmaceuticals, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure), we proposed that their pass-through payment amount would be equal to ASP+6 percent for CY 2022 minus a payment offset for any predecessor drug products contributing to the pass-through payment as described in section V.A.6. of the CY 2022 OPPS/ASC proposed rule (86 FR 42126). We proposed this policy because, if not for the pass-through payment status of these policy-packaged products, payment for these products would be packaged into the associated procedure.

We proposed to continue to update pass-through payment rates on a quarterly basis on our website during CY 2022 if later quarter ASP submissions (or more recent WAC or AWP information, as applicable) indicate that adjustments to the payment rates for these pass-through payment drugs or biologicals are necessary. For a full description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632 through 68635).

For CY 2022, consistent with our CY 2021 policy for diagnostic and therapeutic radiopharmaceuticals, we proposed to provide payment for both diagnostic and therapeutic radiopharmaceuticals that are granted pass-through payment status based on the ASP methodology. As stated earlier, for purposes of pass-through payment, we consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or therapeutic radiopharmaceutical receives pass-through payment status during CY 2023, we proposed to follow the standard ASP methodology to determine the pass-through payment rate that drugs receive under section 1842(o) of the Act, which is proposed at ASP+6 percent. If ASP data are not available for a radiopharmaceutical, we proposed to provide pass-through payment at WAC+3 percent (consistent with our proposed policy in section V.B.2.b. of the CY 2022 OPPS/ASC proposed rule (86 FR 42132)), the equivalent payment provided to pass-through drugs and biologicals without ASP information. Additional detail on the WAC+3 percent payment policy can be found in section V.B.2.b. of the CY 2022 OPPS/ASC proposed rule. If WAC information also is not available, we proposed to provide payment for the pass-through radiopharmaceutical at 95 percent of its most recent AWP.

The drugs and biologicals that we proposed to have pass-through payment status expire after December 31, 2022, are shown in Table 39.

6. Provisions for Reducing Transitional Pass-Through Payments for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals to Offset Costs Packaged Into APC Groups

Under the regulation at 42 CFR 419.2(b), nonpass-through drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure are packaged in the OPPS. This category includes diagnostic radiopharmaceuticals, contrast agents, stress agents, and other diagnostic drugs. Also, under the regulation at 42 CFR 419.2(b), nonpass-through drugs and biologicals that function as supplies in a surgical procedure are packaged in the OPPS. This category includes skin substitutes and other surgical-supply drugs and biologicals. As described earlier, section 1833(t)(6)(D)(i) of the Act specifies that the transitional pass-through payment amount for pass-through drugs and biologicals is the difference between the amount paid under section 1842(o) of the Act and the otherwise applicable OPD fee schedule amount. Because a payment offset is necessary in order to provide an appropriate transitional pass-through payment, we deduct from the pass-through payment for policy-packaged drugs, biologicals, and radiopharmaceuticals an amount reflecting the portion of the APC payment associated with predecessor products in order to ensure no duplicate payment is made. This amount reflecting the portion of the APC payment associated with predecessor products is called the payment offset.

The payment offset policy applies to all policy-packaged drugs, biologicals, and radiopharmaceuticals. For a full description of the payment offset policy as applied to policy-packaged drugs, which include diagnostic radiopharmaceuticals, contrast agents, stress agents, and skin substitutes, we refer readers to the discussion in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70430 through 70432). For CY 2022, as we did in CY 2021, we proposed to continue to apply the same policy-packaged offset policy to payment for pass-through diagnostic radiopharmaceuticals, pass-through contrast agents, pass-through stress agents, and pass-through skin substitutes. The proposed APCs to which a payment offset may be applicable for pass-through diagnostic radiopharmaceuticals, pass-through contrast agents, pass-through stress agents, and pass-through skin substitutes are identified in Table 40.

We proposed to continue to post annually on our website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.html a file that contains the APC offset amounts that will be used for that year for purposes of both evaluating cost significance for candidate pass-through payment device categories and drugs and biologicals and establishing any appropriate APC offset amounts. Specifically, the file will continue to provide the amounts and percentages of APC payment associated with packaged implantable devices, policy-packaged drugs, and threshold packaged drugs and biologicals for every OPPS clinical APC.

Comment: One commenter requested that CMS release a copy of the APC offset file with future OPPS/ASC proposed rules to enable the public to calculate the percentage of APC payment associated with packaged drug costs using APC offset data for the upcoming calendar year.

Response: We thank the commenter for their suggestion, and we will consider addressing this request in future rulemaking.

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Payment Status

1. Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals

a. 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 to $50 per administration during CYs 2005 and 2006. In CY 2007, we used the four quarter moving average Producer Price Index (PPI) levels for Pharmaceutical Preparations (Prescription) to trend the $50 threshold forward from the third quarter of CY 2005 (when the Pub. L. 108-173 mandated threshold became effective) to the third quarter of CY 2007. We then rounded the resulting dollar amount to the nearest $5 increment in order to determine the CY 2007 threshold amount of $55. Using the same methodology as that used in CY 2007 (which is discussed in more detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085 through 68086)), we set the packaging threshold for establishing separate APCs for drugs and biologicals at $130 for CY 2021 (84 FR 61312 through 61313).

Following the CY 2007 methodology, for the CY 2022 OPPS/ASC proposed rule, we used the most recently available four quarter moving average PPI levels to trend the $50 threshold forward from the third quarter of CY 2005 to the third quarter of CY 2022 and rounded the resulting dollar amount ($132.44) to the nearest $5 increment, which yielded a figure of $130. In performing this calculation, we used the most recent forecast of the quarterly index levels for the PPI for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor Statistics series code WPUSI07003) from CMS's Office of the Actuary. For the CY 2022 OPPS/ASC proposed rule, based on these calculations using the CY 2007 OPPS methodology, we proposed a packaging threshold for CY 2022 of $130.

Comment: Two commenters expressed their support for maintaining the drug packaging threshold for CY 2022 at $130. One commenter believes, however, that the drug packaging threshold has been increasing faster than payment increases under the OPPS. This commenter would like us to research if the drug packaging threshold should be lowered in future years.

Response: We appreciate the support of the commenters of the drug packaging threshold level of $130. We also thank the one commenter for their suggestion to consider reducing the drug packaging threshold in future years and will consider it for future rulemaking.

After consideration of the public comments, we repeated our drug packaging threshold calculations for the final rule with the most current data available. Once again, we calculated a drug packaging threshold for CY 2022 of $130. Therefore, we are finalizing our proposal without modification to have a drug packaging threshold for CY 2022 of $130.

b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, Certain Biologicals, and Certain Therapeutic Radiopharmaceuticals Under the Cost Threshold (“Threshold-Packaged Drugs”)

To determine the proposed CY 2022 packaging status for all nonpass-through drugs and biologicals that are not policy packaged, we calculated, on a HCPCS code-specific basis, the per day cost of all drugs, biologicals, and therapeutic radiopharmaceuticals that had a HCPCS code in CY 2019 and were paid (via packaged or separate payment) under the OPPS. We used data from CY 2019 claims processed through June 30, 2020, for this calculation. However, we did not perform this calculation for those drugs and biologicals with multiple HCPCS codes that include different dosages, as described in section V.B.1.d. of the CY 2022 OPPS/ASC proposed rule (86 FR 42129), or for the following policy-packaged items that we proposed to continue to package in CY 2022: Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; and drugs and biologicals that function as supplies when used in a surgical procedure.

In order to calculate the per day costs for drugs, biologicals, and therapeutic radiopharmaceuticals to determine their proposed packaging status in CY 2022, we use the methodology that was described in detail in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and finalized in the CY 2006 OPPS final rule with comment period (70 FR 68636 through 68638). For each drug and biological HCPCS code, we used an estimated payment rate of ASP+6 percent (which is the payment rate we proposed for separately payable drugs and biologicals (other than 340B drugs)) for CY 2022, as discussed in more detail in section V.B.2.b. of the proposed rule) to calculate the CY 2022 proposed rule per day costs. We used the manufacturer-submitted ASP data from the fourth quarter of CY 2020 (data that were used for payment purposes in the physician's office setting, effective April 1, 2021) to determine the proposed rule per day cost. While the CY 2020 ASP data were collected during the PHE, ASP data are not affected by changes in utilization the way non-drug services are for setting payment rates, and so we believe CY 2020 ASP data continues to be representative of the price of drugs in the market. We have continued to use ASP data from CY 2020 to report quarterly drug rates for CY 2020 and CY 2021.

As is our standard methodology, for 2022, we proposed to use payment rates based on the ASP data from the fourth quarter of CY 2020 for budget neutrality estimates, packaging determinations, impact analyses, and completion of Addenda A and B to the proposed rule (which are available via the internet on the CMS website) because these are the most recent data available for use at the time of development of the proposed rule. These data also were the basis for drug payments in the physician's office setting, effective April 1, 2021. For items that did not have an ASP-based payment rate, such as some therapeutic radiopharmaceuticals, we used their mean unit cost derived from the CY 2019 hospital claims data to determine their per day cost.

We proposed to package items with a per day cost less than or equal to $130, and identify items with a per day cost greater than $130 as separately payable unless they are policy-packaged. Consistent with our past practice, we cross-walked historical OPPS claims data from the CY 2019 HCPCS codes that were reported to the CY 2021 HCPCS codes that we display in Addendum B to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website) for proposed payment in CY 2022.

Our policy during previous cycles of the OPPS has been to use updated ASP and claims data to make final determinations of the packaging status of HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals for the OPPS/ASC final rule with comment period. We note that it is also our policy to make an annual packaging determination for a HCPCS code only when we develop the OPPS/ASC final rule with comment period for the update year. Only HCPCS codes that are identified as separately payable in the final rule with comment period are subject to quarterly updates. For our calculation of per day costs of HCPCS codes for drugs and biologicals in the CY 2022 OPPS/ASC proposed rule, we proposed to use ASP data from the fourth quarter of CY 2020, which is the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective April 1, 2021, along with updated hospital claims data from CY 2019. We note that we also proposed to use these data for budget neutrality estimates and impact analyses for the CY 2022 OPPS/ASC proposed rule.

Payment rates for HCPCS codes for separately payable drugs and biologicals included in Addenda A and B of the final rule with comment period will be based on ASP data from the second quarter of CY 2021. These data will be the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective October 1, 2021. These payment rates would then be updated in the January 2022 OPPS update, based on the most recent ASP data to be used for physicians' office and OPPS payment as of January 1, 2022. For items that do not currently have an ASP-based payment rate, we proposed to recalculate their mean unit cost from all of the CY 2019 claims data and update cost report information available for the CY 2022 final rule with comment period to determine their final per day cost.

Consequently, the packaging status of some HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals in the proposed rule may be different from the same drugs' HCPCS codes' packaging status determined based on the data used for the final rule with comment period. Under such circumstances, we proposed to continue to follow the established policies initially adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably pay for those drugs whose costs fluctuate relative to the proposed CY 2022 OPPS drug packaging threshold and the drug's payment status (packaged or separately payable) in CY 2021. These established policies have not changed for many years and are the same as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434). Specifically, for CY 2022, consistent with our historical practice, we proposed to apply the following policies to these HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals whose relationship to the drug packaging threshold changes based on the updated drug packaging threshold and on the final updated data:

• HCPCS codes for drugs and biologicals that were paid separately in CY 2021 and that are proposed for separate payment in CY 2022, and that then have per day costs equal to or less than the CY 2022 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2022 final rule, would continue to receive separate payment in CY 2022.

• HCPCS codes for drugs and biologicals that were packaged in CY 2021 and that are proposed for separate payment in CY 2022, and that then have per day costs equal to or less than the CY 2022 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2022 final rule, would remain packaged in CY 2022.

• HCPCS codes for drugs and biologicals for which we proposed packaged payment in CY 2022 but that then have per-day costs greater than the CY 2022 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2022 final rule, would receive separate payment in CY 2022.

We did not receive any public comments on our proposal to recalculate the mean unit cost for items that do not currently have an ASP-based payment rate from all of the CY 2019 claims data and updated cost report information available for this CY 2022 final rule with comment period to determine their final per day cost. We also did not receive any public comments on our proposal to continue to follow the established policies, initially adopted for the CY 2005 OPPS (69 FR 65780), when the packaging status of some HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals in the proposed rule may be different from the same drug HCPCS code's packaging status determined based on the data used for the final rule with comment period. For CY 2022, we are finalizing these two proposals without modification. Please refer to Addendum B to this final rule with comment period, which is available via the internet on the CMS website, for information on the packaging status of drugs, biologicals, and therapeutic radiopharmaceuticals.

c. Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals

As mentioned earlier in this section, under the OPPS, we package several categories of nonpass-through drugs, biologicals, and radiopharmaceuticals, regardless of the cost of the products. Because the products are packaged according to the policies in 42 CFR 419.2(b), we refer to these packaged drugs, biologicals, and radiopharmaceuticals as “policy-packaged” drugs, biologicals, and radiopharmaceuticals. These policies are either longstanding or based on longstanding principles and inherent to the OPPS and are as follows:

• Anesthesia, certain drugs, biologicals, and other pharmaceuticals; medical and surgical supplies and equipment; surgical dressings; and devices used for external reduction of fractures and dislocations (§ 419.2(b)(4));
• Intraoperative items and services (§ 419.2(b)(14));
• Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including, but not limited to, diagnostic radiopharmaceuticals, contrast agents, and pharmacologic stress agents) (§ 419.2(b)(15)); and
• Drugs and biologicals that function as supplies when used in a surgical procedure (including, but not limited to, skin substitutes and similar products that aid wound healing and implantable biologicals) (§ 419.2(b)(16)).

The policy at § 419.2(b)(16) is broader than that at § 419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with comment period: “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). The category described by § 419.2(b)(15) is large and includes diagnostic radiopharmaceuticals, contrast agents, stress agents, and some other products. The category described by § 419.2(b)(16) includes skin substitutes and some other products. We believe it is important to reiterate that cost consideration is not a factor when determining whether an item is a surgical supply (79 FR 66875).

Comment: One commenter requested that we develop a policy to provide separate payment for drugs that are administered at the time of ophthalmic surgery and have an FDA-approved indication to treat or prevent postoperative issues.

Response: A surgical procedure episode consists of both pre-operative and post-operative care in addition to the surgical procedure itself. If a drug used to address a post-operative concern, such as pain management, is billed together with a surgical procedure, we assume that the pain management drug was given as a part of the overall surgical procedure. Since the pain management drug is ancillary to the primary ophthalmic surgery procedure, it is considered a surgical supply. The pain management drug is only administered to the patient because the patient has received ophthalmic surgery, and the drug would not have been administered to the patient if the patient did not have the surgery. In the OPPS, we pay one rate for the entire surgical procedure, and payment for supplies, such as pain management drugs, is packaged into the payment rate for the surgical procedure. We note exceptions to this policy in the ASC setting are discussed in II.A.3.b. (Payment Policy for Non-Opioid Pain Management Drugs and Biologicals that Function as Surgical Supplies under the ASC Payment System) of this final rule with comment period.

Comment: One commenter recommended that CMS continue to apply radiolabeled product edits to the nuclear medicine procedures to ensure that all packaged costs are included on nuclear medicine claims in order to establish appropriate payment rates in the future. The commenter was concerned that many providers performing nuclear medicine procedures are not including the cost of diagnostic radiopharmaceuticals used for the procedures in their claims submissions. The commenter believes this lack of drug cost reporting could be causing the cost of nuclear medicine procedures to be underreported and therefore request that the radiolabeled product edits be reinstated.

Response: We appreciated the commenter's feedback; however, we are not reinstating the radiolabeled product edits to nuclear medicine procedures, which required a diagnostic radiopharmaceutical to be present on the same claim as a nuclear medicine procedure for payment to be made under the OPPS. As previously discussed in the CY 2020 OPPS/ASC final rule with comment period (85 FR 86033 through 86034), the edits were in place between CY 2008 and CY 2014 (78 FR 75033). We believe the period of time in which the edits were in place was sufficient for hospitals to gain experience reporting procedures involving radiolabeled products and to become accustomed to ensuring that they code and report charges so that their claims fully and appropriately reflect the costs of those radiolabeled products. As with all other items and services recognized under the OPPS, we expect hospitals to code and report their costs appropriately, regardless of whether there are claims processing edits in place.

Comment: Several commenters requested that diagnostic radiopharmaceuticals be paid separately in all cases, not just when the drugs have pass-through payment status. One commenter suggested payment based upon ASP, WAC, AWP, or mean unit cost data derived from hospital claims. Some commenters mentioned that pass-through payment status helps the diffusion of new diagnostic radiopharmaceuticals into the market, but is not enough to make up for what the commenters believe is inadequate payment after pass-through status expires. Commenters opposed incorporating the cost of the drug into the associated APC, and provided evidence showing procedures in which diagnostic radiopharmaceuticals are considered to be a surgical supply, which the commenter believed are often paid at a lower rate than the payment rate for the diagnostic radiopharmaceutical itself when the drug had pass-through payment status. Additionally, commenters proposed alternative payment methodologies such as subjecting diagnostic radiopharmaceuticals to the drug packaging threshold, creating separate APC payments for diagnostic radiopharmaceuticals that cost more than $500, or using ASP, WAC, or AWP to account for packaged radiopharmaceutical costs.

Response: We thank commenters for their suggestions. Commenters have made many of these suggestions in the past and we addressed them in previous rules, including the CY 2020 OPPS/ASC final rule (84 FR 61314 through 61315) and the CY 2021 OPPS/ASC final rule (85 FR 86034). We continue to believe that diagnostic radiopharmaceuticals are an integral component of many nuclear medicine and imaging procedures and charges associated with them should be reported on hospital claims to the extent they are used, and accordingly, the payment for the radiopharmaceuticals is reflected within the payment for the primary procedure.

In response to the comment regarding the proposed cost of the packaged procedure in CY 2022 being substantially lower than the payment rate of the radiopharmaceutical when it was on pass-through payment status plus the payment rate of the procedure associated with the radiopharmaceutical, we note that rates are established in a manner that uses the geometric mean of reported costs to furnish the procedure based on data submitted to CMS from all hospitals paid under the OPPS to set the payment rate for the service. Accordingly, the costs that are calculated by Medicare reflect the average costs of items and services that are packaged into a primary procedure and will not necessarily equal the sum of the cost of the primary procedure and the average sales price of the specific items and services used in the procedure in each case. Furthermore, the costs will be based on the reported costs submitted to Medicare by the hospitals and not the list price established by the manufacturer. Claims data that include the radiopharmaceutical packaged with the associated procedure reflect the combined cost of the procedure and the radiopharmaceutical used in the procedure. Additionally, we do not believe it is appropriate to create a new packaging threshold specifically for diagnostic radiopharmaceuticals as such a threshold would not align with our overall packaging policy and commenters have submitted only limited data to support a specific threshold.

With respect to the request that we create a new APC for each radiopharmaceutical product, we do not believe it is appropriate to create unique APCs for diagnostic radiopharmaceuticals. Diagnostic radiopharmaceuticals function as supplies during a diagnostic test or procedure and following our longstanding packaging policy, these items are packaged under the OPPS. Packaging supports our goal of making OPPS payments consistent with those of a prospective payment system, which packages costs into a single aggregate payment for a service, encounter, or episode of care. Furthermore, diagnostic radiopharmaceuticals function as supplies that enable the provision of an independent service, and are not themselves the primary therapeutic modality, and therefore, we do not believe they warrant separate payment through creation of a unique APC at this time. We welcome ongoing dialogue with stakeholders regarding suggestions for payment changes for consideration in future rulemaking.

Comment: One commenter expressed their approval of the drugs proposed to be included in our policy-packaged drug policy.

Response: We appreciate the support of the commenter.

After consideration of the public comments we received, we are finalizing our proposals without modification to continue our drug packaging policies, which are included in the regulation text 42 CFR 419.2(b).

d. Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological but Different Dosages

In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 through 60491), we finalized a policy to make a single packaging determination for a drug, rather than an individual HCPCS code, when a drug has multiple HCPCS codes describing different dosages because we believe that adopting the standard HCPCS code-specific packaging determinations for these codes could lead to inappropriate payment incentives for hospitals to report certain HCPCS codes instead of others. We continue to believe that making packaging determinations on a drug-specific basis eliminates payment incentives for hospitals to report certain HCPCS codes for drugs and allows hospitals flexibility in choosing to report all HCPCS codes for different dosages of the same drug or only the lowest dosage HCPCS code. Therefore, we proposed to continue our policy to make packaging determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for those HCPCS codes that describe the same drug or biological but different dosages in CY 2022.

For CY 2022, in order to propose a packaging determination that is consistent across all HCPCS codes that describe different dosages of the same drug or biological, we aggregated both our CY 2019 claims data and our pricing information at ASP+6 percent across all of the HCPCS codes that describe each distinct drug or biological in order to determine the mean units per day of the drug or biological in terms of the HCPCS code with the lowest dosage descriptor. The following drugs did not have pricing information available for the ASP methodology for the CY 2022 OPPS/ASC proposed rule, and as is our current policy for determining the packaging status of other drugs, we used the mean unit cost available from the CY 2019 claims data to make the proposed packaging determinations for these drugs: HCPCS code C9257 (Injection, bevacizumab, 0.25 mg); HCPCS code J1840 (Injection, kanamycin sulfate, up to 500 mg); HCPCS code J1850 (Injection, kanamycin sulfate, up to 75 mg); HCPCS code J3472 (Injection, hyaluronidase, ovine, preservative free, per 1000 usp units); HCPCS code J7100 (Infusion, dextran 40, 500 ml); and HCPCS code J7110 (Infusion, dextran 75, 500 ml).

For all other drugs and biologicals that have HCPCS codes describing different doses, we then multiplied the proposed weighted average ASP+6 percent per unit payment amount across all dosage levels of a specific drug or biological by the estimated units per day for all HCPCS codes that describe each drug or biological from our claims data to determine the estimated per day cost of each drug or biological at less than or equal to the proposed CY 2022 drug packaging threshold of $130 (so that all HCPCS codes for the same drug or biological would be packaged) or greater than the proposed CY 2022 drug packaging threshold of $130 (so that all HCPCS codes for the same drug or biological would be separately payable). The proposed packaging status of each drug and biological HCPCS code to which this methodology would apply in CY 2022 is displayed in Table 41.

Comment: One commenter supported our proposal to continue our current policy to make packaging determinations on a drug-specific basis rather than a HCPCS code basis when multiple HCPCS codes are used to describe different quantities of a drug or biological.

Response: We appreciate the support of the commenter.

After reviewing the public comments, we are finalizing our proposal, without modification, to continue our policy to make packaging determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for those HCPCS codes that describe the same drug or biological but different dosages. The packaging status of each drug and biological HCPCS code to which this methodology applies in CY 2022 is displayed in Table 41.

2. Payment for Drugs and Biologicals Without Pass-Through Status That Are Not Packaged

a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other Separately Payable Drugs and Biologicals

Section 1833(t)(14) of the Act defines certain separately payable radiopharmaceuticals, drugs, and biologicals and mandates specific payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a “specified covered outpatient drug” (known as a SCOD) is defined as a covered outpatient drug, as defined in section 1927(k)(2) of the Act, for which a separate APC has been established and that either is a radiopharmaceutical agent or is a drug or biological for which payment was made on a pass-through basis on or before December 31, 2002.

Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and biologicals are designated as exceptions and are not included in the definition of SCODs. These exceptions are—

• A drug or biological for which payment is first made on or after January 1, 2003, under the transitional pass-through payment provision in section 1833(t)(6) of the Act.
• A drug or biological for which a temporary HCPCS code has not been assigned.
• During CYs 2004 and 2005, an orphan drug (as designated by the Secretary).

Section 1833(t)(14)(A)(iii) of the Act requires that payment for SCODs in CY 2006 and subsequent years be equal to the average acquisition cost for the drug for that year as determined by the Secretary, subject to any adjustment for overhead costs and taking into account the hospital acquisition cost survey data collected by the Government Accountability Office (GAO) in CYs 2004 and 2005, and later periodic surveys conducted by the Secretary as set forth in the statute. If hospital acquisition cost data are not available, the law requires that payment be equal to payment rates established under the methodology described in section 1842(o), section 1847A, or section 1847B of the Act, as calculated and adjusted by the Secretary as necessary for purposes of paragraph (14). We refer to this alternative methodology as the “statutory default.” Most physician Part B drugs are paid at ASP+6 percent in accordance with section 1842(o) and section 1847A of the Act.

Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in OPPS payment rates for SCODs to take into account overhead and related expenses, such as pharmacy services and handling costs. Section 1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead and related expenses and to make recommendations to the Secretary regarding whether, and if so how, a payment adjustment should be made to compensate hospitals for overhead and related expenses. Section 1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the weights for ambulatory procedure classifications for SCODs to take into account the findings of the MedPAC study.

It has been our policy since CY 2006 to apply the same treatment to all separately payable drugs and biologicals, which include SCODs, and drugs and biologicals that are not SCODs. Therefore, we apply the payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, as required by statute, but we also apply it to separately payable drugs and biologicals that are not SCODs, which is a policy determination rather than a statutory requirement. In the CY 2022 OPPS/ASC proposed rule, we proposed to apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and biologicals, including SCODs. Although we do not distinguish SCODs in this discussion, we note that we are required to apply section 1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying this provision to other separately payable drugs and biologicals, consistent with our history of using the same payment methodology for all separately payable drugs and biologicals.

For a detailed discussion of our OPPS drug payment policies from CY 2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68386 through 68389), we first adopted the statutory default policy to pay for separately payable drugs and biologicals at ASP+6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act. We have continued this policy of paying for separately payable drugs and biologicals at the statutory default for CYs 2014 through 2021.

b. CY 2022 Payment Policy

For 2022, we proposed to continue our payment policy that has been in effect since CY 2013 to pay for separately payable drugs and biologicals, with the exception of 340B-acquired drugs, at ASP+6 percent in accordance with section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We proposed to pay for separately payable nonpass-through drugs acquired with a 340B discount at a rate of ASP minus 22.5 percent (as described in section V.B.6). We refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353 through 59371), and the CY 2021 OPPS/ASC final rule with comment period (85 FR 86042 through 86055) for more information about our current payment policy for drugs and biologicals acquired with a 340B discount.

In the case of a drug or biological during an initial sales period in which data on the prices for sales of the drug or biological are not sufficiently available from the manufacturer, section 1847A(c)(4) of the Act permits the Secretary to make payments that are based on WAC. Under section 1833(t)(14)(A)(iii)(II) of the Act, the amount of payment for a separately payable drug equals the average price for the drug for the year established under, among other authorities, section 1847A of the Act. As explained in greater detail in the CY 2019 PFS final rule, under section 1847A(c)(4) of the Act, although payments may be based on WAC, unlike section 1847A(b) of the Act (which specifies that payments using ASP or WAC must be made with a 6 percent add-on), section 1847A(c)(4) of the Act does not require that a particular add-on amount be applied to WAC-based pricing for this initial period when ASP data is not available. Consistent with section 1847A(c)(4) of the Act, in the CY 2019 PFS final rule (83 FR 59661 to 59666), we finalized a policy that, effective January 1, 2019, WAC-based payments for Part B drugs made under section 1847A(c)(4) of the Act will utilize a 3-percent add-on in place of the 6-percent add-on that was being used according to our policy in effect as of CY 2018. For the CY 2019 OPPS, we followed the same policy finalized in the CY 2019 PFS final rule (83 FR 59661 to 59666). For CYs 2020 and 2021, we adopted a policy to utilize a 3-percent add-on instead of a 6-percent add-on for drugs that are paid based on WAC under section 1847A(c)(4) of the Act pursuant to our authority under section 1833(t)(14)(A)(iii)(II) (84 FR 61318 and 85 FR 86039). For 2022, we proposed to continue to utilize a 3-percent add-on instead of a 6-percent add-on for drugs that are paid based on WAC pursuant to our authority under section 1833(t)(14)(A)(iii)(II) of the Act, which provides, in part, that the amount of payment for a SCOD is the average price of the drug in the year established under section 1847A of the Act. We also proposed to apply this provision to non-SCOD separately payable drugs. Because we proposed to establish the average price for a drug paid based on WAC under section 1847A of the Act as WAC+3 percent instead of WAC+6 percent, we believe it is appropriate to price separately payable drugs paid based on WAC at the same amount under the OPPS. We proposed that, if finalized, our proposal to pay for drugs or biologicals at WAC+3 percent, rather than WAC+6 percent, would apply whenever WAC-based pricing is used for a drug or biological under 1847A(c)(4). For drugs and biologicals that would otherwise be subject to a payment reduction because they were acquired under the 340B Program, the payment amount for these drugs (proposed as a rate of WAC minus 22.5 percent) would continue to apply. We refer readers to the CY 2019 PFS final rule (83 FR 59661 to 59666) for additional background on this policy.

We proposed that payments for separately payable drugs and biologicals would be included in the budget neutrality adjustments, under the requirements in section 1833(t)(9)(B) of the Act. We also proposed that the budget neutral weight scalar would not be applied in determining payments for these separately payable drugs and biologicals.

We note that separately payable drug and biological payment rates listed in Addenda A and B to the CY 2022 OPPS/ASC proposed rule (available via the internet on the CMS website), which illustrate the proposed CY 2022 payment of ASP+6 percent for separately payable nonpass-through drugs and biologicals and ASP+6 percent for pass-through drugs and biologicals, reflect either ASP information that is the basis for calculating payment rates for drugs and biologicals in the physician's office setting effective April 1, 2021, or WAC, AWP, or mean unit cost from CY 2019 claims data and updated cost report information available for the CY 2022 OPPS/ASC proposed rule. In general, these published payment rates are not the same as the actual January 2022 payment rates. This is because payment rates for drugs and biologicals with ASP information for January 2022 will be determined through the standard quarterly process where ASP data submitted by manufacturers for the third quarter of CY 2021 (July 1, 2021, through September 30, 2021) will be used to set the payment rates that are released for the quarter beginning in January 2022 in December 2021. In addition, payment rates for drugs and biologicals in Addenda A and B to the proposed rule for which there was no ASP information available for April 2021 are based on mean unit cost in the available CY 2019 claims data. If ASP information becomes available for payment for the quarter beginning in January 2022, we will price payment for these drugs and biologicals based on their newly available ASP information. Finally, there may be drugs and biologicals that have ASP information available for the proposed rule (reflecting April 2021 ASP data) that do not have ASP information available for the quarter beginning in January 2022. These drugs and biologicals would then be paid based on mean unit cost data derived from CY 2019 hospital claims. Therefore, the proposed payment rates listed in Addenda A and B to the proposed rule are not for January 2022 payment purposes and are only illustrative of the CY 2022 OPPS payment methodology using the most recently available information at the time of issuance of the proposed rule.

Comment: Multiple commenters expressed their support for paying for separately payable drugs and biologicals at ASP+6 percent. The commenters believe this policy is consistent with statute and Congressional intent, and generates more predictable payment for providers than previous payment methodologies for drugs and biologicals. The commenters believe the ASP+6 percent payment policy ensures equivalent payment for drugs and biologicals between the outpatient hospital setting and the physician office, which encourages Medicare beneficiaries to receive care in the most clinically appropriate setting.

Response: We appreciate the commenters' feedback.

Comment: One commenter requested that an add-on percentage of greater than 6 percent of ASP be paid for separately payable radiopharmaceuticals to reflect higher overhead and handling costs for these products.

Response: The add-on percentage of 6 percent is generally viewed as reflecting the overhead and handling cost of most drugs, radiopharmaceuticals, and biologicals that are separately payable in the OPPS even though the overhead and handling costs for individual products may be higher or lower than 6 percent of the ASP. We believe that the add-on percentage of 6 percent is appropriate for separately payable radiopharmaceuticals.

Comment: Two commenters requested that we exclude both diagnostic and therapeutic radiopharmaceuticals from our proposed policy that during an initial sales period in which data on the prices for sales of the drug or biological are not sufficiently available from the manufacturer, that payments can be made for drugs using WAC pricing plus a 3 percent price add-on. The commenters believe the cost of preparing radiopharmaceuticals is higher than the cost of preparing other drugs and biologicals and a 6 percent price add-on should be required anytime that we use WAC to price a radiopharmaceutical.

Response: The WAC of a drug or biological is defined in section 1847A(c)(6)(B) of the Act as the manufacturer's list price for the drug or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of drug or biological pricing data. Because the WAC does not include discounts, it typically exceeds ASP, and the use of a WAC-based payment amount for the same drug results in higher dollar payments than the use of an ASP-based payment amount. Also, MedPAC in their June 2017 Report to the Congress ( http://www.medpac.gov/docs/default-source/reports/jun17_reporttocongress_sec.pdf , pages 42 through 44) suggested that greater parity between ASP-based acquisition costs and WAC-based payments for Part B drugs could be achieved and recommended changing the 6 percent add-on for WAC-based payments to 3 percent. Given this evidence that WAC pricing tends to overestimate drug cost, we believe our current and proposed policy to pay drugs at WAC plus 3 percent for all drugs, biologicals, and radiopharmaceuticals when ASP is not available more accurately reflects the cost of new products recently entering the market than does WAC plus 6 percent.

After considering the public comments we received, we are finalizing our proposals related to payment for SCODs and other separately payable drugs and biologicals without modification.

c. Biosimilar Biological Products

For CY 2016 and CY 2017, we finalized a policy to pay for biosimilar biological products based on the payment allowance of the product as determined under section 1847A of the Act and to subject nonpass-through biosimilar biological products to our annual threshold-packaged policy (for CY 2016, 80 FR 70445 through 70446; and for CY 2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, we proposed to continue this same payment policy for biosimilar biological products.

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59351), we noted that, with respect to comments we received regarding OPPS payment for biosimilar biological products, in the CY 2018 PFS final rule, CMS finalized a policy to implement separate HCPCS codes for biosimilar biological products. Therefore, consistent with our established OPPS drug, biological, and radiopharmaceutical payment policy, HCPCS coding for biosimilar biological products is based on the policy established under the CY 2018 PFS final rule.

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59351), after consideration of the public comments we received, we finalized our proposed payment policy for biosimilar biological products, with the following technical correction: All biosimilar biological products are eligible for pass-through payment and not just the first biosimilar biological product for a reference product. In the CY 2019 OPPS/ASC proposed rule (83 FR 37123), for CY 2019, we proposed to continue the policy in place from CY 2018 to make all biosimilar biological products eligible for pass-through payment and not just the first biosimilar biological product for a reference product.

In addition, in CY 2018, we adopted a policy that biosimilars without pass-through payment status that were acquired under the 340B Program would be paid the ASP of the biosimilar minus 22.5 percent of the reference product's ASP (82 FR 59367). We adopted this policy in the CY 2018 OPPS/ASC final rule with comment period because we believe that biosimilars without pass-through payment status acquired under the 340B Program should be treated in the same manner as other drugs and biologicals acquired through the 340B Program. As noted earlier, biosimilars with pass-through payment status are paid their own ASP+6 percent of the reference product's ASP. Separately payable biosimilars that do not have pass-through payment status and are not acquired under the 340B Program are also paid their own ASP plus 6 percent of the reference product's ASP. If a biosimilar does not have ASP pricing, but instead has WAC pricing, the WAC pricing add-on of either 3 percent or 6 percent is calculated from the biosimilar's WAC and is not calculated from the WAC price of the reference product.

As noted in the CY 2019 OPPS/ASC proposed rule (83 FR 37123), several stakeholders raised concerns to us that the payment policy for biosimilars acquired under the 340B Program could unfairly lower the OPPS payment for biosimilars not on pass-through payment status because the payment reduction would be based on the reference product's ASP, which would generally be expected to be priced higher than the biosimilar, thus resulting in a more significant reduction in payment than if the 22.5 percent was calculated based on the biosimilar's ASP. We agreed with stakeholders that the current payment policy could unfairly lower the price of biosimilars without pass-through payment status that are acquired under the 340B Program. In addition, we noted that we believed that these changes would better reflect the resources and production costs that biosimilar manufacturers incur. We also stated that we believe this approach is more consistent with the payment methodology for 340B-acquired drugs and biologicals, for which the 22.5 percent reduction is calculated based on the drug or biological's ASP, rather than the ASP of another product. In addition, we explained that we believed that paying for biosimilars acquired under the 340B Program at ASP minus 22.5 percent of the biosimilar's ASP, rather than 22.5 percent of the reference product's ASP, will more closely approximate hospitals' acquisition costs for these products.

Accordingly, in the CY 2019 OPPS/ASC proposed rule (83 FR 37123), we proposed changes to our Medicare Part B drug payment methodology for biosimilars acquired under the 340B Program. Specifically, for CY 2019 and subsequent years, in accordance with section 1833(t)(14)(A)(iii)(II) of the Act, we proposed to pay nonpass-through biosimilars acquired under the 340B Program at ASP minus 22.5 percent of the biosimilar's ASP instead of the biosimilar's ASP minus 22.5 percent of the reference product's ASP. This proposal was finalized without modification in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58977).

For 2022, we proposed to continue our policy to make all biosimilar biological products eligible for pass-through payment and not just the first biosimilar biological product for a reference product. We also proposed to continue our current policy of paying for nonpass-through biosimilars acquired under the 340B program at the biosimilar's ASP minus 22.5 percent of the biosimilar's ASP instead of the biosimilar's ASP minus 22.5 percent of the reference product's ASP, in accordance with section 1833(t)(14)(A)(iii)(II) of the Act.

Comment: One commenter supported our proposal to continue our policy from CY 2018 to make biosimilar biological products eligible for pass-through payment and not just the first biosimilar biological product for a reference product.

Response: We appreciate the commenter's support of this established policy.

Comment: Multiple commenters supported our proposal to pay nonpass-through biosimilars acquired under the 340B Program at ASP minus 22.5 percent of the biosimilar's ASP, rather than the reference product's ASP.

Response: We appreciate the commenters' support. Please see section V.B.6. of this final rule with comment period for a discussion of payment policy for drugs and biologicals acquired under the 340B program.

Comment: One commenter did not support our proposal to continue our CY 2018 policy to make all biosimilar biological products eligible for pass-through payment and not just the first biosimilar biological product for a reference product. The commenter believes that there should be a “level playing field” between biosimilars and their reference products in order to increase competition and reduce costs for beneficiaries. The commenter does not believe it is fair for biosimilars of a reference product to be receiving passthrough payment of ASP plus 6 percent of the reference product's ASP. The commenter pointed out that when the reference product is no longer eligible for pass-through payment, if it is acquired under the 340B program, hospitals would be paid for the product at ASP minus 22.5 percent, while the biosimilar that has pass-through status continues to receive payment at ASP plus 6 percent of the reference product's ASP. The commenter believes that this difference in the payment rates for biosimilars and their reference products could potentially lead to increased Medicare spending on biosimilars as providers utilize biosimilars instead of the biosimilars' reference products because of the higher payment rates for biosimilars in these circumstances.

Response: As discussed in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58977), we continue to believe that eligibility for pass-through payment status reflects the unique, complex nature of biosimilars and is important as biosimilars become established in the market, just as it is for all other new drugs and biologicals. In terms of the potential increased payment for biosimilars under our policy to allow biosimilars to be eligible for pass-through status, overall increased competition due to the presence of more biosimilars on the market as a result of this policy is expected to drive payments down for both Medicare and for beneficiaries over time, even if there may be increased spending on biosimilars in the short term.

After consideration of the public comments we received, we are finalizing our proposed payment policy for biosimilar products, without modification, to continue the policy established in CY 2018 to make all biosimilar biological products eligible for pass-through payment and not just the first biosimilar biological product for a reference product. We are also finalizing our proposal to continue to pay nonpass-through biosimilars acquired under the 340B Program at the biosimilar's ASP minus 22.5 percent of the biosimilar's, rather than the reference product's ASP. Our final policy regarding the payment rate for drugs and biologicals that are acquired under the 340B program is described in section V.B.6 of this final rule with comment period.

3. Payment Policy for Therapeutic Radiopharmaceuticals

For CY 2022, we proposed to continue the payment policy for therapeutic radiopharmaceuticals that began in CY 2010. We pay for separately payable therapeutic radiopharmaceuticals under the ASP methodology adopted for separately payable drugs and biologicals. If ASP information is unavailable for a therapeutic radiopharmaceutical, we base therapeutic radiopharmaceutical payment on mean unit cost data derived from hospital claims. We believe that the rationale outlined in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 through 60525) for applying the principles of separately payable drug pricing to therapeutic radiopharmaceuticals continues to be appropriate for nonpass-through, separately payable therapeutic radiopharmaceuticals in CY 2022. Therefore, we proposed for CY 2022 to pay all nonpass-through, separately payable therapeutic radiopharmaceuticals at ASP+6 percent, based on the statutory default described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full discussion of ASP-based payment for therapeutic radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final rule with comment period (74 FR 60520 through 60521). We also proposed to rely on CY 2019 mean unit cost data derived from hospital claims data for payment rates for therapeutic radiopharmaceuticals for which ASP data are unavailable and to update the payment rates for separately payable therapeutic radiopharmaceuticals according to our usual process for updating the payment rates for separately payable drugs and biologicals on a quarterly basis if updated ASP information is unavailable. For a complete history of the OPPS payment policy for therapeutic radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65811), the CY 2006 OPPS final rule with comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524). The proposed CY 2022 payment rates for nonpass-through, separately payable therapeutic radiopharmaceuticals are included in Addenda A and B to the CY 2022 OPPS/ASC proposed rule (which are available via the internet on the CMS website).

Comment: One commenter supported the continuation of this policy to provide a predicable payment methodology and avoid the payment swings that occurred prior to adoption of the statutory default rate for therapeutic radiopharmaceuticals.

Response: We thank the commenter for their support.

We did not receive any additional public comments on this proposal and are finalizing our proposal, without modification, to continue to pay all nonpass-through, separately payable therapeutic radiopharmaceuticals at ASP+6 percent. We are also finalizing our proposal to continue to rely on CY 2019 mean unit cost data derived from hospital claims data for payment rates for therapeutic radiopharmaceuticals for which ASP data are unavailable. The CY 2022 final payment rates for nonpass-through separately payable therapeutic radiopharmaceuticals are included in Addenda A and B to this final rule with comment period (which are available via the internet on the CMS website).

4. Payment for Blood Clotting Factors

For CY 2021, we provided payment for blood clotting factors under the same methodology as other nonpass-through separately payable drugs and biologicals under the OPPS and continued paying an updated furnishing fee (85 FR 86041). That is, for CY 2021, we provided payment for blood clotting factors under the OPPS at ASP+6 percent, plus an additional payment for the furnishing fee. We note that when blood clotting factors are provided in physicians' offices under Medicare Part B and in other Medicare settings, a furnishing fee is also applied to the payment. The CY 2021 updated furnishing fee was $0.238 per unit.

For 2022, we proposed to pay for blood clotting factors at ASP+6 percent, consistent with our proposed payment policy for other nonpass-through, separately payable drugs and biologicals, and to continue our policy for payment of the furnishing fee using an updated amount. Our policy to pay a furnishing fee for blood clotting factors under the OPPS is consistent with the methodology applied in the physician's office and in the inpatient hospital setting. These methodologies were first articulated in the CY 2006 OPPS final rule with comment period (70 FR 68661) and later discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765). The proposed furnishing fee update is based on the percentage increase in the Consumer Price Index (CPI) for medical care for the 12-month period ending with June of the previous year. Because the Bureau of Labor Statistics releases the applicable CPI data after the PFS and OPPS/ASC proposed rules are published, we are not able to include the actual updated furnishing fee in the proposed rules. Therefore, in accordance with our policy, as finalized in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765), we proposed to announce the actual figure for the percent change in the applicable CPI and the updated furnishing fee calculated based on that figure through applicable program instructions and posting on our website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html .

We proposed to provide payment for blood clotting factors under the same methodology as other separately payable drugs and biologicals under the OPPS and to continue payment of an updated furnishing fee. We will announce the actual figure of the percent change in the applicable CPI and the updated furnishing fee calculation based on that figure through the applicable program instructions and posting on the CMS website.

Comment: One commenter supports our proposal to continue to pay for blood clotting factors at ASP+6 percent plus a furnishing fee for the clotting factor update annually using the CPI. The commenter also supports our policy to pay the same clotting factor furnishing fee in both the hospital outpatient and physician office settings.

Response: We appreciate the commenter's support for our policies.

After reviewing the public comment that we received, we are finalizing our proposal, without modification, to provide payment for blood clotting factors under the same methodology as other separately payable drugs and biologicals under the OPPS and to continue payment of an updated furnishing fee. We will announce the actual figure of the percent change in the applicable CPI and the updated furnishing fee calculation based on that figure through the applicable program instructions and posting on the CMS website.

5. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims Data

For CY 2022, we proposed to continue to use the same payment policy as in CY 2021 for nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data, which describes how we determine the payment rate for drugs, biologicals, or radiopharmaceuticals without an ASP. For a detailed discussion of the payment policy and methodology, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70442 through 70443). The proposed CY 2022 payment status of each of the nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data is listed in Addendum B to the CY 2022 OPPS/ASC proposed rule, which is available via the internet on the CMS website.

We did not receive any comments on our proposal. Therefore, we are finalizing our CY 2022 proposal without modification, including our proposal to assign drug or biological products status indicator “K” and pay for them separately for the remainder of CY 2022 if pricing information becomes available. The CY 2022 payment status of each of the nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data is listed in Addendum B to this final rule with comment period, which is available via the internet on the CMS website.

6. CY 2022 OPPS Payment Methodology for 340B Purchased Drugs

a. Overview

Under the OPPS, payment rates for drugs are generally provided for in section 1833(t)(14)(A). Under that provision, the payment amount is more specifically set forth by cross-reference to section 1847A, which generally sets a default rate of ASP+6 percent for certain drugs; however, the Secretary has statutory authority to adjust that rate under the OPPS. As described below, beginning in CY 2018, the Secretary adjusted the 340B drug payment rate to ASP minus 22.5 percent to approximate a minimum average discount for 340B drugs, which was based on findings of the GAO and MedPAC that hospitals were acquiring drugs at a significant discount under HRSA's 340B Drug Pricing Program. As described in the following sections, in December 2018, the United States District Court for the District of Columbia (the district court) concluded that the Secretary lacks the authority to bring the default rate in line with average acquisition cost unless the Secretary obtains survey data from hospitals on their acquisition costs. On July 10, 2019, the district court entered final judgment. The agency appealed to the United States Court of Appeals for the District of Columbia Circuit (hereinafter referred to as “the D.C. Circuit”), and on July 31, 2020, the court entered an opinion reversing the district court's judgment in this matter. Following the D.C. Circuit's reversal of the lower court's decision, appellees' petition for panel rehearing and petition for rehearing en banc were denied on October 16, 2020. For CY 2021, CMS continued its policy of paying for drugs and biologicals acquired through the 340B Program at ASP minus 22.5 percent.

On January 10, 2021, the appellees filed a petition for a writ of certiorari in the United States Supreme Court. On July 2, 2021, the Supreme Court granted their petition for a writ of certiorari and directed the parties to argue whether the petitioners' suit challenging HHS's 340B drugs payment adjustment is precluded by section 1833(t)(12).

b. Background

In the CY 2018 OPPS/ASC proposed rule (82 FR 33558 through 33724), we proposed changes to the OPPS payment methodology for drugs and biologicals (hereinafter referred to collectively as “drugs”) acquired under the 340B Program. We proposed these changes to better, and more accurately, reflect the resources and acquisition costs that these hospitals incur. We stated our belief that such changes would allow Medicare beneficiaries (and the Medicare program) to pay a more appropriate amount when hospitals participating in the 340B Program furnish drugs to Medicare beneficiaries that are purchased under the 340B Program. Subsequently, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 through 59370), we finalized our proposal and adjusted the payment rate for separately payable drugs and biologicals (other than drugs with pass-through payment status and vaccines) acquired under the 340B Program from ASP+6 percent to ASP minus 22.5 percent. We stated that our goal was to make Medicare payment for separately payable drugs more aligned with the resources expended by hospitals to acquire such drugs, while recognizing the intent of the 340B Program to allow covered entities, including eligible hospitals, to stretch scarce resources in ways that enable hospitals to continue providing access to care for Medicare beneficiaries and other patients. Congress created the 340B Drug Pricing Program so that the eligible entities—safety net providers identified in the statute—could stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. By design, the 340B Program increases the resources available to these safety net providers by providing discounts on covered outpatient drugs that generate savings that can be used to support patient care or other services. When the program was created, there was an understanding that many of the patients seen by these safety net providers were Medicare and Medicaid beneficiaries. This rule aims to fulfill the goals of different Federal programs, each of which helps ensure access to care for vulnerable populations. We note, however, that the 340B program does not contemplate subsidization from Medicare in the form of payments far exceeding hospitals' acquisition costs. We also note that critical access hospitals are not paid under the OPPS, and therefore are not subject to the OPPS payment policy for 340B-acquired drugs. We also excepted rural sole community hospitals, children's hospitals, and PPS-exempt cancer hospitals from the 340B payment adjustment in CY 2018. In addition, as stated in the CY 2018 OPPS/ASC final rule with comment period, this policy change does not apply to drugs with pass-through payment status, which are required to be paid based on the ASP methodology, or vaccines, which are excluded from the 340B Program.

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699 through 79706), we implemented section 603 of the Bipartisan Budget Act of 2015. As a general matter, applicable items and services furnished in certain off-campus outpatient departments of a provider on or after January 1, 2017, are not considered covered outpatient services for purposes of payment under the OPPS and are paid “under the applicable payment system,” which is generally the Physician Fee Schedule (PFS). However, consistent with our policy to pay separately payable, covered outpatient drugs and biologicals acquired under the 340B Program at ASP minus 22.5 percent, rather than ASP+6 percent, when billed by a hospital paid under the OPPS that is not excepted from the payment adjustment, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59015 through 59022), we finalized a policy to pay ASP minus 22.5 percent for 340B-acquired drugs and biologicals furnished in non-excepted off-campus PBDs paid under the PFS. We adopted this payment policy effective for CY 2019 and subsequent years.

We clarified in the CY 2019 OPPS/ASC proposed rule (83 FR 37125) that the 340B payment adjustment applies to drugs that are priced using either WAC or AWP, and that it has been our policy to subject 340B-acquired drugs that use these pricing methodologies to the 340B payment adjustment since the policy was first adopted. The 340B payment adjustment for WAC-priced drugs is WAC minus 22.5 percent. 340B-acquired drugs that are priced using AWP are paid an adjusted amount of 69.46 percent of AWP. The 69.46 percent of AWP is calculated by first reducing the original 95 percent of AWP price by 6 percent to generate a value that is similar to ASP or WAC with no percentage markup. Then we apply the 22.5 percent reduction to ASP/WAC-similar AWP value to obtain the 69.46 percent of AWP, which is similar to either ASP minus 22.5 percent or WAC minus 22.5 percent.

As discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 through 59370), to effectuate the payment adjustment for 340B-acquired drugs, we implemented modifier “JG”, effective January 1, 2018. Hospitals paid under the OPPS, other than a type of hospital excluded from the OPPS (such as critical access hospitals), or excepted from the 340B drug payment policy for CY 2018, were required to report modifier “JG” on the same claim line as the drug HCPCS code to identify a 340B-acquired drug. For CY 2018, rural sole community hospitals, children's hospitals and PPS-exempt cancer hospitals were excepted from the 340B payment adjustment. These hospitals were required to report informational modifier “TB” for 340B-acquired drugs, and continue to be paid ASP+6 percent. We refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353 through 59370) for a full discussion and rationale for the CY 2018 policies and use of modifiers “JG” and “TB”.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 58981), we continued the Medicare 340B payment policies that were implemented in CY 2018 and adopted a policy to pay for nonpass-through 340B-acquired biosimilars at ASP minus 22.5 percent of the biosimilar's ASP, rather than of the reference product's ASP. In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61321), we continued the 340B policies that were implemented in CY 2018 and CY 2019.

Our CY 2018 and 2019 OPPS payment policies for 340B-acquired drugs have been the subject of ongoing litigation. On December 27, 2018, in the case of American Hospital Association, et al. v. Azar, et al., the district court concluded in the context of reimbursement requests for CY 2018 that the Secretary exceeded his statutory authority by adjusting the Medicare payment rates for drugs acquired under the 340B Program to ASP minus 22.5 percent for that year. In that same decision, the district court recognized the “havoc that piecemeal review of OPPS payment could bring about' in light of the budget neutrality requirement,” and ordered supplemental briefing on the appropriate remedy. On May 6, 2019, after briefing on remedy, the district court issued an opinion that reiterated that the 2018 rate reduction exceeded the Secretary's authority, and declared that the rate reduction for 2019 (which had been finalized since the Court's initial order was entered) also exceeded his authority. Rather than ordering HHS to pay plaintiffs their alleged underpayments, however, the district court recognized that crafting a remedy is “no easy task, given Medicare's complexity,” and initially remanded the issue to HHS to devise an appropriate remedy while also retaining jurisdiction. The district court acknowledged that “if the Secretary were to retroactively raise the 2018 and 2019 340B rates, budget neutrality would require him to retroactively lower the 2018 and 2019 rates for other Medicare Part B products and services.” “And because HHS has already processed claims under the previous rates, the Secretary would potentially be required to recoup certain payments made to providers; an expensive and time-consuming prospect.”

We respectfully disagreed with the district court's understanding of the scope of the Secretary's adjustment authority. On July 10, 2019, the district court entered final judgment. The agency appealed to the D.C. Circuit, and on July 31, 2020, the court entered an opinion reversing the district court's judgment in this matter. Following the D.C. Circuit's decision, appellees' petition for panel rehearing and petition for rehearing en banc were denied on October 16, 2020. In January of 2021, appellees petitioned the United States Supreme Court for a writ of certiorari. On July 2, 2021, the Court granted the petition.

Before the D.C. Circuit upheld our authority to pay ASP minus 22.5 percent, we stated in the CY 2020 OPPS/ASC final rule with comment period that we were taking the steps necessary to craft an appropriate remedy in the event of an unfavorable decision on appeal. Notably, after the CY 2020 OPPS/ASC proposed rule was issued, we announced in the Federal Register (84 FR 51590) our intent to conduct a 340B hospital survey to collect drug acquisition cost data for certain quarters in CY 2018 and 2019. We stated that such survey data may be used in setting the Medicare payment amount for drugs acquired by 340B hospitals for cost years going forward, and also may be used to devise a remedy for prior years if the district court's ruling was upheld on appeal. The district court itself acknowledged that CMS may base the Medicare payment amount on average acquisition cost when survey data are available. No 340B hospital disputed in the rulemakings for CY 2018 and 2019 that the ASP minus 22.5 percent formula was a conservative adjustment that represented the minimum discount that hospitals receive for drugs acquired through the 340B program, which is significant because 340B hospitals have internal data regarding their own drug acquisition costs. We stated in the CY 2020 OPPS/ASC final rule with comment period that we thus anticipated that survey data collected for CY 2018 and 2019 would confirm that the ASP minus 22.5 percent rate is a conservative amount that overcompensates covered entity hospitals for drugs acquired under the 340B program. We also explained that a remedy that relies on such survey data could avoid the complexities referenced in the district court's opinion. For a complete discussion of the Hospital Acquisition Cost Survey for 340B-Acquired Specified Covered Outpatient Drugs, we refer readers to the CY 2021 OPPS/ASC proposed rule (85 FR 48882 through 48891) and the CY 2021 OPPS/ASC final rule with comment period (85 FR 86042 through 86055).

We proposed a payment rate for 340B drugs of ASP minus 28.7 percent based on survey data, and also proposed in the alternative that the agency could continue its current policy of paying ASP minus 22.5 percent for CY 2021. We explained that we adopted the OPPS 340B payment policy based on the average minimum discount for 340B-acquired drugs being approximately ASP minus 22.5 percent. The estimated discount was based on a MedPAC analysis identifying 22.5 percent as a conservative minimum discount that 340B entities receive when they purchase drugs under the 340B program, which we discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 52496). We emphasized that we continue to believe that ASP minus 22.5 percent is an appropriate payment rate for 340B-acquired drugs under the authority of section 1833(t)(14)(A)(iii)(II) for the reasons we stated when we adopted this policy in CY 2018 (82 FR 59216). We pointed out that on July 31, 2020, the D.C. Circuit reversed the decision of the district court, holding that this interpretation of the statute was reasonable. Therefore, we also proposed in the alternative that the agency could continue the current Medicare payment policy for CY 2021. If adopted, we stated that this proposed policy would continue the current Medicare payment policy for CY 2021.

Based on feedback from stakeholders, we stated that we believed maintaining the current payment policy of paying ASP minus 22.5 percent for 340B drugs was appropriate in order to maintain consistent and reliable payment for these drugs both for the remainder of the PHE, and after its conclusion, to give hospitals increased certainty as to payments for these drugs. We explained that continuing our current policy also gives us more time to conduct further analysis of hospital survey data for potential future use for 340B drug payment. We also noted that any changes to the current 340B payment policy would be adopted through public notice and comment rulemaking.

Finally, we stated that while we believe our methods to conduct the 340B Drug Acquisition Cost Survey, as well as the methodology we used to calculate the proposed average or typical discount received by 340B entities on 340B drugs, are valid, we nonetheless recognize the comments that we received from stakeholders. Utilization of the survey data is complex, and we emphasized that we wish to continue to evaluate how to balance and weigh the use of the survey data, the necessary adjustments to the data, and the weighting and incorporation of ceiling prices—all to determine how best to take the relevant factors into account for potentially using the survey to set Medicare OPPS drug payment policy. We stated that we would continue to assess commenters' feedback as we explore whether survey data should be considered hospital acquisition cost data for purposes of paying for drugs acquired under section 1833(t)(14)(A)(iii)(I) of the Act.

c. CY 2022 Proposed 340B Drug Payment Policy

For CY 2022, we proposed to continue our current policy of paying ASP minus 22.5 percent for 340B-acquired drugs and biologicals, including when furnished in nonexcepted off-campus PBDs paid under the PFS. We proposed, in accordance with section 1833(t)(14)(A)(iii)(II) of the Act, to pay for separately payable Medicare Part B drugs and biologicals (assigned status indicator “K”), other than vaccines and drugs on pass-through status, that are acquired through the 340B Program at ASP minus 22.5 percent when billed by a hospital paid under the OPPS that is not excepted from the payment adjustment. We proposed to continue our current policy for calculating payment for 340B-acquired biosimilars, which is discussed in section V.B.2.c. of the CY 2019 OPPS/ASC final rule with comment period, and would continue the policy we finalized in CY 2019 to pay ASP minus 22.5 percent for 340B-acquired drugs and biologicals furnished in nonexcepted off-campus PBDs paid under the PFS.

We also proposed to continue the 340B payment adjustment for WAC-priced drugs, which is WAC minus 22.5 percent. 340B-acquired drugs that are priced using AWP would continue to be paid an adjusted amount of 69.46 percent of AWP. Additionally, we proposed to continue to exempt rural sole community hospitals (as described under the regulations at § 412.92 and designated as rural for Medicare purposes), children's hospitals, and PPS-exempt cancer hospitals from the 340B payment adjustment. We stated that these hospitals would continue to report informational modifier “TB” for 340B-acquired drugs, and would continue to be paid ASP+6 percent. We also explained that we may revisit our policy to exempt rural SCHs, as well as other hospital types, from the 340B drug payment reduction in future rulemaking.

We stated that we are also continuing to require hospitals to use modifiers to identify 340B-acquired drugs. We refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353 through 59370) for a full discussion and rationale for the CY 2018 policies and the requirements for use of modifiers “JG” and “TB”. We explained that we believe maintaining the current policy of paying ASP minus 22.5 percent for 340B drugs is appropriate given the July 31, 2020 D.C. Circuit decision, which reversed the district court's decision and held that the interpretation of the statute was reasonable when the 340B drug payment policy was implemented in CY 2018. We noted that any changes to the current 340B payment policy would be adopted through public notice and comment rulemaking.

While we believe the Secretary has discretion to propose a payment rate for 340B drugs based on the 2020 survey results, we explained that we also continue to believe that the current payment rate of ASP minus 22.5 percent represents the minimum discount that 340B covered entities receive, which more closely aligns the payment rate with the resources expended by 340B hospitals to acquire such drugs compared to a payment rate of ASP+6 percent, while also recognizing the intent of the 340B program to allow covered entities, including eligible hospitals, to stretch scarce resources in ways that enable hospitals to continue providing access to care for Medicare beneficiaries and other patients. Additionally, we stated that we continue to believe it is important to provide consistency and reliable payment for these drugs both for the remainder of the PHE, and after its conclusion, to give hospitals increased certainty as to payments for these drugs.

d. Comments on the Proposed CY 2022 340B Payment Policy

Comment: Several commenters, including a hospital association, pharmaceutical research and manufacturing companies, and a community oncology association, supported the current OPPS payment policy for 340B-acquired drugs. They believed that approximating payment based on acquisition costs is appropriate; however, they also recommended reform to the 340B program itself. Some of these commenters believed the policy would continue to address the inappropriate growth of the 340B Program, stem physician practice consolidation with hospitals, and preserve patient access to community-based care.

Response: We thank the commenters for their support of our 340B payment policies. We note that comments related to the reform of the 340B program are outside of the scope of this final rule and we also note that the 340B program is administered by the Health Resources and Services Administration, not CMS; however, we thank commenters for their input.

Comment: A commenter inquired if the 340B drug payment policy applies to therapeutic radiopharmaceuticals that are paid based on the mean unit cost data, stating that it would be inappropriate and inaccurate to apply the 22.5 percent reduction to these payment amounts. Another commenter opposed the 340B drug payment policy specifically for therapeutic radiopharmaceuticals, citing the unique cost structure of radiopharmaceuticals. Another commenter requested a similar-product specific exemption for Chimeric Antigen Receptor T-cell (CAR T-cell) therapy when purchased through the 340B program.

Response: The 340B drug payment policy applies to OPPS separately payable drugs (status indicator “K”) purchased through the 340B drug program, which include therapeutic radiopharmaceuticals when these products are acquired through the 340B drug program. The classes of drugs exempted from the policy are vaccines (status indicator “L” or “M”), and drugs with transitional pass-through payment status (status indicator “G”). We note that the drug cost methodology has no impact on the application of the 340B discount. As we noted above, our policy applies to all drugs purchased through the 340B drug program except for vaccines and drugs with transitional pass-through payment status. While we acknowledge that radiopharmaceuticals necessitate special handling, we note that there are other drug classes that also necessitate special handling under the 340B program. Therefore, we disagree with the commenter that therapeutic radiopharmaceuticals purchased through the 340B drug program should qualify for an exemption from application of the payment adjustment. We note that, under the OPPS, the 340B payment adjustment is ASP minus 22.5 percent, WAC minus 22.5 percent, or 69.46 percent of AWP. We reiterate, these payment rates are based on the minimum average discount for products purchased through the 340B program, with the actual acquisition costs likely being much lower.

Comment: Some commenters had concerns that new biosimilars on pass-through status would have a competitive advantage over their reference product as a result of the disparity in OPPS payment for these products when a biosimilar has pass-through status. Commenters believed the disparity resulting from the combined 340B drug payment and pass-through policies would advantage biosimilars receiving pass-through payment if the applicable reference product is acquired under the 340B program and not receiving pass-through payment. The commenters believe the disparity would lead to inappropriate prescribing inconsistent with clinical guidelines and/or standards of care.

Response: We disagree with commenters that the current payment policy would unfairly place reference products at a competitive disadvantage relative to their applicable biosimilars. We believe the continuation of our current biosimilar policy will allow for appropriate payment and access to these important treatments. As noted in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86043), we do not believe that the biosimilars' temporary payments provided by pass-through status will create the substantial competitive advantage that commenters described. We note that the advantage of pass-through payment exists under the current 340B policy that includes both new drugs and biosimilars. We also note we are continuing the policy from previous years regarding biosimilars and 340B payment. Please see section V.B.2.C. of this final rule with comment period for additional discussion regarding biosimilars and section V.A.1. for additional discussion on drug pass-through payments. We note that the advantage of pass-through payment exists under the current 340B policy that includes both new drugs and biosimilars. We are continuing the policy from previous years regarding payment for biosimilars acquired under the 340B program.

Comment: Several commenters disagreed that ASP minus 22.5 was a conservative adjustment that represented the minimum discount that hospitals receive when they acquire drugs through the 340B program. They contended that they are losing money when dispensing certain drugs as the price paid by CMS is significantly lower than the price paid by the entity.

Response: We thank the commenters for their feedback. The 22.5 percent discount off of ASP is a conservative minimum discount for products acquired under the 340B program based on a 2015 MedPAC analysis, which we discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 52496). Our 2020 Hospital Acquisition Cost Survey for 340B-Acquired SCODs has shown the average discount to be about 34.7 percent. As noted in the 2021 OPPS/ASC final rule with comment period (85 FR 86045), the 2020 Hospital Acquisition Cost Survey for 340B-Acquired SCODS incorporated the 340B ceiling prices for hospitals that did not affirmatively respond to the survey and may have skewed the average discount determined based on survey results (34.7 percent off of ASP) towards the minimum average discount (that is, the ceiling price) that a 340B hospital would receive on a drug. Since the ceiling price is the maximum amount covered entities may permissibly be required to pay for a drug under section 340B(a)(1) of the Public Health Service Act, we would not expect any 340B hospital to have acquisition costs for any acquired drug that are greater than ASP minus 22.5 percent. Therefore, we disagree that covered entities are, on average, losing money under the current 340B drug payment policy of ASP minus 22.5 percent for drugs purchased through the 340B drug program.

Comment: Several commenters requested that we make our 340B exemptions policy permanent. Additionally, commenters asked CMS to extend the exemption to urban SCHs, Medicare Dependent Hospitals, Rural Referral Centers.

Response: We thank commenters for their recommendations. At this time, we do not believe it is appropriate to revise our 340B exemptions policy and believe we should maintain our current policy for CY 2022. Nonetheless, we will take these comments into consideration for future rulemaking.

Comment: Several commenters stated that CMS has not provided sufficient analysis for the continuation of the 340B payment policy, expressing their belief that CMS has not considered changes in utilization or volume for hospitals that are actively participating in the 340B program since the implementation of the policy. They further noted that CMS has not analyzed the impact of the prior year's reimbursement changes for drugs acquired under the 340B program for the affected hospitals. They contended that CMS has not provided evidence that the payment policy remains budget neutral by recalculating the policy's impact to make sure the conversion factor is properly adjusted over time to reflect changes in inflation or 340B drug utilization.

Response: In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 through 59370), we implemented the 340B drug payment policy and adjusted the payment rate for separately payable drugs and biologicals (other than drugs with pass-through payment status and vaccines) acquired under the 340B Program. This adjustment changed the payment rate from ASP+6 percent to ASP minus 22.5 percent for drugs subject to this policy. In that rule, we stated that our goal was to make Medicare payment for separately payable drugs more aligned with the resources expended by hospitals to acquire such drugs. We believe the current 340B drug payment policy reflects the average minimum discount that 340B participating hospitals receive for drugs acquired under the 340B Program, and we believe it is inappropriate for Medicare to subsidize other programs through Medicare payments for separately payable drugs. We note the data collected in our 2020 Hospital Acquisition Cost Survey for 340B-acquired SCODs found the average 340B program drug discount to be 34.7 percent.

With respect to OPPS budget neutrality and the conversion factor, OPPS budget neutrality is generally developed on a prospective basis by isolating the effect of any changes in payment policy or data under the prospective OPPS with all other factors held constant. We note that since the CY 2018 implementation of the 340B drug payment policy in which we developed a budget neutrality adjustment for the policy, the adjusted percentage payment has remained at ASP minus 22.5 percent. As a result, while some of the claims may change based on drug payment and billing, as indicated by the “JG” modifier, these drugs, including their utilization and expected payments, would be included as part of the broader budget neutrality adjustments, but collectively they would not have a separate budget neutrality adjustment specifically for the 340B drug payment policy. We note that in the rules in which we proposed to establish or modify the adjustment, we have included in the impact analysis the estimated effects on different categories of providers based on the policy. Finally, we note that we monitor the payment and utilization patterns associated with this adjustment and for drug spending more broadly, and will continue to do so.

Comment: Several commenters called on CMS to suspend the current 340B drug payment policy and restore the 340B drug and biological payment rate to the statutory ASP+6 percent until the litigation is resolved in the U.S. Supreme Court. Other commenters recommended CMS postpone any changes to the 340B drug payment policy until the court case has concluded. Others recommended CMS suspend the policy amid the COVID-19 Public Health Emergency (PHE).

Response: We acknowledge that the issue of the Secretary's authority to adjust the 340B drug payment rate is subject to litigation before the U.S. Supreme Court. As explained at prior stages of the litigation, we believe that the suit now before the Court is precluded by 1833(t)(12), and, in the alternative, that our 340B drug payment policy is within the statutory authority under 1833(t)(14)(A), which was confirmed by the D.C. Circuit. While the litigation involving this policy is pending, we believe maintaining the current payment policy for CY 2022 would be appropriate in order to maintain consistent and reliable payment. Regarding payment during the COVID-19 PHE, we believe maintaining consistent payment is important; therefore, we are maintaining our proposed policy. We note that any changes to this payment policy would be adopted through notice and comment rulemaking.

Comment: Many commenters opposed the CY 2022 proposal to pay for drugs acquired under the 340B program at the payment rate of ASP minus 22.5 percent. These commenters urged CMS to withdraw its proposed policy and contended that the policy was an unlawful application of the CMS's authority.

Many commenters opposed the current 340B policy and argued that it redistributes resources designated for safety net hospitals to subsidize non-340B or private hospitals because the payment reduction is budget neutral. The commenters requested that CMS end its policy of paying for drugs obtained through the 340B program at ASP minus 22.5 percent and restore the statutory default payment rate of ASP+6 percent.

Many commenters also alleged that private pharmacy benefit managers and third-party payers are citing Medicare's payment reduction to justify implementing similar policies that provide lower reimbursement for 340B drugs compared to non-340B drugs.

Response: We respectfully disagree with the commenters' assertions that our 340B drug payment policy is illegal or an unlawful application of the law. We disagree with commenters that the OPPS 340B payment policy has taken away resources designated for safety net hospitals and our internal analyses have not demonstrated any issues related to access of separately payable drugs as a result of the implementation of this policy. As discussed in this section of the CY 2022 final rule with comment period, the D.C. Circuit has confirmed that our 340B drug payment policy is within our authority in section 1833(t)(14) of the Act.

We note that CMS does not control policies created by private pharmacy benefit managers and third-party payers regarding payment for 340B drugs compared to non-340B drugs.

After reviewing the public comments for CY 2022, we are finalizing our proposal, without modification, to pay ASP minus 22.5 percent for 340B-acquired drugs, including when furnished in nonexcepted off-campus PBDs paid under the PFS. Our finalized proposal continues the 340B Program policies that were implemented in CY 2018 with the exception of the way we are calculating payment for 340B-acquired biosimilars, which is discussed in section V.B.2.c. of the CY 2019 OPPS/ASC final rule with comment period, and would continue the policy we finalized in CY 2019 to pay ASP minus 22.5 percent for 340B-acquired drugs and biologicals furnished in nonexcepted off-campus PBDs paid under the PFS.

We believe that the current payment rate of ASP minus 22.5 percent represents the minimum discount that 340B covered entities receive, which more closely aligns the payment rate with the resources expended by 340B hospitals to acquire such drugs compared to a payment rate of ASP+6 percent, while also recognizing the intent of the 340B program to allow covered entities, including eligible hospitals, to stretch scarce resources in ways that enable hospitals to continue providing access to care for Medicare beneficiaries and other patients. Additionally, we continue to believe it is important to provide consistent and reliable payment for these drugs both for the remainder of the PHE, and after its conclusion, to give hospitals increased certainty as to payments for these drugs. We note that any changes to this payment policy would be adopted through notice and comment rulemaking.

7. High Cost/Low Cost Threshold for Packaged Skin Substitutes

a. Background

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74938), we unconditionally packaged skin substitute products into their associated surgical procedures as part of a broader policy to package all drugs and biologicals that function as supplies when used in a surgical procedure. As part of the policy to package skin substitutes, we also finalized a methodology that divides the skin substitutes into a high cost group and a low cost group, in order to ensure adequate resource homogeneity among APC assignments for the skin substitute application procedures (78 FR 74933).

Skin substitutes assigned to the high cost group are described by HCPCS codes 15271 through 15278. Skin substitutes assigned to the low cost group are described by HCPCS codes C5271 through C5278. Geometric mean costs for the various procedures are calculated using only claims for the skin substitutes that are assigned to each group. Specifically, claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to calculate the geometric mean costs for procedures assigned to the high cost group, and claims billed with HCPCS code C5271, C5273, C5275, or C5277 are used to calculate the geometric mean costs for procedures assigned to the low cost group (78 FR 74935).

Each of the HCPCS codes described earlier are assigned to one of the following three skin procedure APCs according to the geometric mean cost for the code: APC 5053 (Level 3 Skin Procedures): HCPCS codes C5271, C5275, and C5277; APC 5054 (Level 4 Skin Procedures): HCPCS codes C5273, 15271, 15275, and 15277; or APC 5055 (Level 5 Skin Procedures): HCPCS code 15273. In CY 2021, the payment rate for APC 5053 (Level 3 Skin Procedures) was $524.17, the payment rate for APC 5054 (Level 4 Skin Procedures) was $1,715.36, and the payment rate for APC 5055 (Level 5 Skin Procedures) was $3,522.15. This information also is available in Addenda A and B of the CY 2021 OPPS/ASC final rule with comment period, as issued with the final rule correction notice (86 FR 11428) (the correction notice and corrected Addenda A and B are available via the internet on the CMS website).

We have continued the high cost/low cost categories policy since CY 2014, and we proposed to continue it for CY 2022. Under the current policy, skin substitutes in the high cost category are reported with the skin substitute application CPT codes, and skin substitutes in the low cost category are reported with the analogous skin substitute HCPCS C-codes. For a discussion of the CY 2014 and CY 2015 methodologies for assigning skin substitutes to either the high cost group or the low cost group, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 74932 through 74935) and the CY 2015 OPPS/ASC final rule with comment period (79 FR 66882 through 66885).

For a discussion of the high cost/low cost methodology that was adopted in CY 2016 and has been in effect since then, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 through 70435). Beginning in CY 2016 and in subsequent years, we adopted a policy where we determined the high cost/low cost status for each skin substitute product based on either a product's geometric mean unit cost (MUC) exceeding the geometric MUC threshold or the product's per day cost (PDC) (the total units of a skin substitute multiplied by the mean unit cost and divided by the total number of days) exceeding the PDC threshold. We assigned each skin substitute that exceeded either the MUC threshold or the PDC threshold to the high cost group. In addition, we assigned any skin substitute with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low cost group (85 FR 86059).

However, some skin substitute manufacturers have raised concerns about significant fluctuation in both the MUC threshold and the PDC threshold from year to year using the methodology developed in CY 2016. The fluctuation in the thresholds may result in the reassignment of several skin substitutes from the high cost group to the low cost group which, under current payment rates, can be a difference of over $1,000 in the payment amount for the same procedure. In addition, these stakeholders were concerned that the inclusion of cost data from skin substitutes with pass-through payment status in the MUC and PDC calculations would artificially inflate the thresholds. Skin substitute stakeholders requested that CMS consider alternatives to the current methodology used to calculate the MUC and PDC thresholds and also requested that CMS consider whether it might be appropriate to establish a new cost group in between the low cost group and the high cost group to allow for assignment of moderately priced skin substitutes to a newly created middle group.

We share the goal of promoting payment stability for skin substitute products and their related procedures as price stability allows hospitals using such products to more easily anticipate future payments associated with these products. We have attempted to limit year-to-year shifts for skin substitute products between the high cost and low cost groups through multiple initiatives implemented since CY 2014, including: Establishing separate skin substitute application procedure codes for low-cost skin substitutes (78 FR 74935); using a skin substitute's MUC calculated from outpatient hospital claims data instead of an average of ASP+6 percent as the primary methodology to assign products to the high cost or low cost group (79 FR 66883); and establishing the PDC threshold as an alternate methodology to assign a skin substitute to the high cost group (80 FR 70434 through 70435).

To allow additional time to evaluate concerns and suggestions from stakeholders about the volatility of the MUC and PDC thresholds, in the CY 2018 OPPS/ASC proposed rule (82 FR 33627), we proposed that a skin substitute that was assigned to the high cost group for CY 2017 would be assigned to the high cost group for CY 2018, even if it did not exceed the CY 2018 MUC or PDC thresholds. We finalized this policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59347). We stated in the CY 2018 OPPS/ASC proposed rule that the goal of our proposal to retain the same skin substitute cost group assignments in CY 2018 as in CY 2017 was to maintain similar levels of payment for skin substitute products for CY 2018 while we study our skin substitute payment methodology to determine whether refinements to the existing policies are consistent with our policy goal of providing payment stability for skin substitutes.

We stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59347) that we would continue to study issues related to the payment of skin substitutes and take these comments into consideration for future rulemaking. We received many responses to our request for comments in the CY 2018 OPPS/ASC proposed rule about possible refinements to the existing payment methodology for skin substitutes that would be consistent with our policy goal of providing payment stability for these products. In addition, several stakeholders have made us aware of additional concerns and recommendations since the release of the CY 2018 OPPS/ASC final rule with comment period. As discussed in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58967 through 58968), we identified four potential methodologies that have been raised to us that we encouraged the public to review and provide comments on. We stated in the CY 2019 OPPS/ASC final rule with comment period that we were especially interested in any specific feedback on policy concerns with any of the options presented as they relate to skin substitutes with differing per day or per episode costs and sizes and other factors that may differ among the dozens of skin substitutes currently on the market.

For CY 2020, we sought more extensive comments on the two policy ideas that generated the most comment from the CY 2019 comment solicitation. One of the ideas was to establish a payment episode between 4 to 12 weeks where a lump-sum payment would be made to cover all of the care services needed to treat the wound. There would be options for either a complexity adjustment or outlier payments for wounds that require a large amount of resources to treat. The other policy idea would be to eliminate the high cost and low cost categories for skin substitutes and have only one payment category and set of procedure codes for the application of all graft skin substitute products. Please refer to the CY 2019 OPPS final rule (83 FR 58967 to 58968) and the CY 2020 OPPS final rule (84 FR 61328 to 61331) for a detailed summary and discussion of the comments we received in response to these comment solicitations. We are continuing to consider the comments we received in response to these comment solicitations from CY 2019 and CY 2020.

Comment: Multiple commenters provided suggestions on changes to the payment methodology for graft skin substitute payment policy for future rulemaking.

Response: We appreciate the additional advice regarding possible changes to the payment methodology for graft skin substitute products, and we will consider this information as a part of future rulemaking.

b. Packaged Skin Substitutes for CY 2022

For CY 2022, consistent with our policy since CY 2016, we proposed to continue to determine the high cost/low cost status for each skin substitute product based on either a product's geometric MUC exceeding the geometric MUC threshold or the product's PDC (the total units of a skin substitute multiplied by the MUC and divided by the total number of days) exceeding the PDC threshold. Consistent with the methodology as established in the CY 2014 OPPS/ASC through CY 2018 OPPS/ASC final rules with comment period, we analyzed CY 2019 claims data to calculate the MUC threshold (a weighted average of all skin substitutes' MUCs) and the PDC threshold (a weighted average of all skin substitutes' PDCs). The proposed CY 2022 MUC threshold is $48 per cm² (rounded to the nearest $1) and the proposed CY 2022 PDC threshold is $949 (rounded to the nearest $1). We also proposed that our definition of skin substitutes includes synthetic skin substitute products in addition to biological skin substitute products as described in section V.B.7. (86 FR 42137 through 42143) of the CY 2022 OPPS/ASC proposed rule. We also want to clarify that the availability of an HCPCS code for a particular human cell, tissue, or cellular or tissue-based product (HCT/P) does not mean that that product is appropriately regulated solely under section 361 of the PHS Act and the FDA regulations in 21 CFR part 1271. Manufacturers of HCT/Ps should consult with the FDA Tissue Reference Group (TRG) or obtain a determination through a Request for Designation (RFD) on whether their HCT/Ps are appropriately regulated solely under section 361 of the PHS Act and the regulations in 21 CFR part 1271.

For CY 2022, as we did for CY 2021, we proposed to assign each skin substitute that exceeds either the MUC threshold or the PDC threshold to the high cost group. In addition, we proposed to assign any skin substitute with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low cost group. For CY 2022, we proposed that any skin substitute product that was assigned to the high cost group in CY 2021 would be assigned to the high cost group for CY 2022, regardless of whether it exceeds or falls below the CY 2022 MUC or PDC threshold. This policy was established in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59346 through 59348).

For CY 2022, we proposed to continue to assign skin substitutes with pass-through payment status to the high cost category. We proposed to assign skin substitutes with pricing information but without claims data to calculate a geometric MUC or PDC to either the high cost or low cost category based on the product's ASP+6 percent payment rate as compared to the MUC threshold. If ASP is not available, we proposed to use WAC+3 percent to assign a product to either the high cost or low cost category. Finally, if neither ASP nor WAC is available, we proposed to use 95 percent of AWP to assign a skin substitute to either the high cost or low cost category. We proposed to continue to use WAC+3 percent instead of WAC+6 percent to conform to our proposed policy described in section V.B.2.b of the CY 2022 OPPS/ASC proposed rule (86 FR 42132) to establish a payment rate of WAC+3 percent for separately payable drugs and biologicals that do not have ASP data available. New skin substitutes without pricing information would be assigned to the low cost category until pricing information is available to compare to the CY 2022 MUC and PDC thresholds. We also proposed to continue to include synthetic products in addition to biological products in our description of skin substitutes. For a discussion of our existing policy under which we assign skin substitutes without pricing information to the low cost category until pricing information is available, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70436). For a discussion of how we determined that synthetic skin graft sheet products can be reported with graft skin substitute procedure codes, we refer readers to the CY 2021 OPPS/ASC final rule (85 FR 86064 to 86067).

Comment: The HOP Panel recommended and several commenters supported ending the packaging of the graft skin substitute add-on codes (CPT codes 15272, 15274, 15276, and 15278; HCPCS codes C5272, C5274, C5276, and C5278). The HOP Panel and the commenters request that these codes be assigned to APCs that reflect the estimated costs of these service codes. Commenters claim that packaging the graft skin substitute add-on codes eliminates the variation of payment for wound care treatment based on the size of the wound. They assert that providers are discouraged from treating wounds between 26 and 99 cm² and over 100 cm² in the outpatient hospital setting because of the financial losses they experience to provide such care. Commenters believe that packaging graft skin substitute add-on codes disrupts the methodology of how the American Medical Association (AMA), the organization that manages CPT service codes, intended graft skin substitute procedures to be paid.

Response: We do not believe the recommendation of the HOP Panel and the commenters is appropriate for paying for graft skin substitutes under the OPPS. The OPPS is a prospective payment system and not a fee-for-service payment system. That means that we generally attempt to make one payment for all of the services billed with the primary medical procedure, including add-on procedures such as the ones described by CPT codes 15272, 15274, 15276, and 15278, and HCPCS codes C5272, C5274, C5276, and C5278.

More specifically, we calculate the OPPS payment rate by first calculating the geometric mean cost of the procedure. This calculation includes claims for individual services that used a lower level of resources and claims for individual services that used a higher level of resources. The resulting geometric mean cost will reflect the median service cost for a given medical procedure. Next, we group the medical procedure with other medical procedures with clinical and resource similarity in an APC and calculate the geometric mean of these related procedures to generate a base payment rate for all procedures assigned to the APC.

A prospective payment system like the OPPS is designed to pay providers the geometric mean cost of the primary service they provide, and such a system encourages efficiencies and cost-savings in the administration of health care. However, a prospective payment system is not intended to discourage providers from rendering medically-necessary to patients. For example, it's possible that a provider could experience a financial loss when they perform a service where a patient receives 85 cm² of a graft skin substitute product, but that same provider could see a financial gain when the next patient receives a skin graft where only 10 cm² of product is used. Paying separately for add-on codes in a prospective payment system defeats the goals of such a payment system. If providers are paid at cost or nearly at cost for each individual service they render, there is no incentive for them to control costs. Add-on codes should be packaged with the primary medical service to be able to establish a median payment rate that gives providers incentives to keep their costs in line with typical providers throughout the Medicare program. The need for cost efficiencies in the application of graft skin substitutes to treat wounds is no different than need for cost efficiencies in other procedures administered in the outpatient hospital setting. Therefore, add-on codes, including the add-on codes for the administration of graft skin substitutes must remain packaged to maintain the integrity of the OPPS.

Comment: The HOP Panel recommended and several commenters support ensuring that the payment rate of graft skin substitute procedures be the same no matter where on the body the graft skin substitute product is applied to the patient. There are four graft skin substitute application procedures for high cost skin substitute products (CPT codes 15271, 15273, 15275, and 15277) and a similar four graft skin substitute applications for low cost skin substitute products (HCPCS codes C5272, C5274, C5276, and C5278). The reason there are four application service codes is that there are different service codes for applying graft skin substitutes to children and infants as compared to adults and there are different service codes for applying graft skin substitutes to the trunk, arms, and legs as compared to the face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, fingers, and toes. Commenters claim that the cost to apply graft skin substitute products does not depend on the location of the wound because the same amount of product is used on the wound and the same clinical resources are used to treat the wound independent of the location of the wound.

Response: We appreciate commenters concerns and note that that current codes describing the application of high and low cost graft skin substitutes for adults (CPT codes 15271 and 15275, and HCPCS codes C5272 and C5276) have been assigned the same APC (5054). Because they are currently included in the same APC, OPPS payment for them is the same, and this payment policy is consistent with the recommendation from the HOP Panel and other commenters. We note that the codes describing the application of high and low cost products for children and infants in the trunk, arms, and legs (CPT code 15273 or HCPCS code C5274) have been assigned to a lower-paying APC (APC 5054) than the APC assignment for the application of high and low cost graft skin substitute products for children in the face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hand, feet, fingers, and toes—CPT code 15277 or HCPCS code C5277, which are assigned to APC 5055. These APCs have different payment rates. We note that these services—the application of skin substitutes for children—are fairly low volume services in the OPPS because Medicare beneficiaries tend to be older. In addition, the differences in costs that have determined APC assignments for these services for children have been supported by historical cost data. We also note that none of these service codes are in violation of the 2-times rule. While we do not believe we should change the APC assignments for these services at this time, we are interested in additional feedback on this issue, including whether we should revaluate APC assignments for the application of skin substitutes for children in the future.

Comment: One commenter did not support our proposal to assign graft skin substitute products to a high cost or a low cost group based on if the MUC or PDC of a product exceeds a weighted average of either the MUC or PDC of all graft skin substitute products. The commenter believes the current two-tier system provides incentives for providers to use higher-cost graft skin substitute products instead of lower-cost products that have similar efficacy to the higher-cost products. The commenter supports a payment system where the high cost and low cost groups have been eliminated. The commenter believes geometric mean payment rate for each graft skin substitute application service code would be calculated using all of the separately paid claims for a given code without consideration to the mean unit cost of the graft skin substitute product used in the service. The commenter believes this approach would reduce spending on graft skin substitute procedures by encouraging the use of lower-cost graft skin substitute products and will reduce administration burden for providers as they only need to use one set of product application codes.

Response: As we explained in the CY 2014 OPPS/ASC final rule (78 FR 74933), the graft skin substitute procedures described by CPT codes 15271 through 15278 are clinically homogeneous, but there is resource heterogeneity between different skin substitute products with the cost per cm² ranging from under $10 per cm² to over $200 per cm² . As we discussed in prior rules, establishing high cost and low cost groups for skin substitutes makes the payment for these products more homogeneous and reduces the risk of excessive overpayment or underpayment to a provider when a skin substitute product is used. However, we appreciate the commenter's proposal and note that establishing a payment policy in which with only one set of product application service codes may have other benefits, such as simplifying coding and payments for these procedures and products, and we may explore these concepts in future rulemaking.

Comment: Two commenters supported our proposal to continue to assign skin substitutes to the low cost or high cost group. Commenters also supported our proposal that any skin substitute product that was assigned to the high cost group in CY 2020 would be assigned to the high cost group for CY 2021, regardless of whether it exceeds or falls below the CY 2021 MUC or PDC threshold.

Response: We appreciate the support of the commenters for our proposals.

Comment: Two commenters supported our inclusion of synthetic products in our definition of skin substitute products.

Response: We appreciate the support of the commenters.

Comment: One commenter requested that CMS no longer use the term “skin substitutes” to describe products that do not function like human skin that is grafted onto a wound and are not substitutes for skin grafts, but do aid in wound healing by stimulating the patient to regenerate lost tissue. Instead, the commenters request that we use the term “cellular and/or tissue based products for skin wounds” that is abbreviated “CTPs”.

Response: We appreciate the suggestion by the commenter, but we do not believe it is appropriate at this time to end our use of the term “skin substitute.” Notably, the CPT and HCPCS codes used to report graft procedures using cellular and tissue based products to heal skin wounds, CPT codes 15271 through 15278 and HCPCS codes C5271 through C5278, use the term “skin substitute” in the descriptor. We feel that we should use terminology that reflects the service descriptors that are reported in the OPPS. Also, we believe the term “skin substitute” is well-understood by providers and industry stakeholders.

Comment: Two commenters wanted us to confirm that our proposed rule language that encourages manufacturers of HCT/Ps to consult with the FDA Tissue Reference Group (TRG) or obtain a determination through a Request for Designation (RFD) on whether their HCT/Ps are appropriately regulated solely under section 361 of the PHS Act and the regulations in 21 CFR part 1271 applied only to those HCT/Ps that do not have either an FDA 510(k) clearance, premarket approval (PMA), or biologic license application (BLA) approval. These commenters are supportive of the policy as long as no consultation or determination is required for HCT/Ps with either a 510(k) clearance, a PMA, or a BLA approval.

Response: We can confirm that our suggestion for manufacturers of HCT/Ps to consult with the FDA Tissue Reference Group (TRG) or obtain a determination through a Request for Designation (RFD) on whether their HCT/Ps are appropriately regulated solely under section 361 of the PHS Act and the regulations in 21 CFR part 1271 does apply only to those HCT/Ps that do not have either a 510(k) clearance, a PMA, or a BLA approval from FDA.

Comment: Multiple commenters stated that HCPCS code C1849, which is used to report synthetic graft skin substitute products, should be assigned to the low cost skin substitute group by default, similar to how we pay for HCPCS code Q4100 (Skin substitute, not otherwise specified), which is used to report multiple biological skin substitute products that do not have product-specific HCPCS codes. Commenters also expressed concerns that synthetic graft skin substitute products that should receive payment through the low cost skin substitute group would instead receive payment in the high cost skin substitute group and increase overall graft skin substitute costs for Medicare.

Response: We were aware of one synthetic graft skin substitute product that was described by HCPCS code C1849 when the code was established in July 2020. The manufacturer provided pricing data that showed the cost of the product is above the MUC threshold for graft skin substitute products and therefore HCPCS code C1849 should be assigned to the high cost skin substitute group. We note that we used pricing data to assign HCPCS code C1849 to the high cost group, and the assignment of HCPCS code C1849 to the high cost skin substitute group was not automatic. As more synthetic graft skin substitute products are identified, we will use their pricing data to calculate an average price for the products described by HCPCS code C1849 and compare that average price to the overall MUC threshold to determine whether HCPCS code C1849 should be assigned to the high cost or low cost skin substitute group.

Comment: One commenter noted that CMS previously assigned HCPCS code Q4117 (Hyalomatrix, per square centimeter) to a product considered a synthetic skin substitute which demonstrates that synthetic skin substitutes can function within the current coding under both the PFS and OPPS frameworks. The commenter stated that it would be better for CMS to judiciously assign HCPCS codes to synthetic products that meet these application requirements.

Response: We will take this suggestion into consideration for future rulemaking as we continue our work to address payment for all skin substitutes across settings, taking into account the intersection between biological, bioengineered, and synthetic components of these products. We also plan to further evaluate the characteristics of products with an existing Q-code for future rulemaking.

Comment: One commenter, the manufacturer, has requested that HCPCS codes Q4122 (Dermacell, per square centimeter) and Q4150 (Allowrap ds or dry, per square centimeter) continue to be assigned to the high-cost skin substitute group.

Response: HCPCS codes Q4122 and Q4150 were both assigned to the high cost group in CY 2021 and also were proposed to be assigned to the high-cost group for CY 2022. Any skin substitute assigned to the high cost group in CY 2021 will continue to be assigned to the high cost group in CY 2022 even if the MUC and PDC for the skin substitute product is below the overall MUC and PDC thresholds for all skin substitute products. Accordingly, we are finalizing our proposal to assign HCPCS codes Q4122 and Q4150 to the high-cost group in CY 2022.

After consideration of the public comments we received, we are finalizing our proposal to assign a skin substitute with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low cost group, unless the product was assigned to the high cost group in CY 2021, in which case we would assign the product to the high cost group for CY 2022, regardless of whether it exceeds the CY 2022 MUC or PDC threshold. We are also finalizing our proposal to assign to the high cost group any skin substitute product that exceeds the CY 2022 MUC or PDC thresholds and assign to the low cost group any skin substitute product that does not exceed the CY 2021 MUC or PDC thresholds and was not assigned to the high cost group in CY 2021. We are finalizing our proposal to continue to use payment methodologies, including ASP+6 percent and 95 percent of AWP, for skin substitute products that have pricing information but do not have claims data to determine if their costs exceed the CY 2022 MUC. In addition, we are finalizing our proposal to continue to use WAC+3 percent instead of WAC+6 percent for skin substitute products that do not have ASP pricing information or claims data to determine if those products' costs exceed the CY 2022 MUC. We also are finalizing our proposal to retain our established policy to assign new skin substitute products with pricing information to the low cost group. Table 42 includes the final CY 2022 cost category assignment for each skin substitute product.

VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices

A. Amount of Additional Payment and Limit on Aggregate Annual Adjustment

Section 1833(t)(6)(E) of the Act limits the total projected amount of transitional pass-through payment for drugs, biologicals, and categories of devices for a given year to an “applicable percentage,” currently not to exceed 2.0 percent of total program payments estimated to be made for all covered services under the OPPS furnished for that year. If we estimate before the beginning of the calendar year that the total amount of pass-through payments in that year would exceed the applicable percentage, section 1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction in the amount of each of the transitional pass-through payments made in that year to ensure that the limit is not exceeded. We estimate the pass-through spending to determine whether payments exceed the applicable percentage and the appropriate pro rata reduction to the conversion factor for the projected level of pass-through spending in the following year to ensure that total estimated pass-through spending for the prospective payment year is budget neutral, as required by section 1833(t)(6)(E) of the Act.

For devices, developing a proposed estimate of pass-through spending in CY 2022 entails estimating spending for two groups of items. The first group of items consists of device categories that are currently eligible for pass-through payment and that will continue to be eligible for pass-through payment in CY 2022. The CY 2008 OPPS/ASC final rule with comment period (72 FR 66778) describes the methodology we have used in previous years to develop the pass-through spending estimate for known device categories continuing into the applicable update year. The second group of items consists of devices that we know are newly eligible, or project may be newly eligible, for device pass-through payment in the remaining quarters of CY 2021 or beginning in CY 2022. The sum of the proposed CY 2022 pass-through spending estimates for these two groups of device categories equaled the proposed total CY 2022 pass-through spending estimate for device categories with pass-through payment status. We determined the device pass-through estimated payments for each device category based on the amount of payment as required by section 1833(t)(6)(D)(ii) of the Act, and as outlined in previous rules, including the CY 2014 OPPS/ASC final rule with comment period (78 FR 75034 through 75036). We note that, beginning in CY 2010, the pass-through evaluation process and pass-through payment methodology for implantable biologicals newly approved for pass-through payment beginning on or after January 1, 2010, that are surgically inserted or implanted (through a surgical incision or a natural orifice) use the device pass-through process and payment methodology (74 FR 60476). As has been our past practice (76 FR 74335), in the proposed rule, we proposed to include an estimate of any implantable biologicals eligible for pass-through payment in our estimate of pass-through spending for devices. Similarly, we finalized a policy in CY 2015 that applications for pass-through payment for skin substitutes and similar products be evaluated using the medical device pass-through process and payment methodology (76 FR 66885 through 66888). Therefore, as we did beginning in CY 2015, for CY 2022, we also proposed to include an estimate of any skin substitutes and similar products in our estimate of pass-through spending for devices.

For drugs and biologicals eligible for pass-through payment, section 1833(t)(6)(D)(i) of the Act establishes the pass-through payment amount as the amount by which the amount authorized under section 1842(o) of the Act (or, if the drug or biological is covered under a competitive acquisition contract under section 1847B of the Act, an amount determined by the Secretary equal to the average price for the drug or biological for all competitive acquisition areas and year established under such section as calculated and adjusted by the Secretary) exceeds the portion of the otherwise applicable fee schedule amount that the Secretary determines is associated with the drug or biological. Our proposed estimate of drug and biological pass-through payment for CY 2022 for this group of items was $462.4 million, as discussed below, because we proposed that most non pass-through separately payable drugs and biologicals would be paid under the CY 2022 OPPS at ASP+6 percent with the exception of 340B-acquired separately payable drugs, which we proposed would be paid at ASP minus 22.5 percent, and because we proposed to pay for CY 2022 pass-through payment drugs and biologicals at ASP+6 percent, as we discuss in section V.A. of the CY 2022 OPPS/ASC proposed rule (86 FR 42116).

Furthermore, payment for certain drugs, specifically diagnostic radiopharmaceuticals and contrast agents without pass-through payment status, is packaged into payment for the associated procedures, and these products are not be separately paid. In addition, we policy-package all non pass-through drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure, drugs and biologicals that function as supplies when used in a surgical procedure, drugs and biologicals used for anesthesia, and other categories of drugs and biologicals, as discussed in section V.B.1.c. of the CY 2022 OPPS/ASC proposed rule (86 FR 42129 through 42131). We proposed that all of these policy-packaged drugs and biologicals with pass-through payment status will be paid at ASP+6 percent, like other pass-through drugs and biologicals, for CY 2022, less the policy-packaged drug APC offset amount described below. Our estimate of pass-through payment for policy-packaged drugs and biologicals with pass-through payment status approved prior to CY 2022 is not $0. This is because the pass-through payment amount and the fee schedule amount associated with the drug or biological will not be the same, unlike for separately payable drugs and biologicals. In section V.A.6. of the CY 2022 OPPS/ASC proposed rule (86 FR 42126 through 42127), we discuss our policy to determine if the costs of certain policy-packaged drugs or biologicals are already packaged into the existing APC structure. If we determine that a policy-packaged drug or biological approved for pass-through payment resembles predecessor drugs or biologicals already included in the costs of the APCs that are associated with the drug receiving pass-through payment, we proposed to offset the amount of pass-through payment for the policy-packaged drug or biological. For these drugs or biologicals, the APC offset amount is the portion of the APC payment for the specific procedure performed with the pass-through drug or biological, which we refer to as the policy-packaged drug APC offset amount. If we determine that an offset is appropriate for a specific policy-packaged drug or biological receiving pass-through payment, we proposed to reduce our estimate of pass-through payments for these drugs or biologicals by the APC offset amount.

Similar to pass-through spending estimates for devices, the first group of drugs and biologicals requiring a pass-through payment estimate consists of those products that were recently made eligible for pass-through payment and that will continue to be eligible for pass-through payment in CY 2022. The second group contains drugs and biologicals that we know are newly eligible, or project will be newly eligible, in the remaining quarters of CY 2021 or beginning in CY 2022. The sum of the CY 2022 pass-through spending estimates for these two groups of drugs and biologicals equals the total CY 2022 pass-through spending estimate for drugs and biologicals with pass-through payment status.

B. Estimate of Pass-Through Spending for CY 2022

For 2022, we proposed to set the applicable pass-through payment percentage limit at 2.0 percent of the total projected OPPS payments for CY 2022, consistent with section 1833(t)(6)(E)(ii)(II) of the Act and our OPPS policy from CY 2004 through CY 2021 (85 FR 86068). The pass-through payment percentage limit is calculated using pass-through spending estimates for devices and for drugs and biologicals.

For the first group of devices, consisting of device categories that are currently eligible for pass-through payment and will continue to be eligible for pass-through payment in CY 2022, there are 9 active categories for CY 2022. The active categories are described by HCPCS codes C2596, C1734, C1982, C1824, C1839, C1748, C1825, C1052, and C1062. Based on the information from the device manufacturers, we estimate that HCPCS code C2596 will cost $11.3 million in pass-through expenditures in CY 2022, HCPCS C1734 will cost $36.9 million in pass-through expenditures in CY 2022, HCPCS code C1982 will cost $116.3 million in pass-through expenditures in CY 2022, HCPCS code C1824 will cost $46 million in pass-through expenditures in CY 2022, HCPCS code C1839 will cost $500,000 in pass-through expenditures in CY 2022, HCPCS code C1748 will cost $39.1 million in pass-through expenditures in CY 2022, HCPCS code C1825 will cost $3.5 million pass-through expenditures in CY 2022, HCPCS code C1052 will cost $40 million in pass-through expenditures in CY 2022, and HCPCS code C1062 will cost $14.3 million in pass-through expenditures in CY 2022. Therefore, we proposed an estimate for the first group of devices of $307.9 million.

In estimating our proposed CY 2022 pass-through spending for device categories in the second group, we included: device categories that we assumed at the time of the development of the CY 2022 OPPS/ASC proposed rule will be newly eligible for pass-through payment in CY 2022; additional device categories that we estimated could be approved for pass-through status after the development of the proposed rule and before January 1, 2022; and contingent projections for new device categories established in the second through fourth quarters of CY 2022. For CY 2022, we proposed to use the general methodology described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66778), while also taking into account recent OPPS experience in approving new pass-through device categories. The proposed estimate of CY 2022 pass-through spending for this second group of device categories is $244.4 million.

We did not receive any public comments on this proposal. As stated earlier in this final rule with comment period, we are approving three devices for pass-through payment status in the CY 2022 rulemaking cycle: RECELL® Autologous Cell Harvesting Device, Shockwave C2 Coronary Intravascular Lithotripsy (IVL) catheter, and AngelMed Guardian® System. The manufacturers of these systems provided utilization and cost data that indicate the amount of spending for the devices would be approximately $18.4 million for RECELL® Autologous Cell Harvesting Device, $118.4 million for Shockwave C2 Coronary Intravascular Lithotripsy (IVL) catheter, and $5.1 million for AngelMed Guardian® System. Therefore, we are finalizing an estimate of $141.9 million for this second group of devices for CY 2022.

To estimate proposed CY 2022 pass-through spending for drugs and biologicals in the first group, specifically those drugs and biologicals recently made eligible for pass-through payment and continuing on pass-through payment status for at least one quarter in CY 2022, we proposed to use the CY 2019 Medicare hospital outpatient claims data regarding their utilization, information provided in the respective pass-through applications, other historical hospital claims data, pharmaceutical industry information, and clinical information regarding these drugs and biologicals to project the CY 2022 OPPS utilization of the products.

For the known drugs and biologicals (excluding policy-packaged diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure, and drugs and biologicals that function as supplies when used in a surgical procedure) that will be continuing on pass-through payment status in CY 2022, we estimate the pass-through payment amount as the difference between ASP+6 percent and the payment rate for non pass-through drugs and biologicals that will be separately paid. Separately payable drugs are paid at a rate of ASP+6 percent with the exception of 340B-acquired drugs, for which we proposed to pay ASP minus 22.5 percent. Therefore, the proposed payment rate difference between the pass-through payment amount and the non pass-through payment amount is $462.4 million for this group of drugs.

Because payment for policy-packaged drugs and biologicals is packaged if the product is not paid separately due to its pass-through payment status, we proposed to include in the CY 2022 pass-through estimate of the difference between payment for the policy-packaged drug or biological at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC information is not available) and the policy-packaged drug APC offset amount, if we determine that the policy-packaged drug or biological approved for pass-through payment resembles a predecessor drug or biological already included in the costs of the APCs that are associated with the drug receiving pass-through payment, which we estimate for CY 2022 for the first group of policy-packaged drugs to be $0 since there are currently no policy-packaged drugs for which we have cost data that will be on pass-through in CY 2022.

We did not receive any public comments on our proposal. Using our methodology for this final rule with comment period, we calculated a CY 2022 spending estimate for this first group of drugs and biologicals of approximately $466.7 million based on our decision to maintain our current policy of paying ASP minus 22.5 percent for 340B-acquired drugs.

To estimate proposed CY 2022 pass-through spending for drugs and biologicals in the second group (that is, drugs and biologicals that we knew at the time of development of the proposed rule were newly eligible or recently became eligible for pass-through payment in CY 2022, additional drugs and biologicals that we estimated could be approved for pass-through status subsequent to the development of the proposed rule and before January 1, 2022, and projections for new drugs and biologicals that could be initially eligible for pass-through payment in the second through fourth quarters of CY 2022), we proposed to use utilization estimates from pass-through applicants, pharmaceutical industry data, clinical information, recent trends in the per unit ASPs of hospital outpatient drugs, and projected annual changes in service volume and intensity as our basis for making the CY 2022 pass-through payment estimate. We also proposed to consider the most recent OPPS experience in approving new pass-through drugs and biologicals. Using our proposed methodology for estimating CY 2022 pass-through payments for this second group of drugs, we calculated a proposed spending estimate for this second group of drugs and biologicals of approximately $10 million.

We did not receive any public comments on our proposal. Since the release of the CY 2022 OPPS/ASC proposed rule, we have identified seven additional policy-packaged drugs in addition to the three policy-packaged drugs that had pass-through status when the proposed rule was released. Our original proposed estimate of $10 million of additional pass-through payments for the second group of drugs and biologicals did anticipate the approval of some of the additional policy-packaged drugs and biologicals with pass-through status, but not all of them. Therefore, for this final rule, we are revising our estimate of pass-through spending for the second group of drugs and biologicals to be $20 million.

We estimate for this final rule with comment period that the amount of pass-through spending for the device categories and the drugs and biologicals that are continuing to receive pass-through payment in CY 2022 and those device categories, drugs, and biologicals that first become eligible for pass-through payment during CY 2022 would be approximately $936.5 million (approximately $449.8 million for device categories and approximately $486.7 million for drugs and biologicals) which represents 1.14 percent of total projected OPPS payments for CY 2022 (approximately $82 billion). Therefore, we estimate that pass-through spending in CY 2022 will not amount to 2.0 percent of total projected OPPS CY 2022 program spending. As discussed in section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190), due to the effects of the COVID-19 PHE, we proposed to generally use CY 2019 claims data instead of CY 2020 claims data to establish the CY 2022 OPPS rates and to use cost report data from the same set of cost reports originally used in CY 2021 final rule OPPS ratesetting. We stated that if our proposal to use CY 2019 data, rather than CY 2020 data, to inform CY 2022 ratesetting is finalized, we would effectively remove approximately one year of pass-through data collection time for ratesetting purposes. Therefore, for CY 2022, in section X.F. of the CY 2022 OPPS/ASC proposed rule (86 FR 42190 through 42193), we proposed to use our equitable adjustment authority under 1833(t)(2)(E) to provide up to four quarters of separate payment for 21 drugs and biologicals whose pass-through payment status will expire on March 31, 2022, June 30, 2022, or September 30, 2022 and six drugs and biologicals and one device category whose pass-through payment status will expire on December 31, 2021. This would ensure that we have a full year of claims data from CY 2021 to use for CY 2023 ratesetting and would allow us to avoid using CY 2020 data to set rates for these pass-through drugs, biologicals, and the device category for CY 2022.

We estimated the spending for the drugs, biologicals, and device category for which we proposed to provide separate payment for the remainder of CY 2022 using our equitable adjustment authority. To estimate proposed CY 2022 spending for the one device pass-through category with pass-through status expiring on December 31, 2021, we also used the general methodology described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66778). For this device category, we calculate a proposed spending estimate of $34.5 million. To estimate proposed CY 2022 spending for the six drugs with pass-through status expiring on December 21, 2021 and the 18 drugs and three biologicals with pass-through status expiring on March 30, 2022, June 30, 2022, and September 30, 2022, we performed an analysis similar to the analysis for the first group of drugs and biologicals described earlier in this section where we estimated the pass-through payment amount as the difference between ASP+6 percent and the payment rate for non pass-through drugs and biologicals that will be separately paid. For this group, we calculate a proposed spending estimate for CY 2022 of $44.4 million. We estimate that total spending for these 27 drugs and biologicals and one device category would be approximately $78.9 million for CY 2022. The drugs, biologicals, and device category for which we proposed to provide separate payment for one to four quarters in CY 2022 are listed in Table 43 below. Please refer to section X.F. of this final rule with comment period regarding our decision to implement our proposal to utilize our equitable adjustment authority to pay separately for the remainder of CY 2022 for the device category, drugs, and biologicals with pass-through status that expires between December 31, 2021, and September 30, 2022.

VII. OPPS Payment for Hospital Outpatient Visits and Critical Care Services

For CY 2022, we proposed to continue with our current clinic and emergency department (ED) hospital outpatient visits payment policies. For a description of the current clinic and ED hospital outpatient visits policies, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70448). We also proposed to continue our payment policy for critical care services for CY 2022. For a description of the current payment policy for critical care services, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70449), and for the history of the payment policy for critical care services, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75043). In the CY 2022 OPPS/ASC proposed rule, we sought public comments on any changes to these codes that we should consider for future rulemaking cycles. We continue to encourage commenters to provide the data and analysis necessary to justify any suggested changes.

In the CY 2022 OPPS/ASC proposed rule, we stated that we would continue the clinic visit payment policy for CY 2022 and beyond. More specifically, we stated that we would continue to utilize a PFS-equivalent payment rate for the hospital outpatient clinic visit service described by HCPCS code G0463 when it is furnished by excepted off-campus provider-based departments. The PFS-equivalent rate for CY 2022 is 40 percent of the proposed OPPS payment (that is, 60 percent less than the proposed OPPS rate). Under this policy, these departments will be paid approximately 40 percent of the OPPS rate (100 percent of the OPPS rate minus the 60-percent payment reduction that is applied in CY 2022) for the clinic visit service in CY 2022. We stated that we would continue to monitor the effect of this change in Medicare payment policy, including the volume of these types of OPD services.

Comment: We received several comments on our payment policy for hospital outpatient visits. Many commenters expressed concerns that CMS's policy to pay the PFS-equivalent rate for outpatient clinic visits furnished in excepted off-campus provider-based departments would cause financial harm to hospitals. Other commenters suggested that CMS develop a set of national guidelines for coding ED visits, and a few of commenters provided specific edits to the descriptor of the HCPCS code for hospital outpatient clinic visits (G0463).

Response: We appreciate commenters' concerns and will continue to examine these concerns and determine if any modifications to these policies are warranted in future rulemaking.

After consideration of the public comments, we are finalizing our proposal to continue to utilize a PFS-equivalent payment rate for the hospital outpatient clinic visit service described by HCPCS code G0463 when it is furnished by excepted off-campus provider-based departments as proposed. We are also finalizing our proposal to continue our current ED outpatient visits and critical care payment policies.

VIII. Payment for Partial Hospitalization Services

A. Background

A partial hospitalization program (PHP) is an intensive outpatient program of psychiatric services provided as an alternative to inpatient psychiatric care for individuals who have an acute mental illness, which includes, but is not limited to, conditions such as depression, schizophrenia, and substance use disorders. Section 1861(ff)(1) of the Act defines partial hospitalization services as the items and services described in paragraph (2) prescribed by a physician and provided under a program described in paragraph (3) under the supervision of a physician pursuant to an individualized, written plan of treatment established and periodically reviewed by a physician (in consultation with appropriate staff participating in such program), which sets forth the physician's diagnosis, the type, amount, frequency, and duration of the items and services provided under the plan, and the goals for treatment under the plan. Section 1861(ff)(2) of the Act describes the items and services included in partial hospitalization services. Section 1861(ff)(3)(A) of the Act specifies that a PHP is a program furnished by a hospital to its outpatients or by a community mental health center (CMHC), as a distinct and organized intensive ambulatory treatment service, offering less than 24-hour-daily care, in a location other than an individual's home or inpatient or residential setting. Section 1861(ff)(3)(B) of the Act defines a CMHC for purposes of this benefit. We refer readers to sections 1833(t)(1)(B)(i), 1833(t)(2)(B), 1833(t)(2)(C), and 1833(t)(9)(A) of the Act and 42 CFR 419.21, for additional guidance regarding PHP.

In CY 2008, we began efforts to strengthen the PHP benefit through extensive data analysis, along with policy and payment changes by implementing two refinements to the methodology for computing the PHP median. For a detailed discussion on these policies, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66670 through 66676). In CY 2009, we implemented several regulatory, policy, and payment changes. For a detailed discussion on these policies, we refer readers to the CY 2009 OPPS/ASC final rule (73 FR 68688 through 68697). In CY 2010, we retained the two-tier payment approach for partial hospitalization services and used only hospital-based PHP data in computing the PHP APC per diem costs, upon which PHP APC per diem payment rates are based (74 FR 60556 through 60559). In CY 2011 (75 FR 71994), we established four separate PHP APC per diem payment rates: Two for CMHCs (APC 0172 and APC 0173) and two for hospital-based PHPs (APC 0175 and APC 0176) and instituted a 2-year transition period for CMHCs to the CMHC APC per diem payment rates. For a detailed discussion, we refer readers to section X.B. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 71991 through 71994). In CY 2012, we determined the relative payment weights for partial hospitalization services provided by CMHCs based on data derived solely from CMHCs and the relative payment weights for partial hospitalization services provided by hospital-based PHPs based exclusively on hospital data (76 FR 74348 through 74352). In the CY 2013 OPPS/ASC final rule with comment period, we finalized our proposal to base the relative payment weights that underpin the OPPS APCs, including the four PHP APCs (APCs 0172, 0173, 0175, and 0176), on geometric mean costs rather than on the median costs. For a detailed discussion on this policy, we refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68406 through 68412).

In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622) and CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 through 66908), we continued to apply our established policies to calculate the four PHP APC per diem payment rates based on geometric mean per diem costs using the most recent claims data for each provider type. For a detailed discussion on this policy, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75047 through 75050). In the CY 2016, we described our extensive analysis of the claims and cost data and ratesetting methodology, corrected a cost inversion that occurred in the final rule data with respect to hospital-based PHP providers and renumbered the PHP APCs. In CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 through 79691), we continued to apply our established policies to calculate the PHP APC per diem payment rates based on geometric mean per diem costs and finalized a policy to combine the Level 1 and Level 2 PHP APCs for CMHCs and for hospital-based PHPs. We also implemented an eight-percent outlier cap for CMHCs to mitigate potential outlier billing vulnerabilities. For a comprehensive description of PHP payment policy, including a detailed methodology for determining PHP per diem amounts, we refer readers to the CY 2016 and CY 2017 OPPS/ASC final rules with comment period (80 FR 70453 through 70455 and 81 FR 79678 through 79680).

In the CYs 2018 and 2019 OPPS/ASC final rules with comment period (82 FR 59373 through 59381, and 83 FR 58983 through 58998, respectively), we continued to apply our established policies to calculate the PHP APC per diem payment rates based on geometric mean per diem costs, designated a portion of the estimated 1.0 percent hospital outpatient outlier threshold specifically for CMHCs, and proposed updates to the PHP allowable HCPCS codes. We finalized these proposals in the CY 2020 OPPS/ASC final rule with comment period (84 FR 61352). We refer readers to section VIII.D. of the CY 2022 OPPS/ASC proposed rule for a discussion of the proposed updates and the applicability for CY 2021.

In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61339 through 61350), we finalized our proposal to use the calculated CY 2020 CMHC geometric mean per diem cost and the calculated CY 2020 hospital-based PHP geometric mean per diem cost, but with a cost floor equal to the CY 2019 final geometric mean per diem costs as the basis for developing the CY 2020 PHP APC per diem rates. Also, we continued to designate a portion of the estimated 1.0 percent hospital outpatient outlier threshold specifically for CMHCs, consistent with the percentage of projected payments to CMHCs under the OPPS, excluding outlier payments.

In the April 30, 2020 interim final rule with comment (85 FR 27562 through 27566), effective as of March 1, 2020 and for the duration of the COVID-19 Public Health Emergency (PHE), hospital and CMHC staff are permitted to furnish certain outpatient therapy, counseling, and educational services (including certain PHP services), incident to a physician's services, to beneficiaries in temporary expansion locations, including the beneficiary's home, so long as the location meets all conditions of participation to the extent not waived. A hospital or CMHC can furnish such services using telecommunications technology to a beneficiary in a temporary expansion location if that beneficiary is registered as an outpatient. These provisions apply only for the duration of the COVID-19 PHE.

In the CY 2021 final rule (85 FR 86073 through 86080), we finalized a CMHC geometric mean per diem cost of $136.14 and a final hospital-based PHP geometric mean per diem cost of $253.76 using the most recent updated claims and cost data. In the CY 2021 proposed rule (85 FR 48901 through 48905), we had proposed, for CY 2021 and subsequent years, to use the CY 2021 CMHC geometric mean per diem cost calculated in accordance with our existing methodology, but with a cost floor equal to the per diem cost for CMHCs of $121.62 that was calculated for CY 2020 ratesetting (84 FR 61339 through 61344), as the basis for developing the CY 2021 CMHC APC per diem rate. We had also proposed, for CY 2021 and subsequent years, to use the CY 2021 hospital-based geometric mean per diem cost calculated in accordance with our existing methodology, but with a cost floor equal to the per diem cost for hospital-based providers of $222.76 that was calculated for CY 2020 ratesetting (84 FR 61344 through 61345). We explained in the CY 2021 final rule that the final calculated geometric mean per diem costs for both CMHCs and hospital-based PHPs were significantly higher than each proposed cost floor, therefore a floor was not necessary at the time, and we did not finalize the proposed cost floors in the CY 2021 OPPS/ASC final rule with comment period.

B. PHP APC Update for CY 2022

1. PHP APC Geometric Mean Per Diem Costs

In summary, for CY 2022 only, we proposed to use the CY 2022 CMHC geometric mean per diem cost calculated in accordance with our existing methodology, but with a cost floor equal to the per diem cost for CMHCs of $136.14, which is the final CMHC geometric mean per diem cost calculated last year for CY 2021 ratesetting (85 FR 86080), as the basis for developing the CY 2022 CMHC APC per diem rate. We also proposed, for CY 2022 only, to use the CY 2022 hospital-based geometric mean per diem cost calculated in accordance with our existing methodology, but with a cost floor equal to the per diem cost for hospital-based providers of $253.76 calculated last year for CY 2021 ratesetting (85 FR 86080). Following this methodology, we proposed to use the cost floor value of $136.14 for CMHCs as the basis for developing the CY 2022 CMHC APC per diem rate, and to use the cost floor value of $253.76 as the basis for developing the CY 2021 hospital-based APC per diem rate. We also proposed to use the latest available CY 2019 claims and cost data from the CY 2021 rulemaking to determine CY 2022 geometric mean per diem costs in the CY 2022 OPPS/ASC proposed rule, and we proposed that if the final CY 2022 cost for CMHCs or hospital-based PHPs was calculated to be above the proposed floor for that provider type, we would use the final calculated cost instead of the floor. Lastly, in accordance with our longstanding policy, we proposed to continue to use CMHC APC 5853 (Partial Hospitalization (three or More Services Per Day)) and hospital-based PHP APC 5863 (Partial Hospitalization (three or More Services Per Day)).

We are finalizing these proposals in this CY 2022 OPPS/ASC final rule as proposed, and we discuss our rationale and the public comments received on these proposals in the following sections.

2. Development of the PHP APC Geometric Mean Per Diem Costs

In preparation for CY 2022, we followed the PHP ratesetting methodology described in section VIII.B.2. of the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462 through 70466) to calculate the PHP APCs' geometric mean per diem costs and payment rates for APCs 5853 and 5863, incorporating the modifications made in the CY 2017 OPPS/ASC final rule with comment period. As discussed in section VIII.B.1. of the CY 2017 OPPS/ASC final rule with comment period (81 FR 79680 through 79687), the geometric mean per diem cost for hospital-based PHP APC 5863 is based upon actual hospital-based PHP claims and costs for PHP service days providing three or more services. Similarly, the geometric mean per diem cost for CMHC APC 5853 is based upon actual CMHC claims and costs for CMHC service days providing three or more services. In addition, for CY 2022, we proposed to use cost and charge data from the Hospital Cost Report Information System (HCRIS) as the source for the CMHC cost-to-charge ratios (CCRs), instead of using the Outpatient Provider Specific File (OPSF). As discussed in section VIII.B.2.a of this OPPS/ASC final rule, we are finalizing our proposal to use HCRIS as the source for CMHC CCRs.

As discussed in section X.E of the OPPS/ASC proposed rule (86 FR 42188 through 42190), we analyzed OPPS cost and claims information from CY 2019 and CY 2020 to better understand the effects of the COVID-19 PHE on outpatient services, including PHP, and to identify which data would be the best available for ratesetting. As discussed in that section of the proposed rule, we observed a number of changes, likely as a result of the COVID-19 PHE, in the CY 2020 OPPS claims that we would ordinarily use for ratesetting, and this includes changes in the claims for partial hospitalization, and we continue to observe those changes in the data for this OPPS/ASC final rule. For PHP services in particular, we observe that for hospital-based PHPs, the number of PHP days in our trimmed CY 2020 claims dataset is approximately 49 percent less than the number of PHP days in our trimmed CY 2019 claims dataset; and for CMHCs, the number of PHP days in our trimmed CY 2020 claims dataset is approximately 51 percent less than the number of PHP days in our trimmed CY 2019 claims dataset.

For this CY 2022 ratesetting, we proposed 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. We explained that we believe 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. Furthermore, there was a substantial decrease in the number of PHP providers in the CY 2020 data that we continue to observe for this CY 2022 OPPS/ASC final rule. Our trimmed CY 2020 claims dataset for this final rule contains cost and claim information from 31 fewer hospital-based PHP providers than are in the CY 2019 data. These significant decreases in utilization and in the number of hospital-based PHP providers who submitted CY 2020 claims led us to believe that CY 2020 data are not the best overall approximation of expected PHP services in CY 2022. We stated that 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 CY 2022 PHP services. Therefore, as discussed in section X.E of the OPPS/ASC proposed rule (86 FR 42188 through 42190), and consistent with what CMS proposed to do for other APCs under the OPPS, we proposed 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, for calculating the CY 2022 CMHC and hospital-based PHP APC per diem costs.

Comment: We received 6 comments, which were all in support of our proposal to use the 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, for calculating the CY 2022 CMHC and hospital-based PHP APC per diem costs. Several commenters stated their agreement with CMS' assessment that the ongoing COVID-19 PHE has disrupted the provision PHP services, and acknowledged that the proposed PHP payment rate methodology outlined in the proposed rule should help lessen the impact of COVID-19 on providers. One national organization expressed its belief that ensuring financial stability and sustainability for these programs is critical to ensuring access to this level of care for some of Medicare's most vulnerable patients.

Response: We thank commenters for their support. We agree with commenters that ensuring access to PHP services is critical, especially within the context of the COVID-19 PHE. As discussed above, we have analyzed more recent data for this CY 2022 OPPS/ASC final rule, and continue to observe significant changes from the CY 2019 PHP claims, which lead us to continue to believe that 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 CY 2022 PHP services.

After careful consideration of the comments we received and after analyzing more recent data, we are finalizing our proposal to use the 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, for calculating the CY 2022 CMHC and hospital-based PHP APC per diem costs.

The CMHC and hospital-based PHP APC per diem costs are the provider-type specific costs derived from the latest updated CY 2019 claims and cost data from the CY 2021 rulemaking. The CMHC and hospital-based PHP APC per diem payment rates are the national unadjusted payment rates calculated from the CMHC and hospital-based PHP APC geometric mean per diem costs, respectively, after applying the OPPS budget neutrality adjustments described in section II.A.4 of this CY 2022 OPPS/ASC final rule.

a. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments

For this CY 2022 OPPS/ASC final rule, we prepared data consistent with our policies as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463 through 70465). However, as discussed above, we finalized our proposal to use CY 2019 claims data 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, for calculating the CY 2022 CMHC PHP APC per diem cost.

For CY 2022 and future years, we also proposed to use cost and charge information from HCRIS as the basis for determining the CMHC CCRs used to calculate the geometric mean per diem cost for CMHC APC 5853. Following the methodology described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462), we calculated the CCR based on Medicare costs and charges. However, we noted that CMHCs are now reporting their costs using the newer cost reporting form, Form CMS 2088-17, which has different lines and columns than the ones described in the CY 2016 OPPS/ASC final rule for Form CMS 2088-92. Therefore, to calculate each CMHC's CCR for the CY 2022 OPPS/ASC proposed rulemaking, we divided costs from Worksheet C, Line 50, Column 5 by charges from Worksheet C, Line 50, Column 4.

As noted above, prior to this year's proposed rulemaking, our longstanding methodology for calculating CCRs for CMHCs had been to use the CCRs from the OPSF. As discussed in the CY 2004 OPPS/ASC final rule (68 FR 63468), a Program Memorandum was issued on January 17, 2003, which directed the fiscal intermediaries to recalculate hospital and CMHC cost-to-charge ratios and to update the cost-to-charge ratios on an ongoing basis in the OPSF, which was used as the basis for the CCRs used in calculating the geometric mean per diem costs for CMHCs. Subsequently, in the CY 2009 OPPS/ASC final rule (73 FR 68690), commenters addressed the fact that cost report information for CMHCs was not at that time included in HCRIS, and recommended that CMS base its calculations only in the cost report information that the agency can verify directly and not on data provided by the fiscal intermediary. CMS responded in the same OPPS/ASC final rule that it was working to include CMHC cost reports in the system, but that the CCRs from the OPSF continued to be the best available data for ratesetting. In the CY 2011 OPPS/ASC final rule (75 FR 71993 through 71994), commenters requested that CMHC cost report information be included in HCRIS, and CMS explained that CMHC cost reports would begin to be available in HCRIS starting in early 2011. Since that time, CMHC cost reports have become available in HCRIS. Because the data is now available and consistently populated based on the cost reports that CMHCs submit, we stated that we believe using cost information from HCRIS would be more consistent with the methodology for calculating most other OPPS services, including hospital-based PHP services. Therefore, we proposed for CY 2022 and future years to use HCRIS as the source for CMHC cost information used for calculating the geometric mean per diem cost for CMHC APC 5853.

We did not receive any comments on this proposal, and we are finalizing it as proposed. For CY 2022 and future years, we will use HCRIS as the source for CMHC cost information used for calculating the geometric mean per diem cost for CMHC APC 5853. Accordingly, we used HCRIS as the source for the CMHC cost information for this CY 2022 OPPS/ASC final rule.

Prior to calculating the final geometric mean per diem cost for CMHC APC 5853, we prepared the data by first applying trims and data exclusions, and assessing CCRs as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463 through 70465), so that ratesetting is not skewed by providers with extreme data. Before any trims or exclusions were applied, there were 40 CMHCs in the PHP claims data file. Under the ±2 standard deviation trim policy, we excluded any data from a CMHC for ratesetting purposes when the CMHC's geometric mean cost per day was more than ±2 standard deviations from the geometric mean cost per day for all CMHCs. In applying this trim for CY 2022 ratesetting, one CMHC had geometric mean costs per day below the trim's lower limit of $32.94, and one had geometric mean costs per day above the trim's upper limit of $486.92. Therefore, we are excluding data for ratesetting from these 2 CMHCs.

In accordance with our PHP ratesetting methodology (80 FR 70465), we also remove service days with no wage index values, because we use the wage index data to remove the effects of geographic variation in costs prior to APC geometric mean per diem cost calculation (80 FR 70465). For this CY 2022 final rule ratesetting, no CMHC was missing wage index data for all of its service days and, therefore, no CMHC was excluded. We also exclude providers without any days containing 3 or more units of PHP-allowable services. One provider is excluded from ratesetting because it had no days containing 3 or more units of PHP-allowable services. In addition to our trims and data exclusions, before calculating the PHP APC geometric mean per diem costs, we also assess CCRs (80 FR 70463). Our longstanding PHP OPPS ratesetting methodology defaults any CMHC CCR that is not available or any CMHC CCR greater than one to the statewide hospital CCR associated with the provider's urban/rural designation and their state location (80 FR 70463). For the CY 2022 OPPS/ASC proposed rule ratesetting and this OPPS/ACS final rule, there are 3 CMHCs with CCRs greater than one, and 12 CMHCs with missing CCR information. Therefore, we are defaulting the CCRs for these 15 CMHCs for ratesetting to the applicable statewide hospital CCR for each CMHC based on its urban/rural designation and its state location.

In summary, the application of these data preparation steps resulted in an adjusted CCR during our ratesetting process for 15 CMHCs having either a CCR greater than one or having no CCR. We are also excluding one CMHC because it had no days containing 3 or more services and 2 CMHCs for failing the ±2 standard deviation trim, resulting in the inclusion of 37 CMHCs. There were 564 CMHC claims removed during data preparation steps due to the ±2 standard deviation trim or because they either had no PHP allowable-codes or had zero payment days, leaving 10,370 CMHC claims in our CY 2022 final rule ratesetting modeling. After applying all of the previously listed trims, exclusions, and adjustments, we followed the methodology described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70464 through 70465) and modified in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 through 79688, and 79691), using the CMHC CCRs calculated based on the cost information from HCRIS as discussed in this OPPS/ASC final rule, to calculate the CMHC APC geometric mean per diem cost. The calculated CY 2022 geometric mean per diem cost for all CMHCs for providing three or more services per day (CMHC APC 5853) is $129.93, a decrease from $136.14 calculated last year for CY 2021 ratesetting (85 FR 86080).

In the CY 2022 OPPS/ASC proposed rule (86 FR 42151 through 42152), we proposed a cost floor of $136.14, which is equal to the final CY 2021 geometric mean per diem cost for CMHC APC 5853, in order to stabilize the geometric mean per diem costs for CY 2022 only. We recognized the disruption that the ongoing COVID-19 PHE appears to be having on CMHCs' operations, and stated that we believe it is important for CMS to continue to support Medicare beneficiaries' access to critical PHP services during the COVID-19 PHE by helping to maintain the stability of payments to PHP providers. We stated that we were concerned that the calculated geometric mean per diem cost of $130.41 for the proposed rule would result in a disruption to CMHC payments at a time when the need for mental health services has increased.

Because the calculated geometric mean per diem cost for CMHC APC 5853 was below the cost floor, we proposed to calculate the CY 2022 CMHC APC 5853 payment rate based on the cost floor of $136.14. We also proposed that if the final CY 2022 geometric mean per diem cost is calculated to be higher than $136.14, then we would use the calculated geometric mean per diem cost.

Comment: We received 3 comments on our proposed calculation of the geometric mean per diem cost for CMHC APC 5853. All commenters were supportive of the proposed cost floor to stabilize the geometric mean per diem costs finalized in the prior year, CY 2021. Commenters also encouraged CMS to consider long-term approaches to addressing cost fluctuations in PHP services and provide more stable payment rates to ensure access to these important services. Additionally, one commenter urged CMS to consider making CMHCs financially whole, which should include payment that will expand their capacity to meet growing need, particularly in underserved communities.

Response: We appreciate commenters' support for the proposed policies. We agree with commenters about the importance of maintaining stable payment rates to ensure access to PHP services. We continue to recognize that because the CMHC ratesetting dataset is small (n=37), changes in costs from a small number of providers can influence the overall geometric mean per diem cost calculation. We are considering approaches to address cost fluctuations in future years; however, since we did not propose a methodology for future years, we are not finalizing any methodology in this CY 2022 OPPS/ASC final rule to address cost fluctuations in future years.

We also appreciate the commenter's suggestion about the need for ensuring that CMS supports the capacity of CMHCs to meet the growing needs of underserved communities. We recognize the critical role that CMHCs play in the communities they serve. The commenter did not offer specific information about which growing community needs CMHCs are facing or what mechanism CMS should consider for enabling CMHCs to expand capacity in order to meet these needs, but we note that section 1866(e)(2) of the Act only authorizes Medicare to make payments to CMHCs for PHP services.

We agree with the commenter that PHP payment rates should accurately reflect the financial costs to providers of providing PHP services to their communities. Sections 1833(t)(2) and 1833(t)(9) of the Act set forth the requirements for establishing and adjusting OPPS payment rates, which are based on costs, and which include PHP payment rates. Because our PHP ratesetting methodology depends heavily on provider-reported costs, we strongly encourage CMHCs to review cost reporting instructions to be sure they are reporting their costs correctly. These instructions are available in chapter 45 of the Provider Reimbursement Manual (PRM), Part 2, available on the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals . We want to reiterate that it is a requirement for CMHCs, unless they are approved as a low-utilization or no-utilization provider in accordance with PRM-1, chapter 1, section 110 (42 CFR 413.24(g) and (h)), to file full cost reports, which helps us capture accurate CMHC costs in rate setting. We furthermore encourage those CMHCs that do not file full cost reports to consider doing so.

After careful consideration of the comments received, we are finalizing our proposal to establish a cost floor for CY 2022 equal to the final CY 2021 geometric mean per diem cost for CMHC APC 5853, which is $136.14. The calculated CY 2022 geometric mean per diem cost for all CMHCs for providing three or more services per day (CMHC APC 5853) is $129.93. Because this amount is below the cost floor, we are finalizing our proposal to calculate the CY 2022 CMHC APC 5853 payment rate based on the cost floor of $136.14.

b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions

For this CY 2022 final rule, we prepared data consistent with our policies as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463 through 70465) for hospital-based PHP providers, which is similar to that used for CMHCs. However, as discussed above, we finalized our proposal to use CY 2019 claims data 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, for calculating the CY 2022 hospital-based PHP APC per diem cost. The CY 2019 PHP claims included data for 449 hospital-based PHP providers for our calculations in the CY 2022 OPPS/ASC final rule.

Consistent with our policies, as stated in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463 through 70465), we prepared the data by applying trims and data exclusions. We applied a trim on hospital service days for hospital-based PHP providers with a CCR greater than 5 at the cost center level. To be clear, the CCR greater than 5 trim is a service day-level trim in contrast to the CMHC ±2 standard deviation trim, which is a provider-level trim. Applying the CCR greater than 5 trim removed affected service days from one hospital-based PHP provider from our proposed ratesetting. However, 100 percent of the service days for this hospital-based PHP provider had at least one service associated with a CCR greater than 5, so the trim removed this provider entirely from our proposed ratesetting. In addition, 68 hospital-based PHPs were removed for having no days with PHP payment. Two hospital-based PHPs were removed because none of their days included PHP-allowable HCPCS codes. No hospital-based PHPs were removed for missing wage index data, and a single hospital-based PHP was removed by the OPPS ±3 standard deviation trim on costs per day. (We refer readers to the OPPS Claims Accounting Document, available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html ).

Overall, we removed 72 hospital-based PHP providers (1 with all service days having a CCR greater than 5) + (68 with no PHP payment) + (2 with no PHP-allowable HCPCS codes) + (1 provider with geometric mean costs per day outside the ± 3 SD limits)], resulting in 377 (449 total−72 excluded) hospital-based PHP providers in the data used for calculating ratesetting.

After completing these data preparation steps, we calculated the CY 2022 geometric mean per diem cost for hospital-based PHP APC 5863 by following the methodology described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70464 through 70465) and modified in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 and 79691). The calculated CY 2022 hospital-based PHP APC geometric mean per diem cost for hospital-based PHP providers that provide three or more services per service day (hospital-based PHP APC 5863) is $253.02, which is a very slight decrease from $253.76 calculated last year for CY 2021 ratesetting (85 FR 86080).

In the CY 2022 OPPS/ASC proposed rule (86 FR 42151 through 42152), we proposed a cost floor of $253.76, which is equal to the final CY 2021 geometric mean per diem cost for CMHC APC 5863, in order to stabilize the geometric mean per diem costs for CY 2022 only. We noted that, in general, a decrease of the magnitude calculated for the proposed rule would not be unexpected due to normal variation in cost and claims data. However, we recognized the disruption that the ongoing COVID-19 PHE appears to be having on the operations of hospital-based PHPs, and stated that we believe it is important for CMS to continue to support Medicare beneficiaries' access to critical PHP services during the COVID-19 PHE by helping to maintain the stability of payments to PHP providers. We stated that while the decrease in the geometric mean per diem cost for hospital-based PHP APC 5863 would be very slight based on the CY 2019 claims and cost data used for the CY 2022 OPPS/ASC proposed rule, we continue to believe, as we have stated before in recent years, that access is better supported when geometric mean per diem costs do not fluctuate greatly. We also noted that the proposed cost floor would protect access to PHP services at hospital-based PHPs if the final CY 2022 calculated hospital-based PHP APC geometric mean per diem cost is significantly less, which we were concerned would result in a disruption to hospital-based PHP payments at a time when the need for mental health services has increased.

Because the calculated geometric mean per diem cost for hospital-based PHP APC 5863 was below the cost floor, we proposed to calculate the CY 2022 hospital-based PHP APC 5863 payment rate based on the cost floor of $253.76. We also proposed that if the final CY 2022 geometric mean per diem cost is calculated to be higher than $253.76, then we would use the calculated geometric mean per diem cost.

Comment: We received 5 comments on our proposed calculation of the geometric mean per diem cost for CMHC APC 5863. All commenters were supportive of the proposed cost floor to stabilize the geometric mean per diem costs finalized in the prior year, CY 2021. Commenters also encouraged CMS to consider long-term approaches to addressing cost fluctuations in PHP services and provide more stable payment rates to ensure access to these important services. Three national provider associations commented that while the PHE has magnified the need for improved access to behavioral healthcare, there are severe shortages of behavioral healthcare providers in many parts of the United States, stating their belief that the proposed ratesetting methodology should help lessen the impact of COVID-19 on PHP providers.

Response: We appreciate commenters' support for the proposed policies. We share commenters' concerns about ensuring that Medicare beneficiaries continue to have access to PHP services, particularly in light of the impact of the COVID-19 PHE. We also continue to recognize, as we have noted in past years, that changes in costs from a small number of providers can influence the overall geometric mean per diem cost calculation. We are considering approaches to address cost fluctuations in future years; however, since we did not propose a methodology for future years, we are not finalizing any methodology in this CY 2022 OPPS/ASC final rule to address cost fluctuations in future years.

After careful consideration of the comments received, we are finalizing our proposal to establish a cost floor for CY 2022 equal to the final CY 2021 geometric mean per diem cost for CMHC APC 5863, which is $253.76. The calculated CY 2022 geometric mean per diem cost for all hospital-based PHPs for providing three or more services per day (CMHC APC 5863) is $253.02. Because this amount is below the cost floor, we are finalizing our proposal to calculate the CY 2022 hospital-based PHP APC 5863 payment rate based on the cost floor of $253.76.The final CY 2022 PHP geometric mean per diem costs are shown in Table 44 and are used to derive the proposed CY 2022 PHP APC per diem rates for CMHCs and hospital-based PHPs. The final CY 2022 PHP APC per diem rates are included in Addendum A to the CY 2022 OPPS/ASC proposed rule (which is available on our website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html ).

C. Outlier Policy for CMHCs

For 2022, we proposed to continue to calculate the CMHC outlier percentage, cutoff point and percentage payment amount, outlier reconciliation, outlier payment cap, and fixed dollar- threshold according to previously established policies. These topics are discussed in more detail. We refer readers to section II.G.1 of this CY 2022 OPPS/ASC final rule for our general policies for hospital outpatient outlier payments.

We did not receive any public comments on our proposal, and are finalizing it as proposed.

1. Background

As discussed in the CY 2004 OPPS final rule with comment period (68 FR 63469 through 63470), we noted a significant difference in the amount of outlier payments made to hospitals and CMHCs for PHP services. Given the difference in PHP charges between hospitals and CMHCs, we did not believe it was appropriate to make outlier payments to CMHCs using the outlier percentage target amount and threshold established for hospitals. Therefore, beginning in CY 2004, we created a separate outlier policy specific to the estimated costs and OPPS payments provided to CMHCs. We designated a portion of the estimated OPPS outlier threshold specifically for CMHCs, consistent with the percentage of projected payments to CMHCs under the OPPS each year, excluding outlier payments, and established a separate outlier threshold for CMHCs. This separate outlier threshold for CMHCs resulted in $1.8 million in outlier payments to CMHCs in CY 2004 and $0.5 million in outlier payments to CMHCs in CY 2005 (82 FR 59381). In contrast, in CY 2003, more than $30 million was paid to CMHCs in outlier payments (82 FR 59381).

2. CMHC Outlier Percentage

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 through 59268), we described the current outlier policy for hospital outpatient payments and CMHCs. We note that we also discussed our outlier policy for CMHCs in more detail in section VIII.C. of that same final rule (82 FR 59381). We set our projected target for all OPPS aggregate outlier payments at 1.0 percent of the estimated aggregate total payments under the OPPS (82 FR 59267). This same policy was also reiterated in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58996), the CY 2020 OPPS/ASC final rule with comment period (84 FR 61350), and the CY 2021 OPPS/ASC final rule with comment period (85 FR 86082).

We estimate CMHC per diem payments and outlier payments by using the most recent available utilization and charges from CMHC claims, updated CCRs, and the updated payment rate for APC 5853. For increased transparency, we are providing a more detailed explanation of the existing calculation process for determining the CMHC outlier percentages. To calculate the CMHC outlier percentage, we follow three steps:

• Step 1: We multiply the OPPS outlier threshold, which is 1.0 percent, by the total estimated OPPS Medicare payments (before outliers) for the prospective year to calculate the estimated total OPPS outlier payments:

(0.01 × Estimated Total OPPS Payments) = Estimated Total OPPS Outlier Payments.

• Step 2: We estimate CMHC outlier payments by taking each provider's estimated costs (based on their allowable charges multiplied by the provider's CCR) minus each provider's estimated CMHC outlier multiplier threshold (we refer readers to section VIII.C.3. of the CY 2022 OPPS/ASC proposed rule). That threshold is determined by multiplying the provider's estimated paid days by 3.4 times the CMHC PHP APC payment rate. If the provider's costs exceed the threshold, we multiply that excess by 50 percent, as described in section VIII.C.3. of the CY 2022 OPPS/ASC proposed rule, to determine the estimated outlier payments for that provider. CMHC outlier payments are capped at 8 percent of the provider's estimated total per diem payments (including the beneficiary's copayment), as described in section VIII.C.5. of the CY 2022 OPPS/ASC proposed rule, so any provider's costs that exceed the CMHC outlier cap will have its payments adjusted downward. After accounting for the CMHC outlier cap, we sum all of the estimated outlier payments to determine the estimated total CMHC outlier payments.

(Each Provider's Estimated Costs − Each Provider's Estimated Multiplier Threshold) = A. If A is greater than 0, then (A × 0.50) = Estimated CMHC Outlier Payment (before cap) = B. If B is greater than (0.08 × Provider's Total Estimated Per Diem Payments), then cap adjusted B = (0.08 × Provider's Total Estimated Per Diem Payments); otherwise, B = B. Sum (B or cap-adjusted B) for Each Provider = Total CMHC Outlier Payments.

• Step 3: We determine the percentage of all OPPS outlier payments that CMHCs represent by dividing the estimated CMHC outlier payments from Step 2 by the total OPPS outlier payments from Step 1: (Estimated CMHC Outlier Payments/Total OPPS Outlier Payments).

We proposed to continue to calculate the CMHC outlier percentage according to previously established policies, and we did not propose any changes to our current methodology for calculating the CMHC outlier percentage for CY 2022. Therefore, based on our CY 2022 payment estimates, CMHCs are projected to receive 0.02 percent of total hospital outpatient payments in CY 2022, excluding outlier payments. We proposed to designate approximately less than 0.01 percent of the estimated 1.0 percent hospital outpatient outlier threshold for CMHCs. This percentage is based upon the formula given in Step 3.

We did not receive any public comments on our proposal, and are finalizing it as proposed.

3. Cutoff Point and Percentage Payment Amount

As described in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59381), our policy has been to pay CMHCs for outliers if the estimated cost of the day exceeds a cutoff point. In CY 2006, we set the cutoff point for outlier payments at 3.4 times the highest CMHC PHP APC payment rate implemented for that calendar year (70 FR 68551). For CY 2018, the highest CMHC PHP APC payment rate is the payment rate for CMHC PHP APC 5853. In addition, in CY 2002, the final OPPS outlier payment percentage for costs above the multiplier threshold was set at 50 percent (66 FR 59889). In CY 2018, we continued to apply the same 50 percent outlier payment percentage that applies to hospitals to CMHCs and continued to use the existing cutoff point (82 FR 59381). Therefore, for CY 2018, we continued to pay for partial hospitalization services that exceeded 3.4 times the CMHC PHP APC payment rate at 50 percent of the amount of CMHC PHP APC geometric mean per diem costs over the cutoff point. For example, for CY 2018, if a CMHC's cost for partial hospitalization services paid under CMHC PHP APC 5853 exceeds 3.4 times the CY 2018 payment rate for CMHC PHP APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.4 times the CY 2018 payment rate for CMHC PHP APC 5853 [0.50 × (CMHC Cost−(3.4 × APC 5853 rate))]. This same policy was also reiterated in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58996 through 58997), CY 2020 OPPS/ASC final rule with comment period (84 FR 61351) and the CY 2021 OPPS/ASC final rule with comment period (85 FR 86082 through 86083). For CY 2022, we proposed to continue to pay for partial hospitalization services that exceed 3.4 times the proposed CMHC PHP APC payment rate at 50 percent of the CMHC PHP APC geometric mean per diem costs over the cutoff point. That is, for CY 2022, if a CMHC's cost for partial hospitalization services paid under CMHC PHP APC 5853 exceeds 3.4 times the payment rate for CMHC APC 5853, the outlier payment will be calculated as [0.50 × (CMHC Cost−(3.4 × APC 5853 rate))].

We did not receive any public comments on our proposal, and are finalizing it as proposed.

4. Outlier Reconciliation

In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599), we established an outlier reconciliation policy to address charging aberrations related to OPPS outlier payments. We addressed vulnerabilities in the OPPS outlier payment system that lead to differences between billed charges and charges included in the overall CCR, which are used to estimate cost and would apply to all hospitals and CMHCs paid under the OPPS. We initiated steps to ensure that outlier payments appropriately account for the financial risk when providing an extraordinarily costly and complex service, but are only being made for services that legitimately qualify for the additional payment.

For a comprehensive description of outlier reconciliation, we refer readers to the CY 2019 OPPS/ASC final rules with comment period (83 FR 58874 through 58875 and 81 FR 79678 through 79680).

We proposed to continue these policies for partial hospitalization services provided through PHPs for CY 2022. The current outlier reconciliation policy requires that providers whose outlier payments meet a specified threshold (currently $500,000 for hospitals and any outlier payments for CMHCs) and whose overall ancillary CCRs change by plus or minus 10 percentage points or more, are subject to outlier reconciliation, pending approval of the CMS Central Office and Regional Office (73 FR 68596 through 68599). The policy also includes provisions related to CCRs and to calculating the time value of money for reconciled outlier payments due to or due from Medicare, as detailed in the CY 2009 OPPS/ASC final rule with comment period and in the Medicare Claims Processing Manual (73 FR 68595 through 68599 and Medicare Claims Processing Internet Only Manual, Chapter 4, Section 10.7.2 and its subsections, available online at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf ).

We did not receive any public comments on our proposal, and are finalizing it as proposed.

5. Outlier Payment Cap

In the CY 2017 OPPS/ASC final rule with comment period, we implemented a CMHC outlier payment cap to be applied at the provider level, such that in any given year, an individual CMHC will receive no more than a set percentage of its CMHC total per diem payments in outlier payments (81 FR 79692 through 79695). We finalized the CMHC outlier payment cap to be set at 8 percent of the CMHC's total per diem payments (81 FR 79694 through 79695). This outlier payment cap only affects CMHCs, it does not affect other provider types (that is, hospital-based PHPs), and is in addition to and separate from the current outlier policy and reconciliation policy in effect. In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61351), we finalized a proposal to continue this policy in CY 2020 and subsequent years. In the CY 2022 OPPS/ASC proposed rule, we did not propose any changes to this policy.

6. Fixed-Dollar Threshold

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 through 59268), for the hospital outpatient outlier payment policy, we set a fixed-dollar threshold in addition to an APC multiplier threshold. Fixed-dollar thresholds are typically used to drive outlier payments for very costly items or services, such as cardiac pacemaker insertions. CMHC PHP APC 5853 is the only APC for which CMHCs may receive payment under the OPPS, and is for providing a defined set of services that are relatively low cost when compared to other OPPS services. Because of the relatively low cost of CMHC services that are used to comprise the structure of CMHC PHP APC 5853, it is not necessary to also impose a fixed-dollar threshold on CMHCs. Therefore, in the CY 2018 OPPS/ASC final rule with comment period, we did not set a fixed-dollar threshold for CMHC outlier payments (82 FR 59381). This same policy was also reiterated in the CY 2020 OPPS/ASC final rule with comment period (84 FR 61351) and the CY 2021 OPPS/ASC final rule with comment period (85 FR 86083). We proposed to continue this policy for CY 2022.

We did not receive any public comments on our proposal, and are finalizing it as proposed.

IX. Services That Will Be Paid Only as Inpatient Services

A. Background

Established in rulemaking as part of the initial implementation of the OPPS, the inpatient only (IPO) list identifies services for which Medicare will only make payment when the services are furnished in the inpatient hospital setting because of the nature of the procedure, the underlying physical condition of the patient, or the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged (70 FR 68695). The IPO list was created based on the premise (rooted in the practice of medicine at that time), that Medicare should not pay for procedures furnished as outpatient services that are performed on an inpatient basis virtually all of the time for the Medicare population, either because of the invasive nature of the procedures, the need for postoperative care, or the underlying physical condition of the patient who would require such surgery, because performing these procedures on an outpatient basis would not be safe or appropriate, and therefore not reasonable and necessary under Medicare rules (63 FR 47571). Services included on the IPO list were those determined to require inpatient care, such as those that are highly invasive, result in major blood loss or temporary deficits of organ systems (such as neurological impairment or respiratory insufficiency), or otherwise require intensive or extensive postoperative care (65 FR 67826). There are some services designated as inpatient only that, given their clinical intensity, would not be expected to be performed in the hospital outpatient setting. For example, we have traditionally considered certain surgically invasive procedures on the brain, heart, and abdomen, such as craniotomies, coronary-artery bypass grafting, and laparotomies, to require inpatient care (65 FR 18456). Designation of a service as inpatient-only does not preclude the service from being furnished in a hospital outpatient setting, but means that Medicare will not make payment for the service if it is furnished to a Medicare beneficiary in the hospital outpatient setting (65 FR 18443). Conversely, the absence of a procedure from the list should not be interpreted as identifying those procedures as appropriately performed only in the hospital outpatient setting (70 FR 68696).

As part of the annual update process, we have historically worked with interested stakeholders, including professional societies, hospitals, surgeons, hospital associations, and beneficiary advocacy groups, to evaluate the IPO list and to determine whether services should be added to or removed from the list. Stakeholders were encouraged to request reviews for a particular code or group of codes; and we have asked that their requests include evidence that demonstrates that the procedure was performed on an outpatient basis in a safe and appropriate manner in a variety of different types of hospitals—including but not limited to—operative reports of actual cases, peer-reviewed medical literature, community medical standards and practice, physician comments, outcome data, and post-procedure care data (67 FR 66740).

Prior to CY 2021, we traditionally used five criteria to determine whether a procedure should be removed from the IPO list (65 FR 18455). As noted in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74353), we assessed whether a procedure or service met these criteria to determine whether or not it should be removed from the IPO list and assigned to an APC group for payment under the OPPS when provided in the hospital outpatient setting. We have explained that a procedure is not required to meet all of the established criteria to be removed from the IPO list. The criteria for assessing procedures for removal from the IPO list prior to CY 2021 are the following:

• Most outpatient departments are equipped to provide the services to the Medicare population.
• The simplest procedure described by the code may be furnished in most outpatient departments.
• The procedure is related to codes that we have already removed from the IPO list.
• A determination is made that the procedure is being furnished in numerous hospitals on an outpatient basis.
• A determination is made that the procedure can be appropriately and safely furnished in an ASC and is on the list of approved ASC services or has been proposed by us for addition to the ASC list.

In the past, we have requested that stakeholders submit corresponding evidence in support of their claims that a code or group of codes met the longstanding criteria for removal from the IPO list and was safe to perform on the Medicare population in the hospital outpatient setting—including, but not limited to case reports, operative reports of actual cases, peer-reviewed medical literature, medical professional analysis, clinical criteria sets, and patient selection protocols. Our clinicians thoroughly reviewed all information submitted within the context of the established criteria and if, following this review, we determined that there was sufficient evidence to confirm that the code could be safely and appropriately performed on an outpatient basis, we assigned the service to an APC and included it as a payable procedure under OPPS (67 FR 66740).

We stated in prior rulemaking that, over time, given advances in technology and surgical technique, we would continue to evaluate services to determine whether they should be removed from the IPO list. Our goal is to ensure that inpatient only designations are consistent with current standards of practice. We have asserted in prior rulemaking that, insofar as advances in medical practice mitigate concerns about these procedures being performed on an outpatient basis, we would be prepared to remove procedures from the IPO list and provide for payment for them under the OPPS (65 FR 18443). Prior to CY 2021, changes to the IPO list have been gradual. Further, CMS has at times had to reclassify codes as inpatient only services with the emergence of new information.

We refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74352 through 74353) for a full discussion of our historic policies for identifying services that are typically provided only in an inpatient setting and, therefore, that will not be paid by Medicare under the OPPS, as well as the criteria we have used to review the IPO list to determine whether or not any services should be removed.

In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86084 through 86088), we significantly adjusted our approach to the IPO list. As we stated in that final rule, we no longer saw the need for CMS to restrict payment for certain procedures by maintaining the IPO list to identify services that require inpatient care. In that final rule, we acknowledged the seriousness of the concerns regarding patient safety and quality of care that various stakeholders expressed regarding removing procedures from the IPO list or eliminating the IPO list altogether. But we stated that we believed that the developments in surgical technique and technological advances in the practice of medicine, as well as various safeguards, including, but not limited to, physician clinical judgment, state and local regulations, accreditation requirements, medical malpractice laws, hospital conditions of participation, CMS quality and monitoring initiatives and programs and other CMS initiatives would continue to ensure that procedures removed from the IPO list and provided in the hospital outpatient setting could be performed safely on appropriately selected beneficiaries. We also stated that given our increasing ability to measure the safety of procedures performed in the hospital outpatient setting and to monitor the quality of care, in addition to the other safeguards detailed above, we believed that quality of care was unlikely to be affected by the elimination of the IPO list. We noted that we do not require services that are not included on the IPO list to be performed solely in the hospital outpatient setting and that services that were previously identified as inpatient only can continue to be performed in the inpatient setting. We emphasized that physicians should use their clinical knowledge and judgment, together with consideration of the beneficiary's specific needs, to determine whether a procedure can be performed appropriately in a hospital outpatient setting or whether inpatient care is required for the beneficiary, subject to the general coverage rules requiring that any procedure be reasonable and necessary. We also stated that the elimination of the IPO list would ensure maximum availability of services to beneficiaries in the hospital outpatient setting. Finally, we stressed that as medical practice continues to develop, we believed that the difference between the need for inpatient care and the appropriateness of outpatient care has become less distinct for many services.

Accordingly, in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86084 through 86088), we finalized, with modification, our proposal to eliminate the IPO list over the course of three years (85 FR 86093). We revised our regulation at § 419.22(n) to state that, effective on January 1, 2021, the Secretary shall eliminate the list of services and procedures designated as requiring inpatient care through a 3-year transition. As part of the first phase of this elimination of the IPO list, we removed 298 codes, including 266 musculoskeletal-related services, from the list beginning in CY 2021 and, because we proposed to eliminate the IPO list entirely, the removed procedures were not assessed against our longstanding criteria for removal (85 FR 86094).

B. Changes to the Inpatient Only (IPO) List

In the CY 2022 OPPS/ASC proposed rule, for CY 2022, we proposed to halt the elimination of the IPO list and, after clinical review of the services removed from the IPO list in CY 2021 as part of the first phase of eliminating the IPO list, we proposed to add the 298 services removed from the IPO list in CY 2021 back to the IPO list beginning in CY 2022. In accordance with this proposal, we proposed to amend the regulation at § 419.22(n) to remove the reference to the elimination of the list of services and procedures designated as requiring inpatient care through a three-year transition. We also proposed to codify the five longstanding criteria for determining whether a service or procedure should be removed from the IPO list in the regulation in a new § 419.23.

1. Proposal To Halt the Elimination of the IPO List

Following the CY 2021 OPPS/ASC final rule with comment period, stakeholders continued to express concerns regarding the pace at which the IPO list would be eliminated, the perceived lack of transparency in determining the order of removal of procedures over the course of the elimination process, and what stakeholders believed were insufficient details concerning rate setting for procedures for which payment would be made when furnished in the hospital outpatient department (HOPD) setting, as well as the accuracy of those rates for the HOPD setting. We have received stakeholder requests to reconsider the elimination of the IPO list, to reevaluate procedures removed from the IPO list due to safety and quality concerns, and to, at a minimum, extend the timeframe for eliminating the list.

In the CY 2022 OPPS/ASC proposed rule, we stated that after further consideration of the policy we adopted in the CY 2021 OPPS/ASC final rule with comment period and the concerns stakeholders have raised since the final rule was issued, we believe that we should halt the elimination of the IPO list to ensure that any service removed from the IPO list is evaluated against the previous longstanding criteria for removal from the IPO list before it is removed. We stated that we believe assessing whether a procedure or service meets the criteria for removal would allow for a more gradual removal of services from the IPO list—which would also allow stakeholders more time to evaluate the safety of the service in the HOPD and to prepare to safely furnish the services migrating off of the IPO list, if they so choose. We stated that after further consideration, we continue to believe that the IPO list is a valuable tool for ensuring that the OPPS only pays for services that can safely be performed in the hospital outpatient setting, and we had therefore reconsidered eliminating the IPO list at that time. We stated that we believe that there are many surgical procedures that cannot be safely performed on a typical Medicare beneficiary in the hospital outpatient setting, and therefore, it would be inappropriate for us to assign them separately payable status indicators and establish payment rates in the OPPS (78 FR 75055). We recognized that while physicians are able to make safety determinations for a specific beneficiary, CMS is in the position to make safety determinations for the broader population of Medicare beneficiaries, that is, the typical Medicare beneficiary. Furthermore, we explained that while we want to afford physicians and hospitals the maximum flexibility in choosing the most clinically appropriate site of service for the procedure, as long as the characteristics of the procedure are consistent with the criteria listed above, we believe that the IPO list was a necessary safeguard that considers the broader Medicare population.

In the CY 2021 OPPS/ASC final rule with comment period, we recognized that stakeholders may need time to adjust to the removal of procedures from the list, especially given the significant number of services removed beginning in CY 2021 (85 FR 86085 and 86092). We also recognized that providers may need time to prepare, update their billing systems, and gain experience with newly removed procedures eligible to be paid under either the IPPS or the OPPS (85 FR 86086). We also acknowledged that it will take time for clinical staff and providers to gain experience furnishing these services to the appropriate Medicare beneficiaries in the HOPD, and to develop comprehensive patient selection criteria and other protocols to identify whether a beneficiary can safely have these procedures performed in the hospital outpatient setting (85 FR 86088). In the CY 2021 OPPS/ASC proposed rule, we also reiterated that the removal of a particular procedure from the IPO list does not require that all beneficiaries be treated in the hospital outpatient setting, but explained that we are cognizant that it does require the physician and clinical care team to exercise complex medical judgment to determine the appropriate setting of care, in accordance with the 2-midnight rule.

Separately, we also acknowledged the numerous challenges that providers are facing due to the COVID-19 PHE (85 FR 86089). After further experience with the PHE and its impact on provider and beneficiary behavior, we recognized that the COVID-19 PHE has likely reduced providers' ability to prepare to furnish these services in the hospital outpatient setting in the manner they would absent the PHE. We acknowledged that the COVID-19 PHE may have negatively impacted the time and resources that providers have to adapt to the removal of these procedures from the IPO list— making it more difficult for providers to prepare, update their billing systems, and gain experience with newly removed procedures eligible to be paid under either the IPPS or the OPPS. We also recognized that the COVID-19 PHE has negatively impacted clinical staff and providers' opportunity to develop the comprehensive patient selection criteria and other protocols necessary to identify whether a Medicare beneficiary could safely have these procedures performed in the hospital outpatient setting while guaranteeing them appropriate quality of care.

We explained in the CY 2022 OPPS/ASC proposed rule that after further consideration and review of the additional feedback from stakeholders, we recognized that the timeframe we finalized in the CY 2021 OPPS/ASC final rule with comment period for eliminating the IPO list did not, and would not, give us a sufficient opportunity to carefully assess whether a procedure should be payable in the HOPD setting, with considerations to beneficiary safety and medical advancements. We also explained that the unprecedented removal of the 298 codes from the IPO list transpired quickly. Given the significant policy shift and work required to operationalize the elimination of the IPO list, we acknowledged that more time is required to separately evaluate and consider the inpatient only classification of each service and its potential APC assignment. In addition, we stated that we believe that we should continue to use the longstanding criteria for removing services from the IPO list to evaluate each service before proposing to remove it from the list, and, as noted above, we proposed to codify these criteria in the regulation in a new § 419.23.

We emphasized in the CY 2022 OPPS/ASC proposed rule that we still believe that as medical practice continues to develop, the difference between the need for inpatient care and the appropriateness of outpatient care has become less distinct for many services. We stated that while we recognize that there are services currently classified as inpatient only that may be appropriate in the hospital outpatient setting for some Medicare beneficiaries, we continue to strive to balance the goals of increasing physician and patient choice of setting of care with considerations to patient safety for all Medicare beneficiaries. We explained that we must also consider the timing with which we remove services from the IPO list and the availability of evidence that may support the removal of those services. We stated that we believe that with additional time stakeholders can provide supportive evidence to aid in the evaluation of each individual procedure's assignment to the IPO list, as well as the appropriate APC assignment and corresponding payment for any codes, including but not limited to case reports, operative reports of actual cases, peer-reviewed medical literature, medical professional analysis, clinical criteria sets, and patient selection protocols.

Furthermore, we explained that an initial review of 2021 billing data through May 21, 2021 supported our proposal to halt the elimination of the list, revealing that 131 of the 298 codes removed from the IPO list in the CY 2021 OPPS/ASC final rule with comment period appeared on either zero or one OPPS claim and 269 of the 298 codes appeared on fewer than 100 claims. These data indicated that fewer than 3 percent of the services removed from the IPO list in 2021 had seen notable volume in the hospital outpatient setting following their removal from the IPO list. For perspective, we also note that even before we removed these codes from the IPO list, it was not uncommon to see at least some volume for these codes in the claims data. In CY 2020, when these codes were still not payable under the OPPS, 188 of the codes had at least one outpatient claim and 18 codes had greater than 100 claims, for reasons undetermined. We stated that, as a result, it was likely that not all of the reported claims represent services provided in the hospital outpatient setting due to these services being removed from the IPO list in CY 2021.

Therefore, we proposed to halt the elimination of the IPO list in order to allow for greater consideration of the impact removing services from the list has on beneficiary safety and to allow providers impacted by the COVID-19 PHE additional time to prepare to furnish appropriate services safely and efficiently before continuing to remove large numbers of services from the list.

Comment: Many commenters, including hospital associations, health systems, medical specialty societies, professional organizations, and advocacy groups supported our proposal to halt the elimination of the IPO list. Several commenters thanked CMS for listening to stakeholders' concerns about beneficiary safety and reconsidering the elimination of the IPO list. Commenters stated that the IPO list is a necessary tool and an important programmatic safeguard, and that maintaining the IPO list is necessary to set a national standard for services that should be restricted to the inpatient setting.

Specifically, commenters who supported halting the elimination of the IPO list wanted to maintain the IPO list due to patient safety concerns. These commenters stated that the high-risk, invasive procedures that require post-operative monitoring and care coordination that are included on the IPO list would not be safe to perform on Medicare beneficiaries in the hospital outpatient setting. Commenters noted that complications can occur with any surgical procedure, particularly during the post-operative period and that for many services on the IPO list, such post-operative complications are best identified early and treated promptly in the inpatient hospital setting. Several commenters responded that even with future advancements in medical practice and technology, they could not anticipate that such complicated procedures could ever be provided safely in the hospital outpatient setting, given their clinical nature. Commenters noted that physicians are in the best position to make safety determinations for their patients, but CMS must make policies for the broader, average beneficiary population. The commenters suggested that a careful review is needed before removing extensive surgical procedures performed on patients with complications and/or comorbidities, which are common in the Medicare population.

Supporters of maintaining the IPO list acknowledged operational and administrative concerns with maintaining the IPO list, largely focused on the 2-midnight rule and burden of proof required to allow services removed from the IPO list to be furnished inpatient, but contended that eliminating the IPO list would create new clinical and operational challenges for both practitioners and facilities that would require additional time and resources to adjust to. Several commenters also expressed concerns that the elimination of the IPO list could potentially inappropriately shift costs onto patients and subsequently discourage beneficiaries from seeking necessary care. Most supporters of maintaining the IPO list also supported CMS retaining its current process for evaluating and removing procedures from the IPO list through rulemaking.

Response: We thank the commenters for their support and we refer readers to sections 1X.B.2. and B.4. of this final rule with comment period for additional discussion of commenters' feedback on 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.

Comment: We also received comments from physicians and medical specialty societies who stated that, while they agreed that physicians should be the primary arbiters regarding the clinically appropriate site of service for a procedure for a particular beneficiary, they support maintaining the IPO list because a physician's medical judgment is not always the primary factor in determining whether a procedure is furnished in the inpatient or outpatient hospital setting. These commenters stated that many of the adverse impacts from removing procedures from the IPO list arise from hospitals that drive provider admission decisions. These commenters noted that when procedures are removed from the IPO list, many hospitals and other payers, including Medicare Advantage plans, make rules establishing outpatient status as the assumed baseline site of service for these procedures, regardless of patient characteristics or the physician's clinical assessment. Commenters divulged various reasons for this action on the part of hospitals and payers, including a desire to have the procedure performed in a lower cost setting, misinterpretation of CMS' rulemaking guidance, a desire for administrative simplicity, concerns regarding the application of the 2-midnight benchmark to services that are removed from the IPO list, the potential for claim denials if this benchmark is not met and/or excessive administrative burden to support the case-by-case exception to the 2-midnight rule. According to commenters, physicians must, at times, convince a hospital or payer that a particular patient should receive a given procedure in an inpatient setting due to patient safety concerns.

Commenters requested that CMS provide robust stakeholder education and issue various forms of guidance as a means of reducing administrative and operational burden, to support site of service decisions and to encourage consideration of and deference to the judgment of the physician, professional societies, and hospital associations regarding the procedures that are appropriate to be performed in the HOPD setting. Commenters referenced prior CMS guidance as a useful tool for providers and hospitals. One commenter noted that guidance increases the likelihood of hospital awareness of CMS preamble statements on patient selection. One commenter acknowledged CMS' historical reticence to define clinical criteria in light of our deference to physician judgment but reasoned that a CMS-established baseline protocol would not limit clinical decision-making, as clinicians would still be able to provide supporting clinical documentation to justify inpatient stays for patients that may otherwise be candidates for outpatient surgery. Commenters also requested that CMS institute a safeguard against inappropriate payer behavior that requires services to be furnished in the HOPD setting, despite the clinical judgment of the physician or needs of the patient.

Response: We thank the commenters for their support and we acknowledge the commenters' concerns regarding the administrative burden associated with the IPO list and the removal of procedures from the list. As we have stated in previous rulemaking (85 FR 86087; 84 FR 61354; 82 FR 59384; 81 FR 79697) when commenters raised similar concerns, the removal of a service from the IPO list does not require the service to be performed only on an outpatient basis. Rather, it allows for payment under the OPPS when the service is performed on a registered hospital outpatient. We reiterate that services that are removed from the IPO list can be and are performed on individuals who are admitted as inpatients (as well as individuals who are registered hospital outpatients) when the patient's condition warrants inpatient admission (65 FR 18456). It is a misinterpretation of CMS payment policy for providers to create policies or guidelines that establish the hospital outpatient setting as the baseline or default site of service for a procedure based on its removal from the IPO list. As stated in previous rulemaking, services that are no longer included on the IPO list are payable in either the inpatient or hospital outpatient setting subject to the general coverage rules requiring that any procedure be reasonable and necessary, and payment should be made pursuant to the otherwise applicable payment policies (84 FR 61354; 82 FR 59384; 81 FR 79697).

We also recognize commenters' concerns regarding the need for additional stakeholder education on considerations that would support physician decision-making in selecting an appropriate site of service for procedures furnished to Medicare beneficiaries. We note the balance between several factors on this important issue, namely, the prohibition on CMS interfering with the practice of medicine in Section 1801 of the Social Security Act, the need to provide clear information about CMS billing and payment rules that ensures hospitals, physicians and other stakeholders can understand and operate within them, and that the specific decision about the most appropriate care setting for a given surgical procedure is a complex medical judgment made by the physician based on the beneficiary's individual clinical needs and preferences and on the general coverage rules requiring that any procedure be reasonable and necessary (84 FR 61354). We note that, in the past when services have come off the IPO list, we have attempted to provide general educational information regarding our billing and payment rules. For example, we published Medicare Learning Network (MLN) Booklet 909065 regarding major hip and knee replacement procedures, which is available here: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/jointreplacement-ICN909065.pdf .

We also note the Beneficiary and Family-Centered Care Quality Improvement Organizations (BFCC-QIOs) are contracted by CMS to review a sample of Medicare fee-for-service (FFS) short-stay inpatient claims (claims with hospital stays lasting less than 2 midnights after formal inpatient admission) for compliance with the 2-Midnight Rule. In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61364 through 61365) the BFCC-QIO program adopted a period of exemption from certain medical review activities for procedures newly removed from the IPO list where the length of stay after inpatient admission is less than 2 midnights. During the exemption period, BFCC-QIOs may conduct medical reviews for education purposes but will not deny claims or make referrals to RACs for noncompliance with the 2-midnight rule for procedures that are removed from the IPO list within the first 2 years of their removal. This exemption period was intended to allow providers time to become more familiar with the application of the 2-midnight rule to procedures newly removed from the IPO list, and allows the BFCC-QIOs the opportunity to provide education regarding application of that payment policy to such procedures. In section X.A of this CY 2022 OPPS/ASC final rule with comment period we are reinstating this 2-year exemption policy, and believe that this will give providers needed time to adapt when procedures are newly removed from the IPO list starting January 1, 2022.

In addition to the 2-year exemption period for certain medical review activities, in the coming months we plan to use our experience gained through BFCC-QIO reviews to engage stakeholders to determine if developing additional materials for services that are newly removed from the IPO list would be helpful, including materials that are similar to MLN Booklet 909065 noted above. We reiterate that any such materials will not supersede physicians' medical judgment about whether a procedure should be performed in the inpatient or outpatient hospital setting. With regard to the behavior of commercial payers and site selection for outpatient services, we believe that these comments are out of the scope of the proposed rule.

We refer readers to section X. of this final rule with comment period for additional discussion regarding the 2-midnight rule. We also refer readers to sections 1X.B.2. and B.4. of this final rule with comment period for additional discussion of commenters' feedback on 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.

Comment: Numerous commenters, including some health systems, individual physicians and certain payers, opposed halting the elimination of the IPO list. Most of these commenters opposed halting the elimination of the IPO list due to administrative and operational issues that they believe stem from the existence of the IPO list, including site of service claims denials and compliance documentation. Other commenters contended that eliminating the IPO list would reduce administrative and operational burden and allow for necessary flexibility that could help providers serve the diversity of clinical needs and health statuses among Medicare beneficiaries and would increase patient choice and access to advances in surgical care that have made outpatient procedures safe, effective and efficient. Commenters who supported eliminating the IPO list maintained that the existence of the IPO list did not impact the quality of care beneficiaries receive as there is no distinction between inpatient and outpatient care. Specifically, a few commenters insisted that, for most hospitals the IPO list has no impact on the quality of care provided: Procedures are done in the same operating rooms, with the same infrastructure and the same staff. One commenter asserted that it is an inaccurate conclusion that the provision of services is less safe when conducted in an hospital outpatient setting. The commenter argued that no data has been provided to demonstrate that the removal of services from the IPO list in 2021 resulted in higher incidences of adverse events or increased risk to patient safety when performed in the hospital outpatient setting. Another commenter requested clarification on why CMS believes the IPO list is in the best interest of patient safety. The commenter stated that while there may be enhanced safety for surgeries performed in a hospital versus an ASC or physician office, it is unclear how patient safety differs between the hospital inpatient and hospital outpatient settings. They claimed that utilization of outpatient services increased across all plan types with the 2021 elimination of the IPO list, highlighting the impact across the healthcare system. The commenter noted high levels of patient satisfaction and no compromise in quality as measured by unplanned returns to the emergency department or operating room and no readmissions following services performed in the hospital outpatient setting. Several commenters acknowledged that there will be patients for whom an inpatient procedure remains the safest and most clinically appropriate option but believed that there should be additional flexibility for Medicare beneficiaries who meet relevant clinical criteria. In addition, one commenter suggested that the elimination of the IPO list should occur over 5 to 7 instead of 3.

Response: We appreciate the commenter's feedback. We again acknowledge commenters' concerns regarding the administrative and operational challenges associated with the IPO list, including the application of the 2-midnight benchmark to services that are removed from the IPO list. In addition to the mechanisms that are already in place, including the case-by-case exceptions to the 2-midnight benchmark and the exemption from certain medical review activities related to the 2-midnight rule for procedures that have been recently removed from the IPO list, CMS will continue to work with stakeholders to address these operational concerns in future rulemaking. We again refer readers to section X. of this final rule with comment period for additional discussion regarding the 2-midnight rule.

We also acknowledge stakeholders' concerns regarding the lack of definitive data that shows a difference between services performed in the inpatient and outpatient settings. In the absence of data demonstrating that these procedures can be safely furnished to the typical Medicare beneficiary in the hospital outpatient setting we continue to believe that it is necessary to prioritize the potential impact that removing services from the IPO list has on beneficiary safety and quality of care and develop additional ways to monitor safety prior to removing such a large number of services from the IPO list. We note that certain commenters in this rulemaking cycle (and past OPPS rules) have indicated that hospitals and other payers may use the circumstance of CMS removing a service from the IPO list to encourage that service to be performed outpatient, even when not clinically appropriate for the patient, and we remain concerned about these potential spillover effects due to changes in our policy. As described above, we also believe that the policy to eliminate the IPO list transpired quickly, and we believe it is necessary to halt the elimination of the IPO list and reinstate a more measured process of separately evaluating the inpatient only classification of each service against the five longstanding criteria.

We also note and appreciate commenters concerns about the varying clinical appropriateness of furnishing a given service in the hospital outpatient setting based on a beneficiary's clinical status; that is, we acknowledge that it may be appropriate to furnish certain services in the hospital outpatient setting for a certain number of beneficiaries due to their clinical circumstances, while at the same time it may not be appropriate to furnish those same services in the hospital outpatient setting for many other beneficiaries. As stated in the CY 2022 OPPS/ASC proposed rule, we continue to believe that physicians should use their complex clinical judgment, together with consideration of the beneficiary's needs, to determine the appropriate site of service. We continue to strive to balance the goals of increasing physician and patient choice of setting of care with consideration of patient safety for all Medicare beneficiaries.

After consideration of the comments, we are finalizing our proposal without modification to halt the elimination of the IPO list. In accordance with this proposal, we are finalizing our proposal to amend the regulation at § 419.22(n) to remove the reference to the elimination of the list of services and procedures designated as requiring inpatient care through a 3-year transition.

We refer readers to section IX.B.3 of this final rule with comment period for a discussion on the services removed in CY 2021 that we proposed to return to the IPO list in CY 2022.

2. Proposal To Codify Longstanding Criteria

As we stated in the CY 2022 OPPS/ASC proposed rule, we continue to believe that physicians must use their complex clinical judgment, together with consideration of the beneficiary's needs, to determine the appropriate site of service, but we explained that the broad removal of services from the IPO list in CY 2021 did not allow us to assess whether procedures proposed for removal met the longstanding removal criteria that we have historically used in consideration of the typical Medicare beneficiary. As discussed above and in the proposed rule, to ensure beneficiary safety, we have historically used longstanding criteria to determine if a procedure should be removed from the IPO list, but we noted that the procedures removed from the IPO list beginning in CY 2021 were not assessed against these criteria because we adopted a policy to eliminate the IPO list entirely. After further consideration, we explained that we believe it is important to continue to assess whether services individually meet any of the criteria for removal from the IPO list before being removed. In the CY 2022 OPPS/ASC proposed rule, we proposed to codify in the regulation text in a new § 419.23 our five longstanding criteria, listed above, for determining whether a service or procedure should be removed from the IPO list.

Comment: A majority of commenters, including hospital systems, medical specialty societies, and professional organizations, supported our proposal to codify the five longstanding criteria to determine if a procedure should be removed from the IPO list and supported using the criteria to evaluate the 298 procedures removed from the IPO list in the CY 2021 OPPS/ASC final rule with comment period. Many commenters supported the criteria as proposed, stating that the longstanding criteria appropriately reflect progress and allow us to efficiently assess if outpatient departments are equipped to provide the services under consideration for removal.

Response: We thank commenters for their support.

Comment: Some commenters suggested modifications to the five proposed criteria. One commenter requested that CMS modify the first two criteria to change “most outpatient departments” to “outpatient departments conducting surgical procedures,” due to concerns that the proposed language is undefined and vague. The commenter also expressed that our third criterion—that the procedure is related to codes that we have already removed from the IPO list—was limiting and should be modified to address codes that do not have related codes being considered for removal from the IPO list. We also received comments requesting that we modify the fourth criterion (a determination is made that the procedure is being furnished in numerous hospitals on an outpatient basis) to further define “outpatient basis” and “numerous”. We also received a comment citing concerns that many hospitals do submit claims to Medicare for procedures on the IPO list when they are performed in the hospital outpatient setting due to lack of payment. We also received two comments requesting that we remove the fifth criterion due to concerns that CMS is comparing the capabilities and safety of performing a service in the ASC setting to that of the hospital setting, noting that hospitals have greater resources and are able to admit patients if complications arise.

Further, a few commenters believed our longstanding pre-2021 policy of requiring a service to meet only one criterion to be removed from the IPO list was too lenient and prevented stakeholders from anticipating when a procedure would be eligible for removal from the IPO list. The commenters recommended that we require services to meet all five criteria in order to be removed from the IPO list.

Response: We appreciate the commenters' recommendations and will consider them for future rulemaking. Due in part to the overwhelming support we received from commenters to codify in regulation the current five criteria as well as our position that the criteria remain appropriate, we do not believe it is necessary to change them at this time. However, we plan to continue to engage stakeholders and consider feedback on modifications to the criteria.

As we stated in previous rulemaking, we created the first three criteria because we identified services that were often safely performed in the hospital outpatient setting based on comments we received. We also identified additional services where the simplest procedure described by the code may be performed safely in the hospital outpatient setting or that they were related to codes we removed from the IPO list (65 FR 18456). We established the fourth and fifth criteria in later rulemaking after identifying procedures that were on the IPO list but were also being performed on an outpatient basis or being safely and appropriately performed in the ASC setting (67 FR 66741). These criteria were created to ensure consistency between the IPO list and the ASC CPL and to identify services that are included on the ASC CPL, and therefore should be removed from the IPO list. These criteria were created to help independently identify procedures that could be appropriately performed in the hospital outpatient setting and we reiterate that a service does not need to meet all of the criteria to be removed from the IPO list, meaning that a service does not need to have related codes already removed from the IPO list or does not need to be safely furnished in the ASC setting to be removed from the IPO list.

Additionally, we do not believe that our policy to only require a service to meet one criterion to be removed from the IPO list is too lenient. We believe that not requiring a service to meet multiple criteria allows for greater flexibility to determine if a service is appropriate to remove from the IPO list, as some criteria are irrelevant to certain services. As stated above, while we only require a service to meet one criterion to be considered for removal, satisfying only one criterion does not guarantee that the service will be removed, instead, the case for removal is strengthened with the more criteria the service meets.

Comment: Commenters also recommended additional criteria as well as methods of evaluating the five existing criteria. We also received multiple comments recommending that criteria used to determine if a service is appropriate to remove from the IPO list should consider clinical factors and social factors, including patient's age and comorbidities, support systems, access to care, health literacy, prior hospitalizations, and functional status. Numerous commenters stressed that without consideration of clinical and social factors, patients, surgeons, and hospitals in underserved communities could bear a disproportionate burden and experience unintended consequences of more services being payable in the hospital outpatient setting. Commenters recommended that we also evaluate the out-of-pocket financial impact that moving a service to the hospital outpatient setting would have on Medicare beneficiaries.

Commenters suggested that changes to the IPO list should be based upon scientific evidence on safety, quality, and advancements in medical technology. They acknowledged that a majority of inpatient procedures have limited or no evidence on the safety of performing them in the hospital outpatient setting and that at least some of the evidence available is based on limited, incomplete, or conflicting data from other claims.

We also received some comments with recommendations regarding the data that CMS uses for evaluating services on the IPO list. We received several comments suggesting that CMS analyze claims data for services that had a stay less than 2-midnights and use this data to determine if a service should be eligible to be paid when furnished in the hospital outpatient setting. One commenter also requested that CMS clarify how different data, including commercial data, would be considered when evaluating services for removal using the five criteria as the general patient population used in the collection of the data may vary from the Medicare population.

One commenter urged CMS not to use billed and denied outpatient claims as a source of data to determine if hospitals are equipped to provide a service in the hospital outpatient setting. The commenter advised that there would be few outpatient claims for services on the IPO list because hospitals would avoid billing claims that would be denied. The commenter suggested that CMS should instead analyze the geometric mean or median length of stay for IPPS claims reported with procedures on the IPO list, and crosswalk the ICD-10-PCS codes on the IPPS claims to the CPT codes on the IPO list, so that CMS could analyze data where the patient would remain in the hospital post-procedure, but require less time, less intensive care, or pose less risk than the typical hospital inpatient. The commenter also suggested that CMS analyze data on short-stay inpatient hospitalizations from the Beneficiary Family Centered Care-Quality Improvement Organizations (BFCC-QIOs), with the QIOs nominating procedures that they commonly see in their reviews. Finally, we also received comments recommending that CMS work closely with stakeholders and providers and consider their feedback when evaluating services on the IPO list against our criteria, and to allow for the consideration of factors in addition to the five criteria.

Response: We appreciate the commenters' recommendations. We note that we take clinical evidence into consideration when evaluating a service for removal from the IPO list. We also consider all other available data, including outpatient, inpatient, and professional claims data. This includes data on length-of-stay, and we have continuously encouraged stakeholders to bring decreasing length-of-stays and successful same day discharges to our attention to aid our review (65 FR 18456). We agree that there are limitations in the studies and data available to aid our assessment of the appropriateness of removing procedures from the IPO list, particularly studies that compare outcomes for services furnished in the inpatient hospital setting versus the outpatient hospital setting as well as studies that analyze outcomes for the typical Medicare beneficiary. More specifically, while studies may demonstrate safety for a given procedure in the outpatient hospital setting, those studies may not focus on a Medicare-aged population, or involve patients with certain comorbid conditions that are common for patients 65 and older. We continue to explore ways to engage stakeholders to effectively address limitations in these studies, and we look forward to future work on these important issues. We reiterate that we do not believe it is appropriate at this time to modify the criteria, which were overwhelmingly supported by commenters, as we reinstate and codify them in regulation text. However, as previously stated, we will continue to engage stakeholders and consider feedback on modifications to the criteria for removal from the IPO list.

Comment: One commenter opposed codifying the five longstanding criteria and expressed concern that codifying the criteria would delay timely updates to the IPO. The commenter was concerned that the process of submitting a request to add or remove a service and providing evidence, including peer-reviewed medical literature, physician comments, and outcome data, is time consuming and may cause unnecessary delays in hospitals' ability to provide care and be paid under the OPPS when services are furnished in the hospital outpatient setting for beneficiaries for whom the services are clinically appropriate.

Response: We appreciate the commenter's response. We believe that using our five criteria to evaluate services for removal from the IPO list is necessary to ensure OPPS payment is available for services that are safe for the typical Medicare beneficiary to receive in the hospital outpatient setting. We also believe that the comments and evidence we receive are an important aspect of determining whether it is appropriate to remove a service from the IPO list. Because we review requests to add or remove services from the IPO list annually and address those removals or additions in notice-and-comment rulemaking, we do not believe that use of criteria to assess whether procedures should be removed causes unnecessary delays in making payment available for appropriate procedures under the OPPS.

After reviewing the public comments we received we are finalizing our proposal without modification to codify our five longstanding criteria for determining whether a service or procedure should be removed from the IPO list in the regulation text in a new § 419.23.

3. Returning Procedures Removed in CY 2021 to the IPO List for CY 2022

As discussed earlier in section IX.A. of this final rule with comment period, we typically evaluate whether a service should be removed from the IPO list using five criteria and, while a service does not need to meet all of the criteria to be removed from the IPO list, it should meet at least one criterion, with the case for removing the service from the IPO list strengthened with the more criteria the service meets. For CY 2021, in light of our proposal to eliminate the IPO list over a three-year transition, we proposed that musculoskeletal services would be the first group of services removed from the IPO list. We stated that we proposed to remove this group of services first for several reasons. In recent years, due to new technologies and advances in surgical care protocols, expedited rehabilitation protocols, and significant enhancements in postoperative processes, we have removed TKA and THA, which are both musculoskeletal services, from the IPO list. During the process of proposing and finalizing removing TKA and THA from the IPO list, stakeholders have continuously requested that CMS remove other musculoskeletal services from the IPO list as well, citing shortened length of stay times, advancements in technologies and surgical techniques, and improved postoperative processes. Additionally, we noted that, more often than not, stakeholders historically requested that we remove musculoskeletal services from the IPO list more than other types of services. We also recognized that there is already a set of comprehensive APCs for musculoskeletal services for payment under the OPPS, which facilitates payment for these services and further supported their removal for CY 2021. Specifically, because we had previously removed codes from the IPO list that are similar clinically and in terms of resource cost and assigned them to these comprehensive APCs, we explained that these APCs generally describe appropriate ranges for the musculoskeletal codes removed in CY 2021, which we believed allowed for appropriate payment. We also proposed to remove additional related services that were recommended for removal by stakeholders during the annual HOP panel meeting. As stated above, because these services were being removed from the IPO list as the first phase of the elimination of the list, we did not evaluate each of these services against the longstanding criteria for removing a service from the IPO list.

During the 2021 rulemaking process, a number of commenters supported the removal of the 298 services, but the vast majority of commenters were opposed to removing the services and shared concerns regarding their inability to properly review the clinical nature of this large number of procedures and to provide comprehensive feedback on their removal from the list. Some commenters were able to review the individual services and requested that specific CPT codes remain payable in the inpatient setting only, including CPT codes 27280 (Arthrodesis, open, sacroiliac joint, including obtaining bone graft, including instrumentation, when performed) and 22857 (Total disc arthroplasty (artificial disc), anterior approach, including discectomy to prepare interspace (other than for decompression), single interspace, lumbar) due to concerns about the safety of these procedures if they are performed in the hospital outpatient setting.

As previously stated in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86087), an overwhelming number of stakeholders supported the previously established methodology for identifying appropriate changes to the IPO list. CMS received numerous requests to continue to use the established criteria to review and analyze services proposed for removal as opposed to removing large numbers of services in groups or categories. Commenters noted that they preferred the historical process for assessing services for removal from the IPO list using the five criteria, as they believed this process was more manageable for patients, providers, and other stakeholders, allowing them to provide meaningful input on a procedure-by-procedure basis.

We stated in the CY 2022 OPPS/ASC proposed rule that because we proposed to halt elimination of the IPO list, we also believe it is appropriate to continue to evaluate services that we proposed for removal against the longstanding criteria, and include with our proposals an in-depth analysis of whether most outpatient departments are equipped to provide the services to the Medicare population; whether the simplest procedure described by the code may be performed in most outpatient departments; whether the procedure is related to codes that we have already removed from the IPO list; whether the procedure is being performed in numerous hospitals on an outpatient basis; and whether the procedure can be appropriately and safely performed in an ASC, is on the list of approved ASC procedures, or has been proposed by us for addition to the ASC list. Historically, we have included discussions of the individual codes proposed for removal in the proposed rule and stakeholders have had the opportunity to comment with evidence in support of or opposition to the service's assignment to the IPO list, and we believe it is appropriate to continue to do so.

Furthermore, we explained in the CY 2022 OPPS/ASC proposed rule that in light of ongoing stakeholder feedback, we reviewed each of the procedures removed from the IPO list in CY 2021 to determine whether they individually meet the longstanding criteria for removal from the list for CY 2022. Our review considered the clinical intensity and characteristics of the service, the underlying condition of the beneficiary who would require the service, peer-reviewed medical literature, case reports, clinical criteria sets, and utilization data. This initial review determined that none of the services removed in CY 2021 have sufficient supporting evidence that the service can be safely performed on the Medicare population in the hospital outpatient setting, that most outpatient departments are equipped to provide the services to the Medicare population, or that the services are being performed safely on an outpatient basis. For a large number of the removed services, we did not find vignettes, claims or utilization data, or literature to support their removal under our longstanding criteria. For the few services that did have some data supporting their removal from the list, we found the data to be either incomplete or to be countered by conflicting data. For example, a few services, including CPT code 21627 (sternal debridement), showed increasing migration to the hospital outpatient setting, but we could not locate supportive medical literature case studies or outcomes data to support that the services are safe for the Medicare population in the hospital outpatient setting. Some services, such as CPT code 22558 (Lumbar spine fusion) and CPT code 23472 (reconstruct shoulder joint), show increasing outpatient claims data, but have high length of stay times and extensive post-operative care needs that indicate these services may not be appropriate for the Medicare population in the hospital outpatient setting. Other services, such as CPT code 22846 (Anterior instrumentation; 4 to 7 vertebral segments), lack medical literature or case studies, lack supportive claims data, and have conflicting stakeholder feedback for the safety of the service in the hospital outpatient setting. We were unable to find literature and data for services that included outcomes specific to the Medicare population, particularly in the hospital outpatient setting.

We stated in the CY 2022 OPPS/ASC proposed rule that given that our initial review of each of the services removed from the list in CY 2021 using the five criteria mentioned in section IX.A. of this final rule with comment period did not find sufficient evidence that any of these services would be safe to perform on the Medicare population in the hospital outpatient setting, we did not believe it would be appropriate for Medicare to pay for these services when performed in a hospital outpatient setting. In particular, we found that the simplest procedures described by the codes for these services cannot be furnished safely in most outpatient departments, most outpatient departments are not equipped to provide these services to the Medicare population, and the procedures were not being performed in numerous hospitals on an outpatient basis. We also did not believe the services could be appropriately and safely furnished in an ASC. As a result of this review, we proposed to return all of the procedures removed in the CY 2021 OPPS/ASC final rule with comment period to the IPO list for CY 2022 because we did not believe they met the previously established criteria for removal from the IPO list. Therefore, after further clinical review and additional consideration of safety and quality of care concerns for the group of services removed from the IPO list in the CY 2021 final rule, for CY 2022 we proposed to return these 298 services to the IPO list, as shown in Table 45 below.

We solicited public comment on whether there are services that were removed from the IPO list in CY 2021 that stakeholders believe do meet the longstanding criteria for removing services from the IPO list and should continue to be payable in the hospital outpatient setting in CY 2022. If so, we requested that commenters submit corresponding evidence—including, but not limited to, case reports, operative reports of actual cases, peer-reviewed medical literature, medical professional analysis, clinical criteria sets, and patient selection protocols—that the service meets the longstanding criteria for removal from the IPO list and is safe to perform on the typical Medicare population in the hospital outpatient setting.

As mentioned above, the services that we proposed to add back to the IPO list reflect those services that we believe may pose increased safety risk to the typical Medicare beneficiary. However, we recognized that there may be a subset of Medicare beneficiaries who, on a case-by case-basis, may nonetheless be appropriate to treat in the hospital outpatient setting and we sought comment below on whether any services that were removed in CY 2021, but were proposed to be added back to the IPO for CY 2022, should in fact, remain off the IPO list. Table 45 below contains the proposed additions to the IPO list for CY 2022.

Comment: Most comments supported returning all 298 services back to the IPO list for 2022. Of those commenters that supplied a rationale for their support for returning all 298 services to the IPO list, the most frequently cited reasons were the commenters' concerns with the pace that this shift would take place; the lack of data and evidence available to support furnishing these services in the hospital outpatient setting for the typical Medicare beneficiary; CMS' inability to monitor the impact of such a large migration of services from the inpatient setting to the hospital outpatient setting; CMS' inability to monitor patient safety outcomes for the services if furnished in the hospital outpatient setting; and that the PHE has impacted the commenters' ability to prepare for this shift. Commenters also expressed concerns regarding how quickly a large number of services were removed from the IPO list. Emphasizing the financial and clinical resources needed to prepare clear criteria for surgical site selection; develop criteria for patient selection; update their billing systems; and gain experience with furnishing newly removed services, commenters requested that CMS provide additional time in between removing services from the IPO list.

Response: We thank commenters for their support for our proposal to return 298 services to the IPO list, and their detailed feedback regarding their concerns about patient safety and the timeline for transitioning services off of the IPO list.

Comment: Some commenters opposed returning all 298 services to the IPO list and believed that if all 298 services are moved back on the IPO list in CY 2022, beneficiaries would receive care in an unnecessarily high-cost inpatient setting and experience higher out-of-pocket costs for services. In addition, they argued that higher costs coupled with potential delays in returning home will cause beneficiary dissatisfaction and increase overall cost to the healthcare system. One commenter stated that policy changes over the past 2 years have burdened facilities and clinicians. The commenter noted that many inpatient procedures are canceled due to the PHE, adding additional delays and negatively affecting patient experience and health. For these reasons the commenter suggested CMS reassess returning all 298 procedures to the IPO list.

Some commenters expressed concerns regarding outpatient surgeries for procedures we are returning to the IPO list that were scheduled prior to the publication of the final rule and the subsequent impact on beneficiaries when these surgeries are cancelled or payment is not available for them under the OPPS. Commenters requested that in the event the policy is finalized as proposed, CMS allow services scheduled as outpatient prior to the final rule's implementation date to be payable as they believe this would decrease provider burden and minimize impact on patients expecting outpatient care. The commenters stated that it is difficult for facilities and clinicians to invest in new equipment and develop protocols to move new procedures to the outpatient department if they are unsure how long services will remain payable in the hospital outpatient setting.

Response: We thank commenters for their support and for detailing their experiences. We recognize that there may be operational changes (including scheduling and other administrative changes) that may be necessary to adjust to our final policy to return services to the IPO list. We also recognize that the PHE has broadly impacted access to hospital services and note that we have taken several steps to broaden access to care during the PHE through rulemaking and through waivers issued using our authority in section 1135 of the Act. For additional information about the actions taken to expand access to care and otherwise address the PHE for COVID-19, please visit: https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers . However, we continue to share concerns expressed by other commenters regarding the speed at which we implemented this policy change. We believe that we need to reinstate a more measured process of evaluating individual services for removal from the IPO list against the five longstanding criteria, and to prioritize the potential impacts on the quality and safety of care for services when they are removed from the IPO list.

Comment: Certain commenters (mainly specialists and medical associations) requested specific services (roughly 120 services in total, ranging in complexity) not be placed back on the IPO list. Those services are listed in Table 46 below. These commenters indicated that they were currently performing some of these procedures on an outpatient basis in both the HOPD and ASC setting on non-Medicare patients.

Of those approximately 120 services requested to remain off of the IPO list, two stakeholders included supportive information for CPT 22630 (Arthrodesis, posterior interbody technique, including laminectomy and/or discectomy to prepare interspace (other than for decompression), single interspace; lumbar); CPT 23472 (Arthroplasty, glenohumeral joint; total shoulder (glenoid and proximal humeral replacement (for example, total shoulder))); and CPT 27702 (Arthroplasty, ankle; with implant (total ankle). Several commenters, including medical associations, specialty groups, and surgeons suggested that shoulder and ankle replacement surgeries performed in HOPDs and ASCs demonstrated optimal clinical outcomes. Commenters submitted several peer-reviewed studies comparing outcomes for CPT 23472 and CPT 27702 performed in the inpatient versus the hospital outpatient setting. As a result, they believed performing CPT 23472 and CPT 27702 in a hospital outpatient setting is appropriate as determined by the treating health care provider. Some commenters cited all payer claims data and stated that, following the removal of services from the IPO list, nearly half of shoulder replacement surgeries were performed in the hospital outpatient setting in the first few months of 2021. Commenters that supported leaving CPT 23472 and CPT 27702 off the IPO list and payable under the OPPS highlighted that other procedures that were removed from the IPO list in CY 2021 did not demonstrate similar utilization in the hospital outpatient setting. The commenters stated that low utilization of the majority of services removed from the IPO in CY 2021 confirms physicians are using clinical judgment to determine when the hospital outpatient setting is clinically appropriate.

In regards to CPT 22630, a commenter noted that CPT codes 22633 (Arthrodesis, combined posterior or posterolateral technique with posterior interbody technique including laminectomy and/or discectomy sufficient to prepare interspace (other than for decompression), single interspace and segment; lumbar) and 22612 (Arthrodesis, posterior or posterolateral technique, single level; lumbar (with lateral transverse technique, when performed), which are not on the IPO list, are performed with CPT code 22630 when a posterior approach 360-degree spinal fusion is performed. The commenter noted that while CPT code 22633 was removed from the IPO list in 2020 (84 FR 61355 through 61357), the service described by CPT code 22630, if added to the IPO list, will in effect make the combined procedure, described by CPT codes 22630 and 22633, unable to be performed in the outpatient hospital setting because both procedures need to be payable under the OPPS to be performed there. The commenter recommended keeping CPT code 22630 off the IPO list for CY 2022 so that the individual procedures, along with the combined procedure, are eligible for Medicare payment when furnished in the hospital outpatient setting for appropriate Medicare beneficiaries. A different commenter provided an unpublished study that they believe demonstrates that safety, efficacy, and patient satisfaction for lumbar inter-body fusion surgery furnished in the ASC setting are comparable to or better than in the hospital setting for Medicare beneficiaries.

The services that commenters believed should remain off the IPO list in CY 2022 and continue to be paid under the OPPS when furnished in the hospital outpatient setting are included in Table 46.

Response: We conducted an additional clinical review and reevaluation using the five longstanding criteria for removing services from the IPO list discussed earlier in section IX.A of this final rule with comment period for the services we proposed to return to the IPO list to determine whether any of the procedures should remain off of the list and be paid for under the OPPS when furnished in the HOPD setting. We considered all the evidence that commenters submitted to demonstrate that a procedure was performed on an outpatient basis in a safe and appropriate manner—including but not limited to—operative reports of actual cases, peer-reviewed medical literature, community medical standards and practice, physician comments, outcome data, and post-procedure care data, and our medical advisors thoroughly reviewed all information submitted to determine whether the procedures meet the evaluation criteria we are reinstating.

We also conducted an additional review of 2021 OPPS claims data through September 2021. Our review indicated that hospitals have significantly increased the numbers of services described by CPT codes 22630 (Lumbar spine fusion), 23472 (Reconstruct shoulder joint), and 27702 (Reconstruct ankle joint) furnished in the hospital outpatient setting in the roughly nine months since the services were removed from the IPO list. While at this time we cannot determine from the claims data whether this increase in volume is a result of fundamental changes to clinical practice; the impact of the PHE on inpatient operating room availability; or other reasons, the data do indicate that these services are being furnished frequently in the hospital outpatient setting, and furnished at a substantial number of different outpatient departments. Given the studies submitted and the updated analyses of OPPS claims data, we believe that CPT codes 22630 (Lumbar spine fusion), 23472 (Reconstruct shoulder joint), and 27702 (Reconstruct ankle joint) meet several of the longstanding criteria for removing services from the IPO list: Most outpatient departments are equipped to provide the services to the Medicare population; the simplest procedure described by the codes may be furnished in most outpatient departments; the procedures are being furnished in numerous hospitals on an outpatient basis; and the procedures are related to codes that we have already removed from the IPO list. Therefore, at this time we agree that it is appropriate for CPT codes 22630 (Lumbar spine fusion), 23472 (Reconstruct shoulder joint), and 27702 (Reconstruct ankle joint) and their corresponding anesthesia codes, CPT code 01638 (Anesthesia for open or surgical arthroscopic procedures on humeral head and neck, sternoclavicular joint, acromioclavicular joint, and shoulder joint; total shoulder replacement), and CPT 01486 (Anesthesia for open procedures on bones of lower leg, ankle, and foot; total ankle replacement) to remain off the IPO list and payable under the OPPS when furnished in the HOPD setting. We will continue to monitor and evaluate the impact our decision to pay for these services when furnished in the HOPD setting has on beneficiary outcomes, access to care, and hospital payments.

As noted above, we also received comments requesting that approximately 115 other services remain off the IPO list in CY 2022. Based on our evaluation, we do not believe that there is sufficient evidence or data to support that these services can be safely furnished to the typical Medicare beneficiary in the hospital outpatient setting, and to support stakeholder assertions that these procedures meet one of the five longstanding criteria. We note that for many services stakeholders continued to provide conflicting feedback regarding the ability of providers to safely furnish them in the hospital outpatient setting. At this time, we do not believe it would be appropriate to keep these services off of the IPO list and therefore we are reclassifying these codes as inpatient only procedures for CY 2022. We acknowledge the unique circumstances for this CY2022 rulemaking cycle: These approximately 115 services were on the IPO list prior to CY 2021, they were removed from the IPO list for CY 2021 as part of the first phase of the elimination of the IPO list, and are now being added back to the list in CY 2022. It is not our intention to cause any disruptions or barriers to access care for these services, and we will prioritize the review of these services for potential removal from the IPO list in future rulemaking. We emphasize that the assignment of a service to the IPO list does not prohibit the service from being offered in the hospital outpatient setting and the assignment in this final rule should not be considered as a permanent or irrevocable designation (65 FR 18456). Furthermore, we continue to encourage stakeholders to provide supportive evidence to aid in the evaluations of procedures' assignment to the IPO list, and where appropriate the APC assignment and corresponding payment for any codes as well, including but not limited to case reports, operative reports of actual cases, peer-reviewed medical literature, medical professional analysis, clinical criteria sets, and patient selection protocols for future rulemaking considerations.

4. Topics and Questions Posed for Public Comments

In addition to our proposal to halt the elimination of the IPO list and return services summarily removed from the IPO list in CY 2021 that our clinicians have determined do not meet the criteria for removal from the IPO list, we also sought feedback from stakeholders on whether CMS should maintain the longer-term objective of eliminating the IPO list or if CMS should maintain the IPO list but continue to systematically scale the list back to so that inpatient only designations are consistent with current standards of practice. Specifically, we requested comments on the following:

• Should CMS maintain the longer-term objective of eliminating the IPO list? If so, what is a reasonable timeline for eliminating the list? What method do stakeholders suggest CMS use to approach removing codes from the list?
• Should CMS maintain the IPO list but continue to streamline the list of services included on the list and, if so, suggestions for ways to systematically scale the list back to allow for the removal of codes, or groups of codes, that can safely and effectively be performed on a typical Medicare beneficiary in the hospital outpatient setting so that inpatient only designations are consistent with current standards of practice?
• What effect do commenters believe the elimination or scaling back of the IPO list would have on safety and quality of care for Medicare beneficiaries?
• What effect do commenters believe elimination or the scaling back of the IPO list would have on provider behavior, incentives, or innovation?
• What information or support would be helpful for providers and physicians in their considerations of site of service selections?
• Should CMS' clinical evaluation of the safety of a service in the hospital outpatient setting consider the safety and quality of care for the typical Medicare beneficiary or a smaller subset of Medicare beneficiaries for whom the outpatient provision of a service may have fewer risk factors?
• Are there services that were removed from the IPO list in CY 2021 that stakeholders believe meet the longstanding criteria for removal from the IPO list and should continue to be payable in the hospital outpatient setting in CY 2022? If so, what evidence supports the conclusion that the service meets the longstanding criteria for removal from the IPO list and is safe to perform on the Medicare population in the hospital outpatient setting?

Comment: Numerous commenters responded to CMS' comment solicitation on whether CMS should continue the longer-term objective of eliminating the IPO list or if CMS should maintain the IPO list but continue to systematically scale the list back to ensure that inpatient only designations are consistent with current standards of practice. The overwhelming majority of the commenters, including professional associations, hospital associations, hospitals, and many providers, supported maintaining the IPO list.

We received many of the same types of comments we received in response to our CY 2018 OPPS/ASC proposed rule comment solicitation for removing THA and in subsequent rulemaking. Supporters of maintaining the IPO list also acknowledged the possibility that in the future many—but not all—of the services on the IPO could potentially be safely performed on an outpatient basis. Commenters provided feedback on improvements to the IPO list maintenance process, as well as the criteria, evidence and data that should be required to support removing a procedure from the IPO list. Commenters also suggested alternatives to the IPO list, including different coding mechanisms and alternative approaches to APC assignment for services transitioning off of the IPO list, including changes to the “CA” modifier, which identifies a procedure payable only in the inpatient setting when performed emergently on an outpatient who expires prior to admission. Commenters also recommended ways for CMS to monitor patient outcomes and the impact of services migrating from the IPO list to ensure that there are not unintended consequences of removing procedures from the IPO list. Several commenters shared concerns regarding the unintended impact that large-scale changes to the IPO list may have on hospital finances, particularly rural hospitals, safety net hospitals, and SNFs.

Response: We thank the commenters for their detailed feedback on this topic. We will consider all of these comments for future rulemaking.

Comment: Several commenters recommended that CPT codes 19306 (Mastectomy, radical, including pectoral muscles, axillary and internal mammary lymph nodes); 32853 (Lung transplant, double (bilateral sequential or en bloc); without cardiopulmonary bypass); 33523 ((Coronary artery bypass, using venous graft(s) and arterial graft(s), six or more); and 33935 (Heart-lung transplant with recipient cardiectomy-pneumonectomy), never come off of the IPO list due to their clinical intensity and nature of the services.

Response: We thank commenters for their recommendations.

Comment: Additionally, CMS received comments recommending the removal of two services not originally proposed for removal from the IPO list for CY 2022. The commenters contended that CPT codes 43775 (Laparoscopy, surgical, gastric restrictive procedure; longitudinal gastrectomy ( i.e., sleeve gastrectomy)) and 47550 (Biliary endoscopy, intraoperative (choledochoscopy) (list separately in addition to code for primary procedure)) should be removed from the IPO list because the commenters believed they meet the removal criteria that we are reinstating beginning CY 2022.

Response: We thank commenters for their feedback regarding these services. We note CPT codes 43775 and 47550 were not included in the 298 codes that were removed from the IPO list for CY 2021 and then proposed to be added back to the IPO list in the CY 2022 OPPS/ASC proposed rule. Rather, these codes were added to the IPO list prior to 2021. As discussed above, we received many comments from stakeholders regarding the speed at which the 298 services were removed from the IPO list for CY 2021, and the need for CMS to reinstate a more measured process that includes additional opportunities for public input and transparency when evaluating codes for removal. In light of these comments, we believe it is appropriate to consider the removal of these services from the IPO list in future rulemaking in order to allow further discussion and evaluation. We also continue to encourage stakeholders to provide supportive evidence to aid in the evaluations of these procedures' assignment to the IPO list, including but not limited to case reports, operative reports of actual cases, peer-reviewed medical literature, medical professional analysis, clinical criteria sets, and patient selection protocols for future rulemaking considerations.

Comment: One commenter, a medical device company, requested a reassignment of the OPPS status indicator for CPT code 0643T (Transcatheter left ventricular restoration device implantation including right and left heart catheterization and left ventriculography when performed, arterial approach) from “E1” (not covered by Medicare) to “C” (inpatient only) status due to the complex patient population, the need for intra- and post- operative monitoring and their experience with clinical trials.

Response: We thank the commenter for bringing this CPT code to our attention. CPT code 0643T became effective on July 1, 2021 and for CY 2022, we proposed to assign the code to OPPS status indicator “E1” (Items, codes, and services not covered by any Medicare outpatient benefit category; statutorily excluded; not reasonable and necessary) to indicate that the service was not covered by Medicare. We note that the clinical study associated with CPT code 0643T was approved as a Medicare-approved IDE study with a Category B designation for the device effective November 12, 2020. We agree with commenters that given the invasive nature of the procedures, the clinical intensity of the services provided, and the underlying physical condition of the patient who would require surgery, CPT code 0643T should be classified as an inpatient only procedure.

We refer readers to sections III.D. “OPPS APC-Specific Policies” of this final rule with comment period for additional discussion regarding CY 2022 status indicators and APC assignments.

Comment: Other commenters requested we keep services off the IPO list that were not included in the proposed CY 2022 IPO list.

Response: We thank commenters for their recommendations. We do agree that it is appropriate for these services to remain payable in the OPPS for CY2022. We reiterate that assignment in this final rule should not be considered as a permanent or irrevocable designation (65 FR 18456). Table 47 lists the CPT codes that were not included in the proposed CY 2022 IPO list and were affirmed by commenters.

C. Summary of Final Policy and Changes to the IPO List for CY 2022

As explained above, for CY 2022, we are finalizing our proposal to halt the elimination of the IPO list; to codify in regulation text in a new § 419.22 our five longstanding criteria for determining whether a service or procedure should be removed from the IPO list; and to pause the elimination of the IPO list and add back to the IPO list the services removed in CY 2021, except CPT code 22630 (Arthrodesis, posterior interbody technique, including laminectomy and/or discectomy to prepare interspace (other than for decompression), single interspace; lumbar); CPT code 23472 (Arthroplasty, glenohumeral joint; total shoulder (glenoid and proximal humeral replacement (for example, total shoulder))); CPT code 27702 (Arthroplasty, ankle; with implant (total ankle) and their corresponding anesthesia codes: CPT code 01638 (Anesthesia for open or surgical arthroscopic procedures on humeral head and neck, sternoclavicular joint, acromioclavicular joint, and shoulder joint; total shoulder replacement), and CPT 01486 (Anesthesia for open procedures on bones of lower leg, ankle, and foot; total ankle replacement). We are also classifying CPT code 0643T (Transcatheter left ventricular restoration device implantation including right and left heart catheterization and left ventriculography when performed, arterial approach) as an inpatient only procedure. Finally, we are also finalizing our proposal to amend the regulation at § 419.22(n) to remove the reference to the elimination of the list of services and procedures designated as requiring inpatient care through a 3-year transition and to codify our five longstanding criteria for determining whether a service or procedure should be removed from the IPO list in the regulation in a new § 419.23.

The complete list of codes describing services that are designated as inpatient only services beginning in CY 2022 is also included as Addendum E to this final rule with comment period, which is available via the internet on the CMS website.

X. Nonrecurring Policy Changes

A. Medical Review of Certain Inpatient Hospital Admissions Under Medicare Part A for CY 2022 and Subsequent Years

1. Background on the 2-Midnight Rule

In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50913 through 50954), we clarified our policy regarding when an inpatient admission is considered reasonable and necessary for purposes of Medicare Part A payment. Under this policy, we established a benchmark providing that surgical procedures, diagnostic tests, and other treatments would be generally considered appropriate for inpatient hospital admission and payment under Medicare Part A when the physician expects the patient to require a stay that crosses at least 2 midnights and admits the patient to the hospital based upon that expectation. Conversely, when a beneficiary enters a hospital for a surgical procedure not designated as an inpatient-only (IPO) procedure as described in 42 CFR 419.22(n), a diagnostic test, or any other treatment, and the physician expects to keep the beneficiary in the hospital for only a limited period of time that does not cross 2 midnights, the services would be generally inappropriate for payment under Medicare Part A, regardless of the hour that the beneficiary came to the hospital or whether the beneficiary used a bed. With respect to services designated under the OPPS as IPO list procedures, we explained that because of the intrinsic risks, recovery impacts, or complexities associated with such services, these procedures would continue to be appropriate for inpatient hospital admission and payment under Medicare Part A regardless of the expected length of stay. We also indicated that there might be further “rare and unusual” exceptions to the application of the benchmark, which would be detailed in subregulatory guidance.

In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50913 through 50954), we also finalized the 2-Midnight presumption, which is related to the 2-Midnight benchmark but is a separate medical review policy. The 2-Midnight benchmark represents guidance to reviewers to identify when an inpatient admission is generally reasonable and necessary for purposes of Medicare Part A payment, while the 2-Midnight presumption relates to instructions to medical reviewers regarding the selection of claims for medical review. Specifically, under the 2-Midnight presumption, inpatient hospital claims with lengths of stay greater than 2 midnights after the formal admission following the order are presumed to be appropriate for Medicare Part A payment and are not the focus of medical review efforts, absent evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the 2-Midnight presumption.

In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70538 through 70549), we revisited the previous rare and unusual exceptions policy and finalized a proposal to allow for case-by-case exceptions to the 2-Midnight benchmark, whereby Medicare Part A payment may be made for inpatient admissions where the admitting physician does not expect the patient to require hospital care spanning 2 midnights, if the documentation in the medical record supports the physician's determination that the patient nonetheless requires inpatient hospital care.

In the CY 2016 OPPS/ASC final rule with comment period, we reiterated our position that the 2-Midnight benchmark provides clear guidance on when a hospital inpatient admission is appropriate for Medicare Part A payment, while respecting the role of physician judgment. We stated that the following criteria will be relevant to determining whether an inpatient admission with an expected length of stay of less than 2 midnights is nonetheless appropriate for Medicare Part A payment:

• Complex medical factors such as history and comorbidities;

• The severity of signs and symptoms;
• Current medical needs; and
• The risk of an adverse event.

The exceptions for procedures on the IPO list and for “rare and unusual” circumstances designated by CMS as national exceptions were unchanged by the CY 2016 OPPS/ASC final rule with comment period.

As we stated in the CY 2016 OPPS/ASC final rule with comment period, the decision to formally admit a patient to the hospital is subject to medical review. Specifically, for inpatient admissions not related to a surgical procedure specified by Medicare as an IPO procedure under 42 CFR 419.22(n) and for which there is not a national exception, payment of the claim under Medicare Part A is subject to the clinical judgment of the medical reviewer to determine whether the medical record supports a reasonable expectation of the need for hospital care crossing at least 2 midnights or otherwise supports a need for inpatient care. The medical reviewer's clinical judgment involves the synthesis of all submitted medical record information (for example, progress notes, diagnostic findings, medications, nursing notes, and other supporting documentation) to make a medical review determination on whether the clinical requirements in the relevant policy have been met. In addition, Medicare review contractors must abide by CMS' policies in conducting payment determinations, but are permitted to take into account evidence-based guidelines or commercial utilization tools that may aid such a decision. While Medicare review contractors may continue to use commercial screening tools to help evaluate the inpatient admission decision for purposes of payment under Medicare Part A, such tools are not binding on the hospital, CMS, or its review contractors. This type of information also may be appropriately considered by the physician as part of the complex medical judgment that guides their decision to keep a beneficiary in the hospital and formulation of the expected length of stay.

2. Current Policy for Medical Review of Inpatient Hospital Admissions for Procedures Removed From the Inpatient Only List

In the CY 2020 OPPS/ASC final rule with comment period we finalized a policy to exempt procedures that have been removed from the IPO list from certain medical review activities to assess compliance with the 2-Midnight rule within the 2 calendar years following their removal from the IPO list. We stated that these procedures will not be considered by the Beneficiary and Family-Centered Care Quality Improvement Organizations (BFCC-QIOs) in determining whether a provider exhibits persistent noncompliance with the 2-Midnight rule for purposes of referral to the RAC nor will these procedures be reviewed by RACs for “patient status.” We explained that during this 2-year period, BFCC-QIOs will have the opportunity to review such claims in order to provide education for practitioners and providers regarding compliance with the 2-Midnight rule, but claims identified as noncompliant will not be denied with respect to the site-of-service under Medicare Part A.

For CY 2021 we proposed to continue the 2-year exemption from site-of-service claim denials, BFCC-QIO referrals to RACs, and RAC reviews for “patient status” (that is, site-of-service) for procedures that are removed from the IPO list under the OPPS beginning on January 1, 2021. However, we finalized our proposal with modifications in the CY 2021 OPPS/ASC final rule with comment period. Instead of the 2-year exemption, procedures removed from the IPO list after January 1, 2021 were indefinitely exempted from site-of-service claim denials under Medicare Part A, eligibility for BFCC-QIO referrals to RACs for noncompliance with the 2-Midnight rule, and RAC reviews for “patient status” (that is, site-of-service). We stated that this exemption would last until we have Medicare claims data indicating that the procedure is more commonly performed in the outpatient setting than the inpatient setting. Thus, for the exemption to end for a specific procedure, in a single calendar year we would need to have Medicare claims data indicating that the procedure was performed more than 50 percent of the time in the outpatient setting. We stated that we would revisit in rulemaking whether an exemption for a procedure should be ended or whether we may consider additional metrics in the future that could assist us in determining when the exemption period should end for a procedure. Even during this exemption period, the BFCC-QIOs retain the authority to review such claims in order to provide education for practitioners and providers regarding compliance with the 2-Midnight rule, but claims identified as noncompliant will not be denied with respect to the site-of-service under Medicare Part A. Additionally, we stated that we may still conduct medical review in cases in which we believe there is potential fraud or abuse occurring. We explained that the elimination of the IPO list was a large scale change that created brand new considerations for providers regarding site-of-service determinations. At the time, we believed a change of this significance required us to reevaluate our stance on the exemption period for procedures removed from the IPO list, resulting in our decision to finalize an indefinite exemption period rather than continuing the previous 2 year exemption period.

Finally, in the CY 2021 OPPS/ASC final rule with comment period we amended 42 CFR 412.3 to clarify when a procedure removed from the IPO is exempt from certain medical review activities. We stated that for those services and procedures removed between January 1 and December 31, 2020, this exemption will last for 2 years from the date of such removal. For those services and procedures removed on or after January 1, 2021, this exemption will last until the Secretary determines that the service or procedure is more commonly performed in the outpatient setting.

3. Medical Review of Inpatient Hospital Admissions for Procedures Removed From the Inpatient Only List for CY 2022 and Subsequent Years

As stated earlier in this section, services on the IPO list are not subject to the 2-Midnight rule for purposes of determining whether payment is appropriate under Medicare Part A. However, the 2-Midnight rule is applicable once services have been removed from the IPO list. Outside of the exemption periods discussed above, services that have been removed from the IPO list are subject to initial medical reviews of claims for short-stay inpatient admissions conducted by BFCC-QIOs, and are subject to denial for non-compliance with the 2-midnight rule.

BFCC-QIOs may also refer providers to the RACs for further medical review due to exhibiting persistent noncompliance with Medicare payment policies, including, but not limited to:

• Having high denial rates;
• Consistently failing to adhere to the 2-Midnight rule; or
• Failing to improve their performance after QIO educational intervention.

As stated in section IX. of the CY 2022 OPPS/ASC proposed rule (86 FR 42155 through 42176), CMS proposed to halt the elimination of the IPO list. In accordance with this proposal, we proposed to amend 42 CFR 419.22(n) to remove the reference to the elimination of the list of services and procedures designated as requiring inpatient care through a 3-year transition. We also proposed to return 298 procedures removed from the IPO list in CY 2021 to the IPO list for CY 2022.

Regardless of the status of the IPO list, we believe that the 2-Midnight benchmark remains an important metric to help guide when Part A payment for inpatient hospital admissions is appropriate. As technology advances and more services may be safely performed in the hospital outpatient setting and paid under the OPPS, it is increasingly important for physicians to exercise their clinical judgment in determining the generally appropriate clinical setting for their patient to receive a procedure, whether that be as an inpatient or on an outpatient basis. Importantly, removal of a service from the IPO list has never meant that a beneficiary cannot receive the service as a hospital inpatient—as always, the physician should use his or her complex medical judgment to determine the appropriate setting on a case by case basis.

As stated previously, our current policy regarding IPO list procedures is that they are appropriate for inpatient hospital admission and payment under Medicare Part A regardless of the expected length of stay. Halting the elimination of the IPO list would mean that this will remain true for all services that are still on the list. As in previous years, any services that are removed from the list in the future will be subject to the 2-Midnight benchmark and 2-Midnight presumption. This means that for services removed from the IPO list, under the 2-Midnight presumption, inpatient hospital claims with lengths of stay greater than 2 midnights after admission will be presumed to be appropriate for Medicare Part A payment and will not be the focus of medical review efforts, absent evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the 2-Midnight presumption. Additionally, under the 2-Midnight benchmark, services formerly on the IPO list will be generally considered appropriate for inpatient hospital admission and payment under Medicare Part A when the medical record supports either the admitting physician's reasonable expectation that the patient will require a stay that crosses at least 2 midnights, or the physician's determination that the patient required inpatient hospital care despite an expectation of a shorter length of stay.

Because we proposed to halt the elimination of the IPO list and add 298 services that were removed back to the IPO list, we believed this proposed change required us to reexamine the applicable exemption period. We noted in the CY 2021 OPPS/ASC final rule with comment period that we may shorten the exemption period for a procedure if necessary. We heard from many commenters last year that the 2-year exemption was appropriate when CMS was removing a smaller volume of procedures from the IPO list. However, commenters believed that the unprecedented volume of procedures becoming subject to the 2-Midnight rule with the phased elimination of the IPO list would necessitate a longer exemption period. While these commenters expressed their support for continuing the 2-year exemption, they further stated that a longer exemption period may be more appropriate. Some commenters suggested that anywhere between 3 to 6 years or indefinitely would be appropriate. Commenters expressed their belief that increasing the length of the exemption would be necessary to allow hospitals and practitioners sufficient time to adjust their billing and clinical systems, as well as processes used to determine the appropriate setting of care. For a full description of the comments received please refer to the CY 2021 OPPS/ASC final rule with comment period (85 FR 86115).

We noted in the CY 2022 OPPS/ASC proposed rule that we believed that the indefinite exemption was appropriate when the agency was eliminating the IPO list and removing an unprecedented volume of procedures from the list in a short period of time. That would have resulted in a large number of procedures becoming subject to the 2-Midnight rule in a 3-year span. However, we explained in the CY 2022 OPPS/ASC proposed rule that should we finalize our CY 2022 proposal to halt the elimination of the IPO list, there would no longer be an unprecedented volume of procedures removed from the IPO list at once, and thus the indefinite exemption may no longer be appropriate. As we explained in the CY 2021 OPPS/ASC final rule with comment period, the indefinite exemption was necessary given the magnitude of the change for providers. We explained in the CY 2022 OPPS/ASC proposed rule that because we were now proposing to move toward a much smaller volume of procedures becoming subject to the 2-Midnight rule at one time, we believed that in the event we finalized the proposed halt in the elimination of the IPO list, an indefinite exemption from medical review activities related to the 2-Midnight rule would no longer be warranted.

We also explained in the CY 2022 OPPS/ASC proposed rule that we continued to believe that, in order to facilitate compliance with our payment policy for inpatient admissions, some exemption from certain medical review activities for services removed from the IPO list under the OPPS is appropriate. Accordingly, we proposed to rescind the indefinite exemption and instead apply a 2-year exemption from two midnight medical review activities for services removed from the IPO list on or after January 1, 2021. As finalized in the CY 2020 OPPS/ASC final rule with comment period, and unchanged by the CY 2021 rulemaking, services removed from the IPO list between January 1 and December 30, 2020, are currently subject to a 2-year exemption. Accordingly, we stated that under our proposal, the same 2-year exemption would apply to all service removed from the IPO list on or after January 1, 2020. As we explained in the CY 2020 OPPS/ASC final rule with comment period, we believe that a 2-year exemption from certain medical review activities for procedures removed from the IPO list would allow sufficient time for providers to become more familiar with how to comply with the 2-Midnight rule and for hospitals and clinicians to become used to the availability of payment under both the hospital inpatient and outpatient setting for procedures removed from the IPO list. As we indicated in the CY 2022 OPPS/ASC proposed rule, if we finalized our proposal to halt the elimination of the IPO list, we believed that this rationale would apply equally to the smaller number of services that may be removed from the list at any one time in the future, and thus that the same 2-year exemption period is appropriate.

We also noted in the CY 2022 OPPS/ASC proposed rule that, as with the previous 2-year exemption period for services removed from the IPO list between January 1 and December 30, 2020, applying a 2-year exemption period to services removed from the IPO list on or after January 1, 2021, would allow providers time to gather information on procedures newly removed from the IPO list to help inform education and guidance for the broader provider community, develop patient selection criteria to identify which patients are, and are not, appropriate candidates for outpatient procedures, and to develop related policy protocols. We also said that we believed that this exemption period would aid in compliance with our payment policy for inpatient admissions.

It is important to note that whether there is a limited timeframe or an indefinite exemption from the specified medical review activities, providers are still expected to comply with the 2-Midnight rule. It is also important to note that the 2-Midnight rule does not prohibit procedures from being performed or billed on an inpatient basis. Whether a procedure has an exemption or not does not change what site of service is medically necessary or appropriate for an individual beneficiary. Providers are still expected to use their complex medical judgment to determine the appropriate site of service for each patient and to bill in compliance with the 2-Midnight rule. The exemption is not from the 2-Midnight rule but from certain medical review procedures and site-of-service claim denials.

Absent the removal of an unprecedented number of services at once from the IPO list, we explained in the proposed rule that we continue to believe that a 2-year exemption from BFCC-QIO referral to RACs and RAC “patient status” review of the setting for procedures removed from the IPO list under the OPPS and performed in the inpatient setting would be an adequate amount of time to allow providers to gain experience with application of the 2-Midnight rule to these procedures and the documentation necessary for Part A payment for those patients for which the admitting physician determines that the procedures should be furnished in an inpatient setting. Furthermore, we explained that it was our belief that the 2-year exemption from referrals to RACs, RAC patient status review, and claims denials would be sufficient to allow providers time to update their billing systems and gain experience with respect to newly removed procedures eligible to be paid under either the IPPS or the OPPS, while avoiding potential adverse site-of-service determinations. We solicited public comments regarding the appropriate period of time for this exemption. Commenters indicated whether and why they believed the 2-year period is appropriate, or whether they believed a longer or shorter exemption period would be more appropriate.

In summary, for CY 2021 and subsequent years, we proposed to return to the 2-year exemption from site-of-service claim denials, BFCC-QIO referrals to RACs, and RAC reviews for “patient status” (that is, site-of-service) for procedures that are removed from the IPO list under the OPPS on January 1, 2021 or later. Under this proposal, services removed beginning on January 1, 2021 would receive the same 2-year exemption from 2-Midnight medical review activities as currently applies to services removed between January 1 and December 30, 2020, and not the indefinite exemption finalized in the CY 2021 OPPS/ASC final rule with comment period. We encouraged BFCC-QIOs to review these cases for medical necessity in order to educate themselves and the provider community on appropriate documentation for Part A payment when the admitting physician determines that it is medically reasonable and necessary to conduct these procedures on an inpatient basis. We noted that we will monitor changes in site-of-service to determine whether changes may be necessary to certain CMS Innovation Center models. While we proposed to halt the elimination of the IPO list, we sought comment on whether a 2-year time period is appropriate, or if a longer or shorter period may be more warranted. We also explained in the CY 2022 OPPS/ASC proposed rule, that if we did not finalize our proposal to halt the elimination of the IPO list we might continue with the indefinite exemptions. Finally, we proposed to amend 42 CFR 412.3 to clarify when a procedure removed from the IPO list is exempt from certain medical review activities. We proposed that for all services and procedures removed after January 1, 2020, this exemption would last for 2 years from the date of such removal. This would include those services and procedures removed on or after January 1, 2021, for which this exemption would also be for 2 years from the date of such removal.

Comment: Many commenters, including organizations representing health insurance plans, physician associations, and specialty medical associations supported an indefinite exemption from site-of-service claim denials under Medicare Part A, eligibility for BFCC-QIO referrals to RACs for noncompliance with the 2-Midnight rule, and RAC reviews for site-of-service for procedures that are removed from the IPO list under the OPPS beginning on January 1, 2021. Some of these commenters recommended exemption from site of service reviews until the procedure is performed in the outpatient setting more than 50 percent of the time, or until clinical evidence supports the safety of procedures performed in an outpatient setting. Additional commenters believed CMS should defer to the physician's judgment on the appropriate site of care and exempt providers from site-of-service claims denials beyond the proposed 2-year exemption period. Commenters stated 2 years does not provide enough time for adequate evidence and research to be conducted to demonstrate that procedures removed from the IPO list can be performed safely for Medicare beneficiaries in hospital outpatient settings. According to the commenters, a longer or indefinite exemption period would extend additional protection to beneficiaries and hospitals providing care in outpatient settings.

Other commenters recommended extending site of service review to 3 or 4 years to allow for quality and safety analysis.

Response: We thank the commenters for their recommendations. As we explained in the CY 2021 OPPS/ASC final rule with comment period, we believed that the prior 2-year exemption might not be sufficient given the magnitude of the change for providers due to the elimination of the IPO list. We agreed at the time that due to the unprecedented number of services removed from the IPO list as part of the phased elimination of that list, additional time (beyond 2 years) would be more appropriate for hospitals and practitioners to adjust their billing and clinical systems, as well as develop their own internal processes to determine the appropriate setting of care for their patients, and review for quality and safety. We acknowledged that providers may not be experienced with assessing procedures on the IPO list against the 2-Midnight benchmark and that a longer exemption would allow them ample time to update their processes to make appropriate decisions about whether to admit patients for the large numbers of procedures being removed from the IPO list at the time (85 FR 86116). We also heard from commenters that the 2-year exemption was appropriate when CMS was removing a smaller volume of procedures from the IPO list. We agreed then and still believe now that the 2-year exemption was appropriate when CMS was removing a smaller, more targeted population of procedures from the IPO list. Accordingly, because we are finalizing our proposal to halt the elimination of the IPO list and return most of the removed services back to the list, we are finalizing our proposal without modification to resume the 2-year exemption period for procedures removed from the IPO list for services removed from the IPO list on January 1, 2020 or later.

Comment: Some commenters supported a two-year exemption from 2-midnight medical reviews. They believed a 2-year exemption will provide sufficient time for physicians to become more familiar with appropriate coding, billing, and documentation requirements for procedures removed from the IPO list. Commenters also noted that the 2-year exemption time period would help facilitate the transition of services off the IPO list and allow for the development of patient selection criteria to identify which patients are appropriate candidates for outpatient procedures. One commenter in support of the 2-year exemption time period also stressed the importance of CMS and BFCC-QIOs providing education to providers when services are removed from the IPO list.

Response: We thank the commenters for their support. The BFCC-QIOs will continue to review claims even while procedures are exempt from denial based on site-of-service in order to provide education for practitioners and providers regarding compliance with the 2-Midnight rule (85 FR 86119). Additionally, in the future, we may provide additional educational material regarding considerations for the selection of site-of-service for a procedure to support physicians' decision-making. We note that this additional information will be for informational or educational purposes only and will not be intended to prohibit payment of procedures that were previously included on the IPO list in the outpatient setting.

We appreciate the stakeholders' feedback regarding the appropriate period of time for exemptions from site-of-service claim denials under Medicare Part A, eligibility for BFCC-QIO referrals to RACs for noncompliance with the 2-Midnight rule, and RAC reviews for site-of-service for services removed from the IPO list on January 1, 2021, and later. Given our decision to halt the elimination of the IPO list, and the fact that we are accordingly no longer removing an unprecedented number of procedures from the list at one time, we believe that a 2-year exemption time period is adequate to let providers gain experience with the application of the 2-Midnight rule to those procedures that have been newly removed from the IPO list. We also believe that a 2-year exemption from the medical review activities discussed above for procedures removed from the IPO list will be sufficient time for providers and BFCC-QIOs to understand the documentation necessary to support Part A payment for those patients for which the admitting physician determines that the procedures should be furnished in an inpatient setting. Therefore, we are finalizing our proposed policy without modifications. We are also finalizing our proposal to amend § 412.3 of our regulations to clarify when a procedure removed from the IPO list is exempt from certain medical review activities.

B. Changes to Beneficiary Coinsurance for Additional Procedures Furnished During the Same Clinical Encounter as Certain Colorectal Cancer Screening Tests

Section 122 of Division CC of the Consolidated Appropriations Act (CAA) of 2021 (Pub. L. 116-260), Waiving Medicare Coinsurance for Certain Colorectal Cancer Screening Tests, amends section 1833(a) of the Act to 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. The reduced coinsurance will be phased in beginning January 1, 2022. Currently, the addition of any procedure beyond a planned colorectal cancer screening test (for which there is no coinsurance), results in the beneficiary having to pay coinsurance.

Section 1861(pp) of the Act defines “colorectal cancer screening tests” and, under sections 1861(pp)(1)(B) and (C) of the Act, identifies “screening flexible sigmoidoscopy” and “screening colonoscopy” as two of the recognized procedures. During the course of either one of these two procedures, removal of tissue or other matter may become necessary for diagnostic purposes. Among other things, section 1861(pp)(1)(D) of the Act authorizes the Secretary to include in the definition, other tests or procedures and modifications to the tests and procedures described under this subsection, with such frequency and payment limits as the Secretary determines appropriate, in consultation with appropriate organizations. Section 1861(s)(2)(R) of the Act includes colorectal cancer screening tests in the definition of the medical and other health services that fall within the scope of Medicare Part B benefits described in section 1832(a)(1) of the Act. Section 1861(ddd)(3) of the Act includes colorectal cancer screening tests within the definition of “preventive services.” In addition, section 1833(a)(1)(Y) of the Act provides for payment for a preventive service under the PFS at 100 percent of the lesser of the actual charge or the fee schedule amount for these colorectal cancer screening tests, and under the OPPS at 100 percent of the OPPS payment amount, when the preventive service is recommended by the United States Preventive Services Task Force (USPSTF) with a grade of A or B. As such, there is no beneficiary coinsurance for recommended colorectal cancer screening tests as defined in section 1861(pp)(1) of the Act.

Under these statutory provisions, we have issued regulations governing payment for colorectal cancer screening tests at § 410.152(l)(5). We pay 100 percent of the Medicare payment amount established under the applicable payment methodology for the setting for providers and suppliers, and beneficiaries are not required to pay Part B coinsurance for colorectal cancer screening tests (except for barium enemas, which are not recommended by the USPSTF with a grade of A or B).

In addition to colorectal cancer screening tests, which typically are furnished to patients in the absence of signs or symptoms of illness or injury, Medicare also covers various diagnostic tests (see § 410.32). In general, diagnostic tests must be ordered by the physician or practitioner who is treating the beneficiary and who uses the results of the diagnostic test in the management of the patient's specific medical condition. Under Part B, Medicare may cover flexible sigmoidoscopies and colonoscopies as diagnostic tests when those tests are reasonable and necessary as specified in section 1862(a)(1)(A) of the Act. When these services are furnished as diagnostic tests rather than as screening tests, patients are responsible for the Part B coinsurance (20 or 25 percent depending upon the setting) associated with these services.

We define colorectal cancer screening tests in our regulation at § 410.37(a)(1) to include “flexible screening sigmoidoscopies” and “screening colonoscopies, including anesthesia furnished in conjunction with the service.” Under our current regulations, we exclude from the definition of colorectal screening services, colonoscopies and sigmoidoscopies that begin as screening services, but where a polyp or other growth is found and removed as part of the procedure. The exclusion of these services from the definition of colorectal cancer screening services is based upon longstanding provisions of the statute under section 1834(d)(2)(D) of the Act dealing with the detection of lesions or growths during procedures (See CY 1998 PFS final rule at 62 FR 59048, 59082).

Prior to the enactment of section 122 of the CAA, section 1834(d)(2)(D) of the Act provided that if, during the course of a screening flexible sigmoidoscopy, a lesion or growth is detected which results in a biopsy or removal of the lesion or growth, payment under Medicare Part B shall not be made for the screening flexible sigmoidoscopy, but shall be made for the procedure classified as a flexible sigmoidoscopy with such biopsy or removal. Similarly, prior to the recent legislative change, section 1834(d)(3)(D) of the Act provided that if, during the course of a screening colonoscopy, a lesion or growth is detected that results in a biopsy or removal of the lesion or growth, payment under Medicare Part B shall not be made for the screening colonoscopy but shall be made for the procedure classified as a colonoscopy with such biopsy or removal. In these situations, Medicare pays for the flexible sigmoidoscopy and colonoscopy tests as diagnostic tests rather than as screening tests and the 100 percent payment rate for recommended preventive services under section 1833(a)(1)(Y) of the Act, as codified in our regulation at § 410.152(l)(5), has not applied. As such, beneficiaries currently are responsible for the usual coinsurance that applies to the services (20 or 25 percent of the cost of the services depending upon the setting).

Under section 1833(b) of the Act, before making payment under Medicare Part B for expenses incurred by a beneficiary for covered Part B services, beneficiaries must first meet the applicable deductible for the year. Section 4104 of the Affordable Care Act (that is, the Patient Protection and Affordable Care Act (Pub L. 111-148, March 23, 2010), and the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, March 30, 2010), collectively referred to as the “Affordable Care Act”) amended section 1833(b)(1) of the Act to make the deductible inapplicable to expenses incurred for certain preventive services that are recommended with a grade of A or B by the USPSTF, including colorectal cancer screening tests as defined in section 1861(pp) of the Act. Section 4104 of the Affordable Care Act also added a sentence at the end of section 1833(b)(1) of the Act specifying that the exception to the deductible shall apply with respect to a colorectal cancer screening test 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 screening test. Although amendments made by the Affordable Care Act addressed the applicability of the deductible in the case of a colorectal cancer screening test that involves biopsy or tissue removal, they did not alter the coinsurance provision in section 1833(a) of the Act for such procedures. Although public commenters encouraged the agency to eliminate the coinsurance in these circumstances, the agency found that statute did not provide for elimination of the coinsurance (75 FR 73170 at 73431).

Beneficiaries have continued to contact us noting their concern that a coinsurance percentage applies (20 or 25 percent depending upon the setting) under circumstances where they expected to receive only a colorectal screening test to which coinsurance does not apply. Instead, these beneficiaries received what Medicare considers to be a diagnostic procedure because, for example, polyps were discovered and removed during the procedure. Similarly, physicians have expressed concern about the reactions of beneficiaries when they are informed that they will be responsible for coinsurance if polyps are discovered and removed during a procedure that they had expected to be a screening procedure to which coinsurance does not apply.

Section 122 of the CAA addresses this coinsurance issue by successively reducing, over a period of years, the percentage amount of coinsurance for which the beneficiary is responsible. Ultimately, for services furnished on or after January 1, 2030, the coinsurance will be zero.

To implement the amendments made by section 122 of the CAA, we proposed in the CY 2022 PFS proposed rule to modify our regulations to reflect the changes to Medicare statute. As amended, the statute effectively provides that, for services furnished on or after January 1, 2022, a flexible sigmoidoscopy or a colonoscopy can be considered a screening flexible sigmoidoscopy or a screening colonoscopy test even if an additional procedure is furnished to remove tissue or other matter during the screening test. Specifically, section 122(a)(3) of the CAA added a sentence to the end of section 1833(a) of the Act to include as colorectal screening tests described in section 1833(a)(1)(Y) of the Act, a colorectal cancer screening test, 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 screening test. We note that only flexible screening sigmoidoscopies and screening colonoscopies are recognized currently as colorectal cancer screening tests that might involve removal of tissue or other matter. This new sentence added under section 1833(a) uses the same language that was used to amend the statute at section 1833(b)(1) of the Act to broaden the scope of colorectal cancer screening tests to which a deductible does not apply. Section 122(b)(1) of the CAA then limits application of the 100 percent Medicare payment rate (that is, no beneficiary coinsurance) under section 1833(a)(1)(Y) of the Act for the additional colorectal cancer screening tests (those that are not screening tests “but for” the new sentence at the end of section 1833(a) of the Act) by making payment for them subject to a new section 1833(dd) of the Act. Section 1833(dd) of the Act provides for a series of increases in the Medicare payment rate percentage for those services over successive periods of years through CY 2029. Thereafter, section 1833(dd) of the Act has no effect, so payment for all colorectal cancer screening tests would be made at 100 percent under section 1833(a)(1)(Y) of the Act.

To codify the amendments made by section 122 of the CAA in our regulations, we proposed in the CY 2022 PFS proposed rule to make two modifications to current regulations.

At § 410.37, we proposed in the CY 2022 PFS proposed rule to modify our regulation where we define conditions for and limitations on coverage for colorectal cancer screening tests by adding a new paragraph (j). That paragraph would provide that, effective January 1, 2022, when a planned colorectal cancer screening test, that is, screening flexible sigmoidoscopy or colonoscopy screening test, requires a related procedure, including removal of tissue or other matter, furnished in connection with, as a result of, and in the same clinical encounter as the screening test, it is considered to be a colorectal cancer screening test.

At § 410.152(l)(5), we also proposed in the CY 2022 PFS proposed rule to modify our regulation. There we describe payment for colorectal cancer screening tests. Effective January 1, 2022, we proposed in the CY 2022 PFS proposed rule to provide for an increase in the Medicare payment percentage that is phased in over time. As the Medicare payment percentage increases, the beneficiary coinsurance percentage decreases. We proposed to revise § 410.152(l)(5) to provide that Medicare payment in a specified year is equal to a specified percent of the lesser of the actual charge for the service or the amount determined under the fee schedule that applies to the test. The phased in Medicare payment percentages for colorectal cancer screening services described in the amendments we proposed in the CY 2022 PFS proposed rule to our regulation at § 410.37(j) (and the corresponding reduction in coinsurance) are as follows:

• 80 percent payment for services furnished during CY 2022 (with coinsurance equal to 20 percent);
• 85 percent payment for services furnished during CY 2023 through CY 2026 (with coinsurance equal to 15 percent);
• 90 percent payment for services furnished during CY 2027 through CY 2029 (with coinsurance equal to 10 percent); and
• 100 percent payment for services furnished from CY 2030 onward (with coinsurance equal to zero percent).

Thus, between CYs 2022 and 2030, the coinsurance required of Medicare beneficiaries for planned colorectal cancer screening tests that result in additional procedures furnished in the same clinical encounter will be reduced over time from the current 20 or 25 percent to zero percent beginning CY 2030 and will remain at zero percent thereafter. We refer readers to the CY 2022 PFS proposed rule for the discussion of these changes to the regulations at §§ 410.37 and 410.152(l)(5) to implement section 122 of the CAA.

In the CY 2011 OPPS/ASC final rule with comment period (75 FR 72019 through 72020), we adopted a policy that all surgical services furnished on the same date as a planned screening colonoscopy, planned flexible sigmoidoscopy, or barium enema 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 implementing section 4104(c)(2) of the Affordable Care Act. We created the HCPCS modifier “PT” for providers to append to the diagnostic procedure code that is reported instead of the screening colonoscopy, screening flexible sigmoidoscopy HCPCS code, or as a result of the barium enema when the screening test becomes a diagnostic service. Where the modifier appears on a claim, the claims processing system does not apply the Part B deductible for all surgical services on the same date as the diagnostic test. We stated that we believed this interpretation was appropriate because we believe that it would be very rare for an unrelated surgery to occur on the same date as one of these scheduled screening tests (75 FR 72019). We also stated that we would reassess the appropriateness of the proposed definition of services that are furnished in connection with, as a result of, and in the same clinical encounter as the colorectal cancer screening test that becomes diagnostic in the event of a legislative change to this policy (for example, a statutory change that would remove the coinsurance for these related services in addition to the deductible).

As we did for purposes of implementing section 4104(c)(2) of the Affordable Care Act, to implement the amendments made by section 122 of the CAA, in the CY 2022 OPPS/ASC proposed rule we proposed that all surgical services furnished on the same date as a planned screening colonoscopy or planned flexible sigmoidoscopy would 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. We explained that we believe this interpretation is appropriate because we continue to believe that it is very rare for an unrelated surgery to occur on the same date as a scheduled colorectal cancer screening. We stated that providers must continue to report HCPCS modifier “PT” to indicate that a planned colorectal cancer screening service converted to a diagnostic service. We also noted that, if our proposal was finalized, we would examine the claims data, monitor for any increases in surgical services unrelated to the colorectal cancer screening test performed on the same date as the screening test, and consider revising our policy through rulemaking if there is a notable increase.

Comment: Overall, commenters expressed support for our proposal that all surgical services furnished on the same date as a planned screening colonoscopy or planned flexible sigmoidoscopy would 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.

Response: We thank commenters for their support.

Comment: Several commenters requested that CMS allow providers to waive coinsurance even earlier than 2030 or accelerate the reduction in the coinsurance amounts if they elect to do so without fear of violating any CMS rules. A commenter stated the gradual reduction in coinsurance amounts will lead to patient confusion and administration challenges. Other commenters stated that if providers are not permitted to accelerate the reductions in the coinsurance amounts, hospitals should be able to voluntarily waive the co-insurance prior to January 1, 2030. The commenters believed this process could be similar to CMS allowing hospitals to reduce the beneficiary copayment for APC payable services below 20 percent. In addition, one commenter requested that CMS allow hospitals the option to waive the co-payment amounts as long as the hospitals electing this option consider it a contractual allowance not counted as bad debt.

Response: Through this rulemaking, we are adopting Medicare regulations regarding beneficiary coinsurance that reflect the decreasing beneficiary financial obligations over time as established by statute. Prior to the complete phaseout of Medicare coinsurance amounts for colorectal cancer screening tests in CY 2030, suppliers may waive coinsurance amounts only if they comply with applicable law, including the Federal Anti‐Kickback Statute and the civil monetary penalty provision prohibiting inducements to beneficiaries. We also note that the election to offer reduced copayment amounts provided for in section 1833(t)(8)(B) of the Act provides copayments can be reduced to amounts not less than 20 percent of the OPD fee schedule amount. The coinsurance amount for colorectal cancer screening services in CY 2022 is 20 percent and therefore could not be further reduced under this provision.

We received several comments that were outside the scope of the proposals made in the CY 2022 OPPS/ASC proposed rule. These comments included questions about coverage of bowel preparation products, coverage of non-invasive screening tests that require a follow-up colonoscopy, and cost-sharing for new colorectal screening technologies. Although we are not summarizing and responding to these comments in this final rule, we will take them into consideration for possible future healthcare provider education or rulemaking.

After considering public comments, we are finalizing as proposed the proposals made in the CY 2022 OPPS/ ASC proposed rule to implement section 122 of the CAA. Specifically, we are finalizing that all surgical services furnished on the same date as a planned screening colonoscopy or planned flexible sigmoidoscopy would 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. Providers must continue to report HCPCS modifier “PT” to indicate that a planned colorectal cancer screening service converted to a diagnostic service. We will examine the claims data, monitor for any increases in surgical services unrelated to the colorectal cancer screening test performed on the same date as the screening test, and consider revising our policy through rulemaking if there is a notable increase or abuse of this policy.

C. Low Volume Policy for Clinical and Brachytherapy APCs

Historically, we have used our equitable adjustment authority at section 1833(t)(2)(E) of the Act on a case-by-case basis to adjust how we determine the costs for certain low volume services. In the CY 2016 OPPS/ASC final rule with comment period, we acknowledged that for low volume procedures with significant device costs, the median cost would be a more appropriate measure of the central tendency for purposes of calculating the cost and the payment rate for low volume procedures (80 FR 70388 through 70389). We explained that the median cost is impacted to a lesser degree than the geometric mean cost by more extreme observations. Therefore, in the CY 2016 OPPS/ASC final rule with comment period, we used our equitable adjustment authority under section 1833(t)(2)(E) of the Act to use the median cost, rather than the geometric mean, to calculate the payment rate for the procedure described by CPT code 0308T (Insertion of ocular telescope prosthesis including removal of crystalline lens or intraocular lens prosthesis) for CY 2016.

In the CY 2017 OPPS/ASC final rule with comment period, we adopted a payment policy for low-volume device-intensive procedures similar to the policy we applied to the procedure described by CPT code 0308T. Under this policy, we calculate the payment rate for any device-intensive procedure that is assigned to an APC with fewer than 100 single claims for all procedures in the APC using the median cost instead of the geometric mean cost (81 FR 79660 through 79661). We explained that we believed this policy would help mitigate to some extent the significant year-to-year payment rate fluctuations while preserving accurate claims data-based payment rates for these procedures.

In the CY 2019 OPPS/ASC final rule with comment period, we developed a policy for establishing payment rates for low-volume procedures assigned to New Technology APCs (83 FR 58892 through 58893). In that rule, we explained that procedures assigned to New Technology APCs are typically new procedures that do not have sufficient claims history to establish an accurate payment for them (83 FR 58892). One of the objectives of establishing New Technology APCs is to generate sufficient claims data for a new procedure so that it can be assigned to an appropriate clinical APC. We stated that some procedures that are assigned to New Technology APCs have very low annual volume, which we consider to be fewer than 100 claims. There is a higher probability that payment data for a procedure with fewer than 100 claims per year may not have a normal statistical distribution, which we were concerned could affect the quality of our standard cost methodology for assigning services to clinical APCs. We also noted that services with fewer than 100 claims per year are not generally considered to be significant contributors to the APC ratesetting calculations, and therefore, are not included in the assessment of the 2 times rule. For these low-volume procedures, we were concerned that the methodology we use to estimate the cost of a procedure under the OPPS—calculating the geometric mean for all separately paid claims for a HCPCS procedure code from the most recent available year of claims data—may not generate an accurate estimate of the actual cost of these procedures.

We noted that low utilization of services can lead to wide variation in payment rates from year to year. This volatility in payment rates from year to year can result in even lower utilization and potential barriers to access for these new technologies, which in turn limits our ability to assign the service to an appropriate clinical APC. To mitigate these issues, we believed that it was appropriate to utilize our equitable adjustment authority at section 1833(t)(2)(E) of the Act to adjust how we determine the costs for low-volume services assigned to New Technology APCs. We finalized a policy to calculate payment rates for low-volume procedures with fewer than 100 claims per year that are assigned to a New Technology APC by using up to four years of claims data to calculate the geometric mean, the median, and the arithmetic mean, to include the result of each statistical methodology in annual rulemaking, and to solicit comment on which methodology should be used to establish the payment rate. We explained that once we identify a payment rate for a low-volume service, we would assign the service to the New Technology APC with the cost band that includes its payment rate (83 FR 58893).

While we believe that the policies we have adopted to calculate payment rates for low-volume procedures have mitigated concerns regarding payment rates for new technologies and device-intensive procedures, we also believe that additional items and services may benefit from a policy that applies to clinical APCs with significantly low claims volume available for ratesetting purposes. In particular, we believe that where there are fewer than 100 single claims from the most recent year available for ratesetting for an APC, there is often significant volatility in the payment rate for those APCs that could be addressed with a low-volume adjustment policy similar to our low-volume policies for device-intensive procedures and New Technology APCs. For example, for CY 2022 ratesetting purposes, there are only 42 single claims from CY 2019 available for determining the geometric mean cost for APC 5244 (Level 4 Blood Product Exchange and Related Services) and the payment rate for this APC has fluctuated significantly from year to year. The geometric mean cost of APC 5244 was $30,424.15 in CY 2018 (based on CY 2016 claims), increased by 25.6 percent to $38,220.27 in CY 2019 (based on CY 2017 claims), and decreased by 18.9 percent to $31,015.17 in CY 2021 (based on CY 2019 claims).

Additionally, for CY 2022 ratesetting purposes, there are only 22 single claims from CY 2019 available for determining the geometric mean cost of APC 2632 (Iodine i-125 sodium iodide). The payment rates for this APC have also fluctuated significantly, with a geometric mean cost of $26.63 in CY 2018 (based on CY 2016 claims), which increased by 43.4 percent to $38.20 in CY 2019 (based on CY 2017 claims), and decreased by 31.8 percent to $26.04 in CY 2021 (based on CY 2019 claims).

As we stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42181 through 42185), we believe that APCs with low claims volume available for ratesetting could also benefit from a low-volume adjustment policy similar to the one we currently utilize to set payment rates for device-intensive procedures and procedures assigned to New Technology APCs. Specifically, we proposed to expand the existing low volume adjustment policy applied to procedures assigned to New Technology APCs and designate clinical APCs and brachytherapy APCs with fewer than 100 single claims that can be used for ratesetting purposes in the claims year used for ratesetting for the prospective year (for example, the CY 2019 claims year for this CY 2022 OPPS/ASC proposed rule) as low volume APCs. For clinical and brachytherapy APCs designated as Low Volume, the number of claims available for ratesetting would include claims for all procedures assigned to such APC. Whereas, the existing low volume adjustment policy is applied to procedures assigned to New Technology APCs with fewer than 100 single claims. For APCs designated as low volume and for procedures assigned to New Technology APCs, we proposed to determine a low volume APC's cost and a low volume procedure assigned to a New Technology APC's cost, choosing the “greatest of” the median, arithmetic mean, or geometric mean.

We proposed that the threshold for the low volume APC designation would be fewer than 100 single claims per year for the APC that can be used for ratesetting purposes, as this is how we have traditionally defined low volume under our existing policies. We have defined low volume as fewer than 100 single claims under our existing policies as there is a higher probability that payment data for a procedure with fewer than 100 claims per year may not have a normal statistical distribution, which we were concerned could affect how we set payment rates for low volume APCs and procedures assigned to New Technology APCs. For items and services assigned to clinical and brachytherapy APCs we proposed to designate as low volume APCs, we proposed to use up to 4 years of claims data to establish an APC payment rate as we currently do for low volume services assigned to New Technology APCs. The availability of multiple years of claims data will allow for more claims to be used for ratesetting purposes and create a more statistically reliable payment rate for these APCs than setting rates for APCs with low claims volume based on one year of data alone. Further, using multiple years of claims data, we proposed to use the greatest of the median, arithmetic mean, or geometric mean cost to approximate the cost of items and services assigned to a low volume APC. In previous years, we have received few to no public comments on which statistical methodology to use and have usually chosen the methodology that yields the highest rate to set the payment rate for procedures assigned to New Technology APCs. Going forward, we proposed to formalize this approach for low volume procedures assigned to New Technology APCs as well as clinical and brachytherapy APCs. We believe using the greatest of these three methodologies provides a simple and consistent approach to determining the cost metric to be used for ratesetting for these APCs and avoids uncertainty where multiple cost metrics could be used to set the APC's cost. Additionally, due to the payment volatility and low volume nature of these procedures, we believe that choosing the methodology that yields the highest rate will ensure that these procedures receive sufficient payment and that payment is not a barrier to access for these procedures.

Given the different nature of policies that affect the partial hospitalization program (PHP), we did not propose to apply this low volume APC policy to APC 5853 Partial Hospitalization for CMHCs or APC 5863 Partial Hospitalization for Hospital-based PHPs. We are also not proposing to apply this low volume APC policy to APC 2698 (Brachytx, stranded, nos) or APC 2699 (Brachytx, non-stranded, nos), as we believe our current methodology for determining payment rates for non-specified brachytherapy sources, as discussed in section II.A.2.a.(2). of the CY 2022 OPPS/ASC proposed rule (86 FR 42028 through 42029), is appropriate. Further, as discussed in section IV.B.5. of the CY 2022 OPPS/ASC proposed rule (86 FR 42116), we proposed to eliminate our low volume Device-Intensive Procedure policy, as HCPCS code 0308T has been the only procedure subject to this policy, and subsume the ratesetting for HCPCS code 0308T within our broader low volume APC proposal.

For information on our proposed low volume APC designations, see Table 36 of the CY 2022 OPPS/ASC proposed rule (86 FR 42184).

Comment: Many commenters supported our proposal. Commenters stated that the policy would provide a more accurate calculation of cost, help mitigate year-to-year payment fluctuations, and create better predictability in Medicare revenue for hospitals providing these low-volume procedures. One commenter recommended that New Technology C-codes with fewer than 100 claims be eligible for such adjustment. Another commenter recommended that the threshold for Brachytherapy APCs be increased to fewer than 500 claims.

Response: We thank the commenters for their support of our proposal. We are not accepting the recommendation to apply our low-volume adjustment to New Technology C-codes with fewer than 100 claims that are not assigned to New Technology APCs. New Technology C-codes are established to describe procedures that utilize emerging technologies that cannot be adequately described by existing CPT/HCPCS codes. We have routinely assigned such procedures to clinical APCs due to resource and clinical similarity of existing technologies described by other CPT/HCPCS codes and we are not convinced that we should utilize a unique ratesetting process for New Technology C-codes with fewer than 100 claims assigned to clinical APCs. We note that we assign new codes to New Technology APCs only if the service cannot be placed in any of the existing clinical APCs based on clinical similarity and resource homogeneity. Further, we believe our policy of addressing payment fluctuations for clinical and brachytherapy APCs due to limited claims data at the APC level rather than the CPT/HCPCS code level would more appropriately address stakeholder concerns and is more consistent with how our low volume policies have previously addressed limited claims data.

Additionally, we are not accepting the recommendation to modify our criteria and apply a low volume adjustment to brachytherapy APCs with fewer than 500 claims that can be used for ratesetting. As discussed previously, under our existing policies, we believe that our definition of low volume as fewer than 100 single claims per year increases the probability that payment data for a procedure may not have a normal statistical distribution. Further, we believe that applying the same per-year limit of fewer than 100 single claims to all brachytherapy APCs, clinical APCs, and procedures assigned to New Technology APCs to determine whether they should qualify as low volume APCs or low volume procedures is the most consistent and equitable approach.

After considering the public comments we received, we are finalizing our proposal without modification to designate clinical and brachytherapy APCs as low volume APCs if the APC has fewer than 100 claims that can be used for ratesetting. We also are finalizing our proposal to designate procedures assigned to New Technology APCs as low volume procedures if there are fewer than 100 claims for the procedure that can be used for ratesetting for the year. We are also finalizing our low volume APC payment adjustment to determine the APC cost (or procedure cost in the case of a low volume procedure assigned to a New Technology APC) as the greater of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data. For a discussion of the low volume adjustment as it applies to certain procedures assigned to New Technology APCs, see section III.C. of this final rule with comment period.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42181 through 42185), we proposed to designate three clinical APCs and five brachytherapy APCs as low volume APCs. After reviewing updated CY 2019 claims data available for this final rule, APC 5881 (Ancillary Outpatient Services When Patient Dies) had 99 single claims available for CY 2022 ratesetting purposes. Therefore, with the addition of APC 5881, we are finalizing our proposal, with modification, to designate four clinical APCs and five brachytherapy APCs as low volume APCs under the OPPS. The four clinical APCs and five brachytherapy APCs meet our criteria of having fewer than 100 single claims in the claims year (CY 2019 for the CY 2022 OPPS/ASC final rule with comment period) and therefore, we are finalizing our proposal, with modification, to designate these APCs as low volume APCs. Table 49 illustrates the APC geometric mean cost without the low volume APC designation, the median, arithmetic mean, and geometric mean cost using up to four years of claims data, as well as the statistical methodology we are finalizing to use as the APC's cost for ratesetting purposes for CY 2022. As discussed in section X.E of this final rule with comment period, given our concerns with CY 2020 claims data as a result of the PHE, the 4 years of claims data are based on CY 2016 claims through CY 2019 claims.

Additionally, for this final rule, based on the number of CY 2019 available claims from the standard ratesetting methodology used for ASC ratesetting purposes in this final rule, for CY 2022, under the ASC payment system, we are also finalizing our proposal to designate the APCs in Table 50 as low volume APCs that meet our criteria of having fewer than 100 single claims in the claims year (CY 2019 for the CY 2022 OPPS/ASC proposed rule) and are subject to our new low volume APC payment adjustment under the ASC payment system. Specifically, we are designating five brachytherapy APCs and four clinical APCs as low volume APCs for CY 2022. These are the same brachytherapy APCs we are finalizing as low volume APCs under the OPPS. We are also designating APC 5244, APC 5494, and APC 5495, which are finalizing as low volume under the OPPS, as low volume under the ASC payment system. Additionally, APC 5493—Level 3 Intraocular Procedures meets our criteria to be designated a low volume APC under the ASC payment system for CY 2022. The payment rates for these APCs are established at the highest amount among the geometric mean, median, or arithmetic mean, calculated using up to four years of data, which, in the case of these APCs, are claims data from 2016 through 2019, based on the standard ratesetting methodology. However, as discussed in section XIII.D.1.d of this final rule with comment period, we are finalizing our proposal to limit the ASC payment rate for procedures assigned to low volume APCs at an amount no greater than the procedure's OPPS payment rate.

D. Comment Solicitation on Temporary Policies To Address the COVID-19 PHE

In response to the COVID-19 pandemic, CMS issued waivers and undertook emergency rulemaking to implement a number of temporary policies to address the pandemic, including policies to prevent spread of the infection and support diagnosis of COVID-19. Many of these flexibilities were available because certain statutory or regulatory provisions were waived. These waivers will expire at the conclusion of the PHE. In the CY 2022 OPPS/ASC proposed rule (86 FR 42185) we sought comment on the extent to which stakeholders utilized the flexibilities available under these waivers, as well as whether stakeholders believe certain of these temporary policies should be made permanent to the extent possible within our existing authority. Specifically, we sought comment on stakeholders' experience with hospital staff furnishing services remotely to beneficiaries in their homes through use of communications technology; providers furnishing services in which the direct supervision for cardiac rehabilitation, intensive cardiac rehabilitation, and pulmonary rehabilitation services requirement was met by the supervising practitioner being available through audio/video real-time communications technology; and the need for specific coding and payment to remain available under the OPPS for specimen collection for COVID-19.

1. Mental Health Services Furnished Remotely by Hospital Staff To Beneficiaries in Their Homes

Under the Physician Fee Schedule (PFS), Medicare makes payment to professionals and other suppliers for physicians' services, including certain diagnostic tests and preventive services. Section 1834(m) of the Act specifies the payment amounts and circumstances under which Medicare makes payment for a discrete set of Medicare telehealth services, all of which must ordinarily be furnished in-person, when they are instead furnished using interactive, real-time telecommunications technology. When furnished as Medicare telehealth services under section 1834(m) of the Act, many of these services are still reported using codes that describe “face-to-face” services even though they are furnished using audio/video, real-time communications technology instead of in-person (82 FR 53006). Section 1834(m) of the Act specifies the types of health care professionals that can furnish and be paid by Medicare for telehealth services (referred to as distant site practitioners) and the types and locations of settings where a beneficiary can be located when receiving telehealth services (referred to as originating sites). In the CY 2003 PFS final rule with comment period (67 FR 79988), we established a regulatory process for adding services to or deleting services from the Medicare telehealth services list in accordance with section 1834(m)(4)(F)(ii) of the Act (42 CFR 410.78(f)). This process provides the public with an ongoing opportunity to submit requests for adding services, which we consider and review through the annual PFS rulemaking process. The regulation at § 410.78(a)(3) also defines the requirements for the interactive telecommunications systems that may be used to furnish Medicare telehealth services.

Due to the circumstances of the COVID-19 pandemic, particularly the need to maintain physical distance to avoid exposure to the virus, we anticipated that health care practitioners would develop new approaches to providing care using various forms of technology when they are not physically present with the patient. We have established several flexibilities to accommodate these changes in the delivery of care. For Medicare telehealth services, using waiver authority under section 1135(b)(8) of the Act in response to the PHE for the COVID-19 pandemic, we have removed the geographic and site of service originating site restrictions in section 1834(m)(4)(C) of the Act, as well as the restrictions in section 1834(m)(4)(E) of the Act on the types of practitioners who may furnish telehealth services, for the duration of the PHE for the COVID-19 pandemic. We also used waiver authority to allow certain telehealth services to be furnished via audio-only communication technology during the PHE.

According to MedPAC's report, Telehealth in Medicare after the Coronavirus Public Health Emergency, there were 8.4 million telehealth services paid under the PFS in April 2020, compared with 102,000 in February 2020. MedPAC also reported that during focus groups held in the summer of 2020, clinicians and beneficiaries supported continued access to telehealth visits with some combination of in-person visits. They cited benefits of telehealth, including improved access to care for those with physical impairments, increased convenience from not traveling to an office, and increased access to specialists outside of a local area. In their annual beneficiary survey, over 90 percent of respondents who had a telehealth visit reported being “somewhat” or “very satisfied” with their video or audio visit, and nearly two-thirds reported being “very satisfied.”

Division CC, section 123 of the CAA modified the circumstances under which Medicare makes payment for mental health services furnished via telehealth technology under the PFS following the PHE. Specifically, this legislation removed the geographic originating site restrictions and added the home of the individual as a permissible originating site for Medicare telehealth services when furnished for the purposes of diagnosis, evaluation, or treatment of a mental health disorder. This change correlates with a growing acceptance of the use of technology in the provision of mental health care. According to the Commonwealth Fund, the provision of mental and behavioral health services via communications technology, in particular, has a robust evidence base and numerous studies have demonstrated its effectiveness across a range of modalities and mental health diagnoses (for example, depression, substance use disorders). Clinicians furnishing tele-psychiatry services at Massachusetts General Hospital Department of Psychiatry during the PHE observed several advantages of the virtual format for furnishing psychiatric services, noting that patients with psychiatric pathologies that interfere with their ability to leave home (for example, immobilizing depression, anxiety, agoraphobia, and/or time-consuming obsessive-compulsive rituals) were able to access care more consistently since eliminating the need to travel to a psychiatry clinic can increase privacy and therefore decrease stigma-related barriers to treatment, potentially bringing care to many more patients in need, as well as enhanced ease of scheduling, decreased rate of no-shows, increased understanding of family and home dynamics, and protection for patients and practitioners with underlying health conditions.

These findings are consistent with our analysis of Medicare claims data that indicate that interactive communications technology for mental health care is likely to continue to be in broad use beyond the circumstances of the pandemic. According to our analysis of Medicare Part B claims data for services furnished via Medicare telehealth during the PHE, use of telehealth for many professional services spiked in utilization around April 2020 and diminished over time. In contrast, Medicare claims data suggest that for mental health services added to the Medicare Telehealth list both permanently and temporarily, subsequent to April 2020, the trend is toward maintaining a steady state of usage over time. Given this information, broad acceptance in the public and medical community, and the relatively stable Medicare utilization of mental health services during the COVID-19 pandemic, we believe use of interactive communication technology in furnishing mental health care is becoming an established part of medical practice, very likely to persist after the COVID-19 pandemic, and available across the country under the Medicare statute for the range of professionals furnishing mental health care and paid under the PFS.

In many cases, hospitals provide hospital outpatient mental health services (including behavioral health), education, and training services that are furnished by hospital-employed counselors or other licensed professionals. Examples of these services include psychoanalysis, psychotherapy, diabetes self-management training, and medical nutrition therapy. With few exceptions, the Medicare statute does not have a benefit category that would allow these types of professionals (for example, mental health counselors and registered nurses) to bill Medicare directly for their services. These services can, in many cases, be billed by providers such as hospitals under the OPPS or by physicians and other practitioners as services incident to their professional services under the PFS. We also note that while partial hospitalization services are paid under the OPPS, section 1861(ff)(3)(A) of the Act explicitly prohibits partial hospitalization services from being furnished in an individual's home or residential setting.

As we explained in the interim final rule with comment period published on May 8, 2020 in the Federal Register titled “Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency and Delay of Certain Reporting Requirements for the Skilled Nursing Facility Quality Reporting Program” (the May 8th COVID-19 IFC) (85 FR 27550, 27563), outpatient mental health services, education, and training services require communication and interaction. We stated that facility staff can effectively furnish these services using telecommunication technology and, unlike many hospital services, the clinical staff and patient are not required to be in the same location to furnish them. We further explained that blanket waivers in effect during the COVID-19 PHE allow the hospital to consider the beneficiary's home, and any other temporary expansion location operated by the hospital during the COVID-19 PHE, to be a provider-based department (PBD) of the hospital, so long as the hospital can ensure the locations meet all of the conditions of participation, to the extent not waived. In light of the need for infection control and a desire for continuity of behavioral health care and treatment services, we recognized the ability of the hospital's clinical staff to continue to deliver these services even when they are not physically located in the hospital. Therefore, in the May 8th COVID-19 IFC (85 FR 27564), we made clear that when a hospital's clinical staff are furnishing hospital outpatient mental health services, education, and training services to a patient in the hospital (which can include the patient's home so long as it is provider-based to the hospital), and the patient is registered as an outpatient of the hospital, we will consider the requirements of the regulations at § 410.27(a)(1) to be met. We reminded readers that the physician supervision level for the vast majority of hospital outpatient therapeutic services is currently general supervision under § 410.27. This means a service must be furnished under the physician's overall direction and control, but the physician's presence is not required during the performance of the service.

In the May 8th COVID-19 IFC, we emphasized that all services furnished by the hospital still require an order by a physician or qualified NPP and must be supervised by a physician or other NPP appropriate for supervising the service given their hospital admitting privileges, state licensing, and scope of practice, consistent with the requirements in § 410.27 (85 FR 27563). We noted that hospitals may bill for these services as if they were furnished in the hospital and consistent with any specific requirements for billing Medicare in general, including any relevant modifications in effect during the COVID-19 PHE. We also noted that when these services are provided by clinical staff of the physician or other practitioner and furnished incident to their professional services, and are not provided by staff of the hospital, the hospital would not bill for the services. We stated that in those circumstances, the physician or other practitioner should bill for such services incident to their own services and would be paid under the PFS.

Given that the widespread use of communications technology to furnish services during the PHE has illustrated acceptance within the medical community and among Medicare beneficiaries of the possibility of furnishing and receiving care through the use of that technology, we stated that we were interested in information on the role of hospital staff in providing care to beneficiaries remotely in their homes. During the PHE, hospital staff have had the flexibility to provide these kinds of services to beneficiaries in their homes through communications technology; however, this flexibility is tied to waivers and other temporary policies that expire at the end of the PHE. In instances where a beneficiary may be receiving mental health services from a hospital clinical staff member who cannot bill Medicare independently for their professional service, the beneficiary would then need to physically travel to the hospital to continue receiving the services post-PHE. We stated that we were concerned that this could have a negative impact on access to care in areas where beneficiaries may only be able to access mental health services provided by hospital staff and, during the PHE, have become accustomed to receiving these services in their homes. We also noted that the ability to receive mental health services in their homes may help expand access to care for beneficiaries who prefer additional privacy for the treatment of their condition.

We stated that we were concerned that, during the PHE, practice patterns may have shifted to support expanded virtual services. During the PHE, we have not required any claims-based modifier identifying specifically when a service is furnished by clinical staff of the hospital to a beneficiary in their home through communications technology, and therefore we are not able to gauge the magnitude of these practice pattern shifts. Therefore, we sought comment on the extent to which hospitals have been billing for mental health services provided to beneficiaries in their homes through communications technology during the PHE, and whether they would anticipate continuing demand for this model of care following the conclusion of the PHE. As described in preceding paragraphs, billing for Medicare telehealth services has increased dramatically during the PHE, particularly for mental health services. We sought comment on whether hospitals have experienced a similar increase during the PHE in utilization of mental health services provided by hospital staff to beneficiaries in their homes through communications technology. We also sought comment on whether there are changes commenters believe CMS should make to account for shifting patterns of practice that rely on communication technology to provide mental health services to beneficiaries in their homes.

Comment: Commenters expressed support for continuing OPPS payment for mental health services furnished to beneficiaries in their homes by clinical staff of the hospital through the use of communication technology as a permanent policy post-PHE, stating that the expansion of virtual care broadly during the PHE has been instrumental in maintaining and expanding access to mental health services during the PHE while keeping beneficiaries in their homes and reducing exposure to COVID. A few commenters requested that CMS continue to allow for the beneficiary's home to be reclassified as a PBD post-PHE, while other commenters stated that CMS should ensure that facility-based providers are adequately reimbursed for their services when furnished remotely. A few commenters encouraged CMS to ensure that there are relevant quality and safety measures for services furnished by hospital staff through communication technology.

Additionally, several commenters expressed support for the flexibilities allowing PHP services to be furnished to beneficiaries in their homes via telecommunication technology during the COVID-19 PHE, and encouraged CMS to maintain these flexibilities beyond the PHE or consider making these temporary policies permanent. Commenters expressed that these flexibilities, especially those allowing the use of audio-only telecommunication technology, increase access to vital mental health services amidst a persistent shortage of health care professionals and allow much greater and timelier access to mental health services, especially in rural areas and for vulnerable populations, while also helping drive reductions in the rates at which patients missed appointments. Commenters also shared research and analysis supporting the effectiveness of providing PHP services using telecommunication technology. One academic health center discussed outcomes analysis it conducted of its PHP services and noted that its analysis did not show a decrement in clinical care for patients who received only virtual PHP services. A national association of behavioral healthcare systems shared research showing that the main differences between patients who participated in PHPs via telecommunication technology and those who attended in-person was that those who participated via telecommunication technology had greater lengths of stay and were more likely to stay in treatment until completed.

Response: We thank commenters for their support. We will consider these comments for future rulemaking and, in addition, will continue to explore how hospital payment for virtual services could support access to care in underserved and/or rural areas.

2. Direct Supervision by Interactive Communications Technology

In the interim final rule with comment period titled “Policy and Regulatory Provisions in Response to the COVID-19 Public Health Emergency” published on April 6, 2020 (the April 6th COVID-19 IFC) (85 FR 19230, 19246, 19286), we changed the regulation at 42 CFR 410.27(a)(1)(iv)(D) to provide that, during a Public Health Emergency as defined in § 400.200, the presence of the physician for purposes of the direct supervision requirement for pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac rehabilitation services includes 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. Specifically, the required direct physician supervision can be provided through virtual presence using audio/video real-time communications technology (excluding audio-only) subject to the clinical judgment of the supervising practitioner. We further amended § 410.27(a)(1)(iv)(D) in the CY 2021 OPPS/ASC final rule with comment period to provide that this flexibility continues until the end of the PHE as defined in § 400.200 or December 31, 2021, whichever is later (85 FR 86113). We noted that the public comments we received, along with feedback we have received since the implementation of the policy in the April 6th COVID-19 IFC allowing for direct supervision through virtual presence (85 FR 19246) have convinced us that we need more information on the issues involved with direct supervision through virtual presence before implementing this policy permanently. We acknowledged that the additional time between the issuance of the CY 2021 OPPS/ASC final rule with comment period and the issuance of the CY 2022 OPPS/ASC proposed rule may have allowed providers to collect more information that could inform CMS' decision making and therefore sought additional comment on whether this policy should be adopted on a permanent basis. While we did not propose to maintain this flexibility after the later of the end of the PHE or December 31, 2021, we did seek comment on whether and to what extent hospitals have relied upon this flexibility during the PHE and whether providers expect this flexibility would be beneficial outside of the PHE. We sought comment on whether we should continue to allow direct supervision for these services to include presence of the supervising practitioner via two-way, audio/video communication technology permanently, or for some period of time after the conclusion of the PHE or beyond December 31, 2021, to facilitate a gradual sunset of the policy. We also sought comment on whether there are safety and/or quality of care concerns regarding adopting this policy beyond the PHE and what policies CMS could adopt to address those concerns if the policy were extended post-PHE. Finally, if this policy were made permanent, we sought comment on whether a service-level modifier should be required to identify when the requirements for direct supervision for pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac rehabilitation services were met using audio/video real-time communications technology.

Comment: Commenters supported the adoption of the definition of direct supervision for cardiac rehabilitation and pulmonary rehabilitation, and intensive cardiac rehabilitation services to include presence of the supervising practitioner via two-way, audio/video communication technology on a permanent basis, or, if CMS did not wish to adopt this policy permanently, commenters encouraged CMS to maintain it for a period of time following the conclusion of the PHE, such as until the end of 2022. Most commenters supported development of a service-level modifier, stating that this requirement will allow CMS to track and collect data, although a few commenters stated that requiring a service-level modifier would be unnecessary and create additional burden on providers.

Response: We appreciate commenters' input on this policy and will consider these comments for future rulemaking.

3. Payment for COVID-19 Specimen Collection in Hospital Outpatient Departments

Also in the May 8th COVID-19 IFC, we created a new E/M code to support COVID-19 testing during the PHE: 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) (85 FR 27604). In our review of available HCPCS and CPT codes for the May 8th COVID-19 IFC, we did not identify a code that explicitly described the exact services of symptom assessment and specimen collection that HOPDs were undertaking to facilitate widespread testing for COVID-19. As stated in the May 8th COVID-19 IFC, we believed that HCPCS code C9803 was necessary to meet the resource requirements for HOPDs to provide extensive testing for the duration of the COVID-19 PHE. This code was created only to meet the need of the COVID-19 PHE and we stated that we expected to retire this code at the conclusion of the COVID-19 PHE (85 FR 27605).

We assigned HCPCS code C9803 to APC 5731—Level 1 Minor Procedures effective March 1, 2020 for the duration of the COVID-19 PHE in accordance with section 1833(t)(2)(B) of the Act, which requires services classified in an APC to be comparable clinically and in terms of resource use. APC 5731—Level 1 Minor Procedures contains services similar to HCPCS code C9803 and has a payment rate of $24.67 for CY 2021. HCPCS code C9803 was also assigned a status indicator of “Q1.” The Q1 status indicator indicates that the OPPS will package services billed under HCPCS code C9803 when billed with a separately payable primary service in the same encounter. When HCPCS code C9803 is billed without another separately payable primary service, we will make separate payment for the service under the OPPS. The OPPS also makes separate payment for HCPCS code C9803 when it is billed with a clinical diagnostic laboratory test with a status indicator of “A” in OPPS Addendum B.

In the CY 2022 OPPS/ASC proposed rule we solicited public comments on whether we should keep HCPCS code C9803 active beyond the conclusion of the COVID-19 PHE and whether we should extend or make permanent the OPPS payment associated with specimen collection for COVID-19 tests after the COVID-19 PHE ends, including why commenters believe it would be necessary to continue to provide OPPS payment for this service, as well as how long commenters believe payment should be extended for this code.

Comment: Commenters expressed appreciation for CMS' response to the pandemic, including the creation of HCPCS code C9803. One commenter noted that this code has had a positive impact on the delivery of care during the COVID-19 PHE. We received several comments in support of maintaining OPPS payment for HCPCS code C9803 beyond the conclusion of the COVID-19 PHE, with many commenters in support of making payment for this code permanent. Commenters cited concerns regarding the continuation of COVID-19 cases after the conclusion of the COVID-19 PHE and stressed the importance of continued testing in order to track and control COVID-19 cases. Multiple commenters also requested that CMS continue to pay for HCPCS code C9803 due to concerns regarding the unknown future role COVID-19 will play in our lives and potential increases in cases and new mutations of the virus. One commenter also requested that CMS continue payment for HCPCS code C9803 and reevaluate retiring this code when claims volume becomes low.

One commenter also requested that if CMS were to retire HCPCS code C9803, that we provide significant notice and resources to healthcare providers to prevent disruptions in the delivery of care.

Response: We appreciate the comments regarding payment for COVID-19 specimen collection in hospital-based outpatient departments (HOPDs). We plan to take this feedback into consideration for possible future rulemaking.

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

As described in section I.A. of the CY 2022 OPPS/ASC proposed rule (86 FR 42020), section 1833(t) of the Act requires the Secretary to annually review and update the payment rates for services payable under the Hospital OPPS. Specifically, section 1833(t)(9)(A) of the Act requires the Secretary to review not less often than annually and to revise the groups, the relative payment weights, and the wage and other adjustments described in paragraph (2) of the Act to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors.

In updating the OPPS payment rates and system for each rulemaking cycle we primarily use two sources of information: The outpatient Medicare claims data and HCRIS cost report data. The claims data source is the Outpatient Standard Analytic File, which includes final action Medicare outpatient claims for services furnished in a given calendar year. For the OPPS ratesetting process, our goal is to use the best available data for ratesetting so that we can accurately estimate the costs associated with furnishing outpatient services, and thus set appropriate payment rates. Ordinarily, the best available claims data is the set of data from 2 years prior to the calendar year that is the subject of rulemaking. For the CY 2022 OPPS/ASC proposed rule ratesetting, this typically would have been the set of CY 2020 calendar year outpatient claims data processed through December 31, 2020. The cost report data source is typically the Medicare hospital cost report data files from the most recently available quarterly HCRIS file as we begin the ratesetting process. For example, ordinarily, the best available cost report data used in developing the OPPS relative weights would be from cost reports beginning 3-fiscal years prior to the year that is the subject of the rulemaking. For CY 2022 OPPS ratesetting, under ordinary circumstances, that would be cost report data from HCRIS extracted in December 2020, which would contain many cost reports ending in FY 2020 based on each hospital's cost reporting period.

As discussed in section I.F. of the FY 2022 IPPS/LTCH proposed rule and in the CY 2022 OPPS proposed rule, there are a number of issues related to the use of the standard hospital data we would otherwise use for purposes of CY 2022 ratesetting because data from the applicable time period would include the effects of the COVID-19 PHE (86 FR 25086 through 25090). Even though the specific data elements might be slightly different between the inpatient and outpatient hospital settings, the same questions and challenges exist for hospital data from CY/FY 2020. Some of the issues are focused on the source data and the degree to which the utilization of services and cost patterns found in them are affected by the PHE. Other issues are more prospective in nature and concern whether hospital claims data from this time period might be consistent with our expectations for the prospective year, particularly in a changing environment with regards to COVID-19 vaccinations and treatment.

In the FY 2022 IPPS proposed rule, we proposed to use FY 2019 data for FY 2022 IPPS ratesetting based on our determination that the FY 2019 data would be more representative of FY 2022 inpatient hospital experience than the FY 2020 data (86 FR 25089). In section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190) we noted that there are a number of policies that apply and interact across the IPPS and OPPS, in part because they both concern services furnished in the hospital setting. We also discussed how we have previously noted in annual rulemaking, in regards to adopting the fiscal year IPPS wage index into the OPPS, the “inseparable, subordinate status of the HOPD within the hospital overall” (85 FR 85908). It is in this context where inpatient and outpatient hospital departments are inherently connected to each other, as parts of the broader hospital setting overall, we identified many of the same reasons to propose to use 2019 data for 2022 ratesetting as discussed in the FY 2022 IPPS proposed rule.

In section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190) we also noted that we observed a number of changes, likely as a result of the PHE, in the CY 2020 OPPS claims data that we would ordinarily use for ratesetting. The most significant difference compared to prior years is the decrease in the overall volume of outpatient hospital claims—with approximately 20 percent fewer claims usable for ratesetting purposes when compared to the prior year. In addition, this decrease in outpatient claims volume applied to a majority of the clinical APCs in the OPPS.

In some cases, we saw broad changes as a result of the PHE, including in the APCs for hospital emergency department and clinic visits. Among those APCs, the decrease in volume was approximately 30 percent—some of which may be related to changing practice patterns during the PHE. For example, we saw a significant increase in the use of the HCPCS code Q3014 (Telehealth originating site facility fee) in the hospital outpatient claims, with the approximately 35,000 services billed in the CY 2019 OPPS claims increasing to 1.8 million services in the CY 2020 OPPS claims. This example highlights two types of differences we see in the CY 2020 set of claims when comparing it to more typical claims data. One difference is likely due to the degree to which elective procedures/services were not performed as often during the PHE. The other difference is the result of site of service changes due to flexibilities available during the PHE.

In other cases, we saw changes in the claims data that were associated with specific services that were furnished more frequently during the PHE. For example, two notable exceptions to this decrease in claims volume between CY 2019 and CY 2020 are for APC 5731 (Level 1 Minor Procedures) and APC 5801 (Ventilation Initiation and Management). In the case of APC 5731, HCPCS code C9803 was made effective for services furnished on or after March 1, 2020 through the interim final rule with comment period titled “Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency and Delay of Certain Reporting Requirements for the Skilled Nursing Facility Quality Reporting Program” (85 FR 27602 through 27605) to describe COVID-19 specimen collection. In the CY 2020 claims, HCPCS C9803 has 1,023,957 single claims available for cost modeling, representing approximately 93 percent of claims used to model the APC cost. While in some cases this would be appropriate in establishing the APC cost, we generally would not expect the same volume of the procedure in the CY 2022 OPPS because we anticipate that specimen collection for COVID-19 testing may be significantly lower than it was in CY 2020. Similarly, the estimated increase in the geometric mean cost of APC 5801 based on the CY 2020 claims data may not be predictive of CY 2022 costs for APC 5801 if there is less use of this service in CY 2022 than in CY 2020.

As a result of a number of COVID-19 PHE-related factors, including the changes in services potentially related to the COVID-19 PHE, the significant decrease in volume suggesting that patients may have been deferring elective care during CY 2020, the changes in APC relative weights for services, and the increasing number of Medicare beneficiaries vaccinated against COVID-19, we believed that CY 2020 data were not the best overall approximation of expected outpatient hospital services in CY 2022. Instead we believed that CY 2019 data, as the most recent complete calendar year of data prior to the COVID-19 PHE, were a better approximation of expected CY 2022 hospital outpatient services.

In the CY 2022 OPPS/ASC proposed rule, we also analyzed the extent to which the decision to use CY 2019 or CY 2020 claims data as the basis for ratesetting differentially impacts the CY 2022 OPPS rates. To do this, we estimated the difference in case-mix under the CY 2019-based weights and the CY 2020-based weights if the CY 2022 outpatient experience ended up being the reverse of the assumption made when calculating that set of relative weights. In other words, we compared estimated case-mix calculated under four different scenarios. For the CY 2019-based weights, we calculated the case-mix using claims from the CY 2019-based claims extract as an approximation of the actual CY 2022 experience (Scenario A), and using claims from the CY 2020 based claims extract as an approximation of the actual CY 2022 experience (Scenario B). For the CY 2020-based weights, we calculated the case-mix using claims from the CY 2020 claims based extract as an approximation of the actual CY 2022 outpatient experience (Scenario C), and using claims from the CY 2019 claims based extract as an approximation of the actual CY 2022 experience (Scenario D). The results are shown in the following Table 51.

In Scenario A and Scenario C, there is no differential impact as a result of a less accurate assumption made when the OPPS relative weights were calculated: The CY 2022 outpatient experience matches the assumption made when the OPPS relative weights were calculated. In Scenario B and Scenario D, the actual experience is the reverse of the assumption used when the OPPS relative weights were calculated.

In Scenario B, when the CY 2019-based weights were used, but the CY 2022 outpatient experience turns out to be more similar to CY 2020 claims data, the less accurate assumption slightly affects the calculated case-mix, by 0.1 percent. This can be seen by comparing the modeled case mix under Scenario B (5.056) with the modeled case-mix under Scenario C (5.051). In other words, if we use the CY 2019-based weights and CY 2022 outpatient experience turns out to be more similar to the CY 2020 data, then the modeled case-mix is slightly lower than if we had accurately used the CY 2020-based weights. This suggests that, while there is some impact from using the CY 2019 data if CY 2022 outpatient service utilization ends up being more similar to CY 2020 utilization, that impact would be limited.

In Scenario D, where the CY 2020-based weights were used, but the CY 2022 outpatient experience turns out to be more similar to CY 2019 claims data, this inaccurate assumption has a somewhat more significant effect. In this case, the modeled case-mix is −0.44 percent lower than it would be if we had correctly assumed that CY 2022 outpatient services utilization would be more like CY 2019 than CY 2020. This can be seen by comparing the modeled case-mix under Scenario D (4.600) to the modeled case-mix under Scenario A (4.620). In other words, if we use the CY 2020-based weights and the CY 2022 outpatient experience turns out to be more similar to CY 2019 data, the modeled case-mix is −0.44 percent lower than if we had used the CY 2019-based weights.

In addition to our expectation that CY 2019 is a more likely approximation of the CY 2022 outpatient experience for the reasons discussed earlier, the previous analysis indicates that the differential effect of making an incorrect assumption about which year's data to use to set the CY 2022 OPPS relative weights is more limited if the CY 2019-based weights are used than it is if the CY 2020-based weights are used. While CY 2022 outpatient hospital services data is unlikely to look exactly like either CY 2019 data or CY 2020 data, we believe that it will be more similar to a standard year (not having the effects of the PHE) as pandemic-related issues decline and more of the U.S. population is vaccinated against COVID-19.

Consistent with the proposal to use CY 2019 claims data in establishing the CY 2022 OPPS rates, we also proposed to use cost report data from the same set of cost reports we originally used in final rule 2021 OPPS ratesetting, where we ordinarily would have used the most updated available cost reports available in HCRIS in determining the proposed CY 2022 OPPS APC relative weights (as discussed in greater detail in section II.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42053)). As discussed previously, if we were to proceed with the standard ratesetting process of using updated cost reports, we would have used approximately 1,000 cost reports with the fiscal year ending in CY 2020 based on each hospital's cost reporting period. We note that Medicare outpatient claims data and cost report data from the HCRIS file are examples of data sources for which we discussed the proposed use of CY 2019 data for CY 2022 OPPS ratesetting. While we are generally using CY 2019 claims data and the data components related to it in establishing the CY 2022 OPPS, we noted in the CY 2022 OPPS/ASC proposed rule the specific cases where we used updated information, such as the ASP data used in determining drug packaging status discussed in section V. of the CY 2022 OPPS/ASC proposed rule (86 FR 42116).

We also considered the alternative of continuing with our standard process of using the most updated claims and cost report data available. To facilitate comment on the alternative proposal for CY 2022, we made available the cost statistics and addenda utilizing the CY 2020 data we would ordinarily have provided in conjunction with the CY 2022 OPPS/ASC proposed rule. We provided a file comparing the budget neutrality and certain other ratesetting adjustments calculated under our proposal with those adjustments calculated under this alternative approach. Finally, we made available other proposed rule supporting data files based on the use of the CY 2020 data that we ordinarily would have provided, including: The OPPS Impact File, cost statistics files, addenda, and budget neutrality factors. We refer the reader to the CMS website for the CY 2022 OPPS/ASC proposed rule for more information on where these supplemental files may be found.

We note that the CY 2022 OPPS/ASC proposed rule appeared in the Federal Register on August 4, 2021. In the FY 2022 IPPS/LTCH PPS final rule, which appeared in the August 13, 2021 issue of the Federal Register , CMS finalized a policy to use FY 2019 MedPAR data in FY 2022 IPPS ratesetting (rather than FY 2020 MedPAR data) after consideration of public comments, the vast majority of which supported CMS's proposal to use the FY 2019 data for FY 2022 ratesetting for circumstances where the FY 2020 data is significantly impacted by the COVID-19 PHE. Similar to the comments received on the FY 2022 IPPS proposed rule, we received broad support from commenters with many agreeing that CY 2019 claims data would likely be more similar to the CY 2022 outpatient experience.

Comment: Commenters supported the use of CY 2019 claims in CY 2022 OPPS ratesetting, agreeing that the billing patterns found in the CY 2019 claims data would better approximate the outpatient utilization and costs in the CY 2022 OPPS, due to the effect of the PHE on the CY 2020 claims. A commenter noted challenges during the PHE such as increasing labor costs and suggested that an interim wage index adjustment factor be applied. Several stakeholders agreed with using CY 2019 claims for CY 2022 OPPS ratesetting, but noted that their support applied specifically for the CY 2022 OPPS, as similar policies for future years would need to be evaluated separately.

Response: We appreciate the commenters' support for our proposal to use CY 2019 claims in CY 2022 OPPS ratesetting as a result of the impact of the PHE on CY 2020 claims data. We note that we are finalizing the use of CY 2019 claims data in CY 2022 OPPS ratesetting.

With regards to the request for an interim wage index adjustment factor, we currently do not believe an interim wage index adjustment factor is necessary. The wage index that we would apply in the CY 2022 OPPS is not affected in the same way as claims and cost report data due to the PHE, as a result of being on a longer data delay. As cost report information becomes available that reflects changes in labor costs and wage index inputs, we will continue to review and include as appropriate in the OPPS. For more detail regarding the OPPS wage index policy, please see section II.C. of this final rule with comment period. We note that the final policy to use CY 2019 claims data for OPPS ratesetting specifically applies to the CY 2022 OPPS, and we will continue to monitor the claims and cost report data available and their appropriateness for future OPPS ratesetting, as the PHE continues.

Comment: Certain commenters supported the use of CY 2019 claims data for broader OPPS ratesetting but requested specific exceptions that would allow for the use of CY 2020 claims. These suggested exceptions included requests to use:

• CY 2020 claims data for ratesetting purposes for certain HCPCS codes that only have volume or significant volume in the CY 2020 claims but not in the 2019 claims data;
• CY 2020 claims data for establishing the CY 2022 OPPS relative weights for specific APC series;
• CY 2020 claims data for contextual purposes where CY 2019 claims are unavailable to make APC assignments, but to continue to use CY 2019 claims data for broader ratesetting; and

• Either CY 2019 or CY 2020 claims data in identifying which procedures receive device intensive status and to use the higher of the device offsets between the 2 years of claims data.

Response: We appreciate the commenters' input in determining what data is most appropriate for developing the CY 2022 OPPS relative payment weights. We recognize that there are two important distinct issues raised by these unique requests: (1) The integrity of the OPPS relative payments weights based on the data used, and (2) data availability for ratesetting, particularly as there is different information available in each of the claims and cost report datasets based on the time frame of data they include.

In reviewing the CY 2019 and CY 2020 claims data available for developing the CY 2022 OPPS rates, we noted that we believed the CY 2019 claims would be more reflective of our expectation of the CY 2022 outpatient experience. We do not believe it is appropriate to selectively choose which claims year's data are included or not in establishing the CY 2022 relative payment weights. We note that the relative cost of services used in developing the OPPS relative payment weights is a fundamental part of the OPPS and choosing which claims to use when both CY 2019 and CY 2020 claims are broadly available may inappropriately distort certain components of the OPPS. Further, the choice of different time frames when establishing the claims dataset would raise additional concerns around data consistency and how to mitigate their effects, which may be outsized as a result of the COVID-19 PHE. Potential additional adjustment factors would need to be applied for aspects such as charge inflation, volume adjustments, and CCR adjustments similar to how they are applied for other components of the OPPS, for example, outlier payments. The OPPS relative payment weights affect the budget neutrality calculations because the volume and estimated relative costs of services comprise the budget neutral model. If actual CY 2019 claims were used in some cases and CY 2020 claims in others, we might then inadvertently over or underweight volume or estimated cost, both of which distort not just the specific OPPS payment rates for which they are used but also those of all other services within the budget neutrality model. Based on these data integrity concerns, we continue to believe using CY 2019 claims data—and CY 2019 claims data alone—in establishing the CY 2022 OPPS relative payment weights to the extent possible is the best and most effective policy. We do not believe that it is appropriate to blend use of CY 2020 claims in this process.

In the CY 2022 OPPS/ASC proposed rule, we recognized that there were certain cases in which the CY 2020 claims data may provide additional information around service costs than are available in the CY 2019 claims data, and therefore, may be the best data available for ratesetting. For example, we proposed to make an exception for 11 specific device intensive procedures as described in section IV.B.2. of the CY 2022 OPPS/ASC proposed rule (86 FR 42114) in establishing the procedures' device offsets. In these instances, procedures were previously assigned a default device offset percentage of 31 percent or a device offset percentage based on claims from a clinically similar code, and focusing solely on CY 2019 claims data would yield no changes. However, we recognized that if CY 2020 claims information were available and provided more specific context around device offsets, this updated data would yield better and potentially more specific device offset assignments than the default or clinically similar codes. For more detailed discussion around device intensive status and device offsets, please see section IV.B. of this final rule with comment period.

Along those lines, while we do not believe that it is generally appropriate to include actual CY 2020 OPPS claims data in the process of calculating the OPPS relative weights, we believe that in certain cases it is appropriate to use that cost information as contextual information for APC and device offset assignments in the CY 2022 OPPS. That is, while CY 2019 claims data are more representative of our expectation of the CY 2022 outpatient experience, in cases where there are no CY 2019 claims data available, the CY 2020 claims data may provide additional updated information around the estimated costs for specific services. Therefore, we are establishing an additional limited exception in this final rule with comment period where we will review CY 2020 claims data based on commenter requests and identification of areas where they believe the CY 2020 claims justify alternative placement, if no significant CY2019 claims data is available, as part of our review process for determining CY 2022 APC assignment. It has been our policy for updating OPPS rates annually to use the best available data for ratesetting, and we believe in certain limited, specific circumstances the CY 2020 claims data are the best available for setting CY 2022 rates. We note that throughout this rule, and particularly in section III.C. of this final rule with comment period, where we review the APC-specific policies, we discuss where we have reviewed the CY 2020 claims as part of our evaluation of data for the CY 2022 APC assignments.

With regards to the request that we apply the device intensive policy and device offset calculation based on the higher calculation between that determined by the CY 2019 or CY 2020 claims data, we believe that in cases where claims are available from both years that the CY 2019 claims remain more reflective of actual expected outpatient experience. Based on the issues discussed earlier in this section we believe it is appropriate to use the CY 2019 claims data for establishing the device intensive policy, with the exception of device intensive procedures for which CY 2020 claims remain the only data source. For a more detailed discussion of the CY 2022 device intensive policy and the limited exceptions in which CY 2020 claims data will be used for those purposes, please see section IV.B. of this final rule with comment period.

After consideration of the public comments received, we are finalizing the proposal to use CY 2019 claims data in CY 2022 OPPS ratesetting with modification to allow for review of the CY 2020 claims in determining CY 2022 APC placements based on commenter request and where CY 2019 claims data are unavailable. In addition, we note that we are finalizing the exception to allow for CY 2020 claims data for device offset assignments for the 11 codes for which we proposed exceptions, as discussed in more detail in section IV.B. of this final rule with comment period.

F. Separate Payment in CY 2022 for the Device Category, Drugs, and Biologicals With Transitional Pass-Through Payment Status Expiring Between December 31, 2021 and September 30, 2022

In the CY 2021 OPPS/ASC final rule (85 FR 86012 through 86013), we discussed the public comments we received in response to the comment solicitation we included in the CY 2021 OPPS/ASC proposed rule regarding whether we should utilize our equitable adjustment authority under section 1833(t)(2)(E) of the Act to provide separate payment for some period of time after pass-through status ends for devices with expiring pass-through status in order to account for the period of time that utilization for the devices was reduced due to the PHE. Although we only solicited comments on use of our equitable adjustment authority to pay separately for devices with pass-through status during the PHE, we received public comments both suggesting that drugs, biologicals, and biosimilar biological products with pass-through status during the same time period should also be subject to an adjustment to extend the pass-through period for those products and pointing out that most of these products continue to be separately paid after their pass-through status expires, and therefore, it would be unnecessary to utilize the equitable adjustment authority to “extend” pass-through status for these products.

As discussed elsewhere in section X.E. of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190) and section I.F. of the FY 2022 IPPS/LTCH proposed rule (86 FR 25211 through 25212), our goal is to use the best available data for ratesetting. Ordinarily, the best available claims data is the set of data from 2 years prior to the calendar year that is the subject of rulemaking, and accordingly, we would have used claims data from CY 2020 for calculating proposed rates for the CY 2022 OPPS/ASC proposed rule. As noted in section X.E., however, we proposed to use CY 2019 claims data in establishing the CY 2022 OPPS rates and to use cost report data from the same set of cost reports originally used in the final rule for 2021 OPPS ratesetting. We recognize that due to the effects of the PHE, the CY 2020 claims data may not be the best available data for ratesetting, including for purposes of ratesetting for devices, drugs, and biologicals for which pass-through status expires between December 31, 2021 and September 30, 2022.

For this reason, and after consideration of the public comments we received in response to the comment solicitation included in the CY 2021 OPPS/ASC proposed rule (85 FR 48862), we proposed a one-time equitable adjustment under section 1833(t)(2)(E) of the Act to continue separate payment for the remainder of CY 2022 for devices, drugs, and biologicals with pass-through status that expires between December 31, 2021 and September 30, 2022. We have consistently explained that transitional pass-through payment for drugs, biologicals, and devices is intended as an interim measure to allow for adequate payment of certain new technology while we collect the necessary data to incorporate the costs for these items into the procedure APC rate (66 FR 55861). We believe an equitable adjustment to continue separate payment for devices, drugs, and biologicals with pass-through status that expires between December 31, 2021 and September 30, 2022 is necessary to ensure that we have full claims data from CY 2021 with which to set payment rates beginning in CY 2023. We also believe it is necessary to pay separately for these products in CY 2022 in a manner that mimics continued pass-through status, rather than having to set rates and make APC assignments and packaging decisions for these products for CY 2022 based on data from CY 2020, which we do not believe is the best available data for this purpose.

For those drugs, biologicals and the device for which payment would be packaged following expiration of their pass-through status, we believe providing separate payment for up to a full year in CY 2022 is warranted to ensure there is a full year of data for ratesetting, including to ensure appropriate APC assignments for the services with which these products are billed. For drugs and biologicals that would generally remain separately payable after their pass-through status expires, we believe providing separate payment for up to a full year in CY 2022 is necessary to ensure that these drugs and biologicals would, in fact, be separately payable when their pass-through status expires or that their payment should be packaged if we determine that the drug's cost is below the per-day packaging threshold. Specifically, for threshold-packaged drugs and biologicals, CMS requires current, appropriate data to determine whether the drug should be packaged and then to determine the impact of that packaging on the associated service rates. We also believe separate payment in CY 2022 is necessary to ensure we have sufficient data in the event payment for the drug is packaged with payment for a primary C-APC service. Finally, consistent with our goal of ensuring that the equitable adjustment provides separate payment for drugs and biologicals with pass-through status that expires between December 31, 2021 and September 30, 2022 to mimic pass-through payment to the extent possible, we proposed that separately payable drugs and biologicals that are eligible for this adjustment would not be paid the proposed reduced amount of ASP minus 22.5 percent when they are acquired under the 340B program, and would generally continue to be paid ASP+6 percent for the duration of the time period during which the adjustment applies.

We explained that under our proposal, the device category, drugs, and biologicals that would be affected were as follows. One device category, HCPCS code C1823 (Generator, neurostimulator (implantable), nonrechargeable, with transvenous sensing and stimulation leads), would receive adjusted payment equivalent to an additional four quarters of device pass-through status. There are 27 drugs and biologicals whose pass-through payment status expires between December 31, 2021 and September 30, 2022. Based on CY 2020 data, payment for three of the 27 drugs and biologicals would otherwise be packaged after the expiration of their pass-through status. The remaining 24 drugs and biologicals would be paid separately and would otherwise receive reduced payment at the proposed rate of ASP minus 22.5 percent when they are acquired under the 340B program.

We explained that there are currently six drugs and one device category whose pass-through payment status will expire on December 31, 2021, nine drugs and three biologicals whose pass-through status will expire on March 31, 2022, seven drugs whose pass-through status will expire on June 30, 2022, and two drugs whose pass-through payment status will expire on September 30, 2022. Because pass-through status can expire at the end of a quarter, we proposed that the adjusted payment would be made for between one and four quarters, depending on when the pass-through period expires for the device category, drug, or biological. In particular, we proposed that separate payment would be made a full year for the device category and six drugs for which pass-through status will expire on December 31, 2021, three quarters for the twelve drugs and biologicals for which pass-through status will expire on March 31, 2022, two quarters for the seven drugs for which pass-through status will expire on June 30, 2022, and one quarter for the two drugs for which pass-through status will expire on September 30, 2022.

Table 52 lists pass-through drugs, biologicals and the device category that we proposed would receive adjusted separate payment, their pass-through payment period effective dates and end dates, as well as the number of quarters of separate payment equivalent to an extension of pass-through status that we proposed each drug or device category would receive.

In the CY 2022 OPPS/ASC proposed rule we solicited comments on our proposal to utilize our equitable adjustment authority to pay separately for the remainder of CY 2022 for the device category, drugs, and biologicals with pass-through status that expires between December 31, 2021 and September 30, 2022.

Comment: The overwhelming majority commenters generally supported our proposal to utilize our equitable adjustment authority to pay separately for between one and four quarters for certain devices, drugs, and biologicals whose pass-through status will expire between December 31, 2021 and September 30, 2022. One commenter stated their support for CMS' proposal and added that separate payment for items that will soon lose pass-through status will help ensure beneficiary access to innovative therapies. The commenter added that the COVID-19 pandemic has severely skewed hospital utilization data that is necessary to establish payment rates under the OPPS.

Response: We thank the commenters for their support for our proposal.

Comment: Multiple commenters requested changes to our proposed equitable payment adjustment to either expand or limit its scope. One commenter strongly supported CMS's policy that makes radiopharmaceuticals eligible for pass-through status and added that CMS should apply this pass-through period extension to all radiopharmaceuticals with pass-through status during the COVID-19 PHE. Several other commenters asked that the proposed pass-through extension be expanded to include all pass-through devices, drugs, and biologicals that currently have pass-through status. One commenter acknowledged the requirement in section 1833(t)(2)(E) that equitable adjustments be budget neutral, but nonetheless suggested that to the extent possible, CMS should consider whether the adjustment to continue separate payment could be made in a non-budget neutral manner to minimize the impact of this policy on payment for other items and services under the OPPS.

Another commenter stated that if CMS finalizes use of its equitable adjustment authority to continue separate payment for certain pass-through products, it should not do so for products that have already had more than 3 years of pass-through status. One commenter stated that CMS should not use its equitable adjustment authority to provide separate payments for pass-through drugs, biologicals, and biosimilar biological products after pass-through status expires for these products where the products would continue to receive separate payment under our existing policy. Multiple commenters asked for our proposal to be applied to specific products or HCPCS codes; in some cases the commenters asserted that products on pass-through status experienced claims processing challenges that impacted data collection, ratesetting, and beneficiary access because of the effects of the PHE.

Response: We thank the commenters for the information provided in response to our proposal to utilize our equitable adjustment authority to pay separately for the remainder of CY 2022 for the device category, drugs, and biologicals with pass-through status that expires between December 31, 2021 and September 30, 2022. We note that our proposal was limited to an extension for those drugs, biologicals, and devices for which pass-through status is ending between December 31, 2021 and September 30, 2022 and for which we would otherwise use data from CY 2020 for ratesetting for these products in CY 2022. We agree that this proposal should not be applied to pass-through products that have previously received more than three years of pass-through status, however, to our knowledge no such product for which we proposed to provide continued separate payment has already had more than three years of pass-through status. In response to commenters' request that we implement the proposed adjustment in a non-budget neutral manner, we note that the equitable adjustment authority at section 1833(t)(2)(E) requires that any adjustments made under it be budget neutral.

Furthermore, we note that some commenters alleged that CMS is effectively removing 1 year of pass-through data with their decision to use CY 2019 as opposed to CY 2020 data for ratesetting. We note that CMS is required to provide between 2 and 3 years of pass-through payment status and that each drug, device and biological will have had at least 3 years of pass-through status under our proposal. We will continue to assess this issue as it relates to pass-through status and ratesetting in future years.

After considering the public comments, we are finalizing our proposal to utilize our equitable adjustment authority to pay separately for the remainder of CY 2022 for the device category, drugs, and biologicals with pass-through status that expires between December 31, 2021 and September 30, 2022.

XI. CY 2022 OPPS Payment Status and Comment Indicators

A. CY 2022 OPPS Payment Status Indicator Definitions

Payment status indicators (SIs) that we assign to HCPCS codes and APCs serve an important role in determining payment for services under the OPPS. They indicate whether a service represented by a HCPCS code is payable under the OPPS or another payment system, and also whether particular OPPS policies apply to the code.

For CY 2022, we did not propose to make any changes to the existing definitions of status indicators that were listed in Addendum D1 to the CY 2021 OPPS/ASC final rule with comment period available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices .

We did not receive any comments on the proposed definitions of the OPPS payment status indicators or their definitions for 2022. We believe that the existing definitions of the OPPS status indicators will continue to be appropriate for CY 2022. Therefore, we are finalizing those definitions without modification for CY 2022.

The complete list of payment status indicators and their definitions that would apply for CY 2022 is displayed in Addendum D1 to the CY 2022 OPPS/ASC final rule with comment period, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html .

CY 2022 payment status indicator assignments for APCs and HCPCS codes are shown in Addendum A and Addendum B, respectively, to the CY 2022 OPPS/ASC final rule with comment period, which are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html .

B. CY 2022 Comment Indicator Definitions

In the CY 2022 OPPS/ASC proposed rule, we proposed to use four comment indicators for the CY 2022 OPPS. These comment indicators, “CH”, “NC”, “NI”, and “NP”, are in effect for CY 2021 and we proposed to continue their use in CY 2022. The proposed CY 2022 OPPS comment indicators are as follows:

• “CH”—Active HCPCS code in current and next calendar year, status indicator and/or APC assignment has changed; or active HCPCS code that will be discontinued at the end of the current calendar year.

• “NC”—New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year, as compared to current calendar year for which we requested comments in the proposed rule, final APC assignment; comments will not be accepted on the final APC assignment for the new code.

• “NI”—New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year, as compared to current calendar year, interim APC assignment; comments will be accepted on the interim APC assignment for the new code.

• “NP”—New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year, as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code.

The definitions of the OPPS comment indicators for CY 2022 are listed in Addendum D2 to the CY 2022 OPPS/ASC final rule with comment period, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html .

We did not receive any comments on the proposed definitions of the OPPS comment indicators for 2022.

We believe that the existing CY 2021 definitions of the OPPS comment indicators continue to be appropriate for CY 2022. Therefore, we are finalizing those definitions without modification for CY 2022.

XII. MedPAC Recommendations

The Medicare Payment Advisory Commission (MedPAC) was established under section 1805 of the Act in large part to advise the U.S. Congress on issues affecting the Medicare program. As required under the statute, MedPAC submits reports to the Congress no later than March and June of each year that present its Medicare payment policy recommendations. The March report typically provides discussion of Medicare payment policy across different payment systems and the June report typically discusses selected Medicare issues. We are including this section to make stakeholders aware of certain MedPAC recommendations for the OPPS and ASC payment systems as discussed in its March 2021 report.

A. OPPS Payment Rates Update

The March 2021 MedPAC “Report to the Congress: Medicare Payment Policy,” recommended that Congress update Medicare OPPS payment rates by 2 percent, with the difference between this and the update amount specified in current law to be used to increase payments in a new suggested Medicare quality program, the “Hospital Value Incentive Program (HVIP).” We refer readers to the March 2021 report for a complete discussion of these recommendations. We appreciate MedPAC's recommendations, but as MedPAC acknowledged in its March 2021 report, the Congress would need to change current law to enable us to implement its recommendations. Comments received from MedPAC for other OPPS policies are discussed in the applicable sections of this final rule with comment period.

B. ASC Conversion Factor Update

In the March 2021 MedPAC “Report to the Congress: Medicare Payment Policy,” MedPAC found that, based on its analysis of indicators of payment adequacy, the number of ASCs had increased, beneficiaries' use of ASCs had increased, and ASC access to capital has been adequate. As a result, for CY 2022, MedPAC stated that payments to ASCs are adequate and recommended that, in the absence of cost report data, no payment update should be given for CY 2022 (that is, the update factor would be zero percent).

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59079), we adopted a policy, which we codified at 42 CFR 416.171(a)(2), to apply the productivity-adjusted hospital market basket update to ASC payment system rates for an interim period of 5 years. We refer readers to the CY 2019 OPPS/ASC final rule with comment period for complete details regarding our policy to use the productivity-adjusted hospital market basket update for the ASC payment system for CY 2019 through CY 2023. Therefore, consistent with our policy for the ASC payment system, as discussed in section XIII.G. of the CY 2022 OPPS/ASC proposed rule, we proposed to apply a 2.3 percent productivity-adjusted hospital market basket update factor to the CY 2021 ASC conversion factor for ASCs meeting the quality reporting requirements to determine the CY 2022 ASC payment amounts. The final CY 2022 ASC conversion factor for ASCs meeting quality reporting requirements and the final hospital market basket update factor are discussed in section XIII. of this final rule with comment period.

C. ASC Cost Data

In the March 2021 MedPAC “Report to the Congress: Medicare Payment Policy,” MedPAC recommended that Congress require ASCs to report cost data to enable the Commission to examine the growth of ASCs' costs over time and analyze Medicare payments relative to the costs of efficient providers, and that CMS could use ASC cost data to examine whether an existing Medicare price index is an appropriate proxy for ASC costs or whether an ASC-specific market basket should be developed. Further, MedPAC suggested that CMS could limit the scope of the cost reporting system to minimize administrative burden on ASCs and the program but should make cost reporting a condition of ASC participation in the Medicare program.

While we recognize that the submission of cost data could place additional administrative burden on most ASCs, and we did not propose any cost reporting requirements for ASCs in the CY 2022 OPPS/ASC proposed rule, we are interested in public comment on methods that would mitigate the burden of reporting costs on ASCs while also collecting enough data to reliably use such data in the determination of ASC costs. Such cost data would be beneficial in establishing an ASC-specific market basket index for updating payment rates under the ASC payment system.

Comment: MedPAC reiterated its previous recommendation and suggested that CMS should collect cost data from ASCs to set ASC payment rates that accurately reflect the costs of efficient providers and eliminate payment misalignments that exist as well as inform decisions about annual payment rate updates to the ASC payment system. MedPAC stated that it is feasible for ASCs to provide cost information and that smaller providers, such as hospices, currently provide such information to CMS. MedPAC suggested CMS could create a streamlined process of limited cost data with limited cost variables rather than a formal, and more time-consuming, cost report.

Other commenters suggested that CMS work closely with industry associations in developing the methodology for cost reporting. An ASC industry association suggested that CMS recognize that cost experience can differ greatly depending on factors such as the size of the facility, location, and the specialties served. Further, the ASC association suggested that if CMS were to collect ASC cost reports that we consider developing a single market basket update that could be applied to both ASCs as well as HOPDs.

Response: We appreciate MedPAC's comment regarding cost submission and feedback submitted by other commenters and will take them into consideration in future rulemaking. While we did not propose any cost reporting requirements for CY 2022, the comments we did receive are helpful as we continue to explore methods for obtaining cost information in a manner that does not place undue burden on ASCs.

Comments received from MedPAC for other ASC payment system policies are discussed in the applicable sections of this final rule with comment period. The full March 2021 MedPAC Report to Congress can be downloaded from MedPAC's website at: http://www.medpac.gov .

XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System

A. Background

1. Legislative History, Statutory Authority, and Prior Rulemaking for the ASC Payment System

For a detailed discussion of the legislative history and statutory authority related to payments to ASCs under Medicare, we refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377 through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 32292). For a discussion of prior rulemaking on the ASC payment system, we refer readers to the CYs 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, and 2021 OPPS/ASC final rules with comment period (76 FR 74378 through 74379; 77 FR 68434 through 68467; 78 FR 75064 through 75090; 79 FR 66915 through 66940; 80 FR 70474 through 70502; 81 FR 79732 through 79753; 82 FR 59401 through 59424; 83 FR 59028 through 59080; 84 FR 61370 through 61410, and 85 FR 86121 through 86179, respectively).

2. Policies Governing Changes to the Lists of Codes and Payment Rates for ASC Covered Surgical Procedures and Covered Ancillary Services

Under §§ 416.2 and 416.166 of the Medicare regulations, subject to certain exclusions, covered surgical procedures in an ASC are surgical procedures that are separately paid under the OPPS, are not designated as requiring inpatient care under § 419.22(n) as of December 31, 2020, are not only able to be reported using a CPT unlisted surgical procedure code, and are not otherwise excluded under § 411.15.

In previous years, we identified surgical procedures as those described by Category I CPT codes in the surgical range from 10000 through 69999 as well as those Category III CPT codes and Level II HCPCS codes that directly crosswalk or are clinically similar to procedures in the CPT surgical range that we have determined do not pose a significant safety risk, that we would not expect to require an overnight stay when performed in ASCs, and that are separately paid under the OPPS (72 FR 42478).

Covered ancillary services are specified in § 416.164(b) and, as stated previously, are eligible for separate ASC payment. As provided at § 416.164(b), we make separate ASC payments for the following ancillary items and services when they are provided integral to ASC covered surgical procedures: (1) Brachytherapy sources; (2) certain implantable items that have pass-through payment status under the OPPS; (3) certain items and services that we designate as contractor-priced, including, but not limited to, procurement of corneal tissue; (4) certain drugs and biologicals for which separate payment is allowed under the OPPS; (5) certain radiology services for which separate payment is allowed under the OPPS; and (6) non-opioid pain management drugs that function as a supply when used in a surgical procedure. Payment for ancillary items and services that are not paid separately under the ASC payment system is packaged into the ASC payment for the covered surgical procedure.

We update the lists of, and payment rates for, covered surgical procedures and covered ancillary services in ASCs in conjunction with the annual proposed and final rulemaking process to update the OPPS and the ASC payment system (§ 416.173; 72 FR 42535). We base ASC payment and policies for most covered surgical procedures, drugs, biologicals, and certain other covered ancillary services on the OPPS payment policies, and we use quarterly change requests (CRs) to update services paid for under the OPPS. We also provide quarterly update CRs for ASC covered surgical procedures and covered ancillary services throughout the year (January, April, July, and October). We release new and revised Level II HCPCS codes and recognize the release of new and revised CPT codes by the American Medical Association (AMA) and make these codes effective (that is, the codes are recognized on Medicare claims) via these ASC quarterly update CRs. We recognize the release of new and revised Category III CPT codes in the July and January CRs. These updates implement newly created and revised Level II HCPCS and Category III CPT codes for ASC payments and update the payment rates for separately paid drugs and biologicals based on the most recently submitted ASP data. New and revised Category I CPT codes, except vaccine codes, are released only once a year, and are implemented only through the January quarterly CR update. New and revised Category I CPT vaccine codes are released twice a year and are implemented through the January and July quarterly CR updates. We refer readers to Table 41 in the CY 2012 OPPS/ASC proposed rule for an example of how this process is used to update HCPCS and CPT codes, which we finalized in the CY 2012 OPPS/ASC final rule with comment period (76 FR 42291; 76 FR 74380 through 74384).

In our annual updates to the ASC list of, and payment rates for, covered surgical procedures and covered ancillary services, we undertake a review of excluded surgical procedures, new codes, and codes with revised descriptors, to identify any that we believe meet the criteria for designation as ASC covered surgical procedures or covered ancillary services. Updating the lists of ASC covered surgical procedures and covered ancillary services, as well as their payment rates, in association with the annual OPPS rulemaking cycle is particularly important because the OPPS relative payment weights and, in some cases, payment rates, are used as the basis for the payment of many covered surgical procedures and covered ancillary services under the revised ASC payment system. This joint update process ensures that the ASC updates occur in a regular, predictable, and timely manner.

3. Definition of ASC Covered Surgical Procedures

Since the implementation of the ASC prospective payment system, we have historically defined a “surgical” procedure under the payment system as any procedure described within the range of Category I CPT codes that the CPT Editorial Panel of the AMA defines as “surgery” (CPT codes 10000 through 69999) (72 FR 42478). We also have included as “surgical,” procedures that are described by Level II HCPCS codes or by Category III CPT codes that directly crosswalk or are clinically similar to procedures in the CPT surgical range.

As we noted in the August 7, 2007 final rule that implemented the revised ASC payment system, using this definition of surgery would exclude from ASC payment certain invasive, “surgery-like” procedures, such as cardiac catheterization or certain radiation treatment services that are assigned codes outside the CPT surgical range (72 FR 42477). We stated in that final rule that we believed continuing to rely on the CPT definition of surgery is administratively straightforward, is logically related to the categorization of services by physician experts who both establish the codes and perform the procedures, and is consistent with a policy to allow ASC payment for all outpatient surgical procedures.

However, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59029 through 59030), after consideration of public comments received in response to the CY 2019 OPPS/ASC proposed rule and earlier OPPS/ASC rulemaking cycles, we revised our definition of a surgical procedure under the ASC payment system. In that final rule, we defined a surgical procedure under the ASC payment system as any procedure described within the range of Category I CPT codes that the CPT Editorial Panel of the AMA defines as “surgery” (CPT codes 10000 through 69999) (72 FR 42476), as well as procedures that are described by Level II HCPCS codes or by Category I CPT codes or by Category III CPT codes that directly crosswalk or are clinically similar to procedures in the CPT surgical range that we determined met the general standards established in previous years for addition to the ASC CPL. These criteria included that a procedure is not expected to pose a significant risk to beneficiary safety when performed in an ASC, that standard medical practice dictates that the beneficiary would not typically be expected to require an overnight stay following the procedure, and that the procedure is separately paid under the OPPS. In CY 2021, we revised the definition of covered surgical procedures to surgical procedures specified by the Secretary that are separately paid under the OPPS, are not designated as requiring inpatient care under § 419.22(n) as of December 31, 2020, are not only able to be reported using a CPT unlisted surgical procedure code, and are not otherwise excluded under § 411.15 (85 FR 86153). As discussed in section XIII.C.1.d. of this final rule with comment period (below), we are finalizing our proposal for CY 2022 to revise the language in the regulation text at § 416.166 and reinstate the general standards and exclusion criteria in place prior to CY 2021.

B. ASC Treatment of New and Revised Codes

1. Background on Current Process for Recognizing New and Revised HCPCS Codes Payment for ASC procedures, services, and items are generally based on medical billing codes, specifically, HCPCS codes, that are reported on ASC claims. HCPCS codes are used to report procedures, services, items, and supplies under the ASC payment system. Specifically, we recognize the following codes on ASC claims:

• Category I CPT codes, which describe surgical procedures, diagnostic and therapeutic services, and vaccine codes;
• Category III CPT codes, which describe new and emerging technologies, services, and procedures; and
• Level II HCPCS codes (also known as alpha-numeric codes), which are used primarily to identify drugs, devices, supplies, temporary procedures, and services not described by CPT codes.

We finalized a policy in the August 2, 2007 ASC final rule (72 FR 42533 through 42535) to evaluate each year all new and revised Category I and Category III CPT codes and Level II HCPCS codes that describe surgical procedures, and to make preliminary determinations during the annual OPPS/ASC rulemaking process regarding whether or not they meet the criteria for payment in the ASC setting as covered surgical procedures and, if so, whether or not they are office-based procedures. In addition, we identify new and revised codes as ASC covered ancillary services based upon the final payment policies of the revised ASC payment system. In prior rulemakings, we refer to this process as recognizing new codes. However, this process has always involved the recognition of new and revised codes. We consider revised codes to be new when they have substantial revision to their code descriptors that necessitate a change in the current ASC payment indicator. We refer to these codes as new and revised in the CY 2022 OPPS/ASC proposed rule.

We have separated our discussion below based on when the codes are released and whether we proposed to solicit public comments in the CY 2022 OPPS/ASC proposed rule (and respond to those comments in the CY 2022 OPPS/ASC final rule with comment period) or whether we will be soliciting public comments in the CY 2022 OPPS/ASC final rule with comment period (and responding to those comments in the CY 2023 OPPS/ASC final rule with comment period).

We note that we sought public comments in the CY 2021 OPPS/ASC final rule with comment period (85 FR 85866) on the new and revised Level II HCPCS codes effective October 1, 2020 or January 1, 2021. These new and revised codes were flagged with comment indicator “NI” in Addenda AA and BB to the CY 2021 OPPS/ASC final rule with comment period to indicate that we were assigning them an interim payment status and payment rate, if applicable, which were subject to public comment following publication of the CY 2021 OPPS/ASC final rule with comment period. In the CY 2022 OPPS/ASC proposed rule, we stated that we will finalize the treatment of these codes under the ASC payment system in this CY 2022 OPPS/ASC final rule with comment period.

2. April 2021 HCPCS Codes for Which We Solicited Public Comments in the Proposed Rule

For the April 2021 update, there was one new CPT code and there were 11 new Level II HCPCS codes. In the April 2021 ASC quarterly update (Transmittal 10702, CR 12183, dated April 1, 2021), we added 11 new Level II HCPCS codes to the list of ASC covered surgical procedures and the list of covered ancillary services. Table 39 of the CY 2022 OPPS/ASC proposed rule displayed the new Level II HCPCS codes that were implemented April 1, 2021, along with their final payment indicators for CY 2022.

We invited public comments on the proposed payment indicators and payment rates for the new HCPCS codes that were recognized as ASC covered surgical procedures and ancillary services in April 2021 through the quarterly update CRs, as listed in Table 53. We proposed to finalize their payment indicators in this CY 2022 OPPS/ASC final rule with comment period.

We did not receive any comments on the proposed ASC payment indicator assignments for the new Level II HCPCS codes implemented in April 2021 and we are finalizing the proposed ASC payment indicator assignments for these codes, as indicated in Table 53. We note that several of the temporary drug HCPCS C-codes have been replaced with permanent drug HCPCS J-codes, effective January 1, 2022. Their replacement codes are also listed in Table 53.

The final comment indicators, payment indicators and payment rates, where applicable, for these April 2021 codes can be found in Addendum BB to this CY 2022 OPPS/ASC final rule with comment period rule (which is available via the internet on the CMS website). The list of final ASC payment indicators and corresponding definitions can be found in Addendum DD1 to the CY 2022 OPPS/ASC final rule. These new codes that were effective April 1, 2021, were assigned to comment indicator “NP” in Addendum BB to the CY 2022 OPPS/ASC proposed rule to indicate that the codes were assigned to an interim APC assignment and that comments would be accepted on their interim APC assignments. Also, the list of final comment indicators and definitions used under the ASC payment system can be found in Addendum DD2 in this final rule with comment period. We note that ASC Addenda AA, BB, DD1, and DD2 are available via the internet on the CMS website.

3. July 2021 HCPCS Codes for Which We Solicited Public Comments in the Proposed Rule

In the July 2021 ASC quarterly update (Transmittal 10858, Change Request 12341, dated June 25, 2021), we added several separately payable CPT and Level II HCPCS codes to the list of covered surgical procedures and ancillary services. Table 40 of the CY 2022 OPPS/ASC proposed rule displayed the new HCPCS codes that were effective July 1, 2021. In addition, through the July 2021 quarterly update CR, we added 11 new Category III CPT codes to the list of ASC covered ancillary services, effective July 1, 2021. These codes were listed in Table 41 of the CY 2021 OPPS/ASC proposed rule, along with the proposed comment indicators and payment indicators.

We invited public comments on the proposed comment indicators and payment indicators for the new Level II HCPCS codes newly recognized as ASC covered surgical procedures and covered ancillary services and the new Category III CPT codes for covered ancillary services beginning in July 2021 through the quarterly update CRs, as listed in Tables 40 and 41 of the CY 2022 OPPS/ASC proposed rule. We proposed to finalize the proposed payment indicators in this final rule with comment period.

We did not receive any public comments on the proposed ASC payment indicator assignments for the new Category III CPT codes or Level II HCPCS codes implemented in July 2021 and are finalizing the proposed ASC payment indicator assignments for these codes, as indicated in Tables 54 and 55. We note that several of the HCPCS C-codes have been replaced with HCPCS J-codes, effective January 1, 2022. Their replacement codes are listed in Table 54. The final CY 2022 payment rates for these new codes can be found in Addenda AA and BB to this final rule with comment period.

The list of final ASC payment indicators and corresponding definitions can be found in Addendum DD1 to this final rule with comment period (which is available via the internet on the CMS website). These new codes that were effective July 1, 2021, were assigned comment indicator “NP” in Addendum BB to the CY 2022 OPPS/ASC proposed rule to indicate that the codes were assigned to an interim APC assignment and that comments would be accepted on those assignments. The list of final comment indicators and definitions used under the ASC payment system can be found in Addendum DD2 to the CY 2022 OPPS/ASC final rule. We note that ASC Addenda AA, BB, DD1, and DD2 are available via the internet on the CMS website.

4. October 2021 HCPCS Codes for Which We Are Soliciting Public Comments in This CY 2022 OPPS/ASC Final Rule With Comment Period

In the past, we released new and revised HCPCS codes that are effective October 1 through the October OPPS quarterly update CRs and incorporated these new codes in the final rule with comment period.

For CY 2022, consistent with our established policy, we proposed that the Level II HCPCS codes that will be effective October 1, 2021, would be flagged with comment indicator “NI” in Addendum B to this final rule with comment period to indicate that we have assigned the codes an interim OPPS payment status for CY 2022. We did not receive any public comments regarding this proposed process; and, for CY 2022, we are finalizing our proposal, without modification, to continue our established process for recognizing and soliciting public comments on new Level II HCPCS codes that become effective on October 1, 2021. We note all codes flagged with comment indicator “NI” in ASC Addenda.

AA and BB to this final rule with comment period, including the codes effective October 1, 2021, will be assigned an interim payment status to indicate that they are subject to public comment.

In the October 2021 ASC quarterly update (Transmittal 11004, Change Request 12451, dated September 17, 2021), we added several separately payable Level II HCPCS codes to the list of covered surgical procedures and ancillary services. We note that because many of the new drug HCPCS J codes effective October 1 have predecessor HCPCS C-codes, they are not completely new to the ASC payment system, and have been paid separately under their predecessor codes. Table 56 shows the interim ASC payment indicators for the new codes effective October 1, 2021, with no predecessor codes. The final comment indicators, payment indicators, and payment rates, where applicable, for these October 2021 codes can be found in Addendum AA and Addendum BB to this CY 2022 OPPS/ASC final rule with comment period rule (which is available via the internet on the CMS website). Because these codes were effective October 1, 2021, we were not able to include them in the CY 2022 OPPS/ASC proposed rule that appeared in the Federal Register on August 4, 2021. We note that the definitions for the ASC payment indicators can be found in Addendum DD1 to this final rule with comment period. In addition, the definitions for the ASC comment indicators can be found in Addendum DD2 to this final rule with comment period. We are inviting public comments in this final rule with comment period for the codes listed in Table 56 on the interim payment indicators, which would then be finalized in the CY 2023 OPPS/ASC final rule with comment period.

5. January 2022 HCPCS Codes

a. Level II HCPCS Codes for Which We Are Soliciting Public Comments in This CY 2022 OPPS/ASC Final Rule With Comment Period

As has been our practice in the past, we incorporate those new Level II HCPCS codes that are effective January 1 in the final rule with comment period, thereby updating the ASC payment system for the calendar year. We note that unlike the CPT codes that are effective January 1 and are included in the OPPS/ASC proposed rules, and except for the G-codes listed in Addendum O to the CY 2022 OPPS/ASC proposed rule, most Level II HCPCS codes are not released until sometime around November to be effective January 1. Because these codes are not available until November, we are unable to include them in the OPPS/ASC proposed rules, however, the codes are flagged with comment indicator “NI” in ASC Addenda AA and BB to this final rule with comment period to indicate that we are assigning them an interim payment status, which is subject to public comment. Therefore, as we stated in the CY 2022 OPPS/ASC proposed rule, these Level II HCPCS codes that will be effective January 1, 2022 will be released to the public through the January 2022 ASC Update CR and included on the CMS HCPCS website and in this final rule with comment period.

In addition, for CY 2022, we proposed to continue our established policy of assigning comment indicator “NI” in Addendum AA and Addendum BB to the OPPS/ASC final rule with comment period to the new Level II HCPCS codes that will be effective January 1, 2022, to indicate that we are assigning them an interim payment indicator, which is subject to public comment. We are inviting public comments in this final rule with comment period on the payment indicator assignments, which would then be finalized in the CY 2023 OPPS/ASC final rule with comment period.

b. CPT Codes for Which We Solicited Public Comments in the CY 2022 OPPS/ASC Proposed Rule

For new and revised CPT codes effective January 1, 2022, that were received in time to be included in the CY 2022 OPPS/ASC proposed rule, we proposed the appropriate payment indicator assignments, and solicited public comments on those assignments. We stated we would accept comments and finalize the payment indicators in this final rule with comment period. For those new/revised CPT codes that were received too late for inclusion of the CY 2022 OPPS/ASC proposed rule, we stated that we may either make interim final assignments in this final rule with comment period or use HCPCS G codes that mirror the predecessor CPT codes and retain the current APC and status indicator assignments for a year until we can propose APC and status indicator assignments in the following year's rulemaking cycle.

For the CY 2022 ASC update, the new and revised Category I and III CPT codes that will be effective on January 1, 2022, can be found in ASC Addendum AA and Addendum BB to this final rule with comment period (which are available via the internet on the CMS website). The CPT codes are assigned to comment indicator “NP” to indicate that the code is new for the next calendar year or the code is an existing code with substantial revision to its code descriptor in the next calendar year as compared to the current calendar year and that comments will be accepted on the proposed payment indicator. Further, we remind readers that the CPT code descriptors that appear in Addendum AA and Addendum BB are short descriptors and do not describe the complete procedure, service, or item described by the CPT code. Therefore, we included the 5-digit placeholder codes and their long descriptors for the new and revised CY 2022 CPT codes in Addendum O to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website) so that the public could adequately comment on our proposed payment indicator assignments. The 5-digit placeholder codes were in Addendum O to the CY 2022 OPPS/ASC proposed rule, specifically under the column labeled “CY 2021 OPPS/ASC Proposed Rule 5-Digit Placeholder Code.” The final CPT code numbers are included in this final rule with comment period, and can be found in Addendum AA, Addendum BB, and Addendum O.

In summary, we solicited public comments on the proposed CY 2022 payment indicators for the new and revised Category I and III CPT codes that will be effective January 1, 2022. Because these codes are listed in Addenda AA and Addendum BB with short descriptors only, we listed them again in Addendum O with the long descriptors. We also proposed to finalize the payment indicator for these codes (with their final CPT code numbers) in this final rule with comment period. The final payment indicator and comment indicator for these codes can be found in Addendum AA and BB to this final rule with comment period. The list of ASC payment indicators and corresponding definitions can be found in Addendum DD1 to this final rule with comment period. These new CPT codes that will be effective January 1, 2022, were assigned to comment indicator “NP” in Addendum AA and BB to the CY 2022 OPPS/ASC proposed rule to indicate that the codes were assigned to an interim payment indicator and that comments would be accepted on their interim ASC payment assignments. Also, the list of comment indicators and definitions used under the ASC can be found in Addendum DD2 of this final rule with comment period. We note that ASC Addenda AA, BB, DD1, and DD2 are available via the internet on the CMS website.

Finally, in Table 57 below, we summarize our process for updating codes through our ASC quarterly update CRs, seeking public comments, and finalizing the treatment of these new codes under the ASC payment system.

C. Update to the List of ASC Covered Surgical Procedures and Covered Ancillary Services

1. Covered Surgical Procedures

a. Covered Surgical Procedures Designated as Office-Based

(1) Background

In the August 2, 2007 ASC final rule, we finalized our policy to designate as “office-based” those procedures that are added to the ASC Covered Procedures List (CPL) in CY 2008 or later years that we determine are furnished predominantly (more than 50 percent of the time) in physicians' offices based on consideration of the most recent available volume and utilization data for each individual procedure code and/or, if appropriate, the clinical characteristics, utilization, and volume of related codes. In that rule, we also finalized our policy to exempt all procedures on the CY 2007 ASC list from application of the office-based classification (72 FR 42512). The procedures that were added to the ASC CPL beginning in CY 2008 that we determined were office-based were identified in Addendum AA to that rule with payment indicator “P2” (Office-based surgical procedure added to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs; payment based on OPPS relative payment weight); “P3” (Office-based surgical procedures added to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE RVUs); or “R2” (Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE RVUs; payment based on OPPS relative payment weight), depending on whether we estimated the procedure would be paid according to the ASC standard ratesetting methodology based on its OPPS relative payment weight or at the MPFS nonfacility PE RVU-based amount.

Consistent with our final policy to annually review and update the ASC CPL to include all covered surgical procedures eligible for payment in ASCs, each year we identify covered surgical procedures as either temporarily office-based (these are new procedure codes with little or no utilization data that we have determined are clinically similar to other procedures that are permanently office-based), permanently office-based, or nonoffice-based, after taking into account updated volume and utilization data.

Comment: A number of commenters requested that we modify our approach to incorporate PFS nonfacility PE RVUs in response to our proposal to update clinical labor pricing data in the CY 2022 PFS proposed rule. These commenters contended that our proposal to update clinical labor pricing data would cause significant declines in ASC payment for certain office-based services. The commenters recommended we delay or transition the proposed changes in nonfacility PE RVUs under the ASC payment system.

Response: We are not accepting this recommendation. While we acknowledge that certain proposals under the PFS may have a downstream impact on ASC payment rates for office-based procedures, our office-based policy is meant to achieve payment parity between the ASC and physician office settings. Therefore, we believe ASC payment rates for office-based procedures should be consistent with the PFS payment rates where nonfacility PE RVU data is available. Additionally, under the PFS, we are finalizing a policy to update clinical labor pricing over a four-year transition. For more information on the proposed clinical labor pricing update under the PFS, see 86 FR 39118 through 39123.

(2) Changes for CY 2022 to Covered Surgical Procedures Designated as Office-Based

In developing the CY 2022 OPPS/ASC proposed rule, we followed our policy to annually review and update the covered surgical procedures for which ASC payment is made and to identify new procedures that may be appropriate for ASC payment (described in detail in section XIII.C.1.d. of this final rule with comment period), including their potential designation as office-based. Historically, we would also review the most recent claims volume and utilization data (CY 2020 claims) and the clinical characteristics for all covered surgical procedures that are currently assigned a payment indicator in CY 2020 of “G2” (Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment weight), as well as for those procedures assigned one of the temporary office-based payment indicators, specifically “P2”, “P3”, or “R2” in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86131 through 86139). However, as discussed in section X.E of the CY 2022 OPPS/ASC proposed rule (86 FR 42188 through 42190), given our concerns with CY 2020 claims data as a result of the PHE, we did not propose to review the most recent claims volume and utilization data from CY 2020 claims and instead we proposed not to assign permanent office-based designations for CY 2022 to any covered surgical procedure currently assigned a payment indicator of “G2” (Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment weight).

Similarly, we also proposed not to use the most recent claims volume and utilization data and other information for procedures designated as temporarily office-based and temporarily assigned one of the office-based payment indicators, specifically “P2,” “P3” or “R2”. Instead, we proposed to continue to designate these procedures, shown in Table 58 below, as temporarily office-based for CY 2022. CPT code 0551T (Transperineal periurethral balloon continence device; adjustment of balloon(s) fluid volume) is removed from Table 58 below as this code is being deleted effective January 1, 2022. The procedures we proposed to designate as temporarily office-based for CY 2022 are identified with an asterisk in Addendum AA to this final rule with comment period (which is available via the internet on the CMS website).

As discussed in the August 2, 2007 ASC final rule revised ASC payment system final rule (72 FR 42533 through 42535), we finalized our policy to designate certain new surgical procedures as temporarily office-based until adequate claims data are available to assess their predominant sites of service, whereupon if we confirm their office-based nature, the procedures would be permanently assigned to the list of office-based procedures. In the absence of claims data, we stated we would use other available information, including our clinical advisors' judgment, predecessor CPT and Level II HCPCS codes, information submitted by representatives of specialty societies and professional associations, and information submitted by commenters during the public comment period.

For CY 2022, we proposed to designate two new CY 2022 CPT codes for ASC covered surgical procedures as temporarily office-based. After reviewing the clinical characteristics, utilization, and volume of related procedure codes, we determined that the procedures listed in Table 59 would be predominantly performed in physicians' offices. We believe the procedure described by CPT code 42975 (Drug-induced sleep endoscopy, with dynamic evaluation of velum, pharynx, tongue base, and larynx for evaluation of sleep-disordered breathing, flexible, diagnostic) is similar to CPT code 31505 (Laryngoscopy, indirect; diagnostic (separate procedure)) which is currently on the list of ASC covered surgical procedures and was assigned a final payment indicator of “P3”—Office-based surgical procedure added to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE RVUs—in CY 2021. Additionally, we believe the procedure described by CPT code 53454 (Periurethral transperineal adjustable balloon continence device; percutaneous adjustment of balloon(s) fluid volume) is similar to CPT code 0551T (Transperineal periurethral balloon continence device; adjustment of balloon(s) fluid volume), which is currently on the list of ASC covered surgical procedures and was assigned a final payment indicator of “R2”—Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE RVUs; payment based on OPPS relative payment weight—for CY 2021. As such, we proposed to add CPT codes 42975 (CMS placeholder code 42XXX) and 53454 (CMS placeholder code 53XX4) in Table 59 to the list of ASC covered surgical procedures designated as temporarily office-based for CY 2022.

Comment: One commenter recommended that we not assign office-based payment indicator “P3” to CPT code 64640 (Destruction by neurolytic agent; other peripheral nerve or branch) and suggested this procedure is not predominantly performed in the office setting.

Response: CPT code 64640 has been assigned permanent office-based status since CY 2008. With the exceptions of procedures assigned temporary office-based status and calendar years for which office-based procedures meet the criteria to be assigned device-intensive status, office-based procedures are not eligible to remove their office-based designation. As discussed previously, these are permanent assignments. While we acknowledge that certain office-based procedures can become more predominantly performed in higher cost settings, such as a hospital outpatient department, we do not believe this suggests that our office-based payment policy is hindering access to care for these procedures in an ASC setting.

Comment: One commenter recommended we reevaluate the permanent office-based designation for CPT code 42975. The commenter suggested that this procedure is more similar to CPT code 31546 (Laryngoscopy, direct, operative, with operating microscope or telescope, with submucosal removal of non-neoplastic lesion(s) of vocal cord; reconstruction with graft(s) (includes obtaining autograft))—a procedure that is not predominantly performed in a physician office setting.

Response: We are not accepting this recommendation. As discussed previously, we believe the procedure described by CPT code 42975 is similar to CPT code 31505 (Laryngoscopy, indirect; diagnostic (separate procedure)), which is predominantly performed in the physician office setting and is currently on the list of ASC covered surgical procedures and was assigned a final payment indicator of “P3”—Office-based surgical procedure added to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE RVUs—in CY 2021.

After reviewing the public comments we received, we are finalizing our proposal, without modification, to designate the procedures shown in Tables 58 and 59 above as temporarily office-based. The procedures for which the office-based designation for CY 2022 is temporary are indicated by an asterisk in Addendum AA to this final rule with comment period (which is available via the internet on the CMS website).

b. Device-Intensive ASC Covered Surgical Procedures

(1) Background

We refer readers to the CY 2019 OPPS/ASC final rule with comment period (83 FR 59040 through 59041), for a summary of our existing policies regarding ASC covered surgical procedures that are designated as device-intensive.

(2) Changes to List of ASC Covered Surgical Procedures Designated as Device-Intensive for CY 2022

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 590401 through 59043), for CY 2019, we modified our criteria for device-intensive procedures to better capture costs for procedures with significant device costs. We adopted a policy to allow procedures that involve surgically inserted or implanted, high-cost, single-use devices to qualify as device-intensive procedures. In addition, we modified our criteria to lower the device offset percentage threshold from 40 percent to 30 percent. Specifically, for CY 2019 and subsequent years, we adopted a policy that device-intensive procedures would be subject to the following criteria:

• All procedures must involve implantable devices assigned a CPT or HCPCS code;
• The required devices (including single-use devices) must be surgically inserted or implanted; and
• The device offset amount must be significant, which is defined as exceeding 30 percent of the procedure's mean cost. Corresponding to this change in the cost criterion we adopted a policy that the default device offset for new codes that describe procedures that involve the implantation of medical devices will be 31 percent beginning in CY 2019. For new codes describing procedures that are payable when furnished in an ASC and involve the implantation of a medical device, we adopted a policy that the default device offset would be applied in the same manner as the policy we adopted in section IV.B.2. of the CY 2019 OPPS/ASC final rule with comment period (83 FR 58944 through 58948). We amended § 416.171(b)(2) of the regulations to reflect these new device criteria.

In addition, as also adopted in section IV.B.2. of CY 2019 OPPS/ASC final rule with comment period, to further align the device-intensive policy with the criteria used for device pass-through status, we specified, for CY 2019 and subsequent years, that for purposes of satisfying the device-intensive criteria, a device-intensive procedure must involve a device that:

• Has received FDA marketing authorization, has received an FDA investigational device exemption (IDE) and has been classified as a Category B device by FDA in accordance with 42 CFR 405.203 through 405.207 and 405.211 through 405.215, or meets another appropriate FDA exemption from premarket review;
• Is an integral part of the service furnished;
• Is used for one patient only;
• Comes in contact with human tissue;
• Is surgically implanted or inserted (either permanently or temporarily); and
• Is not any of the following:

++ Equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or

++ A material or supply furnished incident to a service (for example, a suture, customized surgical kit, scalpel, or clip, other than a radiological site marker).

Based on these criteria, for 2022, we proposed to update the ASC CPL to indicate procedures that are eligible for payment according to our device-intensive procedure payment methodology, based on the proposed individual HCPCS code device-offset percentages using the CY 2019 OPPS claims and cost report data available for the CY 2022 OPPS/ASC proposed rule.

The ASC covered surgical procedures that we proposed to designate as device-intensive, and therefore subject to the device-intensive procedure payment methodology for CY 2022, are assigned payment indicator “J8” and are included in ASC Addendum AA to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website). The CPT code, the CPT code short descriptor, the proposed CY 2022 ASC payment indicator, and an indication of whether the full credit/partial credit (FB/FC) device adjustment policy would apply because the procedure is designated as device-intensive are also included in Addendum AA to the proposed rule (which is available via the internet on the CMS website).

Under current policy, the payment rate under the ASC payment system for device-intensive procedures furnished with an implantable or inserted medical device are calculated by applying the device offset percentage based on the ASC standard ratesetting methodology to the OPPS national unadjusted payment based on the ASC standard ratesetting methodology to determine the device cost included in the OPPS payment rate for a device-intensive ASC covered surgical procedure, which we then set as equal to the device portion of the national unadjusted ASC payment rate for the procedure. We calculate the service portion of the ASC payment for device intensive procedures by applying the uniform ASC conversion factor to the service (non-device) portion of the OPPS relative payment weight for the device-intensive procedure. Finally, we sum the ASC device portion and ASC service portion to establish the full payment for the device-intensive procedure under the ASC payment system (82 FR 59409).

In past rulemaking (79 FR 66924), we have stated that the device-intensive methodology for ASCs should align with the device-intensive policies under the OPPS. Further, we have stated that we do not believe that procedures are device-intensive in one setting and not in another setting. We have heard concerns from stakeholders that our methodology does not provide device-intensive status to certain procedures even though the procedures' device offset percentages are greater than our 30 percent threshold when calculated under the standard ASC ratesetting methodology. We have also heard concerns from stakeholders that procedures designated as device-intensive under the OPPS are not assigned device-intensive status under the ASC payment system even though the procedure has significant device costs.

The different ratesetting methodologies used under the OPPS and ASC payment system can create conflicts when determining device-intensive status. For example, procedures with device offset percentages greater than 30 percent under the OPPS may not have device offset percentages greater than 30 percent when calculated under the standard ASC ratesetting methodology. Under current policy, procedures must be device-intensive in the OPPS setting to be eligible for device-intensive status under the ASC payment system. However, this methodology has caused confusion among stakeholders and has denied device-intensive status to procedures with significant device costs. While we believe that device-intensive policies under the ASC payment system should align with device-intensive policies under the OPPS, we believe device-intensive status under the ASC payment system should, at a minimum, reflect a procedure's estimated device costs under the ASC standard ratesetting methodology. Therefore, for CY 2022 and subsequent years, we proposed to assign device-intensive status to procedures that involve surgically inserted or implanted, high-cost, single-use devices to qualify as device-intensive procedures if their device offset percentage exceeds 30 percent under the ASC standard ratesetting methodology, even if the procedure is not designated as device-intensive under the OPPS.

Further, in situations where a procedure is designated as device-intensive under the OPPS but the procedure's device offset percentage is below the device-intensive threshold under the standard ASC ratesetting methodology, we believe that deference should be given to the OPPS designation to address this conflict in status. Since the comprehensive ratesetting methodology under the OPPS packages a greater amount of non-device costs into the primary procedure and is typically able to use a greater number of claims in its ratesetting methodology, we believe that if a device receives OPPS device-intensive status, the device should also be device-intensive in the ASC setting, given that fewer non-device costs are generally packaged into a procedure's cost under the ASC methodology compared to the OPPS methodology. Therefore, for CY 2022 and subsequent years, we proposed that if a procedure is assigned device-intensive status under the OPPS, but has a device offset percentage below the device-intensive threshold under the standard ASC ratesetting methodology, the procedure will be assigned device-intensive status under the ASC payment system with a default device offset percentage of 31 percent.

We solicited comments on our proposed changes related to designating surgical procedures as device-intensive under the ASC payment system.

Comment: Many commenters supported our proposed changes related to designating surgical procedures as device-intensive under the ASC payment system. One commenter requested that we allow for the continuation of the default device offset percentage of 31 percent for procedures with fewer than 100 claims if the device offset percentage under the comprehensive and standard ratesetting methodology is less than 30 percent.

Response: We thank the commenters for their support of our proposal. We do not believe it would be appropriate to eliminate our device offset calculation for procedures with fewer than 100 claims because it is not our general policy to judge the accuracy of hospital charging and hospital cost reporting practices for purposes of ratesetting. Therefore, we will continue to rely on available claims data for determining device offset percentages for procedures with fewer than 100 claims.

Comment: Many commenters requested that we apply the device offset percentage for several new procedures with the predecessor code's device offset percentage based on CY 2019 claims data. These procedures include:

• The predecessor CPT code 0191T in assigning the device offset percentage for CPT code 66989 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1-stage procedure), manual or mechanical technique ( e.g., irrigation and aspiration or phacoemulsification), complex, requiring devices or techniques not generally used in routine cataract surgery ( e.g., iris expansion device, suture support for intraocular lens, or primary posterior capsulorrhexis) or performed on patients in the amblyogenic developmental stage; with insertion of intraocular ( e.g., trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more);

• The predecessor CPT code 0191T in assigning the device offset percentage for CPT code 66991 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1 stage procedure), manual or mechanical technique ( e.g., irrigation and aspiration or phacoemulsification); with insertion of intraocular ( e.g., trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more);

• The predecessor CPT code 0191T in assigning the device offset percentage for CPT code 0671T (Insertion of anterior segment aqueous drainage device into the trabecular meshwork, without external reservoir, and without concomitant cataract removal, one or more);
• The predecessor CPT code 0548T in assigning the device offset percentage for CPT code 53451 (Periurethral transperineal adjustable balloon continence device; bilateral insertion, including cystourethroscopy and imaging guidance);
• The predecessor CPT code 0549T in assigning the device offset percentage for CPT code 53452 (Periurethral transperineal adjustable balloon continence device; unilateral insertion, including cystourethroscopy and imaging guidance); and
• The predecessor HCPCS code C9752 in assigning the device offset percentage for CPT code 64628 (Thermal destruction of intraosseous basivertebral nerve, including all imaging guidance; first 2 vertebral bodies, lumbar or sacral).

Additionally, at the August 18, 2021 HOP Panel Meeting, a presenter requested that we use the predecessor CPT code 64568 (Incision for implantation of cranial nerve ( e.g., vagus nerve) neurostimulator electrode array and pulse generator) in assigning the device offset percentage for CPT code 64582 (Open implantation of hypoglossal nerve neurostimulator array, pulse generator, and distal respiratory sensor electrode or electrode array). Based on the information presented at the meeting, the HOP Panel recommended we use CPT code 64568 to assign the device offset percentage for CPT code 64582.

Response: We agree with the commenters and the HOP Panel's recommendation. We note that we inadvertently did not apply device offset percentages to the new HCPCS codes mentioned by commenters and recommended by the HOP Panel where claims data of a predecessor code was available. Therefore, we are revising the device offset percentages for these procedures for this final rule to use CY 2019 claims data from these procedures' predecessor codes.

Comment: One commenter requested that we assign HCPCS code C9778 (Colpopexy, vaginal; minimally invasive extra-peritoneal approach (sacrospinous)) device-intensive status as this procedure meets our device-intensive criteria.

Response: After further review, we agree with the commenter that HCPCS code C9778 meets our criteria for device-intensive status. We are accepting the commenter's recommendation and assigning a default device offset percentage of 31 percent to HCPCS code C9778 under the ASC payment system for CY 2022.

Comment: Commenters requested that we assign device-intensive status to:

• CPT code 0499T (Cystourethroscopy, with mechanical dilation and urethral therapeutic drug delivery for urethral stricture or stenosis, including fluoroscopy, when performed);

• CPT code 58674 (Laparoscopy, surgical, ablation of uterine fibroid(s) including intraoperative ultrasound guidance and monitoring, radiofrequency);

• CPT code 50590 (Lithotripsy, extracorporeal shock wave);

• CPT code 59200 (Insertion of cervical dilator ( e.g., laminaria, prostaglandin) (separate procedure));

• CPT code 66174 (Transluminal dilation of aqueous outflow canal; without retention of device or stent);
• CPT code 66175 (Transluminal dilation of aqueous outflow canal; with retention of device or stent);
• CPT code 93571 (Intravascular doppler velocity and/or pressure derived coronary flow reserve measurement (coronary vessel or graft) during coronary angiography including pharmacologically induced stress; initial vessel (list separately in addition to code for primary procedure); and
• HCPCS code C9757 (Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, foraminotomy and excision of herniated intervertebral disc, and repair of annular defect with implantation of bone anchored annular closure device, including annular defect measurement, alignment and sizing assessment, and image guidance; 1 interspace, lumbar).

Response: Based on CY 2019 claims data available for this final rule, the procedures requested by commenters do not have device offset percentages that exceed the 30-percent threshold required for device-intensive status under the OPPS or ASC payment system and, therefore, are not eligible to be assigned device-intensive status.

Comment: Some commenters recommended that the 30 percent device-intensive threshold be based on the final ASC payment rate and not OPPS costs. Additionally, one commenter requested that we lower the device-intensive threshold to 25 percent.

Response: We do not believe device offset percentages should be determined by dividing the OPPS-derived device offset portion by the final ASC payment rate as this would, in effect, be substantially reducing the device-intensive threshold under the ASC payment system. As we stated in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86015), lowering the device-intensive threshold assigns a greater amount of device costs, which are held constant between the OPPS and ASC payment system, into the prospective year. Lowering the device-intensive threshold, even to 25 percent, would put additional downward pressure on the ASC weight scalar and reduce the nondevice portion of ASC payment rates for surgical procedures. Therefore, for these reasons we are not accepting these recommendations.

Comment: One commenter suggested that we modify the device-intensive criteria to allow packaged procedures that trigger a complexity adjustment under OPPS to be eligible for device-intensive status under the ASC payment system.

Response: We do not believe any changes are warranted to our packaging policies under the ASC payment system at this time. Therefore, we are not accepting this comment but may consider it in future rulemaking.

Comment: One commenter recommended we publish an Addendum to our proposed and final rules that displays the device offset percentages for both device-intensive and nondevice-intensive procedures under the ASC payment system similar to Addendum P for the OPPS.

Response: We are accepting this recommendation. We are creating an Addendum FF for this final rule with comment period and subsequent proposed and final rules that will display the device offset percentages calculated under the standard ASC ratesetting methodology for covered surgical procedures.

After review of the public comments we received, we are finalizing our proposed methodology, without modification, to designate surgical procedures as device-intensive under the ASC payment system. Specifically, for CY 2022 and subsequent years, we are finalizing our proposal to designate procedures as device-intensive procedures if their device offset percentage exceeds 30 percent under the ASC standard ratesetting methodology, even if the procedure is not designated as device-intensive under the OPPS. Additionally, for CY 2022 and subsequent years, we are finalizing our proposal that if a procedure is assigned device-intensive status under the OPPS, but has a device offset percentage below the device-intensive threshold under the standard ASC ratesetting methodology, the procedure will be assigned device-intensive status under the ASC payment system with a default device offset percentage of 31 percent.

Additionally, after reviewing the public comments we received, we are designating the ASC covered surgical procedures displayed in Addendum AA with payment indicator “J8” as device-intensive and subject to the device-intensive procedure payment methodology for CY 2022. The full listing of the final CY 2022 device offset percentages under the ASC payment system for covered surgical procedures can be found in Addendum FF to the CY 2022 OPPS/ASC final rule with comment period (which is available via the internet on the CMS website).

c. Adjustment to ASC Payments for No Cost/Full Credit and Partial Credit Devices

Our ASC payment policy for costly devices implanted or inserted in ASCs at no cost/full credit or partial credit is set forth in § 416.179 of our regulations, and is consistent with the OPPS policy that was in effect until CY 2014. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66845 through 66848) for a full discussion of the ASC payment adjustment policy for no cost/full credit and partial credit devices. ASC payment is reduced by 100 percent of the device offset amount when a hospital furnishes a specified device without cost or with a full credit and by 50 percent of the device offset amount when the hospital receives partial credit in the amount of 50 percent or more of the cost for the specified device.

Effective CY 2014, under the OPPS, we finalized our proposal to reduce OPPS payment for applicable APCs by the full or partial credit a provider receives for a device, capped at the device offset amount. Although we finalized our proposal to modify the policy of reducing payments when a hospital furnishes a specified device without cost or with full or partial credit under the OPPS, in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75076 through 75080), we finalized our proposal to maintain our ASC policy for reducing payments to ASCs for specified device-intensive procedures when the ASC furnishes a device without cost or with full or partial credit. Unlike the OPPS, there is currently no mechanism within the ASC claims processing system for ASCs to submit to CMS the amount of the actual credit received when furnishing a specified device at full or partial credit. Therefore, under the ASC payment system, we finalized our proposal for CY 2014 to continue to reduce ASC payments by 100 percent or 50 percent of the device offset amount when an ASC furnishes a device without cost or with full or partial credit, respectively.

Under current ASC policy, all ASC device-intensive covered surgical procedures are subject to the no cost/full credit and partial credit device adjustment policy. Specifically, when a device-intensive procedure is performed to implant or insert a device that is furnished at no cost or with full credit from the manufacturer, the ASC would append the HCPCS “FB” modifier on the line in the claim with the procedure to implant or insert the device. The contractor would reduce payment to the ASC by the device offset amount that we estimate represents the cost of the device when the necessary device is furnished without cost or with full credit to the ASC. We continue to believe that the reduction of ASC payment in these circumstances is necessary to pay appropriately for the covered surgical procedure furnished by the ASC.

Effective in CY 2019 (83 FR 59043 through 59044), for partial credit, we adopted a policy to reduce the payment for a device-intensive procedure for which the ASC receives partial credit by one-half of the device offset amount that would be applied if a device was provided at no cost or with full credit, if the credit to the ASC is 50 percent or more (but less than 100 percent) of the cost of the new device. The ASC will append the HCPCS “FC” modifier to the HCPCS code for the device-intensive surgical procedure when the facility receives a partial credit of 50 percent or more (but less than 100 percent) of the cost of a device. To report that the ASC received a partial credit of 50 percent or more (but less than 100 percent) of the cost of a new device, ASCs have the option of either: (1) Submitting the claim for the device-intensive procedure to their Medicare contractor after the procedure's performance, but prior to manufacturer acknowledgment of credit for the device, and subsequently contacting the contractor regarding a claim adjustment, once the credit determination is made; or (2) holding the claim for the device implantation or insertion procedure until a determination is made by the manufacturer on the partial credit and submitting the claim with the “FC” modifier appended to the implantation procedure HCPCS code if the partial credit is 50 percent or more (but less than 100 percent) of the cost of the device. Beneficiary coinsurance would be based on the reduced payment amount. As finalized in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66926), to ensure our policy covers any situation involving a device-intensive procedure where an ASC may receive a device at no cost or receive full credit or partial credit for the device, we apply our “FB”/”FC” modifier policy to all device-intensive procedures.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 through 59044) we stated we would reduce the payment for a device-intensive procedure for which the ASC receives partial credit by one-half of the device offset amount that would be applied if a device was provided at no cost or with full credit, if the credit to the ASC is 50 percent or more (but less than 100 percent) of the cost of the device. In the CY 2020 OPPS/ASC final rule with comment period, we finalized continuing our existing policies for CY 2020. We note that we inadvertently omitted language that this policy would apply not just in CY 2019 but also in subsequent calendar years. We intended to apply this policy in CY 2019 and subsequent calendar years.

Therefore, we proposed to apply our policy for partial credits specified in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 through 59044) in CY 2022 and subsequent calendar years. Specifically, for CY 2022 and subsequent calendar years, we would reduce the payment for a device-intensive procedure for which the ASC receives partial credit by one-half of the device offset amount that would be applied if a device was provided at no cost or with full credit, if the credit to the ASC is 50 percent or more (but less than 100 percent) of the cost of the device. To report that the ASC received a partial credit of 50 percent or more (but less than 100 percent) of the cost of a device, ASCs have the option of either: (1) Submitting the claim for the device intensive procedure to their Medicare contractor after the procedure's performance, but prior to manufacturer acknowledgment of credit for the device, and subsequently contacting the contractor regarding a claim adjustment, once the credit determination is made; or (2) holding the claim for the device implantation or insertion procedure until a determination is made by the manufacturer on the partial credit and submitting the claim with the “FC” modifier appended to the implantation procedure HCPCS code if the partial credit is 50 percent or more (but less than 100 percent) of the cost of the device. Beneficiary coinsurance would be based on the reduced payment amount.

We did not receive any comments on our policies related to no/cost full credit or partial credit devices, and we are continuing our existing policies for CY 2022 and subsequent years.

d. Additions to the List of ASC Covered Surgical Procedures

Section 1833(i)(1) of the Act requires us, in part, to specify, in consultation with appropriate medical organizations, surgical procedures that are appropriately performed on an inpatient basis in a hospital but that can also be safely performed in an ASC, a CAH, or an HOPD, and to review and update the list of ASC procedures at least every 2 years. We evaluate the ASC covered procedures list (ASC CPL) each year to determine whether procedures should be added to or removed from the list, and changes to the list are often made in response to specific concerns raised by stakeholders.

From CY 2008 through CY 2020, under our regulations at §§ 416.2 and 416.166, covered surgical procedures furnished on or after January 1, 2008, were surgical procedures that met the general standards specified in § 416.166(b) and were not excluded under the general exclusion criteria specified in § 416.166(c). Specifically, under § 416.166(b), the general standards provided that covered surgical procedures were surgical procedures specified by the Secretary and published in the Federal Register and/or via the internet on the CMS website that were separately paid under the OPPS, that would not be expected to pose a significant safety risk to a Medicare beneficiary when performed in an ASC, and for which standard medical practice dictated that the beneficiary would not typically be expected to require active medical monitoring and care at midnight following the procedure. Section 416.166(c) set out the general exclusion criteria used under the ASC payment system to evaluate the safety of procedures for performance in an ASC. The general exclusion criteria provided that covered surgical procedures do not include those surgical procedures that: (1) Generally result in extensive blood loss; (2) require major or prolonged invasion of body cavities; (3) directly involve major blood vessels; (4) are generally emergent or life threatening in nature; (5) commonly require systemic thrombolytic therapy; (6) are designated as requiring inpatient care under § 419.22(n); (7) can only be reported using a CPT unlisted surgical procedure code; or (8) are otherwise excluded under § 411.15. For a discussion of the history of our policies for adding surgical procedures to the ASC CPL, we refer readers to the CY 2021 OPPS/ASC final rule with comment period (85 FR 86143 through 86145).

In the CY 2021 OPPS/ASC final rule with comment period, we significantly revised our policy for adding surgical procedures to the ASC CPL. We revised the definition of covered surgical procedures at 42 CFR 416.166(a) and (b) to add new subparagraphs to provide that, for services furnished on or after January 1, 2021, covered surgical procedures for purposes of the ASC CPL are surgical procedures specified by the Secretary and published in the Federal Register and/or via the internet on the CMS website that: Are separately paid under the OPPS; and are not: Designated as requiring inpatient care as of December 31, 2020; only able to be reported using a CPT unlisted surgical procedure code; or otherwise excluded under § 411.15.

We added a new paragraph (d) to § 416.166 to provide that the general exclusion and general standard criteria that we used to identify covered surgical procedures furnished between January 1, 2008 and December 31, 2020, would, beginning January 1, 2021, be safety factors that physicians consider as to a specific beneficiary when determining whether to perform a covered surgical procedure. We also added a new paragraph (e) to § 416.166 to provide that, on or after January 1, 2021, we add surgical procedures to the list of ASC covered surgical procedures either when we identify a surgical procedure that meets the requirements of paragraph (b)(2) or we are notified of a surgical procedure that could meet the requirements of paragraph (b)(2) and we confirm that such procedure meets those requirements. We added 267 surgical procedures to the ASC CPL that met the revised criteria for covered surgical procedures beginning in CY 2021.

As we explained in the CY 2021 OPPS/ASC final rule with comment period, there were a number of reasons that we made changes to our ASC CPL policy, including that ASCs are increasingly able to safely provide services that meet some of the general exclusion criteria. We explained that we believed it was important that we adapt the ASC CPL in light of significant advances in medical practice, surgical techniques, and ASC capabilities (85 FR 86150). We stated that, while many of the procedures we were adding to the ASC CPL were performed on non-Medicare patients who tend to be younger and have fewer comorbidities than the Medicare population, we believed careful patient selection could identify Medicare beneficiaries who are suitable candidates to receive these services in the ASC setting. We also emphasized the importance of ensuring that the healthcare system has as many access points and patient choices for Medicare beneficiaries as possible, which includes enabling physicians and patients to choose the ASC as the site of care when appropriate. Finally, we reiterated the critical role that physicians play in determining the appropriate site of care for their patients, including whether a surgical procedure can be safely performed in the ASC setting for an individual patient.

1. Proposed Changes to the List of ASC Covered Surgical Procedures for CY 2022

Since the CY 2021 OPPS/ASC final rule was published, we have reexamined our ASC CPL policy and the public comments we received in response to the CY 2021 OPPS/ASC proposed rule, considered the concerns we received from stakeholders since the final rule was published, and conducted an internal clinical review of the 267 procedures we added to the ASC CPL under our revised policy beginning in CY 2021. After examining our revised policy and the feedback we have received, and reviewing the procedures we added to the ASC CPL under our revised policy, we have reconsidered our policy and believe that the policy may not appropriately assess the safety of performing surgical procedures on a typical Medicare beneficiary in an ASC, and that 258 of the 267 surgical procedures we added to the ASC CPL beginning in CY 2021 under our revised policy may not be appropriate to be performed on a typical beneficiary in the ASC setting.

We believe that our current policy—to shift consideration of the general standards and exclusion criteria we have historically used to determine whether a surgical procedure should be added to the ASC CPL from CMS to physicians—needs to be modified to better ensure that surgical procedures added to the ASC CPL under the revised criteria can be performed safely in the ASC setting on the typical Medicare beneficiary. We recognize that appropriate patient selection and physicians' complex medical judgment could help mitigate risks for patient safety. But while we are always striving to balance the goals of increasing physician and patient choice, and expanding site neutral options with patient safety considerations, we nonetheless believe the current policy could be improved with additional patient safety considerations in determining whether a surgical procedure should be added to the ASC CPL.

One issue we identified with our revised policy is that many of the procedures added in CY 2021 would only be appropriate for Medicare beneficiaries who are healthier and have less complex medical conditions than the typical beneficiary. Upon further review, we believe the subset of Medicare beneficiaries who may be suitable candidates to receive these procedures in an ASC setting do not necessarily represent the typical Medicare beneficiary. After evaluating the 267 surgery or surgery-like codes that were added last year, CMS clinicians determined that 258 of these surgical procedures may pose a significant safety risk to a typical Medicare beneficiary when performed in an ASC, including that nearly all would likely require active medical monitoring and care at midnight following the procedure. In the CY 2021 OPPS/ASC final rule with comment period, we established that physicians would consider certain safety factors as to a specific beneficiary when determining whether to perform a covered surgical procedure in an ASC. However, while a physician can make safety determinations for a specific beneficiary, CMS is in the position to make safety determinations for the broader population of Medicare beneficiaries.

While there could be some appropriately selected patient populations for which some of these procedures could be safely performed in the ASC setting, that may not be the case for the typical Medicare beneficiary, due to comorbidities and other health risks that may require more intensive care and monitoring than provided in an ASC setting among this population. We believe it is appropriate to assess the safety of these procedures in the context of the typical Medicare beneficiary, whose health status is representative of the broader Medicare population. Thus, we believe evaluating procedures for their potential to require additional care and monitoring for the typical beneficiary is an appropriate consideration for CMS to make in determining which procedures can safely be performed in an ASC.

We are concerned that, under our current policy, we do not make an active enough determination about whether a procedure is suitable to perform on a typical Medicare beneficiary in an ASC setting. The policy finalized last year allows individual physicians discretion to perform a number of procedures in the ASC setting that would not necessarily be appropriate for the typical Medicare beneficiary in that setting. Clinicians apply appropriate screening criteria to determine either that the procedure should not be performed in the ASC setting because of the risks to the specific beneficiary, or that the specific beneficiary presents a low enough risk profile that the procedure could be safely performed in the ASC setting.

However, we want to reiterate that, in accordance with section 1833(i)(1)(A) of the Act, the Secretary shall specify those surgical procedures that are appropriately (when considered in terms of the proper utilization of hospital inpatient facilities) performed on an inpatient basis in a hospital but that also can be performed safely on an ambulatory basis in an ambulatory surgical center. That is, if Medicare allows payment for these services in the ASC setting, it means that Medicare has determined that the procedure is safe to perform on the typical Medicare beneficiary.

Accordingly, the addition of a procedure to the ASC CPL can signal to physicians that the procedure is safe to perform on the typical Medicare beneficiary in the ASC setting, even though the current criteria, adopted in CY 2021, for adding procedures to the ASC CPL do not include safety criteria other than ensuring that the procedure was not on the IPO list as of CY 2020. We recognize that, while there are similarities between the ASC and HOPD settings, there are also significant differences between the two care settings. The HOPD setting has additional capabilities, resources, and certifications that are not required for the ASC setting. For example, hospitals operate 24/7 and are subject to EMTALA requirements, while ASCs are not. Therefore, a procedure that can be furnished in the HOPD setting is not necessarily safe and appropriate to perform in an ASC setting simply because we make payment for the procedure when it is furnished in the HOPD setting.

In light of these concerns, in the CY 2022 OPPS/ASC proposed rule, we proposed to revise the criteria and process for adding procedures to the ASC CPL by reinstating the ASC CPL policy and regulation text that were in place in CY 2020. While this approach is a departure from the revised policy we adopted for CY 2021, it is consistent with our policy from CY 2008 through CY 2020 where we gradually expanded the ASC CPL while giving careful consideration to safety concerns and risks to the typical beneficiary. This approach would also continue to support our efforts to maximize patient access to care by, when appropriate, adding procedures to the ASC CPL to further increase the availability of ASCs as an alternative, lower cost site of care. While expanding the ASC CPL offers benefits like preserving the capacity of hospitals to treat more acute patients and promoting site neutrality, it is also essential that any expansion of the ASC CPL be done in a carefully calibrated fashion to ensure that Medicare is appropriately signaling that a procedure is safe to be performed in the ASC setting for a typical Medicare beneficiary.

Accordingly, for CY 2022, we proposed to revise the requirements for covered surgical procedures in the regulation at § 416.166 to reinstate the specifications we had established prior to CY 2021. Specifically, we proposed that, effective for services furnished on or after January 1, 2022, covered surgical procedures are those procedures that meet the general standards and do not meet the general exclusions. We proposed to again provide in paragraph (b) of § 416.166 that, subject to the exclusions we proposed to again include in paragraph (c), covered surgical procedures are surgical procedures specified by the Secretary and published in the Federal Register and/or via the internet on the CMS website that are separately paid under the OPPS, that would not be expected to pose a significant safety risk to a Medicare beneficiary when performed in an ASC, and for which standard medical practice dictates that the beneficiary would not typically be expected to require active medical monitoring and care at midnight following the procedure. We proposed to revise paragraph (c) to again include the five criteria currently included in paragraph (d) of the regulation as safety factors physicians consider. We proposed that revised paragraph (c) would provide that, notwithstanding paragraph (b), covered surgical procedures do not include those surgical procedures that: (1) Generally result in extensive blood loss; (2) require major or prolonged invasion of body cavities; (3) directly involve major blood vessels; (4) are generally emergent or life-threatening in nature; (5) commonly require systemic thrombolytic therapy; (6) are designated as requiring inpatient care under § 419.22(n); (7) can only be reported using a CPT unlisted surgical procedure code; or (8) are otherwise excluded under § 411.15. We proposed to remove the physician considerations at § 416.166(d) and change the notification process at § 416.166(e) to a nomination process, which is discussed further in section (d)(2) below.

We stated that we expect that we would continue to expand the ASC CPL in future years under our proposed revised criteria as the practice of medicine and medical technology continue to evolve. We believe that adding appropriate procedures to the ASC CPL that meet the safety criteria that we proposed to reinstate would have beneficial effects for Medicare beneficiaries and healthcare professionals, including increased access, better utilization of existing healthcare resources, and expansion of the capacity of the healthcare system.

Comment: Commenters were largely split on the issue of reinstating the general standards and exclusion criteria at § 416.166 that were in place prior to CY 2021. Many commenters opposed this proposal and recommended that CMS not re-adopt these criteria. These commenters expressed concern at the complete reversal to reinstate the longstanding criteria. Commenters contended that this proposal may substitute administrative criteria for physician clinical judgment, reduce beneficiary choice, and increase costs since the lack of payment for the ASC setting would push these procedures into the higher-cost hospital setting.

However, numerous other commenters supported our proposal to reinstate the general standards and exclusion criteria at § 416.166 that were in place prior to CY 2021 due to patient safety and quality of care concerns. Several commenters urged caution in how CMS modifies criteria and adds procedures to the ASC CPL, as they believe there is not enough information about which procedures are clinically appropriate for the ASC setting. One commenter noted that the general standards and exclusion criteria that were in effect in CY 2020 allowed the ASC CPL to evolve and expand with surgical advancements, while ensuring that procedures that continue to pose significant patient safety risks would only be payable when furnished in the hospital setting.

Several commenters, including providers and professional medical societies, expressed their belief that physicians are best equipped to conduct the clinical evaluation of the safety of procedures and decide whether to perform them on a particular beneficiary in a particular setting.

Response: We thank commenters for their feedback and suggestions. After reviewing the public comments provided, we believe that reinstating the longstanding general standards and exclusion criteria that were in place prior to CY 2021 is the most appropriate way to ensure that procedures that cannot be safely performed on an ambulatory basis for the typical Medicare beneficiary are not added to the ASC CPL and payable under the ASC payment system. The general standards and exclusion criteria identify procedures that typically require overnight stays or require post-operative active medical monitoring and care at midnight following the procedure. When used in conjunction with information from public comments, data from inpatient, outpatient, and ambulatory sites of service, and medical review, we believe these criteria enable us to make an accurate assessment of whether a procedure can be safely performed in an ASC on the typical Medicare beneficiary. As a result, we are finalizing our proposal to revise the regulatory language at § 416.166 and reinstate the general standards and exclusion criteria in place prior to CY 2021. We will take the additional recommendations suggested by commenters into consideration for future rulemaking.

(1) Comment Solicitation on Procedures That Were Added to the ASC CPL in CY 2021 and Would Not Meet the Proposed Revised CY 2022 Criteria

As stated above, we proposed to remove 258 procedures from the ASC CPL for CY 2022 that were added to the ASC CPL in CY 2021 that we believe do not meet the proposed revised CY 2022 ASC CPL criteria. These procedures were listed in Table 45 of CY 2022 OPPS/ASC proposed rule (86 FR 42210). Based on our internal review of preliminary claims submitted to Medicare, we stated in the proposed rule that we do not believe that ASCs have been furnishing the majority of the 267 procedures finalized in 2021. Because of this, we explained that we believed it is unlikely that ASCs have made practice changes in reliance on the policy we adopted in CY 2021. Therefore, we stated that we do not anticipate that ASCs would be significantly affected by the removal of these 258 procedures from the ASC CPL. We sought input from commenters who believe any of the 258 procedures added to the ASC CPL in CY 2021 meet the proposed revised CY 2022 criteria and, if those revised criteria are finalized, should remain on the ASC CPL for CY 2022. We requested any clinical evidence or literature to support commenters' views that any of these procedures meet the proposed revised CY 2022 criteria and should remain on the ASC CPL for CY 2022.

Comment: Numerous commenters did not support our proposal to remove 258 surgical procedures from the ASC CPL beginning in CY 2022 that had been added to the ASC CPL in CY 2021, but that we proposed would not meet the reinstated general standards and exclusion criteria. These commenters, including several ambulatory surgical center associations, providers, and professional associations, supported retaining all 258 procedures on the ASC CPL and requested that CMS reconsider this proposal. Commenters stated that these procedures are being safely and effectively performed on Medicare beneficiaries in the ASC setting with high levels of patient satisfaction, improved efficiency, and lower cost to both the insurer and the patient. Many noted that CMS's decision to add and then remove hundreds of procedures from the ASC CPL was jarring, as well as lacking in transparency and support from data to justify the decision. Several commenters also noted that access to additional surgical procedures in ASCs during the PHE may be an important and viable option for beneficiaries.

However, many other commenters supported our proposal to remove 258 surgical procedures from the ASC CPL, including hospital associations, professional associations, and device manufacturers. These commenters believed that our proposal, if finalized, would lead to improved patient outcomes and safety with fewer complex procedures being done in the ASC setting. Commenters noted that they believe procedures that would pose a high risk of complications that ASCs are not equipped to handle should remain off the ASC CPL until there is careful consideration of the potential safety risks for beneficiaries and the procedures are determined appropriate to be performed in the ASC setting.

Numerous commenters suggested specific codes or code ranges that they believed should be added to or remain on the ASC CPL. We received 140 surgical procedure recommendations in total, listed in Table 61 below. The majority of these recommendations were not accompanied by any supporting literature or evidence, with some providing only experiential data and simply stating support for CMS paying for the surgical procedures when they are furnished in the ASC setting.

Response: We thank commenters for their input. We assessed the commenters' recommendations to keep 140 surgical procedures on the ASC CPL. The recommendations included 123 codes that were part of the 258 codes proposed for removal, 14 codes that were not on the ASC CPL due to being on the Inpatient Only list or not being surgery-like codes, and 3 codes that have been on the ASC CPL and that we did not propose to remove in CY 2022. We individually assessed each of these 140 procedures, evaluating clinical data on these procedures from multiple sites of services, using literature and experiential data provided in public comments, and ASC claims volume from CY 2021 to determine whether these procedures meet each of the proposed regulatory criteria.

Based on our review of the clinical characteristics of the procedures, claims volume in the ASC setting for CY 2021, and their similarity to other procedures that are currently on the ASC CPL, we believe that six procedures (CPT codes 0499T, 54650, 60512, 69660, 28005, and 27412) out of the 140 procedure recommendations we received can be safely performed for the typical beneficiary in the ASC setting and meet the general standards and exclusion criteria for the ASC CPL that we are reinstating. These codes have few to no inpatient admissions and are largely performed in outpatient settings. We agree with commenters who stated that advancements in clinical practice, less invasive techniques, and patient selection have contributed to allowing these procedures to be safely performed in an ASC setting. Therefore, in this final rule with comment period, we are finalizing keeping each of these six procedures on the ASC CPL. These procedures, listed in Table 60 below, are:

• CPT 0499T (Cystourethroscopy, with mechanical dilation and urethral therapeutic drug delivery for urethral stricture or stenosis, including fluoroscopy, when performed);

• CPT 54650 (Orchiopexy, abdominal approach, for intra-abdominal testis ( e.g., fowler-stephens));

• CPT 60512 (Parathyroid autotransplantation (list separately in addition to code for primary procedure));
• CPT 69660 (Stapedectomy or stapedotomy with reestablishment of ossicular continuity, with or without use of foreign material);

• CPT 28005 (Incision, bone cortex ( e.g., osteomyelitis or bone abscess), foot), and

• CPT 27412 (Autologous chondrocyte implantation, knee).

Of these six procedures, two of the codes (CPT 69660 and CPT 28005) were already on the ASC CPL prior to CY 2020. One of the codes (CPT 27412) was added in CY 2020, and was determined to meet the general standards and exclusion criteria and was not proposed for removal this year. Three codes (CPT 0499T, CPT 54650, CPT 60512) were added to the ASC CPL under the revised criteria in CY 2021 and proposed for removal this year.

Due to patient safety concerns, for the remaining procedures that we proposed to remove from the ASC CPL but that commenters recommended that we retain on the list, we believe that 255 of 258 codes proposed for removal this year should be removed from the ASC CPL and that the 14 procedures not currently on the ASC CPL not be added because they are on the IPO list or are not surgery-like. In the CY 2022 OPPS/ASC proposed rule, we assessed all 258 codes against the revised criteria and proposed to remove them based upon our determination that they did not meet the criteria we proposed to reinstate. Therefore, for this final rule with comment period, we solely re-reviewed the 140 codes that commenters specifically recommended for review, 123 of which were among the 258 codes proposed for removal from the ASC CPL beginning in CY 2022, one code of which was added in CY 2021 that was not proposed for removal, and 16 of which are new codes, in order to consider the additional information received from public comments to determine whether these codes should remain on or be added to the ASC CPL. We explain below for each anatomical category of the 135 recommended procedures our rationale for not including them on the ASC CPL beginning in CY 2022.

• 35 genitourinary codes , including laparoscopic ureterolithotomy, nephrectomy, and renal ablation, penis and urethra revision procedures, vaginal repair and removal procedures, and hysterectomy procedures. Many of these procedures have associated inpatient admissions, where the beneficiary requires active medical monitoring and care at midnight following the procedure. Additionally, a number of these procedures would pose a significant safety risk to beneficiaries without post-operative inpatient care.

• 31 musculoskeletal codes , including total shoulder arthroplasty procedures, incision of hip tendons, amputation through metatarsal, reconstruction of mandibular rami procedures, open treatment of orbital floor blowout fracture procedures, knee arthroscopy meniscal transplantation, and lumbar spine fusion procedures. Although a few of these procedures have some claims volume in the outpatient setting, many of them are also complex procedures with inpatient admissions and multiple post-operative inpatient days, where infections and need for intravenous antibiotics are not uncommon events, indicating that the beneficiary would require active monitoring and care past midnight following the procedure.

• 24 cardiovascular codes , including procedures like blood vessel lesion repair, implantable defibrillator electrode removal, infected graft excision, arm artery repair, insertion and removal of intravascular vena cava filter, or wireless cardiac stimulator insertion. These procedures are largely performed in inpatient settings and require multiple post-operative inpatient days, indicating that the beneficiary would require active monitoring and care past midnight following the procedure. These procedures also involve major blood vessels, are emergent or life threatening in nature, and require systemic thrombolytic therapy in some cases.

• 10 respiratory codes , including nasal or sinus endoscopies, laryngoplasties, and windpipe incision. While several of these codes have some outpatient volume, these procedures are largely performed in an inpatient setting. Many of these procedures have associated inpatient admissions and multiple post-operative days, indicating the beneficiary would require active monitoring and care past midnight following the procedure. Additionally, some of these procedures could be emergent or life-threatening in nature.

• 12 gastrointestinal codes , including paraesophageal hernia repairs, laparoscopic esophagogastric fundoplasty, appendectomy, laparoscopic gastric restrictive procedures, and laparoscopic revision or removal of gastric neurostimulator electrodes. While some of these procedures have outpatient volume, many have inpatient admissions and potential procedure risks ( e.g. perforation), indicating that the beneficiary would require active monitoring and care past midnight following the procedure. Additionally, these procedures can involve prolonged invasion of body cavities, and be life-threatening or emergent in nature. Additionally, several of these procedures are less commonly done in Medicare patients and more frequently performed in a younger population.

• 13 nervous system codes , including neck spine disk surgery, laminectomy and laminotomy procedures, spinal cord decompression, spinal lamina removal, spinal disk surgery, and spinal canal catheter implant. These codes have associated inpatient admissions and post-operative days, indicating that the beneficiary would require active monitoring and care past midnight following the procedure. Many of these procedures also pose a significant safety risk to the beneficiary when close post-operative neurosurgical surveillance is not frequently provided.

• 4 endocrine codes including thyroidectomy and parathyroidectomy procedures. While these procedures have outpatient volume, there are inpatient admissions associated with these procedures, indicating the beneficiary would be expected to stay past midnight following the procedure. Additionally, the intraservice time for these procedures can vary greatly, often becoming a prolonged invasion of body cavities.

• 2 chest and lymphatic codes , including biopsy or excision of lymph nodes and mediastinoscopy with lymph node biopsy. There are inpatient admissions associated with these procedures, indicating the beneficiary would be expected to stay past midnight following the procedure.

• 1 ear code , decompression of the internal auditory canal. This procedure is largely performed in the inpatient setting and has associated ICU admissions, indicating the beneficiary would be expected to stay past midnight following the procedure. Additionally, patients often require frequent neurosurgical checks in the post-operative period.

• 1 mastectomy code , modified radical mastectomy. There are inpatient admissions associated with this procedure, indicating the beneficiary would be expected to stay past midnight following the procedure. Additionally, performing this procedure in an ASC can pose safety risks to the typical beneficiary.

• 2 imaging/study codes , including esophagus motility study and liver elastography. These codes are not surgical or surgery-like procedures and would not be covered when furnished in an ASC.

Given these considerations, we believe that these 135 codes do not meet the proposed criteria to be included on the ASC CPL due to inpatient admissions, multiple-day stays past midnight, safety risks to the typical beneficiary without active post-operative monitoring, involvement of major blood vessels, or prolonged invasion of a body cavity. We also note that there is insufficient volume data to fully assess concerns about patient safety risks when these procedures are performed in the ASC, with fewer than 25 procedures proposed for removal from ASC CPL having more than 10 claims in the ASC setting during CY 2021.

However, as medical practice continues to evolve, we recognize that there will be additional advancements and improvements that allow these procedures to be safely offered in the ASC setting for the typical Medicare beneficiary. We believe that there is potential for some of the procedures removed this year to be added back to the ASC CPL if there is adequate evidence that these procedures meet our criteria and can be safely performed on the typical Medicare beneficiary in the ASC setting. We encourage stakeholders to continue to submit this information in future rulemaking.

In summary, we added 267 procedures to the ASC CPL in the CY 2021 OPPS/ASC final rule with comment period, based on the revised criteria for the ASC CPL. In the CY 2022 OPPS/ASC proposed rule, we proposed to remove 258 of the 267 procedures, based on our proposed reinstatement of the CY 2020 criteria. We requested comment on whether we should keep any of these procedures on the ASC CPL. During the public comment period, commenters recommended that 140 surgical procedures either remain on or be added to the ASC CPL, including 3 codes that have been on the ASC CPL that we did not propose to remove in CY 2022, 123 codes that were among the 258 we proposed for removal from ASC CPL, and 14 codes that were not on the ASC CPL due to being on the IPO list or not surgery-like.

Therefore, in this CY 2022 OPPS/ASC final rule with comment period, after reviewing those 140 procedure recommendations, we are finalizing retaining six codes that commenters recommended we retain on the ASC CPL, specifically the 3 codes that have been on the ASC CPL that we did not proposed to remove in CY 2022, as well as 3 codes of the 258 codes proposed for removal. Thus, we are removing the remaining 255 of 258 codes proposed for removal. These procedures are listed below in Tables 60, 61, and 62 of this CY 2022 OPPS/ASC final rule with comment period.

Nomination Process Proposal

For CY 2022, we proposed to change the current notification process for adding surgical procedures to the ASC CPL to a nomination process. We proposed that external parties, for example, medical specialty societies or other members of the public, could nominate procedures to be added to the ASC CPL. CMS anticipates that stakeholders, such as specialty societies that specialize in and have a deep understanding of the complexities involved in providing certain procedures, would be able to provide valuable suggestions as to which additional procedures may reasonably and safely be performed in an ASC. While members of the public may already suggest procedures to be added to the ASC CPL through meetings with CMS or through public comments on the proposed rule, we believe it may be beneficial to enable the public, particularly specialty societies who are very familiar with procedures in their specialty, to formally nominate procedures based on the latest evidence available as well as input from their memberships. We proposed to include the nomination process in a new subparagraph (d)(1) of § 416.166. We proposed that the regulation at § 416.166(d)(2) would provide that, if we identify a surgical procedure that meets the requirements at paragraph (a) of this section, including a surgical procedure nominated by an external party under paragraph (d)(1), we will propose to add the surgical procedure to the list of ASC covered surgical procedures in the next available annual rulemaking. Under this proposal, we would propose to add a nominated procedure to the ASC CPL if it meets the proposed general standards for covered surgical procedures at proposed § 416.166(b), and does not meet the general exclusions in proposed § 416.166(c).

Specifically, for the OPPS/ASC rulemaking for a calendar year, we proposed to request stakeholder nominations by March 1 of the year prior to the calendar year for the next applicable rulemaking cycle in order to be included in that rulemaking cycle. For example, stakeholders would need to send in nominations by March 1, 2022, to be considered for the CY 2023 rulemaking cycle and potentially have their nominated procedures added to the ASC CPL effective January 1, 2023. We proposed that we would evaluate procedures nominated by stakeholders based on the applicable statutory and regulatory requirements for ASC covered surgical procedures. We proposed to address nominated procedures beginning in the CY 2023 rulemaking cycle. We proposed to address in rulemaking nominated procedures for which stakeholders have provided sufficient information for us to evaluate the procedure. We proposed to include in the applicable proposed rule, a summary of the justification for proposing to add or not add each nominated procedure, which would allow members of the public to assess and comment on nominated procedures during the public comment period. We proposed that, after reviewing comments provided during the public comment period, we would indicate whether or not we are adding the procedures to ASC CPL in this final rule with comment period. In the event that CMS determines that a nominated procedure does not meet the criteria to be added to the ASC CPL, we would provide our rationale in the rulemaking. We indicated that in certain cases we may need to defer a proposal regarding a nominated procedure to the next regulatory cycle or future rulemaking in order to have sufficient time to evaluate and make an appropriate proposal about the nominated procedure.

We also sought comment on how we might prioritize our review of nominated procedures, in the event we receive an unexpectedly or extraordinarily large volume of nominations for which CMS has insufficient resources to address in the annual rulemaking. For example, if we could not address every nomination in a rulemaking cycle due to a large volume, we may need to prioritize our review such that we would only address in rulemaking those nominations that merit priority. Therefore, we sought comments as to how CMS should prioritize nominations. For example, whether we would prioritize the nominations that have codes nominated by multiple organizations or individuals, codes recently removed from the IPO list, codes accompanied by evidence that other payers are paying for the service on an outpatient basis or in an ASC setting, or a variety of other factors. We stated that, if we were to finalize a prioritization hierarchy for CMS' review of nominated procedures to the ASC CPL, we would indicate in regulation text, likely in proposed § 416.166(d)(2) Inclusion in Rulemaking: (1) That CMS would apply a prioritization hierarchy for reviewing nominated procedures if necessary because of an unexpectedly or extraordinarily large volume of nominations; and (2) specify CMS' prioritization hierarchy.

We stated that we believe this nominations proposal allows for the expansion of the ASC CPL in a more gradual fashion, which would better balance the goals of increasing patient choice and expanding site neutral options with patient safety considerations. We stated that we believe a nomination process will take time to develop because we want to incorporate stakeholder input on the most effective way to structure this process. We also acknowledged that stakeholders will need time to consider and evaluate potential surgical procedures to nominate. We proposed to accept nominations for surgical procedures to be added to the ASC CPL beginning in CY 2023.

Comment: The majority of commenters, which included device manufacturers, hospital associations, and ambulatory surgery associations, supported the proposal to establish a process for the public to nominate procedures for addition to the ASC CPL. Stakeholders believed this process would provide more transparency and engagement on procedures earlier in the process, formalize the review process, and allow for more gradual expansion of the ASC CPL. One commenter suggested CMS publish nominations publicly before the proposed rule each year to allow more opportunity for input, while another requested more information on the data needs related to the nomination process. Two commenters did not support the nomination process as they believe it would cause additional bureaucracy and delay the ASC CPL additions process.

Commenters offered suggestions on different approaches for CMS to consider when approaching criteria including prioritizing procedures endorsed by physician specialty societies, ASC specialty societies, and/or multi-specialty physician organizations that can directly attest to the safety profile of procedures furnished in ASCs; consider real-world evidence when evaluating a procedure for addition to the ASC CPL; consider evidence that commercial payers are paying for a service in the ASC setting for private and/or Medicare Advantage patients; consider procedures that have been successfully performed for Medicare FFS patients during the COVID-19 PHE under the “Hospital without Walls” initiative; convene a panel of medical experts to assess the ASC CPL criteria to ensure they reflect contemporary thinking and current medical practice; take into account current length of stay (LOS) requirements of a procedure; determine how procedures promote access for beneficiaries and providing deference to the patient-clinician decision-making process; and develop a framework that combines aspects of cost savings based on site of service, patient safety considerations, and volume of procedures that can and have been performed in an ASC setting.

Response: We thank the commenters for their input on the nomination process. We agree with commenters that a formalized process whereby the public notifies CMS of procedures to be added to the ASC CPL would provide more transparency and increase opportunities for CMS to engage with providers and external stakeholders in adding procedures to the ASC CPL. We intend to provide details on how procedures can be nominated early next year, in order for commenters to be able to send their nominations on March 1, 2022. After consideration of the public comments we received, we are finalizing our proposal to add a nomination process under our current regulations at § 416.166(d)(1), which describes how an external party may nominate a surgical procedure by March 1 of a calendar year for the ASC CPL for the following year. We are also finalizing the regulation text we proposed to add at § 416.166(d)(2), which provides that if CMS identifies a surgical procedure that meets the requirements at § 416.166(a), including a surgical procedure nominated under paragraph (d)(1), it will propose to add the surgical procedure to the ASC CPL in the next available rulemaking.

2. Covered Ancillary Services

In the CY 2019 OPPS/ASC final rule (83 FR 59062 through 59063), consistent with the established ASC payment system policy (72 FR 42497), we finalized the policy to update the ASC list of covered ancillary services to reflect the payment status for the services under the CY 2019 OPPS/ASC final rule with comment period. As discussed in prior rulemaking, maintaining consistency with the OPPS may result in changes to ASC payment indicators for some covered ancillary services because of changes that are being finalized under the OPPS for CY 2022. For example, if a covered ancillary service was separately paid under the ASC payment system in CY 2021, but will be packaged under the CY 2022 OPPS, to maintain consistency with the OPPS, we would also package the ancillary service under the ASC payment system for CY 2022. In the CY 2019 OPPS/ASC final rule, we finalized the policy to continue this reconciliation of packaged status for subsequent calendar years. Comment indicator “CH”, which was discussed in section XIII.F. of the CY 2022 OPPS/ASC proposed rule, is used in Addendum BB to this CY 2022 OPPS/ASC final rule (which is available via the internet on the CMS website) to indicate covered ancillary services for which we are finalizing a change in the ASC payment indicator to reflect a finalized change in the OPPS treatment of the service for CY 2022.

For CY 2022, as discussed in section II.A.3.b. of this final rule with comment period, we are finalizing our proposal to revise 42 CFR 416.164(b)(6) to include, as ancillary items that are integral to a covered surgical procedure and for which separate payment is allowed, non-opioid pain management drugs and biologicals that function as a supply when used in a surgical procedure as determined by CMS in proposed new § 416.174.

New CPT and HCPCS codes for covered ancillary services and their final payment indicators for CY 2022 can be found in section XIII.B of this final rule with comment period. All ASC covered ancillary services and their final payment indicators for CY 2022 are also included in Addendum BB to the CY 2022 OPPS/ASC proposed rule (which is available via the internet on the CMS website).

D. Update and Payment for ASC Covered Surgical Procedures and Covered Ancillary Services

1. ASC Payment for Covered Surgical Procedures

a. Background

Our ASC payment policies for covered surgical procedures under the revised ASC payment system are described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66828 through 66831). Under our established policy, we use the ASC standard ratesetting methodology of multiplying the ASC relative payment weight for the procedure by the ASC conversion factor for that same year to calculate the national unadjusted payment rates for procedures with payment indicators “G2” and “A2”. Payment indicator “A2” was developed to identify procedures that were included on the list of ASC covered surgical procedures in CY 2007 and, therefore, were subject to transitional payment prior to CY 2011. Although the 4-year transitional period has ended and payment indicator “A2” is no longer required to identify surgical procedures subject to transitional payment, we retained payment indicator “A2” because it is used to identify procedures that are exempted from the application of the office-based designation.

The rate calculation established for device-intensive procedures (payment indicator “J8”) is structured so only the service portion of the rate is subject to the ASC conversion factor. In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86122 through 86179), we updated the CY 2020 ASC payment rates for ASC covered surgical procedures with payment indicators of “A2”, “G2”, and “J8” using CY 2019 data, consistent with the CY 2021 OPPS update. We also updated payment rates for device-intensive procedures to incorporate the CY 2021 OPPS device offset percentages calculated under the standard APC ratesetting methodology, as discussed earlier in this section.

Payment rates for office-based procedures (payment indicators “P2”, “P3”, and “R2”) are the lower of the PFS nonfacility PE RVU-based amount or the amount calculated using the ASC standard rate setting methodology for the procedure. In the CY 2021 OPPS/ASC final rule with comment period, we updated the payment amounts for office-based procedures (payment indicators “P2”, “P3”, and “R2”) using the most recent available MPFS and OPPS data. We compared the estimated CY 2021 rate for each of the office-based procedures, calculated according to the ASC standard rate setting methodology, to the PFS nonfacility PE RVU-based amount to determine which was lower and, therefore, would be the CY 2021 payment rate for the procedure under our final policy for the revised ASC payment system (§ 416.171(d)).

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75081), we finalized our proposal to calculate the CY 2014 payment rates for ASC covered surgical procedures according to our established methodologies, with the exception of device removal procedures. For CY 2014, we finalized a policy to conditionally package payment for device removal procedures under the OPPS. Under the OPPS, a conditionally packaged procedure (status indicators “Q1” and “Q2”) describes a HCPCS code where the payment is packaged when it is provided with a significant procedure but is separately paid when the service appears on the claim without a significant procedure. Because ASC services always include a covered surgical procedure, HCPCS codes that are conditionally packaged under the OPPS are always packaged (payment indicator “N1”) under the ASC payment system. Under the OPPS, device removal procedures are conditionally packaged and, therefore, would be packaged under the ASC payment system. There would be no Medicare payment made when a device removal procedure is performed in an ASC without another surgical procedure included on the claim; therefore, no Medicare payment would be made if a device was removed but not replaced. To ensure that the ASC payment system provides separate payment for surgical procedures that only involve device removal—conditionally packaged in the OPPS (status indicator “Q2”)—we continued to provide separate payment since CY 2014 and assigned the current ASC payment indicators associated with these procedures.

b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2022

We proposed to update ASC payment rates for CY 2022 and subsequent years using the established rate calculation methodologies under § 416.171 and using our definition of device-intensive procedures, as discussed in section XII.C.1.b. of the CY 2022 OPPS/ASC proposed rule. Because the proposed OPPS relative payment weights are generally based on geometric mean costs, we proposed that the ASC payment system would generally use the geometric mean cost to determine proposed relative payment weights under the ASC standard methodology. We proposed to continue to use the amount calculated under the ASC standard ratesetting methodology for procedures assigned payment indicators “A2” and “G2”.

We proposed to calculate payment rates for office-based procedures (payment indicators “P2”, “P3”, and “R2”) and device-intensive procedures (payment indicator “J8”) according to our established policies and to use our proposed modified definition to identify device-intensive procedures, as discussed in section XII.C.1.b. of the CY 2022 OPPS/ASC proposed rule. Therefore, we proposed to update the payment amount for the service portion of the device-intensive procedures using the standard ASC ratesetting methodology and the payment amount for the device portion based on the proposed CY 2022 device offset percentages that have been calculated using the standard OPPS APC ratesetting methodology. We proposed that payment for office-based procedures would be at the lesser of the proposed CY 2022 MPFS nonfacility PE RVU-based amount or the proposed CY 2022 ASC payment amount calculated according to the ASC standard ratesetting methodology.

As we did for CYs 2014 through 2021, for CY 2022 we proposed to continue our policy for device removal procedures, such that device removal procedures that are conditionally packaged in the OPPS (status indicators “Q1” and “Q2”) would be assigned the current ASC payment indicators associated with those procedures and would continue to be paid separately under the ASC payment system.

Comment: Several commenters recommended that Medicare allow ASCs to bill procedures with an unlisted code, particularly new technologies and innovative techniques in the ASC setting. They noted that many new procedures are performed in the ASC setting before procedure-specific CPT codes are established. These commenters also mentioned that codes include the narrowly defined anatomic region of the service, which could provide the basis for a safety determination, and noted there is not a clear safety rationale for the policy on unlisted codes in the ASC setting. Another commenter requested that MACs be able to price unlisted codes. Commenters requested that CMS eliminate the restriction on billing with unlisted codes in the ASC setting.

Response: Under § 416.166(c)(7), covered surgical procedures do not include procedures that can only be reported using a CPT unlisted surgical procedure code. As discussed in the August 2, 2007 ASC final rule (72 FR 42485), it is not possible to know what specific procedure would be represented by an unlisted code. Additionally, although the code may include the narrowly defined anatomic region of the service, this information is not sufficient to fully assess the procedure against the applicable regulatory criteria at § 416.166. Therefore, as it is not possible to appropriately evaluate procedures reported by unlisted CPT codes, we are not accepting this recommendation.

We are finalizing our proposed policies without modification to calculate the CY 2022 payment rates for ASC covered surgical procedures according to our established rate calculation methodologies under § 416.171 and using the modified definition of device-intensive procedures as discussed in section XIII.C.1.b. of this CY 2022 OPPS/ASC final rule with comment period. For covered office-based surgical procedures, the payment rate is the lower of the final CY 2022 MPFS nonfacility PE RVU-based amount or the final CY 2022 ASC payment amount calculated according to the ASC standard ratesetting methodology. The final payment indicators and rates set forth in this final rule with comment period are based on a comparison using the PFS PE RVUs and the conversion factor effective January 1, 2022. For a discussion of the PFS rates, we refer readers to the CY 2022 PFS final rule with comment period, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html .

c. Limit on ASC Payment Rates for Procedures Assigned to Low Volume APCs

As stated in section XIII.D.1.b. of the CY 2022 OPPS/ASC proposed rule, the ASC payment system generally uses OPPS geometric mean costs under the standard methodology to determine proposed relative payment weights under the standard ASC ratesetting methodology. However, for low-volume device-intensive procedures, the proposed relative payment weights are based on median costs, rather than geometric mean costs, as discussed in section IV.B.5. of the CY 2022 OPPS/ASC proposed rule.

In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61400), we finalized our policy to limit the ASC payment rate for low-volume device-intensive procedures to a payment rate equal to the OPPS payment rate for that procedure. Under this policy, where the ASC payment rate based on the standard ASC ratesetting methodology for low volume device-intensive procedures would exceed the rate paid under the OPPS for the same procedure, we establish an ASC payment rate for such procedures equal to the OPPS payment rate for the same procedure.

As discussed in section X.C of the CY 2022 OPPS/ASC proposed rule (86 FR 42181 through 42185), we proposed a low volume APC policy for CY 2022 and subsequent calendar years. Under our proposal, we expanded the low volume adjustment policy that is applied to procedures assigned to New Technology APCs and applied such policy to clinical and brachytherapy APCs. Specifically, a clinical APC or brachytherapy APC with fewer than 100 claims per year would be designated as a low volume APC. For items and services assigned to APCs we proposed to designate as low volume APCs as well as procedures assigned to New Technology APCs with fewer than 100 claims, we proposed 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. The payment rate for a low volume APC or a low volume New Technology procedure would be based on the highest of the median cost, arithmetic mean cost, or geometric mean cost calculated using multiple years of claims data. Because we proposed to adopt a low volume APC policy, we also proposed to eliminate our low volume device-intensive procedure policy and address ratesetting for HCPCS code 0308T—the only code designated as a low volume device-intensive procedure—within our broader low volume APC proposal. Consequently, we proposed to modify our existing regulations at § 416.171(b)(4) to apply our ASC payment rate limitation to services assigned to low volume APCs rather than low volume device-intensive procedures.

We sought comments on our proposal to modify our existing regulations at § 416.171(b)(4) and limit the ASC payment rate for services assigned to low volume APCs to the payment rate for the OPPS.

Comment: One commenter recommended that we not finalize our proposal to apply a limit to the ASC payment rate for services assigned to low volume APCs to the payment rate for the OPPS. The commenter argued that only comprehensive APCs would be affected by our proposal and that the comprehensive ratesetting methodology generally is able to utilize a greater number of claims than under the ASC standard ratesetting methodology. The commenter stated that such additional claims may include claims that are inaccurately coded for other services and thus produce less accurate payment rates.

Response: We disagree. We do not believe ASCs incur greater costs than hospitals and that the ASC payment rate should be greater than the payment rate under the OPPS. We believe such situations represent a data anomaly and that the ASC payment rate should be limited to the OPPS payment rate for procedures assigned to low volume APCs.

After reviewing the public comment we received, we are finalizing our proposal, without modification, to modify our existing regulations at § 416.171(b)(4) and limit the ASC payment rate for services assigned to low volume APCs to the payment rate for the OPPS.

d. Changes to Beneficiary Coinsurance for Certain Colorectal Cancer Screening Tests

Section 122 of the Consolidated Appropriations Act (CAA) of 2021 (Pub. L. 116-260), Waiving Medicare Coinsurance for Certain Colorectal Cancer Screening Tests, amends section 1833(a) of the Act to 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. The reduced coinsurance will be phased-in beginning January 1, 2022. Detailed discussions on implementing this legislation are included in the CY 2022 PFS final rule and section X.B., “Changes to Beneficiary Coinsurance for Certain Colorectal Cancer Screening Tests” of this final rule with comment period.

After considering public comments, we are finalizing the proposals made in the CY 2022 OPPS/ASC proposed rule to implement section 122 of the CAA without modification. Specifically, we are finalizing that all surgical services furnished on the same date as a planned screening colonoscopy or planned flexible sigmoidoscopy would 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. Providers must continue to report HCPCS modifier “PT” to indicate that a planned colorectal cancer screening service converted to a diagnostic service. We will examine the claims data, monitor for any increases in surgical services unrelated to the colorectal cancer screening test performed on the same date as the screening test, and consider revising our policy through rulemaking if there is a notable increase or abuse of this policy.

2. Payment for Covered Ancillary Services

a. Background

Our payment policies under the ASC payment system for covered ancillary services generally vary according to the particular type of service and its payment policy under the OPPS. Our overall policy provides separate ASC payment for certain ancillary items and services integrally related to the provision of ASC covered surgical procedures that are paid separately under the OPPS and provides packaged ASC payment for other ancillary items and services that are packaged or conditionally packaged (status indicators “N”, “Q1”, and “Q2”) under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 and 77 FR 68457 through 68458), we further clarified our policy regarding the payment indicator assignment for procedures that are conditionally packaged in the OPPS (status indicators “Q1” and “Q2”). Under the OPPS, a conditionally packaged procedure describes a HCPCS code where the payment is packaged when it is provided with a significant procedure but is separately paid when the service appears on the claim without a significant procedure. Because ASC services always include a surgical procedure, HCPCS codes that are conditionally packaged under the OPPS are generally packaged (payment indictor “N1”) under the ASC payment system (except for device removal procedures, as discussed in section IV. of the CY 2022 OPPS/ASC proposed rule). Thus, our policy generally aligns ASC payment bundles with those under the OPPS (72 FR 42495). In all cases, in order for ancillary items and services also to be paid, the ancillary items and services must be provided integral to the performance of ASC covered surgical procedures for which the ASC bills Medicare.

Our ASC payment policies generally provide separate payment for drugs and biologicals that are separately paid under the OPPS at the OPPS rates and package payment for drugs and biologicals for which payment is packaged under the OPPS. However, as discussed in section XIII.D.3. of the CY 2022 OPPS/ASC proposed rule, for CY 2022, we proposed a policy to unpackage and pay separately at ASP plus 6 percent for the cost of non-opioid pain management drugs and biologicals that function as a supply when used in a surgical procedure as determined by CMS under proposed new § 416.174. We generally pay for separately payable radiology services at the lower of the PFS nonfacility PE RVU-based (or technical component) amount or the rate calculated according to the ASC standard ratesetting methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/ASC final rule with comment period (75 FR 72050), payment indicators for all nuclear medicine procedures (defined as CPT codes in the range of 78000 through 78999) that are designated as radiology services that are paid separately when provided integral to a surgical procedure on the ASC list are set to “Z2” so that payment is made based on the ASC standard ratesetting methodology rather than the MPFS nonfacility PE RVU amount (“Z3”), regardless of which is lower (§ 416.171(d)(1)).

Similarly, we also finalized our policy to set the payment indicator to “Z2” for radiology services that use contrast agents so that payment for these procedures will be based on the OPPS relative payment weight using the ASC standard ratesetting methodology and, therefore, will include the cost for the contrast agent (§ 416.171(d)(2)).

ASC payment policy for brachytherapy sources mirrors the payment policy under the OPPS. ASCs are paid for brachytherapy sources provided integral to ASC covered surgical procedures at prospective rates adopted under the OPPS or, if OPPS rates are unavailable, at contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs have been paid for brachytherapy sources provided integral to ASC covered surgical procedures at prospective rates adopted under the OPPS.

Our ASC policies also provide separate payment for: (1) Certain items and services that CMS designates as contractor-priced, including, but not limited to, the procurement of corneal tissue; and (2) certain implantable items that have pass-through payment status under the OPPS. These categories do not have prospectively established ASC payment rates according to ASC payment system policies (72 FR 42502 and 42508 through 42509; § 416.164(b)). Under the ASC payment system, we have designated corneal tissue acquisition and hepatitis B vaccines as contractor-priced. Corneal tissue acquisition is contractor-priced based on the invoiced costs for acquiring the corneal tissue for transplantation. Hepatitis B vaccines are contractor-priced based on invoiced costs for the vaccine.

Devices that are eligible for pass-through payment under the OPPS are separately paid under the ASC payment system and are contractor-priced. Under the revised ASC payment system (72 FR 42502), payment for the surgical procedure associated with the pass-through device is made according to our standard methodology for the ASC payment system, based on only the service (non-device) portion of the procedure's OPPS relative payment weight if the APC weight for the procedure includes other packaged device costs. We also refer to this methodology as applying a “device offset” to the ASC payment for the associated surgical procedure. This ensures that duplicate payment is not provided for any portion of an implanted device with OPPS pass-through payment status.

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933 through 66934), we finalized that, beginning in CY 2015, certain diagnostic tests within the medicine range of CPT codes for which separate payment is allowed under the OPPS are covered ancillary services when they are integral to an ASC covered surgical procedure. We finalized that diagnostic tests within the medicine range of CPT codes include all Category I CPT codes in the medicine range established by CPT, from 90000 to 99999, and Category III CPT codes and Level II HCPCS codes that describe diagnostic tests that crosswalk or are clinically similar to procedures in the medicine range established by CPT. In the CY 2015 OPPS/ASC final rule with comment period, we also finalized our policy to pay for these tests at the lower of the PFS nonfacility PE RVU-based (or technical component) amount or the rate calculated according to the ASC standard ratesetting methodology (79 FR 66933 through 66934). We finalized that the diagnostic tests for which the payment is based on the ASC standard ratesetting methodology be assigned to payment indicator “Z2” and revised the definition of payment indicator “Z2” to include a reference to diagnostic services and those for which the payment is based on the PFS nonfacility PE RVU-based amount be assigned payment indicator “Z3,” and revised the definition of payment indicator “Z3” to include a reference to diagnostic services.

Comment: One commenter recommended that we publish guidance on how MACs are to calculate transitional pass-through payments under the ASC payment system for devices that are eligible for pass-through payment under the OPPS similar to how such guidance is provided under the OPPS.

Response: As previously discussed, devices that are eligible for pass-through payment under the OPPS are separately paid under the ASC payment system and are contractor-priced. Transitional pass-through payments under the OPPS utilize hospital cost-to-charge ratios to reduce the pass-through device to cost and provide the hospital an additional payment of the amount by which the cost of the pass-through device exceeds the applicable device offset amount. ASCs do not submit cost reports and, as such, we are unable to replicate the transitional pass-through payment under the ASC payment system. Currently, MACs have been instructed to pay for such devices in the ASC setting based on invoice or cost. We are unaware of a compelling reason, at this time, to provide additional guidance or clarification on this process, beyond that provided in Section 40, Chapter 14 of the Medicare Claims Processing Manual.

b. Final Payment for Covered Ancillary Services for CY 2022

We are finalizing our proposal to update the ASC payment rates and to make changes to ASC payment indicators, as necessary, to maintain consistency between the OPPS and ASC payment system regarding the packaged or separately payable status of services and the final CY 2022 OPPS and ASC payment rates and subsequent year's payment rates. We are also finalizing our proposal to continue to set the CY 2022 ASC payment rates and subsequent year's payment rates for brachytherapy sources and separately payable drugs and biologicals equal to the OPPS payment rates for CY 2022 and subsequent year's payment rates.

Covered ancillary services and their final payment indicators for CY 2022 are listed in Addendum BB of this final rule with comment period (which is available via the internet on the CMS website). For those covered ancillary services where the payment rate is the lower of the rate under the ASC standard rate setting methodology and the PFS final rates (similar to our office-based payment policy), the final payment indicators and rates set forth in the final rule are based on a comparison using the proposed PFS rates effective January 1, 2022. For a discussion of the PFS rates, we refer readers to the CY 2022 PFS final rule, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html .

3. CY 2022 ASC Packaging Policy for Non-Opioid Pain Management Drugs and Biologicals

Please refer to Section II.A.3.b for a discussion of the final CY 2022 OPPS/ASC for payment for non-opioid pain management drugs and biologicals.

E. New Technology Intraocular Lenses (NTIOLs)

New Technology Intraocular Lenses (NTIOLs) are intraocular lenses that replace a patient's natural lens that has been removed in cataract surgery and that also meet the requirements listed in § 416.195.

1. NTIOL Application Cycle

Our process for reviewing applications to establish new classes of NTIOLs is as follows:

• Applicants submit their NTIOL requests for review to CMS by the annual deadline. For a request to be considered complete, we require submission of the information requested in the guidance document titled “Application Process and Information Requirements for Requests for a New Class of New Technology Intraocular Lenses (NTIOLs) or Inclusion of an IOL in an Existing NTIOL Class” posted on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html .

• We announce annually, in the proposed rule updating the ASC and OPPS payment rates for the following calendar year, a list of all requests to establish new NTIOL classes accepted for review during the calendar year in which the proposal is published. In accordance with section 141(b)(3) of Public Law 103-432 and our regulations at § 416.185(b), the deadline for receipt of public comments is 30 days following publication of the list of requests in the proposed rule.
• In the final rule updating the ASC and OPPS payment rates for the following calendar year, we—

++ Provide a list of determinations made as a result of our review of all new NTIOL class requests and public comments.

++ When a new NTIOL class is created, identify the predominant characteristic of NTIOLs in that class that sets them apart from other IOLs (including those previously approved as members of other expired or active NTIOL classes) and that is associated with an improved clinical outcome.

++ Set the date of implementation of a payment adjustment in the case of approval of an IOL as a member of a new NTIOL class prospectively as of 30 days after publication of the ASC payment update final rule, consistent with the statutory requirement.

++ Announce the deadline for submitting requests for review of an application for a new NTIOL class for the following calendar year.

2. Requests To Establish New NTIOL Classes for CY 2022

We did not receive any requests for review to establish a new NTIOL class for CY 2022 by March 1, 2021, the due date published in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86173).

3. Payment Adjustment

The current payment adjustment for a 5-year period from the implementation date of a new NTIOL class is $50 per lens. Since implementation of the process for adjustment of payment amounts for NTIOLs in 1999, we have not revised the payment adjustment amount, and we did not propose to revise the payment adjustment amount for CY 2022.

The comments and our responses to the comments are set forth below.

Comment: Some commenters requested that we re-evaluate our payment adjustment for a new NTIOL class. Commenters noted that our $50 payment adjustment has not been adjusted since CY 1999 and that the stagnant payment adjustment has been a barrier to intraocular lens innovation. One commenter requested that the $50 be inflated to 2022 dollars and updated by inflation in subsequent years. Another commenter requested that the $50 payment adjustment be increased to $100.

Response: We thank the commenter for their recommendations. We did not propose revising the payment adjustment amount for CY 2022. However, we will take the commenters' recommendations into consideration in future rulemaking.

4. Announcement of CY 2022 Deadline for Submitting Requests for CMS Review of Applications for a New Class of NTIOLS

In accordance with § 416.185(a) of our regulations, CMS announces that in order to be considered for payment effective beginning in CY 2023, requests for review of applications for a new class of new technology IOLs must be received by 5:00 p.m. EST, on March 1, 2022. Send requests via email to outpatientpps@cms.hhs.gov or by mail to ASC/NTIOL, Division of Outpatient Care, Mailstop C4-05-17, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. To be considered, requests for NTIOL reviews must include the information requested on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs .

F. ASC Payment and Comment Indicators

1. Background

In addition to the payment indicators that we introduced in the August 2, 2007 ASC final rule, we created final comment indicators for the ASC payment system in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66855). We created Addendum DD1 to define ASC payment indicators that we use in Addenda AA and BB to provide payment information regarding covered surgical procedures and covered ancillary services, respectively, under the revised ASC payment system. The ASC payment indicators in Addendum DD1 are intended to capture policy-relevant characteristics of HCPCS codes that may receive packaged or separate payment in ASCs, such as whether they were on the ASC CPL prior to CY 2008; payment designation, such as device-intensive or office-based, and the corresponding ASC payment methodology; and their classification as separately payable ancillary services, including radiology services, brachytherapy sources, OPPS pass-through devices, corneal tissue acquisition services, drugs or biologicals, or NTIOLs.

We also created Addendum DD2 that lists the ASC comment indicators. The ASC comment indicators included in Addenda AA and BB to the proposed rules and final rules with comment period serve to identify, for the revised ASC payment system, the status of a specific HCPCS code and its payment indicator with respect to the timeframe when comments will be accepted. The comment indicator “NI” is used in the OPPS/ASC final rule to indicate new codes for the next calendar year for which the interim payment indicator assigned is subject to comment. The comment indicator “NI” also is assigned to existing codes with substantial revisions to their descriptors such that we consider them to be describing new services, and the interim payment indicator assigned is subject to comment, as discussed in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60622).

The comment indicator “NP” is used in the OPPS/ASC proposed rule to indicate new codes for the next calendar year for which the proposed payment indicator assigned is subject to comment. The comment indicator “NP” also is assigned to existing codes with substantial revisions to their descriptors, such that we consider them to be describing new services, and the proposed payment indicator assigned is subject to comment, as discussed in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70497).

The “CH” comment indicator is used in Addenda AA and BB to the proposed rule (these addenda are available via the internet on the CMS website) to indicate that the payment indicator assignment has changed for an active HCPCS code in the current year and the next calendar year, for example if an active HCPCS code is newly recognized as payable in ASCs; or an active HCPCS code is discontinued at the end of the current calendar year. The “CH” comment indicators that are published in this final rule with comment period are provided to alert readers that a change has been made from one calendar year to the next, but do not indicate that the change is subject to comment.

In the CY 2021 OPPS/ASC final rule with comment period, we finalized the addition of ASC payment indicator “K5”—Items, Codes, and Services for which pricing information and claims data are not available. No payment made.—to ASC Addendum DD1 (which is available via the internet on the CMS website) to indicate those services and procedures that CMS anticipates will become payable when claims data or payment information becomes available.

2. ASC Payment and Comment Indicators for CY 2022

For 2022, we proposed new and revised Category I and III CPT codes as well as new and revised Level II HCPCS codes. Therefore, proposed Category I and III CPT codes that are new and revised for CY 2022 and any new and existing Level II HCPCS codes with substantial revisions to the code descriptors for CY 2022, compared to the CY 2021 descriptors, are included in ASC Addenda AA and BB to the CY 2022 OPPS/ASC proposed rule and labeled with proposed comment indicator “NP” to indicate that these CPT and Level II HCPCS codes are open for comment as part of the CY 2022 OPPS/ASC proposed rule. Proposed comment indicator “NP” meant a new code for the next calendar year or an existing code with substantial revision to its code descriptor in the next calendar year, as compared to the current calendar year; and denoted that comments would be accepted on the proposed ASC payment indicator for the new code.

We noted in the CY 2022 OPPS/ASC proposed rule that we would respond to public comments on ASC payment and comment indicators and finalize them in this CY 2022 OPPS/ASC final rule with comment period. We refer readers to Addenda DD1 and DD2 of the CY 2022 OPPS/ASC proposed rule (these addenda are available via the internet on the CMS website) for the complete list of ASC payment and comment indicators proposed for the CY 2022 update. Addenda DD1 and DD2 to this final rule with comment period (these addenda are available via the internet on the CMS website) contain the complete list of ASC payment and comment indicators for CY 2022.

We did not receive any public comments on the proposed ASC payment and comment indicators and we are finalizing their use as proposed without modification. Addenda DD1 and DD2 to this CY 2022 OPPS/ASC final rule (theses addenda are available via the internet on the CMS website) contain the complete list of ASC payment and comment indicators for CY 2022.

G. Calculation of the ASC Payment Rates and the ASC Conversion Factor

1. Background

In the August 2, 2007 ASC final rule (72 FR 42493), we established our policy to base ASC relative payment weights and payment rates under the revised ASC payment system on APC groups and the OPPS relative payment weights. Consistent with that policy and the requirement at section 1833(i)(2)(D)(ii) of the Act that the revised payment system be implemented so that it would be budget neutral, the initial ASC conversion factor (CY 2008) was calculated so that estimated total Medicare payments under the revised ASC payment system in the first year would be budget neutral to estimated total Medicare payments under the prior (CY 2007) ASC payment system (the ASC conversion factor is multiplied by the relative payment weights calculated for many ASC services in order to establish payment rates). That is, application of the ASC conversion factor was designed to result in aggregate Medicare expenditures under the revised ASC payment system in CY 2008 being equal to aggregate Medicare expenditures that would have occurred in CY 2008 in the absence of the revised system, taking into consideration the cap on ASC payments in CY 2007, as required under section 1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the system budget neutral in subsequent calendar years (72 FR 42532 through 42533; § 416.171(e)).

We note that we consider the term “expenditures” in the context of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of the Act to mean expenditures from the Medicare Part B Trust Fund. We do not consider expenditures to include beneficiary coinsurance and copayments. This distinction was important for the CY 2008 ASC budget neutrality model that considered payments across the OPPS, ASC, and MPFS payment systems. However, because coinsurance is almost always 20 percent for ASC services, this interpretation of expenditures has minimal impact for subsequent budget neutrality adjustments calculated within the revised ASC payment system.

In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 through 66858), we set out a step-by-step illustration of the final budget neutrality adjustment calculation based on the methodology finalized in the August 2, 2007 ASC final rule (72 FR 42521 through 42531) and as applied to updated data available for the CY 2008 OPPS/ASC final rule with comment period. The application of that methodology to the data available for the CY 2008 OPPS/ASC final rule with comment period resulted in a budget neutrality adjustment of 0.65.

For CY 2008, we adopted the OPPS relative payment weights as the ASC relative payment weights for most services and, consistent with the final policy, we calculated the CY 2008 ASC payment rates by multiplying the ASC relative payment weights by the final CY 2008 ASC conversion factor of $41.401. For covered office-based surgical procedures, covered ancillary radiology services (excluding covered ancillary radiology services involving certain nuclear medicine procedures or involving the use of contrast agents, as discussed in section XII.D.2. of the CY 2022 OPPS/ASC proposed rule), and certain diagnostic tests within the medicine range that are covered ancillary services, the established policy is to set the payment rate at the lower of the MPFS unadjusted nonfacility PE RVU-based amount or the amount calculated using the ASC standard ratesetting methodology. Further, as discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66841 through 66843), we also adopted alternative ratesetting methodologies for specific types of services (for example, device-intensive procedures).

As discussed in the August 2, 2007 ASC final rule (72 FR 42517 through 42518) and as codified at § 416.172(c) of the regulations, the revised ASC payment system accounts for geographic wage variation when calculating individual ASC payments by applying the pre-floor and pre-reclassified IPPS hospital wage indexes to the labor-related share, which is 50 percent of the ASC payment amount based on a GAO report of ASC costs using 2004 survey data. Beginning in CY 2008, CMS accounted for geographic wage variation in labor costs when calculating individual ASC payments by applying the pre-floor and pre-reclassified hospital wage index values that CMS calculates for payment under the IPPS, using updated Core Based Statistical Areas (CBSAs) issued by OMB in June 2003.

The reclassification provision in section 1886(d)(10) of the Act is specific to hospitals. We believe that using the most recently available pre-floor and pre-reclassified IPPS hospital wage indexes results in the most appropriate adjustment to the labor portion of ASC costs. We continue to believe that the unadjusted hospital wage indexes, which are updated yearly and are used by many other Medicare payment systems, appropriately account for geographic variation in labor costs for ASCs. Therefore, the wage index for an ASC is the pre-floor and pre-reclassified hospital wage index under the IPPS of the CBSA that maps to the CBSA where the ASC is located.

Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which provides the delineations of all Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan Statistical Areas, Combined Statistical Areas, and New England City and Town Areas in the United States and Puerto Rico based on the standards published on June 28, 2010 in the Federal Register (75 FR 37246 through 37252) and 2010 Census Bureau data. (A copy of this bulletin may be obtained at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2013/b13-01.pdf ). In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963), we implemented the use of the CBSA delineations issued by OMB in OMB Bulletin 13-01 for the IPPS hospital wage index beginning in FY 2015.

OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses. On July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provides updates to and supersedes OMB Bulletin No. 13-01 that was issued on February 28, 2013. OMB Bulletin No. 15-01 made changes that are relevant to the IPPS and ASC wage index. We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79750) for a discussion of these changes and our implementation of these revisions. (A copy of this bulletin may be obtained at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2015/15-01.pdf ).

On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which provided updates to and superseded OMB Bulletin No. 15-01 that was issued on July 15, 2015. We refer readers to the CY 2019 OPPS/ASC final rule with comment period (83 FR 58864 through 58865) for a discussion of these changes and our implementation of these revisions. (A copy of this bulletin may be obtained at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf ).

On April 10, 2018, OMB issued OMB Bulletin No. 18-03 which superseded the August 15, 2017 OMB Bulletin No. 17-01. On September 14, 2018, OMB issued OMB Bulletin 18-04 which superseded the April 10, 2018 OMB Bulletin No. 18-03. A copy of OMB Bulletin No. 18-04 may be obtained at https://www.whitehouse.gov/wpcontent/uploads/2018/90/Bulletin-18-04.pdf . We are utilizing the revised delineations as set forth in the April 10, 2018 OMB Bulletin No. 18-03 and the September 14, 2018 OMB Bulletin No. 18-04 to calculate the CY 2021 ASC wage index effective beginning January 1, 2021.

On March 6, 2020, OMB issued Bulletin No. 20-01, which provided updates to and superseded OMB Bulletin No. 18-04 that was issued on September 14, 2018. The attachments to OMB Bulletin No. 20-01 provided detailed information on the updates to statistical areas since September 14, 2018, and were based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2017, and July 1, 2018. (For a copy of this bulletin, we refer readers to the following website: https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf ). In OMB Bulletin No. 20-01, OMB announced one new Micropolitan Statistical Area, one new component of an existing Combined Statistical Area and changes to New England City and Town Area (NECTA) delineations. In the CY 2022 OPPS/ASC proposed rule (86 FR 42228 through 42229), we inadvertently failed to note that OMB Bulletin No. 20-01 had revised certain statistical area delineation; however, after reviewing OMB Bulletin No. 20-01, we have determined that the changes in Bulletin 20-01 encompassed delineation changes that had no effect on the ASC wage index for CY 2022. Specifically, the updates consisted of changes to NECTA delineations and the redesignation of a single rural county into a newly created Micropolitan Statistical Area. The ASC wage indexes do not utilize NECTA definitions, and we include hospitals located in Micropolitan Statistical Areas in each state's rural wage index. Therefore, we note that these OMB updates would not affect any geographic areas for purposes of the ASC wage index calculation for CY 2022.

The final CY 2022 ASC wage indexes fully reflects the OMB labor market area delineations (including the revisions to the OMB labor market delineations discussed above, as set forth in OMB Bulletin Nos. 15-01, 17-01, 18-03, 18-04, and 20-01). We note that, in certain instances, there might be urban or rural areas for which there is no IPPS hospital that has wage index data that could be used to set the wage index for that area. For these areas, our policy has been to use the average of the wage indexes for CBSAs (or metropolitan divisions as applicable) that are contiguous to the area that has no wage index (where “contiguous” is defined as sharing a border). For example, for CY 2022, we are applying a proxy wage index based on this methodology to ASCs located in CBSA 25980 (Hinesville-Fort Stewart, GA).

When all of the areas contiguous to the urban CBSA of interest are rural and there is no IPPS hospital that has wage index data that could be used to set the wage index for that area, we determine the ASC wage index by calculating the average of all wage indexes for urban areas in the state (75 FR 72058 through 72059). In other situations, where there are no IPPS hospitals located in a relevant labor market area, we have continued our current policy of calculating an urban or rural area's wage index by calculating the average of the wage indexes for CBSAs (or metropolitan divisions where applicable) that are contiguous to the area with no wage index.

Comment: Several commenters recommended that we refrain from wage-adjusting the device portion of device-intensive procedures by the wage index for that particular area and only wage-adjust non device portions of the ASC payment rate. The commenters contend that wage-adjusting 50 percent of the ASC payment rate by the wage index for a particular area can reduce ASC payment rates below the cost of certain devices.

Response: We appreciate the commenters recommendation. We did not propose such a change to our application of the ASC wage index but, as we stated in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59042), we will consider the feasibility of this change and take this comment into consideration for future rulemaking.

2. Calculation of the ASC Payment Rates

a. Updating the ASC Relative Payment Weights for CY 2022 and Future Years

We update the ASC relative payment weights each year using the national OPPS relative payment weights (and PFS nonfacility PE RVU-based amounts, as applicable) for that same calendar year and uniformly scale the ASC relative payment weights for each update year to make them budget neutral (72 FR 42533). The OPPS relative payment weights are scaled to maintain budget neutrality for the OPPS. We then scale the OPPS relative payment weights again to establish the ASC relative payment weights. To accomplish this, we hold estimated total ASC payment levels constant between calendar years for purposes of maintaining budget neutrality in the ASC payment system. That is, we apply the weight scalar to ensure that projected expenditures from the updated ASC payment weights in the ASC payment system are equal to what would be the current expenditures based on the scaled ASC payment weights. In this way we ensure budget neutrality and that the only changes to total payments to ASCs result from increases or decreases in the ASC payment update factor.

Where the estimated ASC expenditures for an upcoming year are higher than the estimated ASC expenditures for the current year, the ASC weight scalar is reduced, in order to bring the estimated ASC expenditures in line with the expenditures for the baseline year. This frequently results in ASC relative payment weights for surgical procedures that are lower than the OPPS relative payment weights for the same procedures for the upcoming year. Therefore, over time, even if procedures performed in the HOPD and ASC receive the same update factor under the OPPS and ASC payment system, payment rates under the ASC payment system would increase at a lower rate than payment for the same procedures performed in the HOPD as a result of applying the ASC weight scalar to ensure budget neutrality.

As discussed in section II.A.1.a of the CY 2022 OPPS/ASC proposed rule, given our concerns with CY 2020 claims data as a result of the PHE, we are using the CY 2019 claims data to be consistent with the OPPS claims data for the CY 2022 OPPS/ASC proposed rule. Consistent with our established policy, we proposed to scale the CY 2022 relative payment weights for ASCs according to the following method. Holding ASC utilization, the ASC conversion factor, and the mix of services constant from CY 2019, we proposed to compare the total payment using the CY 2021 ASC relative payment weights with the total payment using the CY 2022 ASC relative payment weights to take into account the changes in the OPPS relative payment weights between CY 2021 and CY 2022. We proposed to use the ratio of CY 2021 to CY 2022 total payments (the weight scalar) to scale the ASC relative payment weights for CY 2022. The proposed CY 2022 ASC weight scalar is 0.8591. Based on updated data for this final rule with comment period, the final CY 2022 ASC weight scalar is 0.8552. Consistent with historical practice, we would scale the ASC relative payment weights of covered surgical procedures, covered ancillary radiology services, and certain diagnostic tests within the medicine range of CPT codes, which are covered ancillary services for which the ASC payment rates are based on OPPS relative payment weights.

Scaling would not apply in the case of ASC payment for separately payable covered ancillary services that have a predetermined national payment amount (that is, their national ASC payment amounts are not based on OPPS relative payment weights), such as drugs and biologicals that are separately paid or services that are contractor-priced or paid at reasonable cost in ASCs. Any service with a predetermined national payment amount would be included in the ASC budget neutrality comparison, but scaling of the ASC relative payment weights would not apply to those services. The ASC payment weights for those services without predetermined national payment amounts (that is, those services with national payment amounts that would be based on OPPS relative payment weights) would be scaled to eliminate any difference in the total payment between the current year and the update year.

For any given year's ratesetting, we typically use the most recent full calendar year of claims data to model budget neutrality adjustments. While we would ordinarily use CY 2020 claims data to model the budget neutrality adjustment for the CY 2022 OPPS/ASC final rule, as discussed in Section X.E. of this final rule, we are finalizing our proposal to use, in general, CY 2019 claims data to model our budget neutrality adjustment. At the time of the CY 2022 OPPS/ASC proposed rule, we had available 100 percent of CY 2019 ASC claims data.

b. Updating the ASC Conversion Factor

Under the OPPS, we typically apply a budget neutrality adjustment for provider-level changes, most notably a change in the wage index values for the upcoming year, to the conversion factor. Consistent with our final ASC payment policy, for the CY 2017 ASC payment system and subsequent years, in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79751 through 79753), we finalized our policy to calculate and apply a budget neutrality adjustment to the ASC conversion factor for supplier-level changes in wage index values for the upcoming year, just as the OPPS wage index budget neutrality adjustment is calculated and applied to the OPPS conversion factor. For CY 2022, we calculated the proposed adjustment for the ASC payment system by using the most recent CY 2019 claims data available and estimating the difference in total payment that would be created by introducing the proposed CY 2022 ASC wage indexes. Specifically, holding CY 2019 ASC utilization, service-mix, and the proposed CY 2022 national payment rates after application of the weight scalar constant, we calculated the total adjusted payment using the CY 2021 ASC wage indexes and the total adjusted payment using the proposed CY 2022 ASC wage indexes. We used the 50-percent labor-related share for both total adjusted payment calculations. We then compared the total adjusted payment calculated with the CY 2021 ASC wage indexes to the total adjusted payment calculated with the proposed CY 2022 ASC wage indexes and applied the resulting ratio of 0.9999 (the proposed CY 2022 ASC wage index budget neutrality adjustment) to the CY 2021 ASC conversion factor to calculate the proposed CY 2022 ASC conversion factor.

Section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary has not updated amounts established under the revised ASC payment system in a calendar year, the payment amounts shall be increased by the percentage increase in the Consumer Price Index for all urban consumers (CPI-U), U.S. city average, as estimated by the Secretary for the 12-month period ending with the midpoint of the year involved. The statute does not mandate the adoption of any particular update mechanism, but it requires the payment amounts to be increased by the CPI-U in the absence of any update. Because the Secretary updates the ASC payment amounts annually, we adopted a policy, which we codified at § 416.171(a)(2)(ii)), to update the ASC conversion factor using the CPI-U for CY 2010 and subsequent calendar years.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075 through 59080), we finalized our proposal to apply the productivity-adjusted hospital market basket update to ASC payment system rates for an interim period of 5 years (CY 2019 through CY 2023), during which we will assess whether there is a migration of the performance of procedures from the hospital setting to the ASC setting as a result of the use of a productivity-adjusted hospital market basket update, as well as whether there are any unintended consequences, such as less than expected migration of the performance of procedures from the hospital setting to the ASC setting. In addition, we finalized our proposal to revise our regulations under § 416.171(a)(2), which address the annual update to the ASC conversion factor. During this 5-year period, we intend to assess the feasibility of collaborating with stakeholders to collect ASC cost data in a minimally burdensome manner and could propose a plan to collect such information. We refer readers to that final rule for a detailed discussion of the rationale for these policies.

The proposed hospital market basket update for CY 2022 was projected to be 2.5 percent, as published in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25435), based on IHS Global Inc.'s (IGI's) 2020 fourth quarter forecast with historical data through the third quarter of 2020.

Section 1886(b)(3)(B)(xi)(II) of the Act, defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP). We finalized the methodology for calculating the productivity adjustment in the CY 2011 PFS final rule with comment period (75 FR 73394 through 73396) and revised it in the CY 2012 PFS final rule with comment period (76 FR 73300 through 73301) and the CY 2016 OPPS/ASC final rule with comment period (80 FR 70500 through 70501). The proposed productivity adjustment for CY 2022 was projected to be 0.2 percentage point, as published in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25435) based on IGI's 2020 fourth quarter forecast.

For 2022, we proposed to utilize the hospital market basket update of 2.5 percent reduced by the productivity adjustment of 0.2 percentage point, resulting in a productivity-adjusted hospital market basket update factor of 2.3 percent for ASCs meeting the quality reporting requirements. Therefore, we proposed to apply a 2.3 percent productivity-adjusted hospital market basket update factor to the CY 2021 ASC conversion factor for ASCs meeting the quality reporting requirements to determine the CY 2022 ASC payment amounts. The ASCQR Program affected payment rates beginning in CY 2014 and, under this program, there is a 2.0 percentage point reduction to the update factor for ASCs that fail to meet the ASCQR Program requirements. We refer readers to section XIV.E. of the CY 2019 OPPS/ASC final rule with comment period (83 FR 59138 through 59139) and section XIV.E. of the CY 2022 OPPS/ASC proposed rule for a detailed discussion of our policies regarding payment reduction for ASCs that fail to meet ASCQR Program requirements. We proposed to utilize the hospital market basket update of 2.5 percent reduced by 2.0 percentage points for ASCs that do not meet the quality reporting requirements and then reduced by the 0.2 percentage point productivity adjustment. Therefore, we proposed to apply a 0.3 percent productivity-adjusted hospital market basket update factor to the CY 2021 ASC conversion factor for ASCs not meeting the quality reporting requirements. We also proposed that if more recent data are subsequently available (for example, a more recent estimate of the hospital market basket update or productivity adjustment), we would use such data, if appropriate, to determine the CY 2022 ASC update for this final rule with comment period.

For 2022, we proposed to adjust the CY 2021 ASC conversion factor ($48.952) by the proposed wage index budget neutrality factor of 0.9993 in addition to the productivity-adjusted hospital market basket update of 2.3 percent discussed above, which results in a proposed CY 2022 ASC conversion factor of $50.043 for ASCs meeting the quality reporting requirements. For ASCs not meeting the quality reporting requirements, we proposed to adjust the CY 2021 ASC conversion factor ($48.952) by the proposed wage index budget neutrality factor of 0.9993 in addition to the quality reporting/productivity-adjusted hospital market basket update of 0.3 percent discussed above, which results in a proposed CY 2022 ASC conversion factor of $49.064.

The comments we received on our proposals for updating the CY 2022 ASC conversion factor and our responses are set forth below.

Comment: Commenters supported continued use of the hospital market basket for updating ASC payments on an annual basis and suggested that using the hospital market basket better aligns the OPPS and ASC payment system. One commenter requested that we permanently use the hospital market basket to update ASC payment rates rather than limiting such update factor through CY 2023.

Response: We thank the commenters for their support of our proposal. We believe using the same update factor to calculate payments to ASC and hospital outpatient departments encourages the migration of services from the hospital setting to the ASC setting, and could potentially increase the presence of ASCs in health care markets or geographic areas where previously there were none or few. The migration of services from the higher cost hospital outpatient setting to the ASC setting is likely to result in savings to beneficiaries and the Medicare program. This policy will also further our goal of giving both physicians and beneficiaries a greater choice in selecting the care setting that best suits their needs.

As we discussed in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075 through 59080), we finalized our policy to apply the hospital market basket update to ASC payment system rates for an interim period of 5 years (CY 2019 through CY 2023), during which we will assess whether there is a migration of the performance of procedures from the hospital setting to the ASC setting as a result of the use of a hospital market basket update, as well as whether there are any unintended consequences, such as less than expected migration of the performance of procedures from the hospital setting to the ASC setting. We intend to publish our assessment of service migration and other factors as a result of the hospital market basket update and any proposals related to our results in the CY 2023 OPPS/ASC proposed rule.

After consideration of the public comments we received, consistent with our proposal that if more recent data are subsequently available (for example, a more recent estimate of the hospital market basket update and productivity adjustment), we would use such data, if appropriate, to determine the CY 2022 ASC update for the CY 2022 OPPS/ASC final rule with comment period, we are incorporating more recent data to determine the final CY 2022 ASC update. Therefore, for this final rule with comment period, the hospital market basket update for CY 2022 is 2.7 percent, as published in the FY 2022 IPPS/LTCH PPS final rule (86 FR 42343), based on IGI's 2021 second quarter forecast with historical data through the first quarter of 2021. The productivity adjustment for this CY 2022 OPPS/ASC final rule with comment period is 0.7 percentage point, as published in the FY 2022 IPPS/LTCH PPS final rule (84 FR 42343) based on IGI's 2021 second quarter forecast.

For CY 2022, we are finalizing the hospital market basket update of 2.7 percent minus the productivity adjustment of 0.7 percentage point, resulting in a productivity-adjusted hospital market basket update factor of 2.0 percent for ASCs meeting the quality reporting requirements. Therefore, we apply a 2.0 percent productivity-adjusted hospital market basket update factor to the CY 2021 ASC conversion factor for ASCs meeting the quality reporting requirements to determine the CY 2022 ASC payment rates. We are finalizing the hospital market basket update of 2.7 percent reduced by 2.0 percentage points for ASCs that do not meet the quality reporting requirements and then subtract the 0.7 percentage point productivity adjustment. Therefore, we apply a 0.0 percent productivity -adjusted hospital market basket update factor to the CY 2021 ASC conversion factor for ASCs not meeting the quality reporting requirements.

For CY 2022, we are adjusting the CY 2021 ASC conversion factor ($48.952) by a wage index budget neutrality factor of 0.9997 in addition to the productivity-adjusted hospital market basket update of 2.0 percent, discussed above, which results in a final CY 2022 ASC conversion factor of $49.916 for ASCs meeting the quality reporting requirements. For ASCs not meeting the quality reporting requirements, we are adjusting the CY 2021 ASC conversion factor ($48.952) by the wage index budget neutrality factor of 0.9997 in addition to the quality reporting/productivity-adjusted hospital market basket update of 0.0 percent discussed above, which results in a final CY 2022 ASC conversion factor of $48.937.

3. Display of CY 2022 ASC Payment Rates

Addenda AA and BB to this final rule with comment period (which are available on the CMS website) display the final ASC payment rates for CY 2022 for covered surgical procedures and covered ancillary services, respectively. Historically, for those covered surgical procedures and covered ancillary services where the payment rate is the lower of the final rates under the ASC standard ratesetting methodology and the MPFS final rates, the final payment indicators and rates set forth in this final rule with comment period are based on a comparison using the PFS rates that would be effective January 1, 2022. For a discussion of the PFS rates, we refer readers to the CY 2022 PFS final rule that is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html .

The final payment rates included in addenda AA and BB to this final rule with comment period reflect the full ASC payment update and not the reduced payment update used to calculate payment rates for ASCs not meeting the quality reporting requirements under the ASCQR Program. These addenda contain several types of information related to the final CY 2022 payment rates. Specifically, in Addendum AA, a “Y” in the column titled “To be Subject to Multiple Procedure Discounting” indicates that the surgical procedure would be subject to the multiple procedure payment reduction policy. As discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66829 through 66830), most covered surgical procedures are subject to a 50-percent reduction in the ASC payment for the lower-paying procedure when more than one procedure is performed in a single operative session.

Comment: One commenter recommended that we remove the “Y” indicator for CPT code 64582 and not apply the multiple procedure discount as the predecessor code, CPT code 64568, was not subject to the multiple procedure discounting policy.

Response: We agree with the commenter that the predecessor code CPT code 64568 was not subject to multiple procedure discounting and that applying our discounting policy to this procedure would be inappropriate due to its high device costs. Therefore, we are removing the “Y” indicator for CPT code 64582 for CY 2022.

Display of the comment indicator “CH” in the column titled “Comment Indicator” indicates a change in payment policy for the item or service, including identifying discontinued HCPCS codes, designating items or services newly payable under the ASC payment system, and identifying items or services with changes in the ASC payment indicator for CY 2022. Display of the comment indicator “NI” in the column titled “Comment Indicator” indicates that the code is new (or substantially revised) and that comments will be accepted on the interim payment indicator for the new code. Display of the comment indicator “NP” in the column titled “Comment Indicator” indicates that the code is new (or substantially revised) and that comments will be accepted on the ASC payment indicator for the new code.

In Addendum BB, the column titled “Drug Pass-Through Expiration during Calendar Year” flags, through the use of an asterisk, each drug for which pass-through payment is expiring during the calendar year (that is, on a date other than December 31st).

The values displayed in the column titled “Final CY 2022 Payment Weight” are the final relative payment weights for each of the listed services for CY 2022. The final relative payment weights for all covered surgical procedures and covered ancillary services where the ASC payment rates are based on OPPS relative payment weights were scaled for budget neutrality. Therefore, scaling was not applied to the device portion of the device-intensive procedures, services that are paid at the MPFS nonfacility PE RVU-based amount, separately payable covered ancillary services that have a predetermined national payment amount, such as drugs and biologicals and brachytherapy sources that are separately paid under the OPPS, or services that are contractor-priced or paid at reasonable cost in ASCs. This includes separate payment for non-opioid pain management drugs.

To derive the final CY 2022 payment rate displayed in the “Final CY 2022 Payment Rate” column, each ASC payment weight in the “Final CY 2022 Payment Weight” column was multiplied by the final CY 2022 conversion factor of $49.916. The conversion factor includes a budget neutrality adjustment for changes in the wage index values and the annual update factor as reduced by the productivity adjustment. The final CY 2022 ASC conversion factor uses the CY 2022 productivity-adjusted hospital market basket update factor of 2.0 percent (which is equal to the projected hospital market basket update of 2.7 percent reduced by a projected productivity adjustment of 0.7 percentage point).

In Addendum BB, there are no relative payment weights displayed in the “Final CY 2022 Payment Weight” column for items and services with predetermined national payment amounts, such as separately payable drugs and biologicals. The “Final CY 2022 Payment” column displays the final CY 2022 national unadjusted ASC payment rates for all items and services. The final CY 2022 ASC payment rates listed in Addendum BB for separately payable drugs and biologicals are based on ASP data used for payment in physicians' offices in 2020.

Addendum EE provides the HCPCS codes and short descriptors for surgical procedures that are proposed to be excluded from payment in ASCs for CY 2022.

In response to public comments we received, we are finalizing an Addendum FF to this final rule with comment period as well as subsequent OPPS/ASC proposed and final rules. Addenda FF to this final rule with comment period displays the OPPS payment rate (based on the standard ratesetting methodology), the device offset percentage, and the device portion of the ASC payment rate for CY 2022 for covered surgical procedures.

XIV. Advancing to Digital Quality Measurement and the Use of Fast Healthcare Interoperability Resources (FHIR) in Outpatient Quality Programs—Request for Information

We aim to move fully to digital quality measurement in the Centers for Medicare & Medicaid Services (CMS) quality reporting and value-based purchasing (VBP) programs by 2025. As part of this modernization of our quality measurement enterprise, in the CY 2022 OPPS/ASC proposed rule (86 FR 42234) we issued a request for information (RFI). The purpose of this RFI was to gather broad public input solely for planning purposes for our transition to digital quality measurement. Any updates to specific program requirements related to providing data for quality measurement and reporting provisions would be addressed through future rulemaking, as necessary. This RFI contains five parts:

• Background. This part provides information on our quality measurement programs and our goal to move fully to digital quality measurement by 2025. This part also provides a summary of recent HHS policy developments that are advancing interoperability and could support our move towards full digital quality measurement.
• Definition of Digital Quality Measures (dQMs). This part provides a potential definition for dQMs. Specific requests for input are included in the section.
• Use of Fast Healthcare Interoperability Resources (FHIR®) for Current Electronic Clinical Quality Measures (eCQMs). This part provides information on current activities underway to align CMS eCQMs with the FHIR standard and support quality measurement via application programming interfaces (APIs), and contrasts this approach to current eCQM standards and practice.
• Changes Under Consideration to Advance Digital Quality Measurement: Potential Actions in Four Areas to Transition to dQMs by 2025. This part introduces four possible steps that would enable transformation of CMS' quality measurement enterprise to be fully digital by 2025. Specific requests for input are included in the section.
• Solicitation of Comments. This part lists all requests for input we had included in the sections of this RFI.

A. Background

As required by law, we implement quality measurement and VBP programs across a broad range of inpatient acute care, outpatient, and post-acute care (PAC) settings consistent with our mission to improve the quality of health care for Americans through measurement, transparency, and increasingly, value-based purchasing. These quality programs are foundational for incentivizing value-based care, contributing to improvements in health care, enhancing patient outcomes, and informing consumer choice. In October 2017, we launched the Meaningful Measures Framework. This framework for quality measurement captures our vision to better address health care quality priorities and gaps, including emphasizing digital quality measurement, reducing measurement burden, and promoting patient perspectives, while also focusing on modernization and innovation. The scope of the Meaningful Measures Framework evolves as the health care environment continues to change. Consistent with the Meaningful Measures Framework, we aim to move fully to digital quality measurement by 2025. We acknowledge facilities within the various care and practice settings covered by our quality programs may be at different stages of readiness and, therefore, the timeline for achieving full digital quality measurement across our quality reporting programs may vary.

We also continue to evolve the Medicare Promoting Interoperability Program's focus on the use of certified electronic health record (EHR) technology, from an initial focus on electronic data capture to enhancing information exchange and expanding quality measurement (83 FR 41634). However, reporting data for quality measurement via EHRs remains burdensome, and our current approach to quality measurement does not readily incorporate emerging data sources such as patient-reported outcomes (PRO) and patient-generated health data (PGHD). There is a need to streamline our approach to data collection, calculation, and reporting to fully leverage clinical and patient-centered information for measurement, improvement, and learning.

Additionally, advancements in technical standards and associated regulatory initiatives to improve interoperability of healthcare data are creating an opportunity to significantly improve our quality measurement systems. In May 2020, we finalized interoperability requirements in the CMS Interoperability and Patient Access final rule (85 FR 25510) to support beneficiary access to data held by certain payers. At the same time, the Office of the National Coordinator for Health Information Technology (ONC) finalized policies in the ONC 21st Century Cures Act final rule (85 FR 25642) to advance the interoperability of health information technology (IT) as defined in section 4003 of the 21st Century Cures Act, including the “complete access, exchange, and use of all electronically accessible health information.” Closely working with ONC, we collaboratively identified Health Level 7 (HL7®) FHIR Release 4.0.1 as the standard to support API policies in both rules. ONC, on behalf of HHS, adopted the HL7 FHIR Release 4.0.1 for APIs and related implementation specifications at 45 CFR 170.215. We believe the FHIR standard has the potential to be a more efficient and modular standard to enable APIs. We also believe this standard enables collaboration and information sharing, which is essential for delivering high-quality care and better outcomes at a lower cost. By aligning technology requirements for payers, health care facilities, and health IT developers HHS can advance an interoperable health IT infrastructure that ensures healthcare facilities and patients have access to health data when and where it is needed.

In the ONC 21st Century Cures Act final rule, ONC adopted a “Standardized API for Patient and Population Services” certification criterion for health IT that requires the use of FHIR Release 4 and several implementation specifications. Health IT certified to this criterion will offer single patient and multiple patient services that can be accessed by third party applications (85 FR 25742). The ONC 21st Century Cures Act final rule also requires health IT developers to update their certified health IT to support the United States Core Data for Interoperability (USCDI) standard. The scope of patient data identified in the USCDI and the data standards that support this data set are expected to evolve over time, starting with data specified in Version 1 of the USCDI. In November 2020, ONC issued an interim final rule with comment period extending the date when health IT developers must make technology meeting updated certification criteria available under the ONC Health IT Certification Program until December 31, 2022 (85 FR 70064).

The CMS Interoperability and Patient Access final rule (85 FR 25510) and program policies build on the ONC 21st Century Cures Act final rule (85 FR 25642). The CMS Interoperability and Patient Access final rule and policies require certain payers (for example, Medicare Advantage organizations, Medicaid and Child Health Insurance Program (CHIP) Fee-for-Service (FFS) programs, Medicaid managed care plans, CHIP managed care entities, and issuers of certain Qualified Health Plan (QHP) on the Federally-facilitated Exchanges (FFEs)) to implement and maintain a standards-based Patient Access API using HL7 FHIR Release 4.0.1 to make available claims and encounter data to their enrollees and beneficiaries (called “patients” in the CMS interoperability rule) with the intent of ensuring enrollees and beneficiaries have access to their own health care information through third-party software applications.

The CMS Interoperability and Patient Access final rule also established new conditions of participation for Medicare and Medicaid participating hospitals and critical access hospitals (CAHs), requiring them to send electronic notifications to another healthcare facility or community provider or practitioner when a patient is admitted, discharged, or transferred (85 FR 25603).

In the calendar year (CY) 2021 Physician Fee Schedule (PFS) final rule (85 FR 84472), we finalized a policy to align the certified EHR technology required for use in the Promoting Interoperability Programs and the Merit-based Incentive Payment System (MIPS) Promoting Interoperability performance category with the updates to health IT certification criteria finalized in the ONC 21st Century Cures Act final rule. Under this policy, MIPS eligible clinicians, and eligible hospitals and CAHs participating in the Promoting Interoperability Programs, must use technology meeting the updated certification criteria for performance and reporting periods beginning in 2023 (85 FR 84825).

The use of APIs can also reduce long-standing barriers to quality measurement. Currently, health IT developers are required to implement individual measure specifications within their health IT products. The health IT developer must also accommodate how that product connects with the unique variety of systems within a specific care setting. This may be further complicated by systems that integrate a wide range of data schemas. This process is burdensome and costly, and it is difficult to reliably obtain high quality data across systems. As health IT developers map their health IT data to the FHIR standard and related implementation specifications, APIs can enable these structured data to be easily accessible for quality measurement or other use cases, such as care coordination, clinical decision support, and supporting patient access.

We believe the emerging data standardization and interoperability enabled by APIs will support the transition to full digital quality measurement by 2025, and are committed to exploring and seeking input on potential solutions for the transition to digital quality measurement as described in this RFI.

B. Definition of Digital Quality Measures

In the proposed rule, we sought to refine the definition of digital quality measures (dQMs) to further operationalize our objective of fully transitioning to dQMs by 2025. We previously noted dQMs use “sources of health information that are captured and can be transmitted electronically and via interoperable systems” (85 FR 84845). In the RFI, we sought input on future elaboration that would define a dQM as a software that processes digital data to produce a measure score or measure scores. Data sources for dQMs may include administrative systems, electronically submitted clinical assessment data, case management systems, EHRs, instruments (for example, medical devices and wearable devices), patient portals or applications (for example, for collection of patient-generated health data), health information exchanges (HIEs) or registries, and other sources. We also note that dQMs are intended to improve the patient experience including quality of care, improve the health of populations, and/or reduce costs.

We discussed one potential approach to developing dQM software in section XIV.D.2. of the preamble of the CY 2022 OPPS/ASC proposed rule (86 FR 42235) and in this final rule with comment period. In that section, we sought comment on the potential definition of dQMs in this RFI.

We also sought feedback on how leveraging advances in technology (for example, FHIR-based APIs) to access and electronically transmit interoperable data for dQMs could reinforce other activities to support quality measurement and improvement (for example, the aggregation of data across multiple data sources, rapid-cycle feedback, and alignment of programmatic requirements).

The transition to dQMs relies on advances in data standardization and interoperability. As providers and payers work to implement the required advances in interoperability over the next several years, we will continue to support reporting of eCQMs through CMS quality reporting programs and through the Promoting Interoperability Programs. These fully digital measures continue to be important drivers of interoperability advancement and learning. As discussed in the CY 2022 OPPS/ASC proposed rule and the next section of this final rule with comment period, we are currently re-specifying and testing these measures to use FHIR rather than the currently adopted Quality Data Model (QDM) in anticipation of the wider use of FHIR standards. We intend to apply significant components of the output of this work, such as the re-specified measure logic and the learning done through measure testing with FHIR-based APIs, to define and build future dQMs that take advantage of the expansion of standardized, interoperable data.

C. Use of FHIR for Current eCQMs

Since we adopted eCQMs in our hospital and clinician quality programs, we have heard from stakeholders about the technological challenges, burden, and related costs of reporting eCQM data. The CMS eCQM Strategy Project engaged with stakeholders through site visits and listening sessions with health systems and provider organizations to learn about their experiences. This stakeholder feedback identified recommendations to improve processes related to alignment; development; implementation and reporting; certification; and communication, education, and outreach. Over the past 2 years, we have focused on opportunities to streamline and modernize quality data collection and reporting processes, such as exploring FHIR ( http://hl7.org/fhir ) as a framework for measure structure and data submission for quality reporting programs, specifically for eCQMs. FHIR is a free and open source standards framework (in both commercial and government settings) created by HL7 International that establishes a common language and process for all health information technology. FHIR allows systems to communicate and information to be shared seamlessly, with a lower burden for hospitals, providers, clinicians, vendors, and quality measurement stakeholders. Specifically, for quality reporting, FHIR enables representing the data in eCQMs as well as provides a structure for eCQMs and reporting, using FHIR as the standard for all. Whereas today, multiple standards being used to report eCQMs is challenging and burdensome.

We are working to convert current eCQMs to the FHIR standard. We are currently testing the exchange of data elements represented in FHIR to CMS through ongoing HL7 Connectathons and integrated system testing by using and refining implementation guides (IGs). Submitting data through FHIR-based APIs has the potential to improve data exchange by providing consistent security, performance, scalability, and structure to all users. In addition, development of FHIR-based APIs could decrease provider burden by automating more of the measure data collection process. We continue to explore and expand potential applications of the FHIR standard and testing with eCQM use cases, and we are strongly considering a transition to FHIR-based quality reporting with the use of the FHIR standard for eCQMs in quality and value-based reporting programs. As we move to an all-dQM format for quality programs, we are depending on testing results and community readiness to improve interoperability, reduce burden, and facilitate better patient care. We will continue to consider how to leverage the interoperability advantages offered by the FHIR standards and API-based data submission, including digital quality measurement.

D. Changes Under Consideration To Advance Digital Quality Measurement: Potential Actions in Four Areas To Transition to Digital Quality Measures by 2025

Building on the advances in interoperability and learning from testing of FHIR-converted eCQMs, we aim to move fully to dQMs, originating from sources of health information that are captured and can be transmitted electronically via interoperable systems, by 2025.

To enable this transformation, we are considering further modernization of the quality measurement enterprise in four major ways: (1) Leverage and advance standards for digital data and obtain all EHR data required for quality measures via provider FHIR-based APIs; (2) redesign our quality measures to be self-contained tools; (3) better support data aggregation; and (4) work to align measure requirements across our reporting programs, other Federal programs and agencies, and the private sector where appropriate.

These changes would enable us to collect and utilize more timely, actionable, and standardized data from diverse sources and care settings to improve the scope and quality of data used in quality reporting and payment programs, reduce quality reporting burden, and make results available to stakeholders in a rapid-cycle fashion. Data collection and reporting efforts would become more efficient, supported by advances in interoperability and data standardization. Aggregation of data from multiple sources would allow assessments of costs and outcomes to be measured across multiple care settings for an individual patient or clinical conditions. We believe that aggregating data for measurement can incorporate a more holistic assessment of an individual's health and health care and produce the rich set of data needed to enable patients and caregivers to make informed decisions by combining data from multiple sources (for example, patient reported data, EHR data, and claims data) for measurement.

Perhaps most importantly, these steps would help us deliver on the full promise of quality measurement and drive us toward a learning health system that transforms healthcare quality, safety, and coordination and effectively measures and achieves value-based care. The shift from a static to a learning health system hinges on the interoperability of healthcare data, and the use of standardized data. The dQMs would leverage this interoperability to deliver on the promise of a learning health system wherein standards-based data sharing and analysis, rapid-cycle feedback, and quality measurement and incentives are aligned for continuous improvement in patient-centered care. Similarly, standardized, interoperable data used for measurement can also be used for other use cases, such as clinical decision support, care coordination and care decision support, which impacts health care and care quality.

We requested comments on four potential future actions that would enable transformation to a fully digital quality measurement enterprise by 2025.

1. Leveraging and Advancing Standards for Digital Data and Obtaining All EHR Data Required for Quality Measures via Provider FHIR-Based APIs

We are considering targeting the data required for our quality measures that utilize EHR data to be data retrieved via FHIR-based APIs based on standardized, interoperable data. Utilizing standardized data for EHR-based measurement (based on FHIR and associated IGs) and aligning where possible with interoperability requirements can eliminate the data collection burden providers currently experience with required chart-abstracted quality measures and reduce the burden of reporting digital quality measure results. We can fully leverage this advance to adapt eCQMs and expand to other dQMs through the adoption of interoperable standards across other digital data sources. We are considering methods and approaches to leverage the interoperability data requirements for APIs in certified health IT set by the ONC 21st Century Cures Act final rule to support modernization of CMS quality measure reporting. As discussed previously, these requirements will be included in certified technology in future years (85 FR 84825) including availability of data included in the USCDI via standards-based APIs, and we will require clinicians and hospitals participating in MIPS and the Promoting Interoperability Programs, respectively, to transition to use of certified technology updated consistent with the 2015 Cures Edition Update (85 FR 84825).

Digital data used for measurement could also expand beyond data captured in traditional clinical settings, administrative claims data, and EHRs. Many important data sources are not currently captured digitally, such as survey and PGHD. We intend to work to innovate and broaden the digital data used across the quality measurement enterprise beyond the clinical EHR and administrative claims. Agreed upon standards for these data, and associated implementation guides will be important for interoperability and quality measurement. We will consider developing clear guidelines and requirements for these digital data that align with interoperability requirements, for example, requirements for expressing data in standards, exposing data via standards-based APIs, and incentivizing technologies that innovate data capture and interoperability.

High quality data are also essential for reliable and valid measurement. Hence, in implementing the shift to collect all clinical EHR data via FHIR-based APIs, we would support efforts to strengthen and test the quality of the data obtained through FHIR-based APIs for quality measurement. We currently conduct audits of eCQM data submitted under our quality programs, including the Hospital Inpatient Quality Reporting (IQR) Program, with functions including checks for data completeness and data accuracy, confirmation of proper data formatting, alignment with standards, and appropriate data cleaning (82 FR 38398 through 38402). These functions would continue and be applied to dQMs and further expanded to automate the manual validation of the data compared to the original data source (for example, the medical record) where possible. Analytic advancements such as natural language processing, big data analytics, and artificial intelligence, can support this evolution. These techniques can be applied to validating observed patterns in data and inferences or conclusions drawn from associations, as data are received, to ensure high quality data are used for measurement.

We sought feedback on the goal of aligning data needed for quality measurement with interoperability requirements and the strengths and limitations of this approach. We also sought feedback on the importance of and approaches to supporting inclusion of PGHD and other currently non-standardized data. We also welcomed comment on approaches for testing data quality and validity.

2. Redesigning Quality Measures To Be Self-Contained Tools

We are considering approaches for including quality measures that take advantage of standardized data and interoperability requirements that have expanded flexibility and functionality compared to CMS' current eCQMs. We are considering defining and developing dQM software as end-to-end measure calculation solutions that retrieve data from primarily FHIR-based resources maintained by providers, payers, CMS, and others; calculate measure score(s); and produce reports. In general, we believe to optimize the use of standardized and interoperable data, the software solution for dQMs should do the following:

• Have the flexibility to support calculation of single or multiple quality measure(s).
• Perform three functions—

++ Obtain data via automated queries from a broad set of digital data sources (initially from EHRs, and in the future from claims, PRO, and PGHD);

++ Calculate the measure score according to measure logic; and

++ Generate measure score report(s).

• Be compatible with any data source systems that implement standard interoperability requirements.
• Exist separately from digital data source(s) and respect the limitations of the functionality of those data sources.
• Be tested and updated independently of the data source systems.
• Operate in accordance with health information protection requirements under applicable laws and comply with governance functions for health information exchange.
• Have the flexibility to be deployed by individual health systems, health IT vendors, data aggregators, and health plans; and/or run by CMS depending on the program and measure needs and specifications.
• Be designed to enable easy installation for supplemental uses by medical professionals and other non-technical end-users, such as local calculation of quality measure scores or quality improvement.
• Have the flexibility to employ current and evolving advanced analytic approaches such as natural language processing.

• Be designed to support pro-competitive practices for development, maintenance, and implementation as well as diffusion of quality measurement and related quality improvement and clinical tools through, for example, the use of open-source core architecture.

We sought comment on these suggested functionalities and other additional functionalities that quality measure tools should ideally have particularly in the context of the possible expanding availability of standardized and interoperable data (for example, standardized EHR data available via FHIR-based APIs).

We were also interested whether and how this more open, agile strategy may facilitate broader engagement in quality measure development, the use of tools developed for measurement for local quality improvement, and/or the application of quality tools for related purposes such as public health or research.

3. Building a Pathway to Data Aggregation in Support of Quality Measurement

Using multiple sources of collected data to inform measurement would reduce data fragmentation (or, different pieces of data regarding a single patient stored in many different places). Additionally, we are considering expanding and establishing policies and processes for data aggregation and measure calculation by third-party aggregators that include, but are not limited to, HIEs and clinical registries. Qualified Clinical Data Registries and Qualified Registries that report quality measures for eligible clinicians in the MIPS program are potential examples at 42 CFR 414.1440(b)(2)(iv) and (v) and (c)(2)(iii) and (iv) and can also support measure reporting. We are considering establishing similar policies for third-party aggregators to maintain the integrity of our measure reporting process and to encourage market innovation.

We sought feedback on aggregation of data from multiple sources to inform measurement and potential policy considerations. We also sought feedback on the role data aggregators can and should play in CMS quality measure reporting in collaboration with providers, and how we can best facilitate and enable aggregation.

4. Potential Future Alignment of Measures Across Reporting Programs, Federal and State Agencies, and the Private Sector

We are committed to using policy levers and working with stakeholders to solve the issue of interoperable data exchange and to transition to full digital quality measurement. We are considering the future potential development and multi-staged implementation of a common portfolio of dQMs across our regulated programs, agencies, and private payers. This common portfolio would require alignment of: (1) Measure concepts and specifications including narrative statements, measure logic, and value sets; and (2) the individual data elements used to build these measure specifications and calculate the measure logic. Further, the required data elements would be limited to standardized, interoperable data elements to the fullest extent possible; hence, part of the alignment strategy will be the consideration and advancement of data standards and IGs for key data elements. We would coordinate closely with quality measure developers, Federal and state agencies, and private payers to develop and to maintain a cohesive dQM portfolio that meets our programmatic requirements and that fully aligns across Federal and state agencies and payers to the extent possible.

We intend for this coordination to be ongoing and allow for continuous refinement to ensure quality measures remain aligned with evolving healthcare practices and priorities (for example, PROs, disparities, and care coordination), and track with the transformation of data collection, alignment with health IT module updates including capabilities and standards adopted by ONC (for example, standards to enable APIs). This coordination would build on the principles outlined in HHS' National Health Quality Roadmap. It would focus on the quality domains of safety, timeliness, efficiency, effectiveness, equitability, and patient-centeredness. It would leverage several existing Federal and public-private efforts including our Meaningful Measures 2.0 Framework; the Federal Electronic Health Record Modernization (Department of Defense and Veterans Affairs (DoD/VA)); the Agency for Healthcare Research and Quality's (AHRQ) Clinical Decision Support Initiative; the Centers for Disease Control and Prevention's (CDC) Adapting Clinical Guidelines for the Digital Age initiative; Core Quality Measure Collaborative, which convenes stakeholders from America's Health Insurance Plans (AHIP), CMS, National Quality Forum (NQF), provider organizations, private payers, and consumers and develops consensus on quality measures for provider specialties; and the NQF-convened Measure Applications Partnership (MAP), which recommends measures for use in public payment and reporting programs. We would coordinate with HL7's ongoing work to advance FHIR resources in critical areas to support patient care and measurement such as social determinants of health. Through this coordination, we would identify which existing measures could be used or evolved to be used as dQMs, in recognition of current healthcare practice and priorities.

This multi-stakeholder, joint Federal, state, and industry effort, made possible and enabled by the pending advances towards true interoperability, would yield a significantly improved quality measurement enterprise. The success of the dQM portfolio would be enhanced by the degree to which the measures achieve our programmatic requirements for measures as well as the requirements of other agencies and payers.

We sought feedback on initial priority areas for the dQM portfolio given evolving interoperability requirements (for example, measurement areas, measure requirements, tools, and data standards). We also sought to identify opportunities to collaborate with other Federal agencies, states, and the private sector to adopt standards and technology-driven solutions to address our quality measurement priorities across sectors.

E. Solicitation of Comments

As noted previously, we sought input on the future development of the following in the CY 2022 OPPS/ASC proposed rule (86 FR 42232):

• Definition of Digital Quality Measures. We sought feedback on the following as described in section XIV.2. of the CY 2022 OPPS/ASC proposed rule:

++ Do you have feedback on the potential future dQM definition?

++ Does this approach to defining and deploying dQMs to interface with FHIR-based APIs seem promising? We also welcomed more specific comments on the attributes or functions to support such an approach of deploying dQMs.

• Use of FHIR for Current eCQMs. We sought feedback on the following as described in section XIV.3. of the preamble of the CY 2022 OPPS/ASC proposed rule:

++ Would a transition to FHIR-based quality reporting reduce burden on health IT vendors and providers? Please explain.

++ Would access to near real-time quality measure scores benefit your practice? How so?

++ What parts of the current CMS Quality Reporting Data Architecture (QRDA) IGs cause the most burden (please explain the primary drivers of burden)?

++ In what ways could CMS FHIR Reporting IG be modified to reduce burden on providers and vendors?

• Changes Under Consideration to Advance Digital Quality Measurement: Actions in Four Areas to Transition to Digital Quality Measures by 2025.

++ We sought feedback on the following as described in section XIV.4.a. of the preamble of the CY 2022 OPPS/ASC proposed rule:

—Do you agree with the goal of aligning data needed for quality measurement with interoperability requirements? What are the strengths and limitations of this approach? Are there specific FHIR IGs suggested for consideration?

—How important is a data standardization approach that also supports inclusion of PGHD and other currently non-standardized data?

—What are possible approaches for testing data quality and validity?

++ We sought feedback on the following as described in section XIV.4.b. of the preamble of the CY 2022 OPPS/ASC proposed rule:

—What functionalities, described in section (4)(b) or others, should quality measure tools ideally have in the context of the pending availability of standardized and interoperable data (for example, standardized EHR data available via FHIR-based APIs)?

—How would this more open, agile strategy for end-to-end measure calculation facilitate broader engagement in quality measure development, the use of tools developed for measurement for local quality improvement, and/or the application of quality tools for related purposes such as public health or research?

++ We sought feedback on the following as described in section XIV.4.c. of the preamble of the CY 2022 OPPS/ASC proposed rule:

—What are key policy considerations for aggregation of data from multiple sources being used to inform measurement?

—What role can or should data aggregators play in CMS quality measure reporting in collaboration with providers? How can CMS best facilitate and enable aggregation?

++ We sought feedback on the following as described in section XIV.4.d. of the preamble of the CY 2022 OPPS/ASC proposed rule:

—What are initial priority areas for the dQM portfolio given evolving interoperability requirements (for example, measurement areas, measure requirements, tools)?

—We also sought to identify opportunities to collaborate with other Federal agencies, states, and the private sector to adopt standards and technology-driven solutions to address our quality measurement priorities and across sectors.

We requested commenters to consider provisions in the CMS Interoperability and Patient Access final rule (85 FR 25510), CMS CY 2021 PFS final rule (85 FR 84472), and the ONC 21st Century Cures Act final rule (85 FR 25642).

We plan to continue working with other agencies and stakeholders to coordinate and to inform any potential transition to dQMs by 2025. While we will not be responding to specific comments submitted in response to this Request for Information in this final rule with comment period, we will actively consider all input as we develop future regulatory proposals or future subregulatory policy guidance. Any updates to specific program requirements related to quality measurement and reporting provisions would be addressed through separate and future notice-and-comment rulemaking, as necessary.

We received comments on these topics:

Comment: There was widespread support among commenters for digital quality measurement in general. Many commenters specifically expressed support for CMS' transition to digital quality measurement. Some commenters noted digital quality measurement holds promise to improve the quality measurement enterprise, and patient outcomes and experience; reduce administrative burden; and make meaningful data more readily available for quality improvement. Commenters encouraged CMS to set up incentives for those who participate in digital measurement to help prepare their facilities' technology for the change, as well as incentives for reporting their quality data. Commenters noted CMS must plan for and design digital quality measure requirements while considering the availability of data standards, data security, and technical infrastructure and capabilities.

However, a few commenters did not fully support CMS' transition to digital measurement, for example, due to lack of readiness, technical capabilities, or specificity from CMS about the transition plan. The commenters expressed concerns with the readiness of ASCs and their informational technology capabilities. Another commenter strongly opposed CMS' access to a facility's EHR for measurement. The commenter noted technological challenges in the outpatient setting and administrative burdens as made evident and exacerbated by the COVID-19 public health emergency.

Regarding the timeline for the transition to digital quality measurement, while some commenters agreed the 2025 timeline is feasible, some questioned the feasibility of the full transition by 2025. Commenters who were hesitant about the 2025 timeline noted the timeline is ambitious or aggressive. Some noted the timeline is ambitious due to the burden facilities have incurred through the COVID-19 public health emergency. Others noted the timeline is impractical for ASCs since ASCs were not included in the provisions of the American Recovery and Reinvestment Act of 2009, which established provisions to encourage adoption of EHRs, and ASCs' current use of EHRs is limited. Some commenters suggested delaying the transition until after the COVID-19 Public Health Emergency (for example, 2 years after its end), while others suggested CMS revert back to the 2030 goal or delay transition until CMS can provide further guidance to stakeholders on their plans for the transition to digital measurement. Other commenters noted CMS' transition will need to account for real-world testing to ensure the availability of data, technical infrastructure, and alignment with other requirements such as ONC's CEHRT. The commenters noted CMS will need to plan for this, coordinate efforts, and encourage adoption by stakeholders particularly in underserved communities.

Response: We appreciate all of the comments on this topic. We believe that this input is very valuable in the continuing development of our transition to digital quality measurement in CMS quality reporting and value-based purchasing programs by 2025. We will continue to take all comments into account as we develop future regulatory proposals or other guidance for our digital quality measurement efforts.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42232), we clarified a potential future definition of dQMs as a software that processes digital data to produce a measure score or measure scores.

Comment: Several commenters noted appreciation for CMS' clarifications of the potential dQM definition. While some commenters supported the broad definition of dQMs and the ability of dQMs to promote rapid-cycle feedback for quality reporting, some commenters found the definition to still be too broad. A few commenters appreciated the broad range of digital data sources included in the definition and noted the definition captures the evolving availability of digital data. A few commenters who also supported the broad definition noted dQMs should and could capture data from across the continuum of care.

Some commenters who did not support the broad definition noted not all of the digital data sources in the definition have been adequately vetted or tested. The commenters noted not all of the digital data sources are currently ready to be used as reliable and valid sources for digital measurement (for example, data from wearable devices, patient-generated health data), although they hold promise for the future. Another commenter who also opposed CMS' transition to digital measurement did not support the use of emerging digital data sources, such as patient-generated health data, without specific details about CMS' plans to incorporate digital data sources in dQMs and ensuring the data would be understandable to beneficiaries.

Several commenters sought additional information and clarification regarding the definition. Specifically, several stakeholders requested further clarification on the potential definition of dQMs, how CMS envisions the future of dQMs, and how the future use of dQMs would differ from the current state. Some stakeholders requested clarification about the use of the term “software” in the potential dQM definition and suggested refinements to the definition. For example, one commenter who noted software development does not align with the current specification or structure of quality measures, suggested using alternative terms in the dQM definition such as “computer readable” or “computer executable.” Some commenters suggested CMS better define goals and expectations for dQM use. Some commenters requested a specific roadmap of implementation for providers to better understand how to prepare for dQMs.

Response: We appreciate all of the comments on and interest in this topic. We believe that this input is very valuable in the continuing development of our transition to digital quality measurement in CMS quality reporting and value-based purchasing programs by 2025. We will continue to take all comments into account as we develop future regulatory proposals or other guidance for our digital quality measurement efforts.

As noted above, we requested input on the use of FHIR for eCQMs and actions in four areas to transition to dQMs by 2025 including:

(1) Leveraging and advancing standards for digital data and obtaining all EHR data required for quality measures via provider FHIR-based APIs.

(2) Redesigning quality measures to be self-contained tools.

(3) Building a pathway to data aggregation in support of quality measurement.

(4) Potential future alignment of measures across reporting programs, Federal and state agencies, and the private sector.

Comment: Some commenters agreed FHIR-based quality reporting would reduce burden on providers. Commenters acknowledged FHIR provides a standardized way of sharing information and agreed the use of FHIR would increase interoperability and harmonization of data standards across providers and care settings. However, some commenters noted not all EHR or health IT vendors have adopted FHIR. Commenters encouraged CMS to evaluate the adoption of FHIR standard as well as understand the potential burden and costs associated with its adoption before requiring its use for digital measurement. Some commenters also requested CMS provide guidance to measure developers, vendors, and other stakeholders on the transition to FHIR-based eCQMs (for example, which version of FHIR to implement and which implementation guides will be used) and ensure sufficient testing prior to widespread adoption. One commenter agreed with incentivizing the use of FHIR but not requiring it as to not place undue burden on hospital or other providers who are not yet ready to adopt FHIR. Another commenter who did not agree with using the FHIR standard cautioned relying on any single approach or standard (for example, FHIR) until successful model elements can be identified.

Some commenters agreed with the goal of aligning data needed for quality measurement with interoperability requirements, and those data necessary for clinical care. For example, one commenter suggested using data elements in quality measures that conform to the data elements and classes in the United States Core Data for Interoperability (USCDI), where possible, to reduce measure complexity and improve data quality. A few commenters noted challenges with managing health information from unstructured data fields for digital measurement in the outpatient setting. The commenters noted some health information in the outpatient setting (for example, for anesthesia and imaging) is contained in unstructured data fields, and this would pose a challenge for FHIR-based quality measurement. Some commenters also expressed concerns about inclusion of data from sources outside of the EHR in measurement due to privacy and validity concerns. Other commenters noted that broader data sources used in measurement will improve measurement but may need to be phased in.

Regarding building a pathway to data aggregation, some commenters agreed that data aggregation will become easier with more aligned and interoperable data, and aggregation of data will strengthen measurement and provide a better understanding of population health. Other commenters requested more clarity on how third-party aggregators will be incorporated into the quality measurement ecosystem. A commenter also noted the need for a national strategy to improve patient identification and matching to facilitate more accurate data aggregation. One commenter identified the potential measure development and testing burden when combining data from multiple sources. Commenters also noted the need for increased data security as data sharing and aggregation is broadly implemented; one commenter recommended the Trusted Exchange Framework and Common Agreement (TEFCA) as a framework to support secure data sharing.

Some commenters supported using provider FHIR-based APIs for quality measurement and agreed with obtaining all EHR data captured for quality measure via provider FHIR-based APIs as a stride towards interoperability. Some commenters also requested CMS provide expectations and clarifications to ensure privacy and data security (for example, security transfer guidelines and security procedures).

However, some commenters expressed concerns about the use of FHIR-based APIs such as the technical infrastructure and financial readiness, and providers' unfamiliarity with or varied uptake of FHIR. For example, as noted above, some commenters pointed out the limited use of EHRs by ASCs. They noted that the technological hurdles created by FHIR may prove problematic for some ASCs. Because ASCs are not required to use EHRs, stakeholders voiced that many do not use EHRs or they use EHRs that are certified. The commenters encouraged any regulations of applications be backwards compatible so as to allow more ASCs to participate. Commenters also identified the need for significant support for small ASCs or ASCS in rural or underserved areas that do not have the resource to have dedicated health IT staff. For support, commenters requested CMS provide technical assistance, advanced notice of requirements, and adequate time for rollout. A few commenters encouraged CMS to rigorously test any programs they implement to ensure patient safety and security as well as checking that systems do not cause accidental bias.

Some commenters agreed with redesigning quality measures as self-contained tools and agreed with their functionalities necessary to achieve digital quality measurement. The recommended CMS work with stakeholders to identify how and when the functionalities of the self-contained tools could be sequenced (for example, which could be achievable by 2025) and scaled. Further, commenters noted the tools should be tested and validated.

Many commenters expressed support for alignment of measurement areas, specifications, data elements used to build the specifications, and tools across reporting programs and payers. Several commenters noted alignment will require input from stakeholders and leadership across federal agencies. Some commenters recommended CMS work with other federal agencies and stakeholders such as patients to understand their role as an active EHR end-user, the National Quality Forum (NQF), the health IT community, the Core Quality Measures Collaborative (CQMC), and others. Some commenters encouraged CMS to partner with ONC on data standards and interoperability requirements (for example, health IT certification requirements) to plan for validating dQMs and ensure alignment across agencies.

Several commenters supported the development of a common dQM portfolio. Some commenters suggested initial priority areas for the common dQM portfolio. For example, some commenters noted the importance of standardizing social risk factor data collection and use of social risk factor data in measurement. Some commenters suggested CMS prioritize dQMs with clinical relevance, dQMs focusing on immunizations, and dQMs for anesthesia care as well as ensure dQMs would be available to cover all medical specialties and practitioners. Some commenters encouraged CMS to identify which existing measures could be used as dQMs while concurrently identifying future priority areas. Commenters also noted alignment could leverage data routinely captured during and across the continuum of clinical care, simplify quality reporting, and help address challenges associated with managing various standards and formats.

Several commenters supported a phased approach to dQM implementation. Several commenters requested CMS allow adequate time for setting up capabilities for implementation, testing, and validation to ensure successful transition to and use of dQMs. Several commenters requested CMS provide a plan for transition to digital quality measurement and consider program incentives, flexibilities in reporting, and technical assistance for providers. One commenter suggested CMS incorporate this plan as part of their creation of the common dQM portfolio. Another commenter recommended CMS develop a staged long-term plan on digital measurement in conjunction with a long-term plan on equity. One commenter, however, expressed concern about the phased approach and noted alignment should be a priority alongside interoperability.

Many commenters expressed they are committed to working with CMS in supporting the transition to digital quality measurement.

Response: We appreciate all of the comments on this topic. We believe that this input is very valuable in the continuing development of our transition to digital quality measurement in CMS quality reporting and value-based purchasing programs by 2025. We will continue to take all comments into account as we develop future regulatory proposals or other guidance for our digital quality measurement efforts.

XV. Requirements for the Hospital Outpatient Quality Reporting (OQR) Program

A. Background

1. Overview

CMS seeks to promote higher quality and more efficient healthcare for Medicare beneficiaries. Consistent with these goals, CMS has implemented quality reporting programs for multiple care settings including the quality reporting program for hospital outpatient care, known as the Hospital Outpatient Quality Reporting (OQR) Program.

2. Statutory History of the Hospital OQR Program

We refer readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 72064 through 72065) for a detailed discussion of the statutory history of the Hospital OQR Program. The Hospital OQR Program regulations are codified at 42 CFR 419.46. In the CY 2021 OPPS/ASC final rule (85 FR 86179), we finalized updates to the regulations to include a reference to the statutory authority for the Hospital OQR Program. Section 1833(t)(17)(A) of the Social Security Act (the Act) states that subsection (d) hospitals (as defined under section 1886(d)(1)(B) of the Act) that do not submit data required for measures selected with respect to such a year, in the form and manner required by the Secretary, will incur a 2.0 percentage point reduction to their annual Outpatient Department (OPD) fee schedule increase factor. In the CY 2021 OPPS/ASC final rule (85 FR 86179) we codified the Hospital OQR Program's statutory authority at § 419.46(a).

3. Regulatory History of the Hospital OQR Program

We refer readers to the CY 2008 through 2021 OPPS/ASC final rules with comment period for detailed discussions of the regulatory history of the Hospital OQR Program:

• The CY 2008 OPPS/ASC final rule (72 FR 66860 through 66875);
• The CY 2009 OPPS/ASC final rule (73 FR 68758 through 68779);
• The CY 2010 OPPS/ASC final rule (74 FR 60629 through 60656);
• The CY 2011 OPPS/ASC final rule (75 FR 72064 through 72110);
• The CY 2012 OPPS/ASC final rule (76 FR 74451 through 74492);
• The CY 2013 OPPS/ASC final rule (77 FR 68467 through 68492);
• The CY 2014 OPPS/ASC final rule (78 FR 75090 through 75120);
• The CY 2015 OPPS/ASC final rule (79 FR 66940 through 66966);
• The CY 2016 OPPS/ASC final rule (80 FR 70502 through 70526);
• The CY 2017 OPPS/ASC final rule (81 FR 79753 through 79797);
• The CY 2018 OPPS/ASC final rule (82 FR 59424 through 59445);
• The CY 2019 OPPS/ASC final rule (83 FR 59080 through 59110);
• The CY 2020 OPPS/ASC final rule (84 FR 61410 through 61420); and
• The CY 2021 OPPS/ASC final rule (85 FR 86179 through 86187).

We have codified certain requirements under the Hospital OQR Program at 42 CFR 419.46. We refer readers to section XV.E. of this final rule with comment period for a detailed discussion of the payment reduction for hospitals that fail to meet Hospital OQR Program requirements for the CY 2024 payment determination.

B. Hospital OQR Program Quality Measures

1. Considerations in Selecting Hospital OQR Program Quality Measures

We refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74458 through 74460) for a detailed discussion of the priorities we consider for the Hospital OQR Program quality measure selection. We did not propose any changes to these policies in the proposed rule.

2. Retention of Hospital OQR Program Measures Adopted in Previous Payment Determinations

We previously finalized and codified at § 419.46(h)(1) a policy to retain measures from a previous year's Hospital OQR Program measure set for subsequent years' measure sets, unless removed (77 FR 68471 and 83 FR 59082). We did not propose any changes to these policies in the proposed rule.

3. Removal of Quality Measures From the Hospital OQR Program Measure Set

a. Immediate Removal

We previously finalized and codified at § 419.46(i)(2) and (3) a process for removal and suspension of Hospital OQR Program measures, based on evidence that the continued use of the measure as specified raises patient safety concerns (74 FR 60634 through 60635, 77 FR 68472, and 83 FR 59082). We did not propose any changes to these policies in the proposed rule.

b. Consideration Factors for Removing Measures

We previously finalized and codified at § 419.46(i)(3) policies to use the regular rulemaking process to remove a measure for circumstances for which we do not believe that continued use of a measure raises specific patient safety concerns (74 FR 60635 and 83 FR 59082). We did not propose any changes to these policies in the proposed rule.

c. Measure Removals Beginning With the CY 2023 Reporting Period/CY 2025 Payment Determination: OP-02 (Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival) and OP-03 (Median Time To Transfer to Another Facility for Acute Coronary Intervention)

In CY 2022 OPPS/ASC proposed rule (86 FR 42237), we proposed to remove two chart-abstracted measures under removal Factor 4—the availability of a more broadly applicable (across settings, populations, or conditions) measure for the particular topic:

• Fibrinolytic Therapy Received Within 30 Minutes of Emergency Department (ED) Arrival (OP-2); and
• Median Time to Transfer to Another Facility for Acute Coronary Intervention (OP-3).

The OP-2 measure assesses the number of acute myocardial infarction (AMI) patients with: (a) ST-segment elevation on the electrocardiogram closest to arrival time receiving fibrinolytic therapy during the ED visit; and (b) a time from hospital arrival to fibrinolysis of 30 minutes or less. For more details on this measure, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66865), where this measure was designated as ED-AMI-3, and the CY 2009 OPPS/ASC final rule with comment period (73 FR 68761), where this measure was relabeled as OP-2 (for the CY 2010 payment determination and subsequent years). The OP-3 measure assesses the median number of minutes before outpatients with chest pain or possible heart attack who needed specialized care were transferred to another hospital capable of offering such specialized care. For more details on this measure, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66865), where this measure was designated as ED-AMI-5, and the CY 2009 OPPS/ASC final rule with comment period (73 FR 68761), where this measure was relabeled as OP-3 (for the CY 2010 payment determination and subsequent years).

In the CY 2022 OPPS/ASC proposed rule (86 FR 42237), we proposed to remove these two measures (Fibrinolytic Therapy Received Within 30 Minutes of Emergency Department (ED) Arrival (OP-2) and Median Time to Transfer to Another Facility for Acute Coronary Intervention (OP-3)) beginning with the CY 2023 reporting period/CY 2025 payment determination due to the availability of a more broadly applicable measure. Specifically, in the CY 2022 OPPS/ASC proposed rule (86 FR 42237), we proposed to adopt the ST-Segment Elevation Myocardial Infarction (STEMI) electronic clinical quality measure (eCQM) into the Hospital OQR Program measure set, which would serve as a replacement for these two measures. We refer readers to section XV.B.4.c. of the CY 2022 OPPS/ASC proposed rule (86 FR 42244) and section XV.B.4.c. of this final rule with comment period for further discussion of the STEMI eCQM, including the measure overview, data sources, and measure calculation.

OP-2 and OP-3 measure the proportion of eligible STEMI patients who receive timely fibrinolytic therapy and timely transfer from an ED to another facility to receive appropriate care, respectively. The STEMI eCQM is an electronic process measure that includes both the populations of OP-2 and OP-3. It measures the percentage of ED patients diagnosed with STEMI that received timely fibrinolytic therapy (within 30 minutes) or timely transfer to a percutaneous coronary intervention (PCI)-capable facility (within 45 minutes). Additionally, the STEMI eCQM (OP-40) captures transfer and non-transfer patients at a PCI-capable facility who receive PCI (within 90 minutes). Pursuant to removal Factor 4, we believe that the adoption of the STEMI eCQM would capture the OP-2 and OP-3 measure populations and expand beyond these populations to comprehensively measure the timeliness and appropriateness of STEMI care.

Furthermore, the OP-2 and OP-3 measures are chart-abstracted measures, which result in greater provider burden due to manual abstraction. The STEMI eCQM (OP-40) allows for the retrieval of data directly from the electronic health record (EHR) using patient-level data. As a result, in the proposed rule we stated our belief that the STEMI eCQM (OP-40) is a more broadly applicable measure and transitions the Hospital OQR Program toward the use of EHR data for quality measurement. We noted in the CY 2022 OPPS/ASC proposed rule (86 FR 42237) that removal of these measures was contingent on the finalization of the STEMI eCQM. We invited public comment on our proposals to remove these measures.

The following is a summary of the comments we received on these proposals and our responses.

Comment: Many commenters supported the proposal to remove the two chart-abstracted measures, Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival (OP-2) and Median Time To Transfer to Another Facility for Acute Coronary Intervention (OP-3), and they were favor of adopting the ST-Segment Elevation Myocardial Infarction (STEMI) eCQM. These commenters also believed that the STEMI eCQM would reduce data collection burden and be more useful than OP-2 and OP-3.

Response: We thank the commenters for their support of our proposal to remove OP-2 and OP-3. We agree that adopting the STEMI eCQM would reduce data collection burden and would be a more broadly applicable measure that transitions the Hospital OQR Program toward the use of EHR data for quality measurement.

Comment: A few commenters supported removing OP-2 and OP-3 in favor of introducing the ST-Segment Elevation Myocardial Infarction (STEMI) eCQM, but expressed concerns about the transition to the STEMI eCQM. One commenter noted that the STEMI eCQM had not yet been endorsed by the NQF and recommended delaying the proposed removal of OP-2 and OP-3 and the addition of the STEMI eCQM until 2024 to allow for completion of NQF review. Another commenter suggested that CMS delay removing OP-2 and OP-3 so that hospitals have time to implement the new STEMI eCQM for an additional year.

Response: We thank the commenters for their support and acknowledge their concerns. We note that, in regard to the endorsement status of the STEMI eCQM, the MAP voted to conditionally support the measure, pending NQF endorsement. CMS is in the process of seeking NQF endorsement for the STEMI eCQM. We refer the reader to section XV.B.4.c. of this final rule with comment period for additional information on the adoption of the STEMI eCQM, including our rationale for adopting the measure when it has not yet been endorsed by the NQF. In response to the suggestion that removing OP-2 and OP-3 should be delayed to allow additional time for transitioning to eCQM reporting, we believe that, as we proposed the reporting of this measure to be voluntary for the CY 2023, hospitals would have sufficient time to practice and operationalize reporting in order to transition from OP-2 and OP-3 to the STEMI eCQM.

Comment: One commenter did not support removing OP-2 and OP-3 from the measure set and believed that it would increase burden for hospitals that are not equipped for electronic reporting, especially smaller and more rural facilities. The commenter stated that reporting requirements for eCQMs exceed those for chart-abstracted measures and that introducing an eCQM will require training or hiring new staff.

Response: We thank the commenter for their input. While we acknowledge that removing two chart-abstracted measures and transitioning to an eCQM may pose certain short-term challenges for hospitals, we reiterate the value of transitioning to an eCQM. That is, we believe that this transition aligns with our overall efforts to reduce regulatory burden on hospitals, lower health care costs, and enhance patient care by streamlining the quality reporting and value-based purchasing programs as stated in the Meaningful Measures Framework. We note, OP-2 and OP-3 measures are chart-abstracted measures, which generally places greater burden on the provider due to the labor and cost of manual abstraction. In contrast, the STEMI eCQM would allow for the retrieval of data directly from the electronic health record (EHR) using patient-level data, thus reducing provider burden.

We believe adoption of this proposal would place limited burden on smaller and more rural facilities. Small hospitals and facilities that do not have the volume of data required for reporting of the eCQMs will be exempt from reporting of those measures based on the case threshold exemptions outlined in section XV.D.6.d.(3) of this final rule with comment period. Additionally, the Medicare and Medicaid EHR Incentive Programs, established by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), authorized HHS to provide financial incentives to hospitals and eligible professionals for the “meaningful use” of certified EHR technology to improve patient care. These financial incentives assisted hospitals in transitioning to the use of EHR technology. Successful demonstration of meaningful use included, among other requirements, using certified EHR technology to meet specified thresholds for a number of objectives and measures and reporting clinical quality measures (CQMs). Given the exemption for facilities that do not meet case thresholds and past efforts to assist with the transition to EHR, we believe that the value added by streamlining the quality reporting and value-based purchasing programs justifies the burden these standards may place on facilities. We refer readers to section XXII.B. of this final rule with comment period for additional information on the burden calculations for removing OP-2 and OP-3 and adopting the STEMI eCQM.

After consideration of the public comments we received, we are finalizing this provision as proposed.

4. Adoption of New Measures for the Hospital OQR Program Measure Set

In the CY 2022 OPPS/ASC proposed rule (86 FR 42238), we proposed to adopt three new measures: (1) COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) measure, beginning with the CY 2022 reporting period; (2) Breast Cancer Screening Recall Rates measure, beginning with the CY 2022 reporting period; and (3) STEMI eCQM, beginning as a voluntary measure for the CY 2023 reporting period, and then as a mandatory measure beginning with the CY 2024 reporting period.

a. Adoption of the COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) Measure Beginning With the CY 2022 Reporting Period/CY 2024 Payment Determination

(1) Background

On January 31, 2020, the Secretary declared a public health emergency (PHE) for the United States (U.S.) in response to the global outbreak of SARS-CoV-2, a novel (new) coronavirus that causes a disease named “coronavirus disease 2019” (COVID-19). COVID-19 is a contagious respiratory infection that can cause serious illness and death. Older individuals, some racial and ethnic minorities, and those with underlying medical conditions are considered to be at higher risk for more serious complications from COVID-19. As of July 2, 2021, the U.S. reported over 33 million cases of COVID-19 and over 600,000 COVID-19 deaths. As of October 14, 2021, the U.S. reported over 44 million cases and over 718,000 COVID-19 deaths. Hospitals and health systems saw significant surges of COVID-19 patients as community infection levels increased. Between December 2, 2020 and January 30, 2021, more than 100,000 Americans with COVID-19 were hospitalized at the same time.

Evidence indicates that COVID-19 primarily spreads when individuals are in close contact with one another. Ongoing research indicates that fully vaccinated people without immunocompromising conditions are able to engage in most activities with very low risk of acquiring or transmitting SARS-CoV-2, and the Centers for Disease Control and Prevention (CDC) issued new guidance for fully vaccinated individuals on May 28, 2021. The virus is typically transmitted through respiratory droplets or small particles created when someone who is infected with the virus coughs, sneezes, sings, talks or breathes. Thus, the CDC advises that infections mainly occur through exposure to respiratory droplets when a person is in close contact with someone who has COVID-19. Experts believe that COVID-19 spreads less commonly through contact with a contaminated surface and that in certain circumstances, infection can occur through airborne transmission. According to the CDC, those at greatest risk of infection are persons who have had prolonged, unprotected close contact (that is, within 6 feet for 15 minutes or longer) with an individual with confirmed COVID-19 infection, regardless of whether the individual has symptoms. Although personal protective equipment (PPE) and other infection control- precautions can reduce the likelihood of transmission in health care settings, COVID-19 can spread between HCP and patients or from patient to patient given the close contact that may occur during the provision of care. The CDC has emphasized that health care settings, including long-term care (LTC) settings, can be high-risk places for COVID-19 exposure and transmission.

Vaccination is a critical part of the nation's strategy to effectively counter the spread of COVID-19 and ultimately help restore societal functioning. On December 11, 2020, the Food and Drug Administration (FDA) issued the first Emergency Use Authorization (EUA) for a COVID-19 vaccine in the U.S. Subsequently, FDA issued EUAs for additional COVID-19 vaccines. Following the publication of the proposed rule, FDA granted full approval to Comirnaty, the Pfizer-BioNTech COVID-19 vaccine on August 23, 2021 for individuals 16 years of age and older.

As part of its national strategy to address COVID-19, the White House stated on March 25, 2021 that it would work with states and the private sector to execute an aggressive vaccination strategy and has outlined a goal of administering 200 million shots in 100 days. On April 21, 2021, it was announced that this goal had been achieved. Although the goal of the U.S. Government is to ensure that every American who wants to receive a COVID-19 vaccine can receive one, the Department of Health and Human Services (HHS), the Department of Defense (DoD), and the CDC, recommended that early vaccination efforts focus on those critical to the PHE response, including HCP, and individuals at highest risk for developing severe illness from COVID-19. For example, the CDC's Advisory Committee on Immunization Practices (ACIP) recommended that HCP should be among those individuals prioritized to receive the initial, limited supply of the COVID-19 vaccination, given the potential for transmission in health care settings and the need to preserve health care system capacity. Research suggests most states followed this recommendation, and HCP began receiving the vaccine in mid-December of 2020.

Frontline healthcare workers, such as those employed in hospitals, have been prioritized for vaccination in most locations. There are approximately 18 million healthcare workers in the U.S. A survey of HCP found that 66 percent of hospital HCP and 64 percent of outpatient clinic HCP reported receiving at least one dose of the vaccine. As of July 2, 2021, the CDC reported that over 328 million doses of COVID-19 vaccine have been administered and approximately 155.9 million people were fully vaccinated. Subsequently, the CDC reported that as of October 14, 2021, over 405 million doses of COVID-19 vaccine have been administered and approximately 188.3 million people had received full doses. The White House indicated on April 6, 2021, that the U.S. retains sufficient vaccine supply, and every adult became eligible to receive the vaccine beginning April 19, 2021. Finally, as part of the Biden Administration's efforts to vaccinate those who are still unvaccinated through increasing the number of Americans covered by vaccination requirements, on September 9, 2021, the Biden Administration announced that COVID-19 vaccination will be required of all staff within Medicare and Medicaid-certified facilities to protect both patients and HCP against COVID-19.

We believe it is important to require that hospital outpatient departments (HOPDs) report HCP vaccination information for health care facilities to assess whether these facilities are taking steps to limit the spread of COVID-19 among their health care workers and to help sustain the ability of HOPDs to continue serving their communities throughout the PHE and beyond. Therefore, we proposed to adopt a new measure, COVID-19 Vaccination Coverage Among HCP beginning with the CY 2024 payment determination. For that payment year, hospitals would be required to report data quarterly on the measure for the January 2022 through December 2022 reporting period. The measure would assess the proportion of a hospital's health care workforce that has been vaccinated against COVID-19.

HCP are at risk of transmitting COVID-19 infection to patients, experiencing illness or death as a result of COVID-19 themselves, and transmitting it to their families, friends, and the general public. We believe HOPDs should report the level of vaccination among their HCP as part of their efforts to assess and reduce the risk of transmission of COVID-19 within their facilities. HCP vaccination can reduce illness that leads to work absence and limit disruptions to providing care with major reductions in SARS-CoV-2 infections among those receiving two dose COVID-19 vaccine despite a high community infection rate. Data from influenza vaccination demonstrates that provider vaccination is associated with that provider recommending vaccination to patients, and we believe HCP COVID-19 vaccination in HOPDs could similarly increase uptake among that patient population. We also believe that publicly reporting the HCP vaccination rates would be helpful to many patients, including those who are at high risk-for developing serious complications from COVID-19, as they choose HOPDs for treatment. Under CMS' Meaningful Measures Framework, the COVID-19 measure addresses the quality priority of “Promote Effective Prevention and Treatment of Chronic Disease” through the Meaningful Measures Area of “Preventive Care.”

(2) Overview of Measure

The COVID-19 Vaccination Coverage Among HCP measure (“COVID-19 HCP vaccination measure”) is a process measure developed by the CDC to track COVID-19 vaccination coverage among HCP in non-LTC facilities including outpatient hospitals.

(a) Measure Specifications

The denominator for the HCP measure is the number of HCP eligible to work in the hospital for at least 1 day during the self-selected week, excluding persons with contraindications to COVID-19 vaccination that are described by the CDC.

The numerator for the HCP measure is the cumulative number of HCP eligible to work in at the hospital for at least 1 day during the self-selected week and who received a complete vaccination course against COVID-19. A complete vaccination course is defined under the specific manufacturer and may require multiple doses or regular revaccination. Vaccination coverage for purposes of this measure is defined as the estimated percentage (given the potential for week-to-week variation) of HCP eligible to work at the hospital for at least 1 day who received a COVID-19 vaccine. Acute care facilities would count HCP working in all inpatient or outpatient units that are physically attached to the inpatient acute care facility site and share the same CMS certification number (CCN), regardless of the size or type of unit. Facilities would also count HCP working in inpatient and outpatient departments that are affiliated with the specific acute care facility (such as sharing medical privileges or patients), regardless of distance from the acute care facility and also share the same CCN. The decision to include or exclude HCP from the acute care facility's HCP vaccination counts would be based on whether individuals meet the specified National Healthcare Safety Network (NHSN) criteria and are physically working in a location that is considered any part of the on-site acute care facility that is being monitored. The proposed specifications for the COVID-19 vaccination coverage among HCP measure are available on the NQF website at: https://www.cdc.gov/nhsn/nqf/index.html .

(b) Review by the Measure Applications Partnership

The COVID-19 HCP vaccination measure was included on the publicly available “List of Measures Under Consideration for December 21, 2020,” a list of measures under consideration for use in various Medicare programs. The Measure Applications Partnership (MAP) hospital workgroup convened on January 11, 2021, and it reviewed the list of Measures Under Consideration (MUC) including the COVID-19 HCP vaccination measure. The MAP hospital workgroup agreed that the proposed measure represents a promising effort to advance measurement for an evolving national pandemic and that it could bring value to the Hospital OQR Program measure set by providing transparency about an important COVID-19 intervention to help prevent infections in HCP and patients. The MAP hospital workgroup also stated in its preliminary recommendations that collecting information on COVID-19 vaccination coverage among HCP and providing feedback to hospitals would allow hospitals to benchmark coverage rates and improve coverage in their facility, and that reducing COVID-19 infection rates in HCP may reduce transmission among patients and reduce instances of staff shortages due to illness.

In its preliminary recommendations, the MAP hospital workgroup did not support this measure for rulemaking, subject to the potential for mitigation. To mitigate its concerns, the MAP hospital workgroup believed that the measure needed well-documented evidence, finalized specifications, testing, and National Quality Forum (NQF) endorsement prior to implementation. Subsequently, the MAP Coordinating Committee met on January 25, 2021, and reviewed the COVID-19 HCP vaccination measure. In its 2020-2021 MAP Final Recommendations, the MAP offered conditional support for rulemaking contingent on CMS bringing the measure back to the MAP once the specifications were further refined. The MAP specifically stated, “the incomplete specifications require immediate mitigation and further development should continue.” In its final report, the MAP noted that the measure would add value by providing visibility into an important intervention to limit COVID-19 infections in HCP and the patients for whom they provide care. The spreadsheet of final recommendations no longer cited concerns regarding evidence, testing, or NQF endorsement. In response to the MAP final recommendation request that CMS bring the measure back to the MAP once the specifications are further refined, CMS and the CDC met with the MAP Coordinating Committee on March 15, 2021. Additional information was provided to address vaccine availability, alignment of the COVID-19 HCP vaccination measure as closely as possible with the data collection for the Influenza HCP vaccination measure (NQF #0431), and clarification related to how HCP are defined. CMS and the CDC also presented preliminary findings from the testing of the numerator of the COVID-19 HCP vaccination measure, which was in process. These preliminary findings showed numerator data should be feasible to collect and reliable. Testing of the measure numerator (the number of HCP vaccinated) involved a comparison of the data collected through the NHSN and independently reported through the Federal pharmacy partnership program for delivering vaccination to LTC facilities. These are two completely independent data collection systems. In initial analyses of the first month of vaccination, the number of healthcare workers vaccinated in approximately 1,200 facilities for which data from both systems was available, the number of healthcare personnel vaccinated was highly correlated between the two systems with a correlation coefficient of nearly 90 percent in the second two weeks of reporting. Because of the high correlation across a large number of facilities and high number of HCP within those facilities receiving at least one dose of the COVID-19 vaccine, we believe the measure is feasible and reliable for use in HOPDs. After reviewing this additional information, the MAP retained its final recommendation of conditional support, and expressed support for CMS' efforts to use the measure as part of the solution for the COVID-19 public health crisis.

Section 1890A(a)(4) of the Act, as added by section 3014(b) of the Affordable Care Act, requires the Secretary to take into consideration input from multi-stakeholder groups in selecting certain quality and efficiency measures. While we value input from the MAP, we believe it is important to propose the measure as quickly as possible to address the urgency of the COVID-19 PHE and its impact on high risk populations, including hospitals. CMS continues to engage with the MAP to mitigate concerns and appreciates the MAP's conditional support for the measure.

(c) Measure Endorsement

Under section 1833(t)(17)(C)(i) of the Act, unless the exception of subclause (ii) applies, measures selected for the Hospital OQR Program must have been set forth by the entity with a contract under section 1890(a) of the Act. The NQF currently holds this contract. Under section 1833(t)(17)(C)(ii) of the Act, the Secretary shall develop measures that the Secretary determines to be appropriate for the measurement of the quality of care furnished by hospitals in outpatient settings and that reflect consensus among affected parties and, to the extent feasible and practicable, shall include measures set forth by one or more national consensus building entities.

In general, we prefer to adopt measures that have been endorsed by the NQF because it is a national multi-stakeholder organization with a well-documented and rigorous approach to consensus development. However, as we have noted in previous rulemaking (for example, 75 FR 72065 and 76 FR 74494 for the Hospital OQR and ASCQR Programs, respectively), the requirement that measures reflect consensus among affected parties can be achieved in other ways, including through the measure development process, through broad acceptance, use of the measure(s), and through public comment.

The COVID-19 HCP vaccination measure is not NQF-endorsed; however, the CDC submitted the measure for consideration in the NQF Fall 2021 measure cycle.

Because this measure is not NQF-endorsed, we considered whether there are other available measures that assess COVID-19 vaccination rates among HCP. We found no other feasible and practical measures on the topic of COVID-19 vaccination among HCP.

(d) Data Collection, Submission, and Reporting

Given the time sensitive nature of this measure considering the current PHE, we proposed that hospitals would be required to begin reporting data on the COVID-19 HCP vaccination measure (OP-38) beginning January 1, 2022, for the CY 2024 payment determination for the Hospital OQR Program. Thereafter, we proposed quarterly reporting periods. While we considered annual reporting periods for the Hospital OQR Program, we proposed quarterly reporting periods given the immediacy of the PHE and the importance of alignment across quality payment programs that have since finalized this measure.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42241), we stated that if our proposal to adopt this measure is finalized, hospitals would report the measure through the CDC's NHSN web-based surveillance system. While the Hospital OQR Program does not currently require use of the NHSN web-based surveillance system, we have previously required use of this system for submitting data. We refer readers to the CY 2014 OPPS/ASC final rule with comment period in which we adopted the Influenza Vaccination Coverage Among Health Care Personnel (NQF #0431) measure (OP-38) (78 FR 75096 through 75099), section XV.D.5.b.(1) of the CY 2022 OPPS/ASC proposed rule (86 FR 42259), and this final rule for additional information on reporting through the NHSN web-based surveillance system under the Hospital OQR Program. Hospitals also have experience reporting acute care hospital measures to the CDC's NHSN under the Hospital IQR Program.

To report this measure, we proposed that hospitals would collect the numerator and denominator for the COVID-19 HCP vaccination measure for at least one, self-selected week during each month of the reporting quarter and submit the data to the NHSN Healthcare Personal Safety (HPS) Component before the quarterly deadline to meet Hospital OQR Program requirements. While we believe that it would be ideal to have HCP vaccination data for every week of each month, we are mindful of the time and resources that hospitals would need to report the data. Thus, in collaboration with the CDC, we determined that data from at least one week of each month would be sufficient to obtain a reliable snapshot of vaccination levels among a hospital's HCP while balancing the costs of reporting. If a hospital submits more than one week of data in a month, the most recent week's data would be used to calculate the measure. For example, if first and third week data are submitted, the third week data would be used. If first, second, and fourth week data are submitted, fourth week data would be used. For each quarter, we proposed that the CDC would calculate a single quarterly COVID-19 HCP vaccination coverage rate for each hospital, which would be calculated by taking the average of the data from the three submission periods submitted by the hospital for that quarter. If finalized, CMS would publicly report each quarterly COVID-19 HCP vaccination coverage rate as calculated by the CDC.

Hospitals would submit the number of HCP eligible to have worked at the facility during the self-selected week that the hospital reports data in NHSN (denominator) and the number of those HCP who have received a complete course of a COVID-19 vaccination (numerator) during the same self-selected week. As previously stated, acute care facilities would count HCP working in all inpatient or outpatient units that share the same CCN, regardless of the size or type of unit.

We received comments on these topics.

Comment: Many commenters supported our proposal to adopt the COVID19 Vaccination Coverage Among HCP Measure and expressed the importance of vaccination in the fight against COVID-19. Several commenters noted that their facilities have already implemented COVID-19 vaccination requirements and that the measure bolsters their efforts to promote vaccination among HCP. Some commenters stated that, given the surge of the Delta variant, the implementation of this measure should not be delayed as widespread vaccination is critical to prevent the spread and further variants of COVID-19. Other commenters noted that the measure has already been approved in other Medicare quality reporting programs and its inclusion in outpatient programs is appropriate and consistent. Some commenters also stated that reporting the measure will ensure transparency and accountability in infection prevention and control for vulnerable populations and communities. Still other commenters appreciated that the measure would make COVID-19 vaccination information available to the public to make informed health care decisions.

Response: We thank commenters for their support of the measure and agree that the measure is critically important in the ongoing fight against COVID-19.

Comment: Several commenters expressed concern that COVID-19 vaccines are authorized under EUA and the measure should not be adopted until such time that a vaccine has received full FDA approval. One commenter stated that all three currently available vaccinations should be fully approved by FDA prior to adoption of this measure because the commenter believes that this will reduce vaccine hesitancy.

Response: On August 23, 2021, subsequent to the publication of the CY 2022 OPPS/ASC proposed rule (86 FR 42240), FDA granted full approval to Comirnaty, formerly known as the Pfizer-BioNTech COVID-19 vaccine. While we recognize that there are differences between EUA authorization and full FDA approval, we note that the process for each is scientifically rigorous. We refer readers to information related to FDA's process for evaluating an Emergency Use Authorization (EUA) request at https://www.fda.gov/vaccines-blood-biologics/vaccines/emergency-use-authorization-vaccines-explained . Each vaccine manufacturer that received EUA authorization enrolled tens of thousands of participants in randomized clinical trials, which is similar to what is required for full FDA approval. Manufacturers submit robust and rigorous data for both an EUA authorization and full FDA approval, and more than 380 million doses of COVID-19 vaccines have been administered. We believe all COVID-19 vaccines with either full approval or EUA authorization to be proven safe and effective. Thus, we believe it is appropriate to include the measure in the Hospital OQR Program.

We further note that the COVID-19 Vaccination Coverage Among HCP measure does not itself require HCP to receive the vaccination, nor does this measure reward or penalize HOPDs for the rate of HCP who have received a COVID-19 vaccine. The COVID-19 Vaccination Coverage Among HCP measure requires HOPDs to collect and report COVID-19 vaccination data that would support public health tracking and provide beneficiaries and their caregivers information to support informed decision making.

Comment: Several commenters expressed concern that this measure should not be adopted until there is clarity around the impact of future booster recommendations. One commenter stated that the numerator requirement of a completed vaccination course may change over time and recommended that CMS establish a definition of completed vaccination course using the national guidelines as of the date the OPPS Final Rule is published each year. Some commenters noted that supply disruptions could have an impact on vaccination coverage among HCP. Some commenters observed that tracking whether HCP have received a complete vaccination course when there are individual differences regarding what is considered a complete vaccination course increases reporting burden. Another commenter questioned how COVID-19 vaccinations will be financed in the future, and whether HCP will be required to pay out of pocket for vaccines and boosters which could impact the numerator requirement for the measure and lead HCP to decline future required doses of the vaccine. Other commenters recommended that reporting for the measure should be optional or delayed until a completed vaccination course can be more clearly and specifically defined. Several commenters recommended that CMS issue guidance on how the measure addresses boosters after booster recommendations have been issued by FDA and the CDC.

Response: The COVID-19 Vaccination Coverage Among HCP measure is a measure of a completed vaccination course (as defined in section XV.B.4.a.2. of the CY 2022 OPPS/ASC proposed rule (86 FR 42240)) and does not address booster shots. On August 12, 2021, FDA amended the emergency use authorizations (EUAs) for both the Pfizer-BioNTech COVID-19 Vaccine and the Moderna COVID-19 Vaccine to allow for the use of an additional dose in certain immunocompromised individuals, specifically, solid organ transplant recipients or those who are diagnosed with conditions that are considered to have an equivalent level of immunocompromise. The Centers for Disease Control on September 27, 2021 further recommended Pfizer-BioNTech boosters for individuals who completed their initial series at least six months ago and are 65 years of age or older; 18 years of age or older with underlying medical conditions; and 18 years of age or older living and working in high-risk settings, which includes healthcare workers. We acknowledge commenter concerns that hospitals may be required to collect additional information from HCP on booster doses. However, we believe that the numerator is sufficiently broad to include future boosters as part of a “complete vaccination course”.

Comment: A few commenters expressed concern about the burden of accurately capturing the number of eligible HCP in the facility for the measure specifications and believed that the total population intended to be captured in the denominator is unclear. Some of these commenters further noted that capturing data such as contraindications would further increase the burden. Commenters further requested CMS clarify the measure specifications of the denominator.

One commenter discussed the challenge for systems or facilities with multiple locations that share the same CCN, facilities located on the same physical site that do not share the same CCN, or systems with many HCP that provide care in more than one setting during a calendar year including physicians who provide most of their services at an outpatient hospital or facility but also provide inpatient care for a few days per year. The commenter stated that in the example of a HCP who primarily practices at an outpatient hospital, but sometimes provides inpatient care, a review of charge-level details for each provider would be necessary to determine if the physicians provided services at the hospital during a specific reporting period, which would be burdensome. The commenter further discussed their system's policy to require vaccination of all HCP as a condition of employment and noted that this alternative approach was more administratively feasible than the proposed measure specifications. To alleviate the challenge of collecting the denominator of eligible HCP working in the facility during the reporting period, the commenter requested CMS define “eligible” HCP and further recommended that CMS offer an attestation alternative for reporting by which an institution would receive 100 percent compliance for the measure if the institution attests that there is a COVID-19 Vaccine Policy which requires that all current employees, students, residents, volunteers, and contractors be fully vaccinated on or before December 31, 2021, and furthermore requires that all new employees receive their first COVID-19 vaccination before starting work and the new employee must be fully vaccinated within 60 days of the hire date. If an institution does not have a policy that meets these criteria, the commenter suggested the institution would be required to report the numerator and denominator as specified in the proposed measure. One commenter requested clarification of whether reporting data for IQR meets the requirements to report for the OQR program.

Response: We recognize commenters' concerns regarding reporting burden associated with the specifications of this measure specifically around the definition of HCP. We note that given the highly infectious nature of the COVID-19 virus, we believe it is important to encourage all personnel within the hospital, regardless of patient contact, role, or employment type, to receive the COVID-19 vaccination to prevent outbreaks within the hospital which may affect resource availability and have a negative impact on patient access to care.

We also note that the measure specifications define “eligible” HCP as all persons receiving a direct paycheck from the reporting facility (that is, on the facility's payroll), regardless of clinical responsibility or patient contact, licensed independent practitioners, and adult students, trainees and volunteers. CDC's guidance for entering data requires submission of HCP count at the facility level, and the measure requires reporting consistent with that guidance. Hospitals should count HCP working in all inpatient or outpatient units that are physically attached to the inpatient site and share the same CCN, regardless of the size or type of unit. Hospitals should also count HCP working in inpatient and outpatient departments that are affiliated with the specific hospital (such as sharing medical privileges or patients), regardless of distance from the hospital and also share the same CCN. The decision to include or exclude HCP from the hospital's HCP vaccination counts should be based on whether individuals meet the specified NHSN criteria and are physically working in a location that is considered any part of the on-site hospital that is being monitored.

The CDC has provided a number of resources including a tool called the Data Tracking Worksheet for COVID-19 Vaccination among Healthcare Personnel to help hospitals log and track the number of HCP who are vaccinated for COVID-19. Hospitals would enter COVID-19 vaccination data for each HCP in the tracking worksheet, and select a reporting week, and the data to be entered into the NHSN will automatically be calculated on the Reporting Summary. Using the CDC Data Tracking Worksheet and Reporting Summary, hospitals would only be required to report information once to capture inpatient and outpatient HCP as long as the HCP included in the report work at facilities that share the same CCN. Therefore, hospitals would be required to submit once for both the Hospital IQR and Hospital OQR Programs so long as the HCP included in the report work at facilities that share the same CCN. If HCP work at multiple facilities that do not share the same CCN, those individuals must be counted under each facility's CCN where they work during the week of data collection.

Comment: A few commenters noted that, while vaccination plays an important role in ending the COVID-19 pandemic, the measure is not currently endorsed by the National Quality Forum and they believed it should not be adopted until it receives such an endorsement. One commenter observed that NQF endorsement improves credibility and affords patients certainty that the measure data is reliable. One commenter recommended that CMS clarify that the adoption of a measure prior to NQF endorsement is only due to the exigency of the current circumstances.

Response: We believe that in the context of the current COVID-19 PHE and continued monitoring and surveillance following the PHE, it is important to adopt this measure as quickly as possible to allow tracking and reporting of COVID-19 Vaccination Coverage Among HCP. This tracking would allow hospitals to identify the appropriateness and effectiveness of their initiatives to improve vaccination coverage and would provide patients and consumers with important information. We therefore believe it is appropriate to use our authority pursuant to section 1833(t)(17)(C)(i) of the Act to develop this measure. That provision permits the Secretary to develop measures that the Secretary determines to be appropriate for the measurement of the quality of care furnished by hospitals in outpatient settings and that reflect consensus among affected parties and, to the extent feasible and practicable, shall include measure set forth by one or more national consensus building entities. As described above, we believe that consensus among affected parties regarding a measure can be achieved through the measure development process, through broad acceptance, use of the measure(s), and through public comment.

Here, we note our efforts to build consensus regarding this measure through our coordination with the CDC, the use of this measure across quality programs, and the pressing need to better track and report COVID-19 vaccination coverage among HCP. There is no National Quality Forum endorsed measure on the topic of COVID-19 vaccination coverage among healthcare personnel, let alone any such measure that is feasible or practical for CMS to implement. We also note that the CDC has submitted this measure for consideration in the NQF Fall 2021 measure cycle.

Separately, we believe that the Secretary's selection of this measure is additionally supported by section 1833(t)(17)(C)(ii) of the Act, which permits the Secretary to select measures that are the same as (or a subset of) the measure for which data are required to be submitted under the Hospital Inpatient Quality Reporting (IQR) Program. The Hospital IQR Program recently adopted the COVID-19 Vaccination Coverage Among HCP measure (86 FR 45382).

Comment: One commenter recommended that CMS monitor for unintended consequences associated with the COVID-19 Vaccination Coverage Among HCP measure due to its short development and adoption timeline.

Response: We appreciate the commenter's suggestion. As previously stated, the COVID-19 vaccines have received rigorous scientific review and FDA has determined that the known and potential benefits outweigh the known and potential risks. Additionally, as the measure steward, the CDC continuously monitors reporting of COVID-19 vaccination data via the NHSN to improve infection control and help target facility-level improvement efforts.

We acknowledge the commenter's concern regarding the development timeline of COVID-19 vaccines. However, as stated previously, we believe all authorized COVID-19 vaccines to be proven safe and effective and believe it is appropriate to include the measure in the Hospital OQR Program.

Comment: A few commenters supported the use of NHSN to report measure data and noted that reporting via NHSN is likely to reduce burden for hospitals.

Response: We thank the commenters for their support.

Comment: Several commenters cited Equal Employment Opportunity Commission (EEOC) guidelines, which state that employers must provide a reasonable accommodation if an employee's sincerely held religious belief, practice, or observance prevents them from receiving the vaccination. The commenters requested CMS and the CDC to revise the measure exclusions to align with EEOC guidance.

Response: We recognize that there are reasons, including religious objections or concerns regarding an individual provider's specific health status, that may lead an individual HCP to decline vaccination. We emphasize that this measure does not mandate vaccines; it only requires reporting of vaccination rates for successful program participation. However, we believe that accurate vaccination rates of HCP are meaningful data for patients and beneficiaries to use when choosing a hospital. The CDC, the measure's steward, offers guidance to hospitals that may decide to report HCP who decline vaccination due to religious reasons. Those HCP, however, would be included in the measure denominator along with other HCP who have not received a completed vaccination course. We further note that the Equal Employment Opportunity Commission (EEOC) released updated and expanded technical assistance on May 28, 2021, stating that Federal equal employment opportunity (EEO) laws do not prevent an employer from requiring all employees physically entering the workplace to be vaccinated for COVID-19, so long as the employer complies with the reasonable accommodation provisions of the Americans with Disabilities Act (ADA) and Title VII of the Civil Rights Act of 1964 and other EEOC considerations. In summary, we do not believe that this measure conflicts with any EEOC guidance and believe that it is appropriate to require hospitals to report these data.

Comment: A few commenters stated that they do not believe the measure is appropriate for quality reporting programs at this time. One commenter stated that the COVID-19 Vaccination Coverage Among HCP measure is dissimilar to the Influenza Vaccination Coverage Among HCP (NQF #0431) measure and the discrepancy between time and resources required for reporting renders the proposed COVID-19 Vaccination Coverage Among HCP measure inappropriate for hospitals at this time. Another commenter stated that the COVID-19 pandemic is ongoing, and the evolving nature of the vaccination effort indicates the measure is not yet mature enough for inclusion in the program. Another commenter observed that it is inappropriate to base this measure on the influenza vaccination measure due to the lack of evidence that COVID vaccines and influenza vaccines are clinically similar.

Response: We thank the commenters for their feedback. We acknowledge that while the CDC, the measure's steward, has sought to align this measure with the Influenza Vaccination Coverage Among HCP measure (NQF #0431), these are different public health initiatives, and different vaccines, and therefore the measure specifications are not in complete alignment. For example, influenza is seasonal while SARS-CoV-2 has circulated continuously since the first cases were reported in the U.S. in January 2020.

With regard to commenters stating that it is premature to adopt the measure, we believe that COVID-19 vaccines are a crucial tool for slowing the spread of disease and death among patients, hospital staff, and the general public. Based on FDA's review, evaluation of the data, and its decision to authorize three vaccines for emergency use and to provide full approval to one vaccine, these vaccines meet FDA's applicable standards for safety and effectiveness to prevent COVID-19, including hospitalization and death. The combination of vaccination, universal source control (that is, wearing masks), social distancing, and handwashing offers further protection from COVID-19. Since the publication of the proposed rule, the emergence of coronavirus variants have resulted in 8.9 million new virus cases. Given the EUA and full approval decisions by FDA and the continued PHE, we do not believe that adoption of the measure is premature. We believe our proposal to adopt the COVID-19 Vaccination Coverage among HCP measure to the Hospital OQR Program is appropriate and necessary for patient safety and to better inform patient decision-making.

Comment: Some commenters stated that it is inappropriate to use payment policies to drive vaccination coverage among HCP. Some commenters expressed concern that this measure could lead facilities to mandate vaccines for staff, with potential unintended consequences (specifically, staff quitting or legal risk for facilities for staff experiencing adverse events).

Response: We thank commenters for their feedback and. understand their concerns. We emphasize that this measure does not require a hospitals to enforce staff vaccination in order for the hospital to successfully participate in the Hospital OQR Program; instead, the hospital must report the rate of its staff that have completed a complete vaccination course.

We noted in the CY 2022 OPPS/ASC proposed rule (86 FR 42239) that a survey of HCP from April 2021 found that 66 percent of hospital HCP and 64 percent of outpatient department HCP reported receiving at least one dose of the vaccine. Subsequent to the publication of the CY 2022 OPPS/ASC proposed rule, research from August 2021 suggests that nearly 73 percent of HCP across all health care facilities have received at least one dose of the vaccine. Based on the findings, we understand that HCP have been receiving the COVID-19 vaccine prior to the adoption of this measure and we do not believe that there is a negative relationship between vaccine uptake among HCP and vaccine requirements. We further emphasize the importance of HCP vaccination to reduce transmission of COVID-19 among hospital staff and patients, and we believe the measure is appropriate for inclusion in the Hospital OQR program.

Comment: Many commenters expressed concern that the measure reporting requirements are duplicative of other state and federal COVID-19 vaccination reporting requirements and that inclusion of the measure in quality reporting programs is unnecessarily burdensome for hospitals. Some commenters questioned the purpose of the measure given the CMS announcement on September 9, 2021 that the agency will require COVID-19 vaccination of staff within all Medicare and Medicaid-certified facilities. Other commenters noted that they are currently required to report COVID-19 vaccination information to HHS and requested that such reporting might be considered a substitute to reporting proposed for the measure. A few commenters recommended a change to attestation-based reporting to reduce resources and burden required for reporting based on the proposed measure specifications. One commenter observed that time spent on multiple reporting requirements would take away from time available for efforts to improve vaccination coverage. Another commenter requested an analysis of burden and feasibility of data collection prior to adoption of the measure.

Response: We appreciate commenters' feedback. We note that most Immunization Information Systems do not include the information needed to determine if an immunized person is a resident of a nursing home, a dialysis patient, or a healthcare worker. Using the NHSN COVID-19 Vaccination Modules allows tracking vaccination coverage among the residents, patients, or healthcare personnel in your facilities. We do recognize that this measure may lead to duplicative reporting if hospitals voluntarily report COVID-19 HCP vaccination information to other data reporting systems in addition to this measure requirement via the NHSN, and we are collaborating with other HHS agencies, including the CDC to minimize reporting burden to the extent feasible. We believe that the COVID-19 vaccination of HCP information submitted for this measure is important as it will be made publicly available for use by Medicare beneficiaries and others in making informed decisions regarding their care including facility choice.

With regard to measure burden analysis, we refer the commenter to section XXII.B.3.a. of this final rule with comment period, where we discuss the burden associated with the measure. We thank the commenters for the suggestion that the measure be attestation-based and note that any changes to the measure specifications would be proposed through future rulemaking.

Comment: A few commenters recommended that CMS reduce reporting frequency from quarterly to twice-yearly or annually to limit reporting burden. One characterized the reporting requirements to be weekly and recommended less frequent reporting requirements. Another commenter stated that the measure is duplicative with other requirements from the CDC and recommended that CMS not adopt the measure but instead collect the information directly from the CDC. Another commenter observed that there are not likely to be large changes in performance at quarterly intervals and recommended less frequent reporting.

Response: As stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42270), we believe that it would be ideal to have HCP vaccination data for every week of each month, we are mindful of the time and resources that some facilities would need to report the data. Thus, in collaboration with the CDC, we determined that data from at least one week of each month would be sufficient to obtain a reliable estimate of vaccination levels among an ASC's HCP while balancing the costs of reporting. We believe that reporting at a lower frequency may result in data that is less meaningful and timely to consumers who want to consider HCP vaccination rates as part of their health care decision-making process. As stated previously, we are collaborating with other HHS agencies, including the CDC to minimize reporting duplication to the extent feasible.

Comment: One commenter recommended development of a validation process for the COVID-19 Vaccination Coverage Among HCP measure.

Response: We thank the commenter for the suggestion and note that, as stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42241), the measure has been tested and shown to be feasible and reliable.

Comment: One commenter supported public reporting of this measure, and specifically noted support for early publication through the initial shortened reporting period.

Response: We thank the commenter for its support.

Comment: A few commenters did not support publicly reporting the measure data. One commenter stated that, all HCP should be vaccinated; however, reporting this information for payment purposes could create incentives for hospital employers to coerce and intimidate HCP who decline the vaccine. Some commenters recommended providing confidential feedback reports to hospitals instead of publicly reporting the data. One commenter recommended delaying public reporting until the underlying evidence is stable and hospitals have had opportunity to report data for several years.

Response: We thank commenters for their feedback. We believe that HCP vaccination is important to prevent the spread of COVID-19 and encourage HCP to disclose their vaccination status to facilitate reporting of the measure. We do not believe public reporting of vaccination data will incentivize coercion or intimidation on the part of hospitals. We noted previously in this section as well as in the CY 2022 OPPS/ASC proposed rule (86 FR 42239), a survey of HCP from April 2021 found that 66 percent of hospital HCP and 64 percent of outpatient department HCP reported receiving at least one dose of the vaccine. Subsequent to the publication of the CY 2022 OPPS/ASC proposed rule, research from August 2021 suggests that nearly 73 percent of HCP across all health care facilities have received at least one dose of the vaccine. Based on this data, we understand that HCP have been receiving the COVID-19 vaccine prior to the adoption of this measure and do not believe that this represents performance that suggests negative relationship between vaccine uptake among HCP and employer vaccination requirements. We believe that publicly reporting the data will be useful to consumers in choosing healthcare providers, including by making comparisons between hospitals.

Comment: One commenter recommended aligning with the policy finalized in the FY 2022 IPPS/LTCH PPS final rule in which only the most recent quarter of data will be used for public reporting (as opposed to a rolling 12-month report).

Response: We agree with the commenter and note that, in alignment with the FY 2022 IPPS/LTCH PPS final rule (86 FR 45382), we will not finalize our plan to add one additional quarter of data during each advancing refresh, until the point that four full quarters of data is reached and then report the measure using four rolling quarters of data. Instead, we will only report the most recent quarter of data. This would result in more meaningful information that is up to date and not diluted with older data. We emphasize that this modification of our proposal does not affect the data collection schedule established for submitting data to NHSN for the COVID-19 vaccination measure. This would simply update the data that are displayed for the public reporting purposes.

After consideration of the public comments we received, we are finalizing our proposal to adopt the COVID-19 Vaccination Coverage Among HCP measure (Newly designated as OP-38) with modification to the quarterly reporting deadlines beginning with the CY 2022 reporting period/CY 2024 payment determination and subsequent years. Based on the comments we have received, it is our belief that reporting a single HCP count for each healthcare facility enrolled in NHSN would reduce burden. Therefore, in collaboration with the CDC, facilities will report data to NHSN by enrolled facility (also known as OrgID). Similar to the data submission process used previously for the Influenza Vaccination Coverage Among Healthcare Personnel (OP-27) (79 FR 66945), the CDC will then translate and submit the data to CMS on behalf of the facilities by CCN.

Additionally, in order to reduce reporting burden, we are finalizing our proposal that facilities must count HCP working in all inpatient or outpatient units that are physically attached to the inpatient site and share the same CCN, regardless of the size or type of unit. Facilities must also count HCP working in inpatient and outpatient departments that are affiliated with the specific hospital (such as sharing medical privileges or patients), regardless of distance from the hospital and also share the same CCN. Reporting data in this way will allow healthcare facilities with multiple care settings to simplify data collection and submit a single count applicable across the inpatient and outpatient settings. We will then publicly report the percentage of HCP who received a complete course of the COVID-19 vaccination per CCN. This single HCP count per CCN will inform the public of the percentage of vaccinated HCP at a particular healthcare facility, which will provide meaningful data and help to improve the quality of care while reducing the burden of reporting.

We are also finalizing our proposal to publicly report the measure, which will begin with the October 2022 Care Compare refresh, or as soon as technically feasible, using data collected from Q1 2022 (January 1, 2022 through March 31, 2022). However, based on public comment, we are finalizing a modification to our proposal. We will not finalize our plan to add one additional quarter of data during each advancing refresh, until the point that four full quarters of data is reached and then report the measure using four rolling quarters of data. Instead, we will only report the most recent quarter of data. This would result in more meaningful information that is up to date and not diluted with older data.

b. Adoption of the Breast Cancer Screening Recall Rates Measure Beginning With the CY 2023 Payment Determination

(1) Background

Performing breast imaging in the outpatient setting facilitates early detection of malignancies. However, performing diagnostic mammography or digital breast tomosynthesis (DBT) as a result of a false-positive screening study or other errant data has the potential to expose women to unnecessary follow-up. This could result in increased prevalence of radiation-induced cancers in younger individuals including those carrying related gene mutations, such as BRCA-1 and BRCA-2 or additional imaging and biopsies, which could lead to unnecessary procedures for individuals who do not have breast cancer. In contrast, recalling too few women for follow-up imaging may lead to delayed diagnoses, higher stages at diagnosis, and/or undetected cases of breast cancer. Given the potential negative consequences associated with too many or too few diagnostic mammography and DBT studies performed within the population, evidence from the clinical literature suggests appropriate recall rates should fall between five to 12 percent.

To address the health and clinical risks associated with too many or too few breast cancer screening recalls, in the CY 2022 OPPS/ASC proposed rule (86 FR 42242), we proposed to adopt the Breast Cancer Screening Recall Rates measure beginning with the CY 2023 payment determination using a data collection period of July 1, 2020, to June 30, 2021, and then data collection periods from July 1 through June 30 of the following year starting 3 years before the applicable payment calendar year for subsequent years. We intend for this measure to move facilities toward the 5 to 12 percent range of recall rates. Facilities that are above or below the range should consider implementation of internal quality-improvement procedures to ensure they are not missing cases or recalling individuals unnecessarily. This measure would fill the gap in women's health and oncology care that was left in the Hospital OQR Program portfolio following the removal of the Mammography Follow Up Rates measure (OP-9). More specifically, this measure would directly address the reason OP-9 was removed from the Hospital OQR Program by bringing the measure into alignment with current clinical practice and emerging scientific evidence through the addition of screening and diagnostic DBT (83 FR 59096). The Breast Cancer Screening Recall Rates measure would be added to a measure set focused on imaging efficiency. While this measure, as currently specified, would not provide data on outcomes (that is, the number of patients who were recalled and subsequently diagnosed with cancer), it would give facilities information to use in examining their own imaging practices. Results from the measure could be used to identify opportunities for improving the efficiency and quality of care provided and would be added to a measure set focused on imaging efficiency.

(2) Overview of Measure

This claims-based process measure documents breast cancer screening recall rates at the facility level. The Breast Cancer Screening Recall Rates measure would calculate the percentage of Medicare fee-for-service (FFS) beneficiaries for whom a traditional mammography or DBT screening study was performed that was then followed by a diagnostic mammography, DBT, ultrasound of the breast, or magnetic resonance imaging (MRI) of the breast in an outpatient or office setting on the same day or within 45-calendar days of the index image. In assessing this measure based on clinical quality and efficiency, there are potential negative consequences of high and low mammography and DBT recall rates. A middle-range number is the ideal value for this measure. A high cumulative dose of low-energy radiation can be a consequence of too many false-positive mammography and DBT recall studies. Alternatively, inappropriately low recall rates may lead to delayed diagnoses or undetected cases of breast cancer. The inclusion of DBT in evaluating recall care may improve recall rates and positive predictive values compared to metrics that focus solely on mammography.

Although this measure is not based on a specific clinical guidelines, expert clinical consensus and support from publications in the peer-reviewed literature emphasize the importance of appropriate recall rates. The adoption of this measure could potentially fill a gap in breast cancer screening measures for the Hospital OQR Program. This measure would address the Meaningful Measure priority area of “Making Care Safer.” The measure addresses this Meaningful Measure area by: (1) Promoting appropriate use of breast cancer screening and diagnostic imaging by encouraging facilities to aim for a performance score within the target recall range; (2) reducing the harms associated with too many recalls, which can lead to unnecessary radiation exposure, anxiety and distress, and increased costs or resource utilization; and (3) addressing the issue of inappropriately low recall rates, which may lead to delayed diagnoses, diagnoses at a later stage, or undetected cases of breast cancer.

The measure was included on the publicly available “List of Measures Under Consideration for December 21, 2020,” a list of measures under consideration for use in various Medicare programs. In January 2021, the Breast Cancer Screening Recall Rates measure was reviewed by both the MAP's rural health workgroup and hospital workgroup, overseen by the Coordinating Committee (MUC20-0005). Both groups and the Coordinating Committee voted to conditionally support the measure, pending NQF endorsement. Concerns cited during the January 2021 MAP review included: (1) The proposed recall range is not based on clinical practice guidelines, but rather expert consensus and synthesis of findings from the scientific literature; (2) use of a range (as opposed to a targeted high or low value) may be difficult for clinicians, patients, and other stakeholders to interpret; (3) the measure does not address social determinants of health, which may impact the rate of recall at some facilities; and (4) the measure does not provide complementary information about patient outcomes (for example, breast cancer detection rate), which could aid in the interpretation and usefulness of the measure's data. Despite these concerns, some members of the rural health workgroup, hospital workgroup, and Coordinating Committee expressed support of the Breast Cancer Screening Recall Rates measure and noted that feedback provided by the MAP did not preclude measure implementation, given its importance to the clinical community and the public. As a part of measure implementation, we noted that we would develop a suite of education and outreach materials to aid stakeholders in the interpretation of measure performance data (86 FR 42243). These materials would explain the measure structure (including use of a range representing ideal performance) to ensure stakeholders understand values within and outside of the target range. Once implemented, the measure would be re-evaluated annually, which would include a consideration of changes to the evidence base and potential integration of social determinants of health (that is, stratification); updates to the measure specifications would be made iteratively, as appropriate, on an annual basis.

Section 1833(t)(17)(C)(i) of the Act directs the Secretary to develop measures that the Secretary determines to be appropriate for the measurement of the quality of care (including medication errors) furnished by hospitals in outpatient settings and that reflect consensus among affected parties and, to the extent feasible and practicable, shall include measures set forth by one or more national consensus building entities.

In general, we prefer to adopt measures that have been endorsed by the NQF because it is a national multi-stakeholder organization with a well-documented and rigorous approach to consensus development. However, as we have noted in previous rulemaking (for example, 75 FR 72065 and 76 FR 74494 for the Hospital OQR and ASCQR Programs, respectively), the requirement that measures reflect consensus among affected parties can be achieved in other ways, including through the measure development process, through broad acceptance, use of the measure(s), and through public comment.

We have reviewed those NQF-endorsed measures that are related to breast imaging and have not identified any that are appropriate for the measurement of mammography or DBT recall rates specifically. As such, we proposed to adopt this measure for use in the Hospital OQR Program because of its importance to women's health and its ability to fill a gap in CMS' Meaningful Measure portfolio even though it has not yet been reviewed by NQF. Submission for NQF endorsement would be considered for this measure in the future.

(3) Measure Calculation

This claims-based process measure documents breast cancer screening recall rates at the facility level. The Breast Cancer Screening Recall Rates measure would calculate the percentage of Medicare FFS beneficiaries for whom a traditional mammography or DBT screening study was performed that was then followed by a diagnostic mammography, DBT, ultrasound of the breast, or MRI of the breast in an outpatient or office setting on the same day or within 45 days of the index image. Specifically, the measure denominator includes Medicare FFS beneficiaries who received a screening mammography or DBT study at a facility paid under the OPPS. The numerator consists of individuals from the denominator who had a diagnostic mammography study, DBT, ultrasound of the breast, or MRI of the breast following a screening mammography or DBT study on the same day or within 45 days of the screening study. The Breast Cancer Screening Recall Rates measure does not have any exclusions. This measure is not risk adjusted. As a process-of-care measure, the decision to image a beneficiary should not be influenced by sociodemographic status factors; rather, risk adjustment for such sociodemographic factors could potentially mask important inequities in care delivery for beneficiaries seen at facilities providing data for this measure. If performance scores for this measure vary across populations, this may be reflective of differences in the quality of care provided to the diverse populations included in the measure's denominator.

Although this measure is not based on a specific clinical guideline, expert clinical consensus and support from the peer-reviewed literature emphasize the importance of appropriate recall rates. We refer readers to the QualityNet website at https://qualitynet.cms.gov for the full measure specifications.

(4) Data Sources

The Breast Cancer Screening Recall Rates measure would be calculated using data from final claims that facilities submit for Medicare beneficiaries enrolled in Medicare FFS. As such, facilities would not have to submit any additional data for this measure. The measurement period for the Breast Cancer Screening Recall Rates measure is 12 months. As noted previously, we would use final claims data from July 1, 2020 to June 30, 2021 to calculate the measure for the CY 2023 payment determination and then data collection periods from July 1 through June 30 of the following year starting 3 years before the applicable payment calendar year for subsequent years. Please note that claims for the initial patient population would be identified from July 1 through May 17 of each year, with numerator cases occurring from July 1 through June 30 annually. The data would be calculated only for facilities paid under the OPPS for mammography and DBT screening in the hospital outpatient setting. Data from the hospital outpatient and carrier files would be used to determine beneficiary inclusion (for example, a mammography follow-up study can occur in any location and be eligible for inclusion in the measure's numerator).

The following is a summary of the comments we received on this proposal and our responses.

Comment: One commenter supported implementation of the Breast Cancer Screening Recall Rates measure into the Hospital OQR Program but encouraged CMS to rename the metric to Breast Cancer Screening Recall Rates.

Response: We thank the commenter for their suggestion. We are refining the name of the measure to the Breast Cancer Screening Recall Rates measure, as this name more accurately describes what this measure assesses.

Comment: Many commenters supported the addition of Breast Cancer Screening Recall Rates measure to the Hospital OQR Program as proposed. A few commenters believe the Breast Cancer Screening Recall Rates measure fills a measurement gap left in the Hospital OQR Program by the removal of Mammography Follow-Up Rates (OP-9) in the CY 2019 OPPS/ASC PPS final rule with comment period (83 FR 59096 through 59097). One commenter acknowledged the low level of burden associated with reporting of claims-based measures.

Response: We thank the commenters for their support.

Comment: A few commenters did not support the addition of Breast Cancer Screening Recall Rates measure to the Hospital OQR Program based on the removal of the Mammography Follow-Up Rates measure (OP-9) in the CY 2019 OPPS/ASC PPS final rule (83 FR 59096 through 59097). The commenters highlight that the measure would not be useful to patients, as it is not based on a clinical practice guideline, systematic review, meta-analysis, or other experimental form of evidence to demonstrate a connection between public reporting of the measure score and its impact on patient outcomes, which is similar to the reason why the OP-9 measure was removed from the Hospital OQR program.

Many commenters provided input on the usability of the Breast Cancer Screening Recall Rates measure's performance scores, suggesting that patients may not be able to fully interpret a facility's performance score presented in comparison to a target range. Commenters also expressed concern about the evidence-base for the measure's 5 percent to 12 percent target range.

Response: We appreciate the commenters' input on the removal of OP-9 from the Hospital OQR Program. We elected to remove OP-9 as it did not align with current clinical practice. The Breast Cancer Screening Recall Rates measure improves upon the OP-9 technical specifications, which had been in use for nearly 10 years, incorporating digital breast tomosynthesis (DBT) as a screening and diagnostic imaging modality to the measure's denominator and numerator, respectively, and refining guidance for interpretation the measure score by presenting a target performance range. OP-9 provided a ceiling for appropriate rates of recall at 14 percent, but did not present a lower bound (due to a lack of evidence at the time of specification). Thus, we believe that the 5 percent to 12 percent range is more interpretable and useful for patients and other consumers than the previously used metric. We will continue to monitor and evaluate the usefulness and usability of the Breast Cancer Screening Recall Rates measure specifications, and specifically the range, during routine measure reevaluation. Additionally, we will ensure education and outreach materials provide meaningful information on data interpretation for our stakeholders.

We acknowledge commenters' concern about the evidence base on which the Breast Cancer Screening Recall Rates measure is based. We convened a technical expert panel (TEP) to gather input from a breadth of stakeholders while specifying this measure; we also collected feedback from additional members of the clinical community through a listening session during which the measure's draft technical specifications were discussed. Based on these qualitative data, we defined the range for appropriate imaging based on the 2013 Breast Imaging Reporting and Data System (BIRADS) Atlas.

Comment: Several commenters provided feedback on the Breast Cancer Screening Recall Rate measure's technical specifications. One commenter questioned why a benchmark value for the measure's range was not provided. Several commenters disagreed with use of the five percent to 12 percent range for appropriate imaging. A few commenters encouraged CMS to consider exclusion of individuals for whom patient or clinical factors necessitate more frequent recall following screening for breast cancer. A few commenters asked why CMS did not include the Breast Cancer Screening Recall Rates measure in a composite of breast cancer measures. A few commenters encouraged CMS to risk adjust the measure to account for potential inequities in care among racial and ethnic minorities. A commenter suggested the incorporation of additional imaging modalities into the measure's technical specifications.

Response: We appreciate the commenters' recommendations on ways to improve the Breast Cancer Screening Recall Rates measure technical specifications. Rather than providing a single benchmark, we used guidance from the American College of Radiology's 2013 BIRADS Manual to define appropriate recall as between five percent and 12 percent of patients for whom follow-up imaging was performed. If, in the future, a single benchmark value is more appropriate for use in public reporting than a range (based on the release of guidance that appears in a clinical practice guideline or other documentation), we will consider revisions to the measure's specifications accordingly.

With respect to the comments that encourage we risk-adjust the measure to account for potential inequities in care around racial and ethnic minorities, we believe risk adjustment for the Breast Cancer Screening Recall Rates measure could have the effect of masking true differences in care provided to patients of different races, ethnicities, and genders. We will continue to monitor and evaluate results for the Breast Cancer Screening Recall Rates measure to ensure high-quality care is provided to all Medicare fee-for-service patients, regardless of their racial, ethnic or gender identities.

We appreciate input on the structure of the Breast Cancer Screening Recall Rates measure and the composition of its data elements. We will continue to monitor the peer-reviewed evidence and feedback from stakeholders to identify future changes to the technical specifications, including the potential need to exclude individuals with certain clinical or patient-focused characteristics. We will also review the additional imaging modalities suggested by commenters to identify if they are appropriate to include in either the measure's denominator or numerator or both. We will consider ways to maximize the value of the Breast Cancer Screening Recall Rates measure including incorporation of facility performance scores into a composite evaluating other types of breast-cancer care.

Comment: One commenter encouraged CMS to engage the clinical community and medical societies in the creation of documentation for implementation of the Breast Cancer Screening Recall Rates measure, including files for education and outreach to its members.

Response: We thank the commenter for their support and welcome feedback from the clinical community and medical societies on the creation of education and outreach resources that would be beneficial for measure implementation.

Comment: One commenter encouraged CMS to perform a dry run of facility performance data prior to implementation of the Breast Cancer Screening Recall Rates measure into the Hospital OQR Program. Another commenter asked CMS to make public reporting of the Breast Cancer Screening Recall Rates measure optional. A third commenter asked CMS to delay implementation of the Breast Cancer Screening Recall Rates measure into the Hospital OQR Program until CY 2025.

Response: We appreciate the feedback received on timing for implementation of the Breast Cancer Screening Recall Rates measure. Because this measure builds upon results presented for OP-9 (prior to its retirement from the Hospital OQR Program in CY 2019), we do not believe a dry run is needed prior to implementation As the Breast Cancer Screening Recall Rates measure closely mirrors the OP-9 technical specifications that were in use within the Hospital OQR Program from 2010 to 2018 and as the measure was publicly reported through April 2020, stakeholders are anticipated to have some familiarity with the measure, Thus, we do not believe data for public reporting of the measure need to be delayed to future years. Further, facilities will receive their claims data, to be used in calculation of the Breast Cancer Screening Recall Rates measure, through a claims detail report (CDR) in 2022, which will allow facilities to identify any errors in processed claims and/or plan for future quality-improvement efforts following implementation of the measure into Hospital OQR.

Comment: A few commenters expressed concern about using data in calculation of the Breast Cancer Screening Recall Rates measure that were processed during the COVID-19 pandemic and encouraged CMS to monitor trends in imaging use during this time.

Response: We appreciate commenters' concern about the impact of COVID-19 pandemic, including delays in care resulting from availability of imaging services and changes in the ways patients accessed care since March 2020. In response to the COVID-19 pandemic, we will not use data from January 1, 2020, through June 30, 2020, for performance calculation. We will continue to monitor trends in utilization and impacts of the COVID-19 pandemic as we implement the Breast Cancer Screening Recall Rates measure.

Comment: Many commenters encouraged CMS to seek National Quality Forum (NQF) endorsement prior to implementation of the Breast Cancer Screening Recall Rates measure into the Hospital OQR Program.

Response: We appreciate commenters' input on the need for NQF endorsement of Breast Cancer Screening Recall Rates measure and will consider how best to leverage NQF endorsement review of the measure following its implementation. We believe the Breast Cancer Screening Recall Rates measure addresses a gap area within the Hospital OQR Program for both cancer care and women's health, and think that addition of this measure to the Program before pursuing NQF endorsement will ensure that the quality of services provided is monitored by CMS.

After consideration of the public comments we received, we are finalizing the adoption Breast Cancer Screening Recall Rates measure (newly designated as OP-39) as proposed.

c. Adoption of the ST-Segment Elevation Myocardial Infarction (STEMI) eCQM Beginning With Voluntary Reporting for the CY 2023 Reporting Period and Mandatory for the CY 2024 Reporting Period/CY 2026 Payment Determination and Subsequent Years

(1) Background

An ST-segment elevation myocardial infarction (STEMI) is a form of heart attack in which there is a complete occlusion of one of the heart arteries. Each year over 250,000 Americans experience a STEMI, approximately 50 percent of whom are Medicare beneficiaries. This is represented on the electrocardiogram as an elevation of the ST segment—the interval between ventricular depolarization and repolarization (which represents the duration of an average ventricular contraction). Time is of the essence in STEMI treatment, and the prompt identification of STEMI and restoration of blood flow to the heart (reperfusion therapy) is a key determinant of health outcomes. Primary percutaneous coronary intervention (PCI), which is the use of balloons and stents to restore blood flow, is the preferred reperfusion modality. The 2013 American College of Cardiology Foundation (ACCF)/American Heart Association (AHA) guidelines recommend the initiation of PCI within 120 minutes from first medical contact (FMC). Specifically, if a patient presents to a PCI-capable facility, primary PCI is recommended within 90 minutes of FMC. If a patient presents to a non-PCI-capable facility, the patient should be expeditiously transported to a PCI-capable facility and receive PCI within a total of 120 minutes. However, in care settings where it is not possible for a patient to receive PCI or be transferred and receive primary PCI within the 120-minute timeframe, fibrinolytic therapy (medications to dissolve blood clots and restore flow) should be administered rapidly for reperfusion in the absence of contraindications. The guidelines recommend that eligible patients should receive fibrinolytic therapy within 30 minutes of hospital arrival.

(2) Overview of Measure

The STEMI eCQM measures the percentage of ED patients with a diagnosis of STEMI who received timely delivery of guideline-based reperfusion therapies appropriate for the care setting and delivered in the absence of contraindications. The Meaningful Measures Framework aims to address issues that are most vital to delivering quality, value-based care to improve patient outcomes. In alignment with the Meaningful Measures quality priority of promoting effective prevention and treatment of chronic disease, we believe this STEMI eCQM encourages timely, effective and appropriate treatment using clinical data available in certified electronic health record technology (CEHRT) and that this measure has the potential to reduce adverse health outcomes.

The measure was included on the publicly available “List of Measures Under Consideration for December 21, 2020,” a list of measures under consideration for use in various Medicare programs. In January 2021, the STEMI eCQM was reviewed by the MAP's rural health workgroup, hospital workgroup, and Coordinating Committee (MUC20-0004) The MAP rural health workgroup conducted discussions regarding the appropriate treatment time for STEMI and how this may be impacted in rural settings due to proximity and transportation issues, especially with getting someone to a PCI-capable facility, and supported the STEMI eCQM (OP-40) for rural providers in the Hospital OQR Program. The MAP voted to conditionally support the measure, pending NQF endorsement. We note that on-site facilities can perform a PCI (if they have the capability to do so), use fibrinolysis, or they can transfer a patient to a facility that provides PCI. These three treatment scenarios are all captured by the measure, including relative treatment times (non-transfer patients receiving PCI at a PCI capable facility within 90 minutes of arrival and patients transferred from a non-PCI-capable to a PCI-capable facility within 45 minutes).

Section 1833(t)(17)(C)(i) of the Act requires the Secretary to develop measures that the Secretary determines to be appropriate for the measurement of the quality of care (including medication errors) furnished by hospitals in outpatient settings and that reflect consensus among affected parties and, to the extent feasible and practicable, shall include measures set forth by one or more national consensus building entities (for example, NQF). We note that section 1833(t)(17) of the Act does not require that each measure we adopt for the Hospital OQR Program be endorsed by a national consensus building entity. We have reviewed and identified two related NQF-endorsed chart-abstracted measures—OP-2 (Fibrinolytic Therapy Received within 30 Minutes of ED Arrival) and OP-3 (Median Time to Transfer to Another Facility for Acute Coronary Intervention).

In section XV.B.3.c. of the CY 2022 OPPS/ASC proposed rule (86 FR 42237), we proposed to remove these two related chart abstracted measures—OP-2 (Fibrinolytic Therapy Received within 30 Minutes of ED Arrival) and OP-3 (Median Time to Transfer to Another Facility for Acute Coronary Intervention)—and replace them with this eCQM. The use of the STEMI eCQM measure, in lieu of the OP-2 and OP-3 measures, would eliminate the need for manual chart-abstraction. It would also broaden the group of measured STEMI patients included in the measure to include patients who present to and receive primary PCI at a PCI-capable facility, which is the vast majority of STEMI patients. The OP-2 and OP-3 measures only include patients presenting to non-PCI-capable facilities who either receive fibrinolytics or are transferred to a PCI-capable facility. The STEMI eCQM better supports compliance with the full group of STEMI patients covered in the 2013 ACCF and AHA guidelines for the management of STEMI by measuring timeliness and appropriateness of care for STEMI. We believe that the STEMI eCQM (OP-40) would efficiently and comprehensively measure timeliness of STEMI care by reducing the burden on facilities currently reporting these two chart-abstracted measures, broadening the STEMI population for which performance scores could be publicly reported, and incorporating contraindications to enhance the clinical applicability of the measure. We refer readers to section XV.B.3.c. of the CY 2022 OPPS/ASC proposed rule (86 FR 42237) and section XV.B.3.c. of this final rule with comment period for further discussion on our proposal to remove the OP-2 and OP-3 measures from the Hospital OQR Program.

As such, in the CY 2022 OPPS/ASC proposed rule (86 FR 42244), we proposed to adopt the STEMI eCQM for use in the Hospital OQR Program because of its importance in measuring timely delivery of guideline-based reperfusion therapies appropriate for the care of ED patients with a diagnosis of STEMI and its ability to fill a gap in CMS' Meaningful Measure portfolio. The measure was submitted to NQF in January 2021 and is under review.

(3) Measure Calculation

The STEMI eCQM is a process measure that assesses the percentage of ED patients aged 18 years or older with a diagnosis of STEMI who received appropriate treatment. The denominator includes all ED patients 18 years or older diagnosed with STEMI who do not have contraindications to fibrinolytic, antithrombotic, and anticoagulation therapies.

The numerator includes:

• ED-based STEMI patients whose time from ED arrival to fibrinolytic therapy is 30 minutes or fewer; or
• Non-transfer ED-based STEMI patients who received PCI at a PCI-capable hospital within 90 minutes of arrival; or
• ED-based STEMI patients who were transferred to a PCI-capable hospital within 45 minutes of ED arrival at a non-PCI-capable hospital.

For more information on the STEMI eCQM, we refer readers to the full measure specifications available on the Electronic Clinical Quality Improvement (eCQI) Resource Center website, available at: https://ecqi.healthit.gov/pre-rulemaking-eh-oqr-ecqms .

(4) Data Sources

This measure is an eCQM that uses data routinely collected through the EHR and is designed to be calculated by the hospitals' CEHRT using patient-level data and submitted to CMS. In 2020, using data from 2018, the STEMI eCQM was tested at two hospital systems (20 EDs in total) with two different EHR platforms for feasibility, validity, and reliability testing, based on the endorsement criteria outlined by NQF. The feasibility testing showed that the measure is feasible and the key features of the eCQM, such as the code sets and measure logic, were readily interpreted by both sites as assessed by the feasibility scorecard and exit interviews conducted at the two sites. The validity testing results showed a wide range of agreement among data elements between the electronic and manual data extracts. Some data elements were collected but not fully interoperable within providers' EHRs. However, as hospitals and EHR vendors meet ONC requirements for interoperability under the ONC 21st Century Cures Act final rule (85 FR 25642 through 25961) and map data elements for interoperability via the FHIR-based API required by December 31, 2022 (85 FR 70075), these data elements would be accessible without special effort.

(5) Implementation

In the CY 2022 OPPS/ASC proposed rule (86 FR 42246), we proposed to start with voluntary reporting beginning with the CY 2023 reporting period and then with mandatory reporting beginning with the CY 2024 reporting period/CY 2026 payment determination and for subsequent years. We believe that taking an incremental approach to implementing this measure would allow hospitals time to implement workflow changes as necessary to better prepare for submitting data and to increase familiarity with data submission with the introduction of an eCQM into the Hospital OQR Program. We refer readers to section XV.D.6. of the CY 2022 OPPS/ASC proposed rule (86 FR 42259) and section XV.D.6. of this final rule with comment period for additional information related to eCQM data submission and reporting requirements under the Hospital OQR Program.

The following is a summary of the comments we received on this proposal and our responses.

Comment: Many commenters supported the addition of the STEMI eCQM to the Hospital OQR Program as proposed. Two commenters appreciated the phased implementation approach, which would allow facilities the ability to make the necessary adjustments for data submission over time. A commenter specifically cited the transition from voluntary to mandatory reporting of the STEMI eCQM as a preferred strategy for implementation. Another commenter suggested phasing the STEMI eCQM (OP-40) into Hospital OQR concurrent to the OP-2 and OP-3 removal would give facilities sufficient time to adjust workflows in how care is provided and documented within sites' EHRs. An additional commenter pointed out the importance of ensuring the STEMI eCQM is implemented concurrent to the removal of OP-2 and OP-3, ensuring the transition is seamless. Commenters noted the adoption of the STEMI eCQM is consistent with CMS' move to modernization and use of meaningful measures.

Many commenters expressed support for CMS' plan to remove Fibrinolytic Therapy Received within 30 Minutes of Emergency Department (ED) Arrival (OP-2) and Median Time to Transfer to Another Facility for Acute Coronary Intervention (OP-3), replacing them with the STEMI eCQM as proposed. Several commenters asserted that the STEMI eCQM is less burdensome for collection and reporting. They noted the replacement of OP-2 and OP-3 with the STEMI eCQM would reduce burden on facilities to abstract information about a sample of cases for each measure quarterly and would provide more precise, evidence-based guidance for how to interpret the STEMI eCQM's quality actions in the numerator.

Response: We thank the commenters for their support.

Comment: One commenter encouraged CMS to delay removal of OP-2 and OP-3 from the Hospital OQR Program until the STEMI eCQM is implemented and data are available for public reporting. Another commenter recommended CMS retain OP-2 and OP-3 in the Hospital OQR Program as optional measures for facilities with limited resources for eCQM reporting.

Response: We appreciate commenters' position on retention of OP-2 and OP-3 as optional measures or for additional years. However, we believe the incremental approach we proposed for implementation of the STEMI eCQM will give facilities sufficient time to meet requirements under the ONC's requirements for interoperability through the ONC 21st Century Cures Act final rule (85 FR 25642 through 25961) and to map data elements for interoperability via the FHIR based API (85 FR 70075). Additionally, to delay removal of OP-2 and OP-3 or to retain them as optional measures would undermine the incremental nature of our implementation. Retaining these measures may cause hospitals to delay their implementation of the STEMI eCQM until the last minute. Thus, we believe that the delayed implementation or retention of OP-2 and OP-3 is not necessary.

Comment: Several commenters encouraged CMS to delay implementation of the STEMI eCQM until the measure obtains endorsement by the NQF.

Response: We appreciate commenters' concern about delaying implementation of this measure into the Hospital OQR program until they are endorsed by NQF. We submitted the STEMI eCQM for endorsement review through NQF's Cardiovascular Project in spring 2021. The NQF Cardiovascular Standing Committee passed the measure on all criteria and on overall suitability for endorsement. At the close of comment period for the CY 2022 OPPS/ASC PPS proposed rule, the STEMI eCQM was undergoing public comment through NQF and would receive review by NQF's Consensus Standards Advisory Committee (CSAC) in fall 2021. Should it be approved by the CSAC, the STEMI eCQM will be endorsed by NQF as #3613e.

As noted in section XV.D.4.a.(2)(c). of this final rule with comment period, CMS is not limited by section 1833(t)(17) of the Act to select measures for the Hospital OQR Program that have been approved by a consensus base entity such as NQF. Given the broad support for the measure obtained during development, including support from the TEP, during measure development public comment, and by the MAP's Rural Health Advisory group, Hospital Workgroup, Coordinating Committee, and MAP public comment, as well as the benefits of the STEMI eCQM over the OP-2 and OP-3 measures, we believe it is critical to implement this measure on the timeline discussed above even if the measure does not obtain NQF endorsement in fall 2021.

Comment: Several commenters recommended CMS support facilities, vendors, and other stakeholders during the implementation of the STEMI eCQM into the Hospital OQR program, as it would be the first eCQM added to the program. Specifically, a few commenters expressed concern about the costs associated with initial implementation of eCQMs (for example, building eCQM logic, validation, certification, etc.) and the timing by which EHR standards must be in place to meet the deadline for voluntary reporting.

Response: We appreciate commenters' concern regarding the start-up costs and requirements for eCQM reporting. However, data elements for the STEMI eCQM are all readily available in structured fields (or will be, based on the FHIR-based API, which is required for implementation by December 31, 2022 (85 FR 70075)). The proposed measure also aligns with interoperability guidance from the ONC 21st Century Cures Act final rule (85 FR 25642 through 25961) published May 1, 2020, therefore facilities and vendors have received advanced notice and guidance on FHIR API standardization that will support the transition to eCQMs. We also note that many facilities have operationalized and gained experience in reporting eCQM for the Hospital IQR Program. Thus, we believe that many facilities have demonstrated readiness in reporting eCQM and the implementation burden will not exceed requirements from other federal regulation already in place.

Additionally, we will provide assistance to facilities, vendors, and other stakeholders through the release of education and outreach materials following adoption of the measure in the program.

Comment: One commenter expressed concern about external factors (such as delays in resuscitation or a family's decision to not pursue aggressive care) that could affect facility performance through no fault of the clinician. This commenter encouraged CMS to exclude these cases to avoid penalization of the facility for care that does not meet the numerator's quality action.

Response: We appreciate the commenter's feedback on measure exclusions and considered these issues during measure development. Certain delays in resuscitation, such as cardiopulmonary arrest, are contraindicated and therefore excluded from the measure. We found that family refusal is not consistently captured in a structured data field. For this reason, we believe that family refusal cannot be reliably used an exclusion criterion at this time.

Comment: One commenter questioned how patients for whom a contraindication to fibrinolytic therapy would be excluded from the STEMI eCQM's initial patient population.

Response: We thank the commenter for their question. To clarify, we specified the measure's exclusions to remove a patient if the patient presents with any of a breadth of clinical diagnoses that reflect a contraindication to fibrinolytic therapy (such as suspected aortic dissection, ischemic stroke, intracranial or intraspinal surgery, etc.); a full list of exclusions for the STEMI eCQM is available on HealthIT.gov ( https://ecqi.healthit.gov/ecqm/eh/pre-rulemaking/1/cms996v2 ).

We will monitor and evaluate additional clinical reasons for not using fibrinolytics to treat a myocardial infarction as this information becomes available.

Comment: One commenter asked how CMS would use data from third-party electrocardiograms (ECGs) in identifying patients for inclusion in the measure's initial population.

Response: We thank the commenter for their feedback. At this time, data from ECGs are not used to identify the STEMI eCQM's initial patient population. Rather, individuals are identified for inclusion in the measure if they were diagnosed with a myocardial infarction and did not have documentation of one or more excluded condition. The full technical specifications for the measure are available on HealthIT.gov.

Comment: A commenter encouraged CMS to perform larger-scale testing and a feasibility assessment for implementation, expanding upon the two sites at which electronic health record (EHR) testing occurred previously, to ensure the measure is truly reliable and valid.

Response: We appreciate the commenter's concern about measure testing. With regards to measure reliability and validity, the NQF Cardiovascular Project's Standing Committee performed an evaluation of the measure's reliability and validity. They concluded that the results represented a moderate level of scientific acceptability. The measure was tested using data from two large hospital systems (with 20 EDs), whereby one system treated a large number, and the second system treated a smaller number of STEMI patients during the data period used for testing. As noted in section XV.B.4.c.(4) of this final rule with comment period, the feasibility testing showed that the measure is feasible and the key features of the eCQM, such as the code sets and measure logic, were readily interpreted by both sites as assessed by the feasibility scorecard and exit interviews conducted at two systems. The validity testing results showed a wide range of agreement among data elements between the electronic and manual data extracts. Statistical methods indicate equivalent agreement that the denominator value is expected by chance in the first system and slight agreement in the second system, with a moderate indication of denominator exclusion values in both EHR systems. With regards to the test sites and EHR systems tested, the two EHR vendors utilized by the two hospital systems tested constitute the vast majority of EHRs.

After consideration of the public comments we received, we are finalizing the adoption of STEMI eCQM (Newly designated as OP-40) as proposed.

5. Modifications to Previously Adopted Measures

a. Requiring OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures Beginning With Voluntary Reporting for the CY 2023 Reporting Period and Mandatory Reporting Beginning With the CY 2024 Reporting Period/CY 2026 Payment Determination and for Subsequent Years

We previously adopted the OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) measures to assess patient experience with care following a procedure or surgery in a HOPD. These survey-based measures rate patient experience as a means for empowering patients and improving the quality of their care (82 FR 59432). For further details on these measures, we refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79771 through 79784), in which we adopted these measures beginning with the CY 2020 payment determination.

Subsequently, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59432 through 59433), we delayed implementation of OP-37a-e for the Hospital OQR Program beginning with the CY 2020 payment determination due to lack of sufficient operational and implementation data. At that time, we believed that our ongoing National OAS CAHPS voluntary reporting program for the survey measures, which began in January 2016 and is unrelated to either the Hospital OQR Program or ASCQR Program, would provide valuable information moving forward. Specifically, we wanted to use the information from the National OAS CAHPS voluntary reporting program to: (1) Ensure that the survey measures appropriately account for patient response rates, both aggregate and by survey administration method; (2) reaffirm the reliability of national implementation of OAS CAHPS Survey data; and (3) appropriately account for the burden associated with administering the survey in the outpatient setting of care.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42246), we proposed to restart the OP-37a-e measure by requiring the measure in the Hospital OQR Program beginning with the CY 2024 reporting period/CY 2026 payment determination. Specifically, for the Hospital OQR Program, we proposed voluntary data collection and reporting beginning with the CY 2023 reporting period, followed by mandatory data collection and reporting beginning with the CY 2024 reporting period/CY 2026 payment determination. As noted previously, the National OAS CAHPS voluntary reporting program is independent of the Hospital OQR Program and the ASCQR Program. As proposed in the CY 2022 OPPS/ASC proposed rule (86 FR 42246), our intent is to make the distinction that HOPDs that voluntarily report the OAS CAHPS Survey-based measures during the CY 2023 reporting period would do so as part of the Hospital OQR Program until mandatory reporting begins. The reporting process for HOPDs to submit OAS CAHPS Survey data would remain unchanged. That is, HOPDs would submit OAS CAHPS Survey data through their vendors, who would submit these data to CMS as appropriate. We refer readers to section XV.D.4.b. of the preamble of the CY 2022 OPPS/ASC proposed rule (86 FR 42258) and of this final rule with comment period for our related proposals regarding the form, manner, and timing for reporting the OP-37a-e Survey-based measures.

Having had the opportunity during the delayed implementation to investigate the concerns about patient response rates and data reliability, we believe that patients are able to respond to OAS CAHPS Survey questions, and that those responses are reliable based on our prior experiences collecting voluntary data for public reporting since CY 2016 (available at https://data.cms.gov/provider-data/ ). We reaffirm that the OAS CAHPS Survey-based measures assess important aspects of care where the patient is the best or only source of information (81 FR 79771). Furthermore, in section XV.D.4.b.(1). of the CY 2022 OPPS/ASC proposed rule (86 FR 42258), we proposed additional collection modes using a web-based module (web with mail follow-up of non-respondents and web with telephone follow-up of non-respondents) for administering the survey, which would be available beginning in CY 2023 under the Hospital OQR Program and for subsequent years. We believe this would address some burden concerns raised during the CY 2017 OPPS/ASC final rule with comment period (81 FR 79777) because the web-based modules would produce similar results but at lower costs of collection. We also continue to believe that the benefits of this measure, such as giving patients the opportunity to compare and assess quality of care in the outpatient setting in a standardized and comparable manner, outweigh the burdens (81 FR 79778). As we stated in the CY 2018 OPPS/ASC final rule with comment period, we continue to believe that implementation of these measures will enable objective and meaningful comparisons between hospital outpatient departments (82 FR 59432) and rating patient experience still provides important information to hospital outpatient departments and patients and enables objective and meaningful comparisons between hospital outpatient departments (82 FR 59432).

We refer readers to section XV.D.4.b. of the CY 2022 OPPS/ASC proposed rule (86 FR 42258) and of this final rule with comment period for our related proposals regarding form, manner, and timing for reporting the OP-37a-e Survey-based measures.

We received comments on these topics.

Comment: A few commenters supported the voluntary collection of OAS CAHPS Survey in the Hospital OQR Program beginning in CY 2023 reporting period.

Response: We thank the commenters for their support.

Comment: A few commenters supported voluntary collection of the OAS CAHPS Survey and recommended releasing additional information regarding operational or technical knowledge learned during the voluntary period prior to the start of mandatory reporting.

Response: We agree that information learned during the OAS CAHPS Survey voluntary reporting period and the National OAS CAHPS Survey voluntary reporting program should be disseminated to HOPDs to help improve their performance and patient safety. For information about the National OAS CAHPS Survey voluntary reporting, we encourage hospitals to visit: https://oascahps.org/General-Information/National-Implementation . We believe the information learned through this prior voluntary reporting timeframe can inform practice during the voluntary reporting period and eventually mandatory reporting as part of the Hospital OQR Program. Specifically, as part of the National OAS CAHPS Survey voluntary reporting, a summary report that includes information about patient-mix adjustments for each quarter is updated and posted before each quarterly data submission period. Preview reports for each facility participating voluntarily is posted on the OAS CAHPS website two weeks prior to public reporting. The Protocols and Guidelines Manual is updated annually with any necessary clarifications about participation requirements and protocols. Training has been provided annually to approved vendors to clarify administration protocols. We refer reader to https://oascahps.org/Training/Training-Materials for more information.

Comment: Several commenters supported the mandatory collection of the OAS CAHPS Survey in the Hospital OQR Program. One commenter stated that the OAS CAHPS Survey will help HOPDs strategically identify strengths, weaknesses, and areas for improvement related for patient experience.

Response: We appreciate the support of mandatory reporting of OAS CAHPS Survey as part of the Hospital OQR program. We believe that these survey-based measures will be useful to assess aspects of care where the patient is the best or only source of information, and to enable objective and meaningful comparisons between HOPDs. We also believe this feedback will help HOPDs identify and improve patient related experiences.

Comment: A few commenters expressed concern with the OAS CAHPS Survey use of CPT codes. These commenters also expressed concern that these codes were not consistent with certain IT vendor support. Another recommended that OAS CAHPS Survey patient eligibility should not rely on CPT codes. A commenter expressed concern surrounding the timeframe around submission of claims and coding information simply does not match—meaning that coding may not be completed to accommodate the 21- to 60-day survey timeframe and recommended that CMS to eliminate the use of CPT codes to trigger survey distribution.

Response: We appreciate this feedback. We interpret the commenters' concern to be that there may be confusion over which patients would be eligible to be surveyed as part of the OAS CAHPS Survey reporting. We note that the OAS CAHPS Survey is administered to all eligible patients, or a random sample thereof, who had at least one outpatient surgery/procedure during the applicable month. Many CPT codes have been excluded from inclusion in the OAS CAHPS Survey, including services like application of a cast or splint, in order to ensure that only patients receiving applicable procedures are surveyed.

With regard to the timing of the availability of CPT codes for sample selection, we recognize in some cases there could be delays in getting the CPT codes updated in the patient record and transmitted to the survey vendor in a timely manner. Under the current protocol for survey administration, we allow survey vendors to work with HOPD and ASC facilities to identify alternative ways to identify the patient records for outpatient surgery or diagnostic procedures that were performed in eligible HOPDs or ASCs (as identified by the facility-level eligibility criteria). Vendors can submit exception requests to request alternative methods for identifying the eligible population. We also note that the current protocol for survey administration allows for late start requests for situations in which the complete patient records are not available within the target window of time for survey administration. Vendors can submit late start requests when the patient data file is received more than 26 days after the sample month. This allows for flexibility in situations when the CPT codes are not available initially but can be updated. Further, sampling is allowed to proceed if 90 percent of the patient records have CPT codes. Updates to the Survey Specifications and Guidelines will be available on the OAS CAHPS Survey website. We will take all comments under consideration as we consider future refinements for the OAS CAHPS Survey.

Comment: A few commenters expressed concern that there is little variation in performance scores for this measure.

Response: We thank the commenters for their feedback. Performance scores are measured and reported publicly at the facility, state, and national levels through the Provider Data Catalog (PDC) datasets ( https://data.cms.gov/provider-data/ ). OAS CAHPS Survey results are publicly reported as “top-box”, “bottom-box”, “middle-box”, and “linear scaled scores”. The scores are adjusted for patient mix within each quarter to account for facility differences in patient mix. During voluntary participation, facilities may choose to have their survey results published or only reported privately through preview reports. Variation in performance scores is expected to increase as more facilities participate. We believe that the OAS CAHPS Survey-based measures will be useful to assess aspects of care where the patient is the best or only source of information, and to enable objective and meaningful comparisons between HOPDs.

Comment: A commenter opposed mandatory reporting for OAS CAHPS Survey, expressing concern regarding its reliability. This commenter also expressed the belief that many of the issues from when the measure was originally delayed have not yet been resolved, namely the potential for low patient response rate, administration burden on providers and lack of reliable national OAS CAHPS Survey data.

Response: We thank the commenter for their feedback and acknowledge their concern. We believe that OAS CAHPS Survey is reliable and that our prior concerns that resulted in the delay of the OAS CAHPS Survey implementation have been resolved. HOPDs have been able to report OAS CAHPS Survey data as part of the National OAS CAHPS Survey since 2016. Based on our experience through this reporting, we are able to: (1) Ensure that the survey measures appropriately account for patient response rates, both aggregate and by survey administration method; (2) reaffirm the reliability of national implementation of OAS CAHPS Survey data; and (3) appropriately account for the burden associated with administering the survey in the outpatient setting of care. We also note that, unit-level reliability analysis of the publicly reported composites for OAS CAHPS are well above the .70 cut-off typically used to assess reliability of a measure.

Comment: A few commenters opposed mandatory reporting and expressed concern regarding the financial burden of OAS CAHPS Survey vendors, and IT resource strain. Several commenters opposed mandatory reporting due to the operational burden on patients and facilities, as well as the repetitive nature of this extensive and complex outpatient survey.

Response: We thank these commenters for their feedback and acknowledge their concerns. While there are administrative and financial burdens associated with implementing the OAS CAHPS Survey and OAS CAHPS Survey-based measures in the Hospital OQR Program, we believe the benefits of capturing patient experience of care data in the HOPD setting outweigh the burdens. In selecting measures for the Hospital OQR Program, we weigh the relevance and utility of measures against the potential burden to HOPDs resulting from the measure's adoption, and we believe the OAS CAHPS Survey is a vital source of information in assessing the quality of care provided at an HOPD.

We post the list of the approved OAS CAHPS Survey vendors on https://oascahps.org and we encourage HOPDs to contact vendors for cost and service information pertaining to OAS CAHPS Survey as there may be differences among vendors and multiple modes of conducting the survey provide greater economical choice.

In addition, we address additional modes to collect OAS CAHPS Survey data in section XVI.D.4.b.(1) of the CY 2022 ASC/OPPS proposed rule (86 FR 42258) which we expect to reduce the future cost of administration. We refer readers to the Protocols and Guidelines Manual for the OAS CAHPS Survey ( https://oascahps.org/Survey-Materials ) for materials for each mode of survey administration.

With respect to the burden on patients, we believe that patients appreciate the opportunity to provide feedback to their providers and that the information learned from their responses has the potential to improve communication and care that HOPDs provide and can simply opt not to respond to the survey if so inclined.

Further, while we did not propose a solely digital mode of conducting the OAS CAHPS Survey, we will continue to analyze whether a web-only or digital-only format would be appropriate for the OAS CAHPS Survey, which could potentially further reduce the costs of administering the survey.

Comment: A few commenters opposed mandatory reporting and cited staffing shortages and the ongoing COVID-19 crisis as reasons for opposing the mandatory adoption of OAS CAHPS Survey at this time.

Response: We understand the commenters' concerns and the aim to accommodate HOPDs while our nation works through the unprecedented COVID-19 pandemic. However, we believe the OAS CAHPS Survey is a critical measure of patient experience at this time. We also note that, since many hospitals already have vendors in place and are successfully reporting the HCAHPS Survey in the IQR program, the burden of finding a vendor and operationalizing the OAS CAHPS is minimal.

Comment: A commenter expressed concern that there is overlap between CAHPS Surveys that would be administered by Clinician Groups, Outpatient/ASCs, as well as from Surgical Care teams and that there is potential for patients to receive multiple requests to complete CAHPS Surveys in connection with a single episode of care, causing confusion and survey fatigue.

Response: While we understand the commenter's concerns regarding resources needed to collect the survey, and survey administration burden for hospitals, the OAS CAHPS Survey was developed for use in assessing patient experience of care for select outpatient surgical procedures. We are dedicated to improving the quality of care provided to patients, and believe patients are a vital source of information in assessing the quality of care provided at a hospital outpatient department. We believe that the benefits of this measure, such as giving patients the opportunity to compare and assess quality of care in the outpatient setting in a standardized and comparable manner, outweigh the burdens.

Regarding confusion among patients and multiple overlapping survey tools, we note that other CAHPS Surveys, such as the HCAHPS Survey, are tailored to different aspects of care provided by hospitals, such as inpatient care. In addition, the survey introduction (and letter) provided to patients includes the date and location of the surgery or procedure that the patient received at the facility. Furthermore, patients will also be reminded of the date and location of the surgery or procedure they received during the telephone interviews. For these reasons, we do not believe there will be issues associated with overlap or confusion for these surveys.

Comment: A commenter expressed concern that departments may have multiple sets of patient experience results and recommended applying the OAS CAHPS Survey for only people who have a day surgery where anesthesia is used.

Response: We thank the commenter for their suggestion; however, we believe that the OAS CAHPS Survey is appropriately scoped to provide patients and facilities meaningful data on the services provided by HOPDs and not just those that require anesthesia.

Comment: A few commenters opposed the OAS CAHPS Survey measures because the OAS CAHPS is not endorsed by the NQF. The commenters encouraged CMS to pursue NQF endorsement of these measures before the OAS CAHPS Survey is required in order to ensure all stakeholders are given insight into the measure and to ensure it is fair and accurate.

Response: We thank commenters for their feedback. We note, section 1833(t)(17) of the Act does not require that each measure we select for the Hospital OQR Program be endorsed by a national consensus building entity, or the NQF specifically. Under this paragraph, the Secretary has the authority to select non-endorsed measures. While we strive to develop NQF-endorsed measures, including when feasible and practicable, we believe the requirement that measures developed by the Secretary for use in the Hospital OQR Program reflect consensus among affected parties can be achieved in other ways, including through the measure development process, which often includes stakeholder input via a Technical Expert Panel (TEP), review by the MAP, broad acceptance and use of the measure, and public comments.

We also believe that lack of NQF endorsement does not limit insight into whether the measures portray hospital performance in a fair and accurate manner. The survey was tested in both the outpatient and ASC settings in 2014 (field testing) and 2015 and 2019 (mode testing) was found to be reliable. We refer readers to https://oascahps.org/ for more information about field and mode testing for these measures. The OAS CAHPS Survey development process followed the principles and guidelines outlined by AHRQ and its CAHPS Consortium. This process included: (1) Reviewing existing literature; (2) reviewing surveys submitted under a public call for measures; (3) conducting focus groups with patients who had recent outpatient surgery; (4) conducting cognitive interviews with patients to assess their understanding and ability to answer survey questions; (5) obtaining stakeholder input on the draft survey and other issues that may affect implementation; conducting a field test; and (6) conducting a test of the various data collection mode effects on survey responses.

Comment: One commenter strongly recommended that CMS reconsider its position on respondent confidentiality and remove the requirement to include the question on consent to share identifying information from the OAS CAHPS Survey if the facility is interested in receiving patient-level response data connected to the patient's identifying data. Another commenter explained that if facilities understood the patient, they could more easily provide their employees immediate, and targeted improvement training. One commenter recommended that CMS align the OAS CAHPS patient confidentiality rules with HCAHPS, which allows for the release of patient-level data for quality improvement purposes with the stipulation that the patient identity should not be shared with direct care staff. Another commenter expressed concern about a question on the OAS CAHPS Survey that seeks information on “Consent to Share Identifying Information”, believing that the question limits the ability to identify trends and thereby limits opportunities.

Response: We thank these commenters for their feedback. While the desire to have patient identifying information to develop responsive training and remediation steps is admirable, we believe that patient confidentiality is an important aspect of the OAS CAHPS Survey to help encourage accurate reporting. The administration protocols for the OAS CAHPS Survey follow protocols for CAHPS® Surveys, restricting the release of patient-level data if the patient has not consented. We note that for the Hospital IQR Program, we do not state that patients' responses and identifying information will not be shared with the hospital because hospitals can self-administer the HCAHPS Survey. However, for surveys administered via a third-party vendor, the survey is not linked to a sample patient's name unless the patient gives his or her consent. We note that facilities may choose to add the “Consent to Share” question to the OAS CAHPS Survey, which asks whether a patient gives permission for their name to be linked to their survey responses. However, we note that each facility should consult with its own counsel to ensure compliance with applicable privacy and security laws.

Comment: A requester sought clarification on whether the OAS CAHPS Survey will be mandated in CY 2024 if outpatient surgery is included in their HCAHPS submission.

Response: The Hospital OQR Program is an independent quality reporting program, and as part of its requirements, HOPDs will be required to meet the reporting requirement for the OAS CAHPS Survey once the OAS CAHPS Survey begins mandatory reporting in CY 2024 reporting period/CY 2026 payment determination.

Comment: A commenter requested that CMS do more to ensure correct attribution of experience and requested CMS provide evidence of the survey's reliability before it requires survey administration, which the commenter believes could reduce the reliability of the results and negatively impact data-driven decision making.

Response: We thank the commenter for their feedback. The purpose of the OAS CAHPS Survey is to obtain data on a patient's experience of care received from a hospital/facility, specifically from an HOPD. While there is always potential that a patient gets confused, we believe that the OAS CAHPS Survey is focused on patients' experience of care received for their ambulatory surgery or procedure. A physician/surgeon who performs surgeries/procedures at a facility is a member of that facility with both rights and responsibilities. We believe it is the facility's responsibility to ensure that someone—whether the doctor, nurse, or other facility staff member—provide patients with information about preparing for their procedure, about the procedure itself, as well as what to expect following the procedure/surgery. Therefore, we believe it is appropriate to include these important communications with patients in the OAS CAHPS Survey and believe experience with the provider attributed to the facility is appropriate.

Further, we believe that the information provided in the OAS CAHPS Survey “Instructions” is sufficient to inform the patient regarding the purpose of the OAS CAHPS Survey and provides sufficient instruction and details for the patient to correctly identify and relate the survey to the facility and procedure that patient received. We began developing the Outpatient and Ambulatory Surgery Survey in 2012 using the principles and guidelines established by the Agency for Healthcare Research and Quality's (AHRQ) CAHPS program and AHRQ approved this instrument as a CAHPS Survey in February 2015.

We reiterate that based on our experience through the National OAS CAHPS voluntary reporting program, we can confirm the OAS CAHPS Survey reliability and (1) ensure that the survey measures appropriately account for patient response rates, both aggregate and by survey administration method; (2) reaffirm the reliability of national implementation of OAS CAHPS Survey data; and (3) appropriately account for the burden associated with administering the survey in the outpatient setting of care. We also note that, unit-level reliability analysis of the publicly reported composites for OAS CAHPS are well above the .70 cut-off typically used to assess reliability of a measure. Based on this reliability, we believe that the information learned from the survey data will allow hospitals to make more informed decisions to improve care.

Comment: Many commenters expressed concern regarding the length of the survey and recommended that the survey should be significantly shortened to focus on actionable aspects of the patient experience and to encourage higher response rates amongst patients. Specifically, some commenters recommended that a revised OAS CAHPS Survey should include five to ten questions.

Response: The OAS CAHPS Survey is comparable in length and survey response rate to other patient experience of care surveys. The survey instrument was developed in order to provide a more complete picture of patients' experience of care in the HOPD setting. We believe allowing facilities to administer a selection of the survey items, or greatly reducing the questions to patients would impair the assessment of a facility's quality of care and would also inhibit the comparison of performance across facilities and the reliability of a facility's scores. In addition, the 24 core questions of the OAS CAHPS Survey are either directly actionable (that is, give feedback to hospitals) or inform the need for patients to answer subsequent questions that are actionable. We note that the survey results to date do not show that respondents are terminating the interview before the last question, which would be an indication of respondent fatigue for a survey that is too long. Based on the most recently received national implementation data for voluntary reporting, the nonresponse due to terminated interviews is less than one percent.

Implementing the OAS CAHPS Survey in the Hospital OQR Program will enable patients to compare patient experience of care data across multiple HOPDs as part of their healthcare decision-making. In addition, we believe implementing the OAS CAHPS Survey in the Hospital OQR Program will incentivize HOPDs to factor patient experience of care into their quality improvement efforts more proactively. Implementing a shorter “sample survey” would not enable the same type of comparison as a fully tested survey.

However, we also acknowledge these commenters' concerns about the length of the OAS CAHPS Survey and will continue to consider whether refinement would be appropriate.

Comment: A commenter sought more information regarding the future of the “Preparations for Discharge and Recovery” domain of the OAS CAHPS Survey and whether CMS will publicly report data collected from the domain.

Response: We plan to report information from “Preparations for Discharge and Recovery” beginning with the data collected in 2022 as part of National OAS CAHPS voluntary reporting and address public reporting OAS CAHPS data as part of the Hospital OQR Program in future rulemaking.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

We also refer readers to section XVI.B.4.c. of this final rule with comment period where we are also finalizing this measure in the ASCQR program with modification.

b. OP-31: Cataracts: Improvement in Patient's Visual Function Within 90 Days Following Cataract Surgery (NQF #1536) Beginning With the CY 2023 Reporting Period/CY 2025 Payment Determination

(1) Background

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75102 through 75104) we finalized the adoption of the OP-31: Cataracts: Improvement in Patient's Visual Function with 90 Days Following Cataract Surgery measure beginning with the CY 2016 payment determination. This measure assesses the percentage of patients aged 18 years and older who had cataract surgery and had improvement in visual function achieved within 90 days following the cataract surgery (78 FR 75102) via the administration of pre-operative and post-operative visual function surveys.

During the CY 2014 OPPS/ASC proposed rule, some commenters expressed concern about the burden of collecting pre-operative and post-operative visual function surveys (78 FR 75103). In response to those comments, we modified and finalized our implementation strategy in a manner that we believed would significantly minimize collection and reporting burden (78 FR 75103). Specifically, we applied a sampling scheme and a low case threshold exemption to address commenters' concerns regarding burden (78 FR 75114). With those changes, we intended to decrease burden and facilitate data reporting by allowing random sampling of cases when volume is high, instead of collecting information for all eligible patients (78 FR 75114). For further details, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75102 through 75104).

Shortly thereafter, we became concerned about the use of inconsistent surveys to assess visual function. The measure specifications allowed for the use of any validated survey and we were not positive about the impact the use of varying surveys might have. Therefore, we issued guidance stating that we would delay the implementation of OP-31. Subsequently, in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66947 through 66948), we finalized our proposal to exclude OP-31 from the CY 2016 payment determination measure set, and for subsequent years. In addition, we finalized allowing hospitals to voluntarily report OP-31 data for the CY 2015 reporting period/CY 2017 payment determination and subsequent years (79 FR 66948).

(2) OP-31 Measure Beginning With the CY 2025 Reporting Period/CY 2027 Payment Determination and for Subsequent Years

In the CY 2022 OPPS/ASC proposed rule (86 FR 42247), we stated that we believed it would be appropriate to require hospitals to report on OP-31. We stated that hospitals have had the opportunity for several years to familiarize themselves with OP-31, prepare to operationalize it, and opportunity to practice reporting the measure since the CY 2015 reporting period/CY 2017 payment determination. We noted that a small number of facilities have consistently reported data for this measure and these data have been made publicly available. While we previously had concerns regarding the use of different surveys to assess visual function (79 FR 66947), we believe that using different surveys will not result in inconsistencies, as the allowable surveys are scientifically validated and provide comparable results. Research has demonstrated that of 16 different cataract surgery outcome questionnaires, it has been demonstrated that all were able to detect clinically important change.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42247), we proposed to require reporting of the OP-31 measure beginning with the CY 2023 reporting period/CY 2025 payment determination and for subsequent years. As we stated in the CY 2014 OPPS/ASC final rule with comment period, as well as the CY 2015 OPPS/ASC final rule with comment period, and consistent with the MAP recommendation, we continue to maintain that this measure “addresses a high-impact condition” that is not otherwise adequately addressed in our current measure set (78 FR 75103 and 79 FR 66947, respectively). Moreover, OP-31 serves to improve patient-centered care by representing an important patient reported outcome (78 FR 75103). This measure provides opportunities for care coordination as well as direct patient feedback.

We refer readers to section XV.D.5.a. of the CY 2022 OPPS/ASC proposed rule (86 FR 42259) and section XV.D.5.a.(1). of this final rule with comment period for information about submitting data via a CMS web-based tool.

We received comments on these topics.

Comment: Several commenters expressed support for mandatory reporting of OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery.

Response: We thank the commenters for their support. The implementation of this measure underwent a number of changes aimed to address previous concerns regarding burden and the usage of various surveys to assess visual function. However, after review of public comments, which are discussed in this section, we are finalizing to require the OP-31 measure beginning with the CY 2025 reporting period/CY 2027 payment determination, instead of our originally proposed data collection beginning with the CY 2023 reporting period.

Comment: A few commenters expressed concern about making this measure mandatory, stating that because the OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery measure is not currently mandatory, many facilities have not been “practicing” reporting it even though it is voluntary in the Hospital OQR Program measure set.

Response: We thank the commenters for their feedback. We note that even though a small number of facilities have reported data for this measure, those that have reported on this measure have done so successfully and consistently. We believe the 2-year extension from our originally proposed timeline of the CY 2023 reporting period/CY 2025 payment determination will provide facilities with sufficient time to provide staff training and operationalize the measure for successful reporting in the Hospital OQR program.

Comment: Many commenters did not support the requirement for mandatory reporting of OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery and cited concerns about the operational complexity of collection and sharing data for the measure across physicians and outpatient settings. Many commenters believed administering surveys and tracking responses for the OP-31 measure would be burdensome. Specifically, many commenters were concerned that EHR systems were not compatible across physicians and outpatient settings, and were concerned by the potential burden their clinics and staff might face in extracting and sharing patient data. Several commenters were also concerned that requiring OP-31 would increase reporting burden during the ongoing COVID-19 pandemic and asked CMS to delay implementation.

Response: We thank the commenters for their input, and we acknowledge their concerns. We highly encourage hospitals, ophthalmologists, and other clinicians to actively and routinely engage in exchanging information to better communicate and coordinate the care of patients to promote quality of care. However, we acknowledge the complexity of administering and sharing data for OP-31 across different settings. In response to these concerns, we are finalizing the requirement to report the OP-31 measure beginning with the CY 2025 reporting period/CY 2027 payment determination instead of our originally proposed data collection beginning with the CY 2023 reporting period. We believe the 2-year extension will provide facilities with sufficient time for clinics and staff to address potential issues with extracting and sharing patient data. The 2-year extension will also allow facilities to prepare and update systems and technology, and prevent additional reporting burden during the COVID-19 pandemic.

Comment: A few commenters raised concerns with measure specifications, especially the lack of specificity around administration of the survey to ensure consistency between the pre- and post-operative surveys as well as comparability of the measure across hospitals. Several commenters requested additional guidance and education from CMS regarding measure specifications and survey instruments. Several commenters expressed their belief that this measure would be better suited to the Physician Quality Reporting System as it was developed as a physician-level measure. A few commenters expressed concern and confusion about administering a 90-day post-op examination. One of the commenters disagreed with the use of the study cited, noting that it reviewed responsiveness of different questionnaires and not comparison of agreement across different questionnaires. One commenter believed that surveys would have a low response rate and that results would not be reliable.

Response: We thank commenters for their feedback. We recognize commenters' concerns related to the measure specifications. However, we continue to believe the assessment of the McAlinden et al. study demonstrated that the use of different surveys did not result in inconsistencies and we maintain that it is appropriate for inclusion in the Hospital OQR Program measure set. We also acknowledge that this measure has been tested at the physician-level and not the facility-level. We would like to clarify, in response to concerns about the administering a 90-day post-op examination, OP-31 is based on a patient survey to assess visual function and not a post-op examination, which tests for visual acuity. We reiterate our belief that OP-31 provides a valuable opportunity for patient feedback on visual function outside of the clinical setting.

Comment: Several commenters believed OP-31 has a limited use in evaluating patient improvement. A few commenters noted that cataract operations already have high rates of success. A few commenters noted that cataract surgeries are performed for other medical reasons beyond improving visual function. One commenter noted its belief that there is not just one measure that can be used to assess improved visual function.

Response: We thank commenters for their input. However, even if cataract procedures have high rates of success, this does not preclude facilities from reporting on OP-31 or continuously working to improve patient outcomes. We agree with the commenters that there is no one measure that can assess all possible medical needs and possible visual function outcomes; however, we continue to believe that OP-31 is a valuable and appropriate measure to close the gap for a high impact, frequently performed procedure.

After consideration of the public comments we received, we are finalizing the proposal to require OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery with modification. To address commenters' concerns, we are finalizing to require OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery beginning with the CY 2025 reporting period/CY 2027 payment determination, instead of our originally proposed data collection beginning with the CY 2023 reporting period. We believe the 2-year extension from our originally proposed timeline of the CY 2023 reporting period/CY 2025 payment determination will provide facilities with additional time to implement coordination strategies between the surgeon and the ophthalmologist, to provide staff training, and operationalize the measure for successful reporting in the Hospital OQR Program.

6. Summary of Previously and Newly Finalized Hospital OQR Program Measure Sets

a. Summary of Previously and Newly Finalized Hospital OQR Program Measure Set for the CY 2023 Payment Determination

We refer readers to the CY 2021 OPPS/ASC final rule with comment period (85 FR 86180 through 86181) for a summary of the previously adopted Hospital OQR Program measure set for the CY 2023 payment determination and subsequent years. As discussed previously, we are finalizing adoption of the Breast Cancer Screening Recall Rates measure in this final rule for the CY 2023 payment determination and subsequent years (OP-39). Table 63 summarizes the previously and newly finalized Hospital OQR Program measure set for the CY 2023 payment determination:

b. Summary of Previously and Newly Finalized Hospital OQR Program Measure Set for the CY 2024 Payment Determination

Table 64 summarizes the previously and newly finalized Hospital OQR Program measure set for the CY 2024 payment determination, which includes the COVID-19 Vaccination Coverage Among HCP measure (OP-38):

c. Summary of Previously and Newly Finalized Hospital OQR Program Measure Set for the CY 2025 Payment Determination

Table 65 summarizes the previously and newly finalized Hospital OQR Program measure set for the CY 2025 payment determination, which includes the ST-Segment Elevation Myocardial Infarction (STEMI) eCQM (OP-40) and removal of the OP-2 and OP-3 measures, and voluntary reporting of OAS CAHPS measures (OP-37a-e):

d. Summary of Previously and Newly Finalized Hospital OQR Program Measure Set for the CY 2026 Payment Determination and Subsequent Years

Table 66 summarizes the previously and newly finalized Hospital OQR Program measure set for the CY 2026 payment determination and subsequent years, which includes the mandatory reporting of the ST-Segment Elevation Myocardial Infarction (STEMI) eCQM (OP-40) and the requirement of the OAS CAHPS measures (OP-37a-e):

7. Hospital OQR Program Measures and Topics for Future Considerations

a. Request for Comment on Potential Adoption of Future Measures for the Hospital OQR Program

We seek to adopt a comprehensive set of quality measures for widespread use to inform decision-making regarding care and for quality improvement efforts in the hospital outpatient setting. In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86083 through 86110), under the OPPS we finalized the elimination of the Inpatient Only (IPO) list over a 3-year transitional period, beginning with the removal of approximately 300 primarily musculoskeletal-related services, with the list to be completely phased out by CY 2024. As discussed in section IX. of the CY 2022 OPPS/ASC proposed rule (86 FR 42155) and section IX. of this final rule with comment period, we have continued to receive stakeholder requests to reconsider the elimination of the IPO list, to reevaluate services removed from the IPO list due to safety and quality concerns, and to, at a minimum, extend the timeframe for eliminating the list. After further consideration and review of the additional feedback from stakeholders, we believe that the timeframe we adopted for removing services from the IPO list does not give us a sufficient opportunity to carefully assess whether a procedure can be removed from the IPO list while still ensuring beneficiary safety. In the CY 2022 OPPS/ASC proposed rule (86 FR 42155), for CY 2022, we proposed to halt the elimination of the IPO list and, after clinical review of the services removed from the IPO list in CY 2021, we proposed to add the 298 services removed from the IPO list in CY 2021 back to the IPO list beginning in CY 2022.

However, as technology and surgical techniques advance, services will continue to transition off of the IPO list, becoming payable in the outpatient setting. We recognize that there may be a need for more measures that inform decision-making regarding care and for quality improvement efforts, particularly focused on the behaviors of services that become newly eligible for payment in the outpatient setting. In light of this, in the CY 2022 OPPS/ASC proposed rule (86 FR 42251), we sought comment on potential future adoption of measures that would allow better tracking of the quality of care for services that transition from the IPO list and become eligible for payment in the outpatient setting.

Therefore, we invited public comment on the potential future adoption of measures for our consideration that address care quality in the hospital outpatient setting given the transition of procedures from inpatient settings to outpatient settings of care.

We received comments on these topics and provide a summary of these comments below.

Comment: Many commenters offered suggestions in response to the Request for Comment on potential adoption of future measures in the Hospital OQR program. Several commenters encouraged CMS to work with stakeholders to identify a balanced set of high-quality, safe, and patient-centered measures that would be appropriate and useful across care settings particularly as procedures transition from the inpatient only list to outpatient settings. The commenters recommended that the measures should also address reporting challenges before proposing to adopt new measures into the OQR program. Several commenters believed CMS should explore additional measures addressing nutrition, breast cancer screening and diagnostic exams, structural equity related to disparity impact and the development of service-specific quality measures. One commenter also strongly recommended that CMS align with Leapfrog and its purchaser constituency by publicly reporting data in a way that puts the needs of consumers first.

Response: We thank commenters for their feedback. We will continue to work with stakeholders and take recommendations into consideration as we determine future updates to the Hospital OQR measure set. We will also explore the program need and feasibility of the commenters' measure recommendations as we consider measures for inclusion in future rulemaking.

Comment: A few commenters recommended that CMS should focus on developing Patient Reported Outcome (PROs) and patient experience measures to gather feedback directly from the patient without interpretation from a third-party source. Commenters stated that these measures can be broadly applied across the surgical domain and other procedures. Furthermore, they believed that prioritizing measures that focus on patients' feeling of inclusivity and developing patient reported metrics of inclusion in the care process is also an important step in addressing systemic bias in health care delivery.

Response: We appreciate the commenters' recommendations. We believe in the importance of patients having a greater role in their healthcare decision making. Accordingly, placing an emphasis on PRO measures directly aligns with our goals to modernize and drive value-based care. We will consider commenters' recommendations as we gather information for future rulemaking efforts.

Comment: Many commenters recommended that CMS consider adopting measures that are currently in the ASCQR Program measure set into the Hospital OQR Program's measure set. The measures commenters recommended for inclusion were: ASC-1, ASC-2, ASC-3, ASC-4, ASC-13, and ASC-14. Commenters noted that moving to adopt measures similar to these in the Hospital OQR Program would increase the alignment of measures between the Hospital OQR and ASCQR Programs and would allow consumers more opportunities to compare quality and safety across settings of care.

Additionally, a few commenters suggested that CMS should consider adopting the Toxic Anterior Segment Syndrome (TASS) measure and the Ambulatory Breast Procedure Surgical Site Infection Outcome Measure in the Hospital OQR Program.

Lastly, one commenter suggested that CMS should consider measures that focus on access to surgical care. The commenter suggests that these measures can provide information on whether patients gained timely access to a surgeon when/if they needed surgery.

Response: We thank the commenters for this valuable feedback. We recognize the need to consider measures that enhance quality improvement efforts moving forward. We also continue to explore ways to address measure gaps, reduce burden and increase efficiency through alignment and streamlining our programs. The information provided in response to this request for comment may inform future Hospital OQR Program rulemaking.

b. Request for Comment on Potential Future Adoption and Inclusion of a Hospital-Level, Risk-Standardized Patient Reported Outcomes Measure Following Elective Primary Total Hip and/or Total Knee Arthroplasty (THA/TKA)

As described in section XV.B.7.a. of the CY 2022 OPPS/ASC proposed rule (86 FR 42251), we sought comment on priorities for quality measurement in outpatient settings due to changes to the IPO procedure list (82 FR 59385 and 84 FR 61355) and the ASC covered procedures list (CPL) (84 FR 61388 and 85 FR 86146) announced in the CY 2021 OPPS/ASC final rule with comment period.

We also requested comment on the potential future adoption of a respecified version of a patient-reported outcome-based performance measure (PRO-PM) for two such procedures—elective primary total hip arthroplasty (THA) and total knee arthroplasty (TKA), which were removed from the IPO list effective with CY 2020 and CY 2018, respectively. We recently solicited public comment on the potential future inclusion of a Hospital-Level Risk-Standardized Patient-Reported Outcomes Measure Following Elective Primary Total Hip and/or Total Knee Arthroplasty (Hospital-Level THA/TKA PRO-PM (NQF #3559)) in the FY 2022 IPPS/LTCH PPS proposed rule for the inpatient hospital setting (86 FR 25589). We refer readers to the FY 2022 IPPS/LTCH PPS final rule for a summary of public comments (86 FR 45408). This measure reports the hospital-level risk-standardized improvement rate (RSIR) in patient-reported outcomes (PROs) following elective primary THA/TKA for Medicare FFS beneficiaries aged 65 years and older. Substantial clinical improvement is measured by achieving a pre-defined improvement in score on one of the two validated joint-specific PRO instruments measuring hip or knee pain and functioning: (1) The Hip dysfunction and Osteoarthritis Outcome Score for Joint Replacement (HOOS, JR) for completion by THA recipients; and (2) the Knee injury and Osteoarthritis Outcome Score for Joint Replacement (KOOS, JR) for completion by TKA recipients. Improvement is measured from the preoperative assessment (data collected 90 to 0 days before surgery) to the postoperative assessment (data collected 300 to 425 days following surgery). Improvement scores are risk adjusted to account for differences in patient case mix. Potential non-response bias in measure scores due to the voluntary nature of PROs is incorporated in the measure calculation with stabilized inverse probability weighting based on likelihood of response.

Currently, the volume of THA and TKA procedures performed is lower among HOPDs than in the inpatient setting. Given the relatively recent removal of TKA and THA from the IPO list, we expect that the volume of THA and TKA procedures will continue to increase in HOPDs, and that significant numbers of Medicare beneficiaries 65 and older will potentially undergo these procedures in the outpatient setting in future years.

We recognize that potential future adoption and implementation of a respecified version of the THA/TKA PRO-PM in the Hospital OQR Program would require sufficient numbers of procedures for each measured HOPD to ensure a reliable measure score. Additionally, implementing a THA/TKA PRO-PM would require providers to successfully collect pre- and post-operative PRO data for each procedure. Specifically, the inpatient THA/TKA PRO-PM discussed in the FY 2022 IPPS/LTCH PPS proposed rule would require a minimum of 25 cases with completed pre- and post-operative PRO data per hospital to ensure a reliable measure score. For more details on the inpatient THA/TKA PRO-PM, we refer readers to the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25589) and the PROs Following Elective Primary Total Hip and/or Total Knee Arthroplasty: Hospital-Level Performance Measure—Measure Methodology Report, available on the CMS website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology .

We will continue to monitor the number of THA and TKA procedures in the outpatient setting and when we believe there is a sufficient number of such procedures performed in these settings to reliably measure a meaningful number of facilities, we may consider expanding the PRO-PM to these settings. We also note that, as finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79764 through 79771), the Hospital OQR Program currently includes a Hospital Visits after Hospital Outpatient Surgery (OP-36) measure using claims data, which provides facilities with important information on patient outcomes for Medicare FFS beneficiaries following surgery at HOPDs and is publicly reported on CMS' Care Compare website ( https://www.medicare.gov/care-compare/ ). The measure calculates a facility-specific risk-standardized hospital visit ratio within 7 days of hospital outpatient surgery, and has as outcomes of interest unplanned hospital admissions, ED visits, and observation stays thereby providing valuable quality information as these procedures are increasingly conducted as outpatient surgeries.

As described in our Meaningful Measures 2.0 Framework, we aim to promote better collection and integration of patients' voices by developing PRO measures as an additional tool for measuring and improving quality. Given the unique challenges and opportunities for PRO-PMs for THA and TKA procedures in the outpatient setting, we invited public comment on the potential future adoption of a respecified version of PRO measures for elective THA/TKA PRO-PM for the Hospital OQR Program in the CY 2022 OPPS/ASC proposed rule (86 FR 42252). Specifically, we invited public comment on the following:

• Input on the mechanism of PRO data collection and submission, including anticipated barriers and solutions to data collection and submission.
• Usefulness of having an aligned set of PRO-PMs across settings where elective THA/TKA are performed, that is, hospital inpatient setting, hospital outpatient departments, and ASCs for patients, providers, and other stakeholders. Specifically, usefulness and considerations for a hospital that performs both inpatient and outpatient elective THA/TKAs.
• Considerations unique to THA/TKAs performed in the hospital outpatient setting such as the volume of procedures performed or the measure cohort, outcome, or risk adjustment approach.

We received comments on these topics.

Comment: Many commenters supported inclusion of a Risk-Standardized Patient Reported Outcomes Measure Following Elective Primary Total Hip and/or Total Knee Arthroplasty (THA/TKA) measure in the OQR program. As these procedures move from inpatient to outpatient settings, commenters noted it was important to monitor quality outcomes and publicly report results. Additionally, commenters stated that the proposed measure is aligned with patient values, being presented in a manner that is easy to understand. Commenters supported use of the HOOS, JR and the KOOS, JR as they are a widely used and less burdensome subset of the HOOS and KOOS surveys.

Response: We thank the commenters for their support of the potential future adoption of a respecified version of PRO measures for elective THA/TKA PRO-PM for the Hospital OQR Program.

Comment: Several commenters expressed concern regarding data collection burden. Commenters noted the increasing reporting threshold for hospitals voluntary participating in PRO collection in the Comprehensive Care for Joint Replacement (CJR) Model made it difficult for participants to meet the threshold. These commenters encouraged CMS to consider whether a lower rate of response is sufficient for measuring performance and asked that CMS cite specific reasons for the thresholds. A few commenters also raised concerns about patient burden, noting that completing patient-reported outcome surveys is burdensome for patients and may compete with other surveys, such as the OAS CAHPS Survey. Although commenters felt it was beneficial to have multiple options for collecting patient data, one commenter shared that their facility still struggled to collect patient-reported outcomes data despite using different modes that best fit their patient population.

Response: We thank the commenters for their feedback and would like to clarify the reporting thresholds. Through the CJR final rules (80 FR 73273 and 86 FR 23496), we finalized a data submission requirement that strategically increased with each performance year. To be successful, a hospital needed to submit PRO data for 50 percent or 50 eligible procedures in the first year of the Model. By performance year 8, hospitals will need to submit PRO data for 90 percent or 500 eligible procedures to be successful. The incremental increase over time allows hospitals to gradually build up their infrastructure and processes for collecting and storing data. While patient-reported outcome-based performance measures require providers to integrate data collection into clinical workflows, this integration provides opportunity for PROs to inform clinical decision making and benefit patients by engaging them in discussions about potential outcomes.

We do not expect this PRO-PM to contribute to survey fatigue or to negatively impact other PRO-PMs. The Patient-Reported Outcome Measure (PROM) instruments used to calculate pre- and postoperative scores for this THA/TKA PRO-PM were carefully selected, with extensive stakeholder input, to be low burden for patients. We appreciate the feedback regarding challenges experienced in collecting PRO data; we encourage providers to incorporate data collection approaches that make PRO survey responses available to patients and providers for clinical decision making, for increased patient investment in PRO response.

Comment: A few commenters recommended using the American Joint Replacement Registry (AJRR) for implementation, citing that participation in the AJRR is a requirement for certification as a center of excellence by The Joint Commission. The commenters felt that using the AJRR would allow facilities to pool their resources for lowest costs. They also noted that as the AJRR incorporates Medicare Administrative Data for populating the database, its use would allow for robust risk adjustment, improved research, and independent reporting for participating facilities to normalize quality. Commenters noted that implementation through the AJRR infrastructure would be efficient for providers while minimizing duplication of reporting.

Response: We appreciate commenters' recommendations regarding the AJRR and we will consider the feasibility and appropriateness of using this registry for future implementation if we proceed with development of an HOPD THA/TKA PRO-PM. We agree that leveraging existing resources, such as registries, will help decrease data collection burden.

Comment: A few commenters provided feedback on differences related to having a joint replacement in the inpatient versus the outpatient setting. Specifically, these commenters noted that patients who undergo joint replacement in the inpatient setting tend to be sicker and more complex, which could result in an inappropriate comparison of quality amongst inpatient settings and outpatient settings. Commenters encouraged CMS to take this into consideration when developing a risk-adjustment strategy. Commenters also noted that caregiver support plays an important role in patient outcomes for procedures performed in the outpatient setting. Commenters also noted that it may be challenging for outpatient facilities to meet the minimum reporting threshold. To alleviate cohort concerns, one commenter encouraged CMS to consider implementing this measure with a three-year measurement period and to include all patients ages 18 and older.

Response: We thank commenters for their insights on the differences between inpatient and outpatient settings. With regards to facilities' ability to meet the reporting threshold, we agree that there must be a sufficient number of procedures in these settings to reliably measure a meaningful number of facilities, and we anticipate an increase in the number of THA/TKA procedures performed in the outpatient setting in future years. We will continue to monitor the cohort specification (including age) and the number of procedures captured during the specified measurement period to ensure meaningful measure results can be calculated. We appreciate the commenters' insight on the differences in patient complexity across different care settings, the need for having support at home, and the impact it may have on risk adjustment. We will continue to take this into consideration if we move forward with respecifying the measure for use in the HOPD setting. Any proposals to implement the measure will be announced through future rulemaking.

Comment: A few commenters expressed concern about the risk adjustment strategy for the measure. Commenters noted the risk adjustment model does not include a variable for Medicare dual eligibility status, nor does it take into consideration a patient's spoken language and other social risk factors that could impact survey completion. Commenters noted that PRO-PMs have the potential to provide valuable insights into health care disparities related to lower extremity arthroplasty and encouraged CMS to further stratify the results by additional social risk factors.

Response: We thank the commenters for their concern and would like to clarify the risk adjustment approach. For the development of the hospital measure, we assessed the impact of Medicare dual eligibility, the Agency for Health Research and Quality (AHRQ) socioeconomic status (SES) Index (socioeconomic status), and non-white race. The addition of each of these three social risk variables provided no statistically significant change to the risk model performance, variable coefficients, or the model outcome. As such, these variables were not included in the hospital risk model. These social risk variables were, however, statistically significantly associated with response to PRO surveys—whether patient-reported outcomes were obtained for patients undergoing primary elective THA/TKA—and so were included in the calculation of stabilized inverse probability weights used to account for potential response-bias. These variables, along with other social risk variables that may become available over time, will be reassessed as part of the respecification process if we proceed with developing an HOPD version of the measure as part of CMS' commitment to improving health equity.

Comment: A few commenters provided feedback for developing and implementing patient-reported outcomes. One commenter encouraged CMS to collect multi-stakeholder input throughout the development process. In addition to the KOOS, one commenter recommended the visual analog scale (VAS), and mobility, self-care, usual activities, pain/discomfort, and anxiety/depression (EQ-5D-3L) scales. Lastly, a commenter recommended incentivized, phased implementation as hospitals who were not part of the CJR Model will need to build up infrastructure to support patient-reported outcome measures.

Response: We thank commenters for their feedback. As part of the inpatient hospital measure development process, the measure developer engaged extensively with technical expert panels and patient working groups to obtain feedback on key measure decisions. We thank the commenter for their suggestion to utilize an incentivized, phased implementation approach. We will continue to engage with stakeholders around these issues of additional survey instruments, phased implementation, and infrastructure improvements during any future development or implementation of an outpatient version of this measure, which would also be announced through notice and comment rulemaking.

Comment: A few commenters recommended measuring patient-reported outcomes at the provider-level as the provider has a strong influence on outcomes and a more direct relationship with the patient.

Response: We thank commenters for their recommendation to measure patient-reported outcomes at the clinician-level. Any future proposals to implement such a measure will be announced through notice and comment rulemaking.

Comment: A few commenters did not support the inclusion of a Risk-Standardized Patient Reported Outcomes Measure Following Elective Primary THA/TKA measure in the OQR program. They cited the burden of collecting patient-reported outcomes data as the reason for not supporting this measure. Another commenter noted that although the procedures were removed from the IPO List, they did not agree that there will be a shift to the HOPD setting. The commenter questioned the validity of patient-reported outcomes data, noting that because a patient did not improve as he/she expected after surgery does not mean the patient did not receive quality care from the hospital. The commenter stated that determining clinical improvement after joint replacement is best determined by the orthopedist who is caring for the patient both pre- and post-procedure.

Response: We reiterate that the PROM instruments that are used to calculate pre- and postoperative scores for this THA/TKA PRO-PM were carefully selected, with extensive stakeholder input, to be low burden for patients and to capture information clinicians deemed essential to understanding response to THA/TKA. We believe that patient-reported outcome-based performance measures provide critical quality information and reflect outcomes that are meaningful to patients. Between January 1, 2018 and September 30, 2020, 264,997 total hip and/or total knee arthroplasties were performed in the outpatient setting. Developing a patient-reported outcomes measure for the Hospital OQR program would ensure these procedures benefit patients undergoing surgery by achieving meaningful improvement. The hospital-level measure was developed with considerable input from stakeholders including patients and orthopedic surgeons. In addition to the patient-reported outcome-based performance measure, CMS publicly reports results related to hospital readmission and complications following these procedures in the inpatient setting and the Hospital Visits after Hospital Outpatient Surgery (OP-36) measure covers these procedures in the outpatient setting.

Comment: One commenter recommended CMS consider measures that evaluate patient and caregiver engagement in decision-making, outcome measures that assess pain and functional status 3, 6, and 9-months post-procedure, and timely public reporting of comparative quality information about surgeons, surgical facilities, rehabilitation services, and home health services.

Response: We appreciate the commenter's recommendations regarding patient engagement, follow-up period, and public reporting. We engaged patients and patient advocates throughout the development of the Hospital-Level THA/TKA PRO-PM (NQF #3559). We will continue to engage patients and patient advocates, as appropriate, if this measure is respecified for the HOPD setting. We agree that timely public reporting of quality information is important for informed patient decision-making.

We appreciate all of the comments submitted in response to this request for comment. These comments may inform future policy development.

c. Request for Comment on Potential Future Efforts To Address Health Equity in the Hospital OQR Program

(1) Introduction and Expansion of the CMS Disparity Methods to Hospital OQR Program Setting

Significant and persistent inequities in health care outcomes exist in the U.S. Belonging to a racial or ethnic minority group; living with a disability; being a member of the lesbian, gay, bisexual, transgender, and queer (LGBTQ+) community; living in a rural area; and being near or below the poverty level, are often associated with worse health outcomes. Such disparities in health outcomes are the result of number of factors, including social, economic, and environmental factors, but importantly for CMS programs, although not the sole determinant, negative experiences, poor access, and provision of lower quality health care can contribute to health inequities. For instance, numerous studies have shown that among Medicare beneficiaries, racial and ethnic minority individuals often receive lower quality of care, report lower experiences of care, and experience more frequent hospital readmissions and procedural complications. Readmission rates for common conditions in the Hospital Readmissions Reduction Program (HRRP) are higher for Black Medicare beneficiaries and higher for Hispanic Medicare beneficiaries with congestive heart failure and acute myocardial infarction. Studies have also shown that African Americans are significantly more likely than White Americans to die prematurely from heart disease and stroke. The COVID-19 pandemic has further highlighted many of these longstanding health inequities with higher rates of infection, hospitalization, and mortality among Black, Latino, and Indigenous and Native American persons relative to White persons. As noted by the CDC, “long-standing systemic health and social inequities have put many people from racial and ethnic minority groups at increased risk of getting sick and dying from COVID-19.” One important strategy for addressing these important inequities is by improving data collection to allow for better measurement and reporting on equity across our programs and policies.

We are committed to achieving equity in health care outcomes for our beneficiaries by supporting providers in quality improvement activities to reduce health inequities, enabling them to make more informed decisions, and promoting provider accountability for health care inequities. For the purposes of the RFI in the CY 2022 OPPS/ASC PPS proposed rule (86 FR 42232), we used a definition of equity established in Executive Order 13985, issued on January 25, 2021, as “the consistent and systematic fair, just, and impartial treatment of all individuals, including individuals who belong to underserved communities that have been denied such treatment, such as Black, Latino, and Indigenous and Native American persons, Asian Americans and Pacific Islanders and other persons of color; members of religious minorities; LGBTQ+ persons; persons with disabilities; persons who live in rural areas; and persons otherwise adversely affected by persistent poverty or inequality.” We noted that this definition was recently established and provides a useful, common definition for equity across different areas of government, although numerous other definitions of equity exist.

Our ongoing commitment to closing the equity gap in CMS quality programs is demonstrated by a portfolio of programs aimed at making information on the quality of health care providers and services, including disparities, more transparent to consumers and providers. The CMS Equity Plan for Improving Quality in Medicare outlines a path to equity which aims to support Quality Improvement Network Quality Improvement Organizations (QIN-QIOs); Federal, state, local, and tribal organizations; providers; researchers; policymakers; beneficiaries and their families; and other stakeholders in activities to achieve health equity.

We refer readers to the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25070) and the FY 2022 IPPS/LTCH PPS final rule (86 FR 42252) which summarizes our existing initiatives aimed at closing the equity gap in outcomes for Medicare beneficiaries, including the CMS Disparity Methods. The methods were finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38405 through 38407) and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42496 through 42500), and results are currently reported confidentially across six quality measures in the HRRP stratified by dual eligibility status. As described in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25070) and the FY 2022 IPPS/LTCH PPS final rule (86 FR 42252), we are considering further expanding the confidential reporting to include measurement of racial and ethnic disparities for one measure in the Hospital IQR Program, the Hospital-Wide All-Cause Unplanned Readmission Measure (NQF #1789).

We have developed two complementary disparity methods to report stratified measure results for outcome measures. The first method (the Within-Hospital Disparity Method) promotes quality improvement by calculating differences in outcome rates among patient groups within a hospital while accounting for their clinical risk factors. This method also allows for a comparison of the magnitude of disparity across hospitals at a given point in time, so hospitals could assess how well they are closing disparity gaps compared to other hospitals. The second methodological approach (the Across-Hospital Disparity Method) is complementary to the first method and assesses hospitals' outcome rates for patients with a given risk factor, across facilities, allowing for a comparison among hospitals on their performance caring for their patients with social risk factors. These methods were first confidentially reported for the inpatient setting in 2019 for the Pneumonia Readmission (NQF #0506) and Pneumonia Mortality (NQF #0468) measures, stratified dual eligibility for Medicare and Medicaid, and confidential reporting for hospitals has since expanded to include additional measures. For additional information on the two disparity methods, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38405 through 38407) and the 2020 Disparity Methods Updates and Specifications Report. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41599) and the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25070), the two disparity methods do not place any additional collection or reporting burden on hospitals because social risk factor data are readily available in claims data.

We received high-level comments on CMS' larger aforementioned plans to address health equity in quality reporting programs.

Comment: Many comments provided general support for efforts to improve equity through quality improvement programs and payment policies but not specific to the measurement considerations in the OQR and ASCQR RFIs. Commenters had varied recommendations for advancing equity through measurement and payment programs. Comments included statements that while there are numerous social risk factors, it is critical to prioritize equity as an emergent issue for Black, Hispanic/Latino, Indigenous and Asian communities and noted that systemic racism, not race, is a social risk factor.

Commenters recommended expanding the portfolio of programs and resources to support the related work of health care providers including data analyses and quality improvement activities to bridge hospital-level efforts with post-acute and community-based programs and models to close health equity gaps. A commenter noted that there are inadequate healthcare-based solutions for addressing social determinants of health. Another stated that working to solve the problems requires federal leadership, and a major aspect of that leadership needs to be addressing the inequities in resources these hospitals experience that have helped lead to the health care disparities in the communities in question. One commenter recommended that CMS build programs for addressing inequities from existing efforts from the public and private sector.

A number of commenters recommended that CMS engage in a robust stakeholder engagement process to discuss the input that was received.

Finally, on the broader use of measures to address health equity, one commenter stated CMS should not use equity health care quality metrics to rank hospitals on health equity because it could create competition rather than collaboration, while another stated that it would be helpful to see the disparities reported at the national level.

Response: We appreciate the feedback provided by the commenters regarding additional approaches to improving health equity outside of the specific topics covered in our OQR and ASCQR health equity RFIs. We will take commenters' feedback into consideration in future policy development.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42252), we sought comment on expanding our efforts to provide results of the disparity methods to promote health equity and improve healthcare quality. Specifically, we sought comment on the idea of stratifying the performance results in the hospital outpatient setting. We have identified six priority measures included in the Hospital OQR Program as candidate measures for disparities reporting stratified by dual eligibility:

• MRI Lumbar Spine for Low Back Pain (OP-8);
• Abdomen CT—Use of Contract Material (OP-10);
• Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac Low Risk Surgery (OP-13);
• Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy (OP-32);
• Admissions and ED Visits for Patients Receiving Outpatient Chemotherapy (OP-35); and
• Hospital Visits after Hospital Outpatient Surgery (OP-36).

To identify these measures, we considered evidence of existing disparities, procedure volume, and statistical reliability. For more information about these measures, we refer readers to the Hospital Outpatient Quality Reporting Specifications Manual available on the QualityNet website. We sought public comment on potential future confidential reporting of the six aforementioned measures, as well as other potential measures described in section XV.B.4. of the CY 2022 OPPS/ASC proposed rule (86 FR 42238) and of this final rule with comment period, stratified by dual eligibility status, if technically feasible, adequately representative, and statistically reliable.

The Within- and Across-Facility Disparity Methods would be applied to the selected measures. The methods offer two different, but complementary metrics of a facility's disparity. The Within-Facility method reports a difference in performance for patient populations at a specific facility (where a score of zero indicates equal outcomes), while the Across-Facility method reports a risk-standardized rate for the measure for only the target population, which shows facilities how they compare to the national average.

(2) Additional Social Risk Factors

We are committed to advancing health equity by improving data collection to better measure and analyze disparities across programs and policies. As we described earlier, we have been considering, among other things, expanding our efforts to stratify data by additional social risk factors and demographic variables, optimizing the ease-of-use of the results, enhancing public transparency of equity results, and building towards provider accountability for health equity. Following potential confidential reporting using dual eligibility as an indicator of social risk, we are exploring the possibility of further expanding stratified reporting to include race and ethnicity.

We refer readers to the “Closing the Health Equity Gap in CMS Hospital Quality Programs” section of the FY 2022 IPPS/LTCH PPS proposed rule which summarizes the existing challenges in accurately determining race and ethnicity in our administrative data, and the need for using advanced statistical methods for enhancing the accuracy of race and ethnicity disparity estimates (86 FR 25554). We also refer readers to the FY 2022 IPPS/LTCH PPS final rule for a summary of public comments (86 FR 45349).

As we stated in the “Closing the Health Equity Gap in CMS Hospital Quality Programs” section of the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25554), because development of sustainable and consistent programs to collect demographic information related to health disparities, such as race and ethnicity, can be considerable undertakings, we recognize that another method to identify more accurate race and ethnicity disparities is needed in the short term. In working with our contractors, two algorithms have been developed to indirectly estimate the race and ethnicity of Medicare beneficiaries (as described further in the next section). We believe that using indirect estimation can help to overcome some of the current limitations of demographic information and enable timelier reporting of equity results until longer term collaborations to improve demographic data quality across the health care sector materialize. The use of indirectly estimated race and ethnicity for conducting stratified reporting does not place any additional collection or reporting burdens on facilities as these data are derived using existing administrative and census-linked data.

Indirect estimation relies on a statistical imputation method for inferring a missing variable or improving an imperfect administrative variable using a related set of information that is more readily available. Indirectly estimated data are most commonly used at the population level (such as the hospital or health plan-level) where aggregated results form a more accurate description of the population than existing, imperfect data sets. For missing race and ethnicity information, these methods use a combination of other data sources which estimate self-identified race and ethnicity, such as language preference, information about race and ethnicity in our administrative records, first and last names matched to validated lists of names correlated to specific national origin groups, and the racial and ethnic composition of the surrounding neighborhood. Indirect estimation has been used in other settings to support population-based equity measurement when self-identified data are not available.

As described previously, we have previously supported the development of two such methods of indirect estimation of race and ethnicity of Medicare beneficiaries. One indirect estimation approach developed by our contractor uses Medicare administrative data, first name and surname matching, derived from the U.S. Census and other sources, with beneficiary language preference, state of residence, and the source of the race and ethnicity code in Medicare administrative data to reclassify some beneficiaries as Hispanic or Asian/Pacific Islander (API). In recent years, we have also worked with another contractor to develop a new approach, the Medicare Bayesian Improved Surname Geocoding (MBISG), which combines Medicare administrative data, first and surname matching, geocoded residential address linked to the 2010 U.S. Census data, applying both Bayesian updating and multinomial logistic regression to estimate the probability of belonging to each of the six racial/ethnic groups.

The MBISG model is currently used to conduct the national, contract-level, stratified reporting of Medicare Part C & D performance data for Medicare Advantage Plans by race and ethnicity. Validation testing reveals concordances between 0.88-0.95 between indirectly estimated and self-reported race and ethnicity among those who identify as White, Black, Hispanic, and API for the MBISG version 2.0 and concordances with self-reported race and ethnicity of 0.96-0.99 for these same groups for MBISG version 2.1. The algorithms under consideration are considerably less accurate for individuals who self-identify as American Indian/Alaskan Native or multiracial. Indirect estimation is a statistically reliable approach for calculating aggregate results for groups of individuals (such as the facility-level) and is not intended, nor being considered, as an approach for predicting the race and ethnicity of individuals.

Despite the high degree of accuracy of the indirect estimation algorithms under consideration there remains the small risk of introducing measurement bias. For example, if the indirect estimation is not as accurate in correctly estimating race and ethnicity in certain geographies or populations it could lead to some bias in the method results. Such bias might result in slight overestimation or underestimation of the quality of care received by a given group. We believe this risk of bias is considerably less than would be expected if stratified reporting were conducted using the race and ethnicity currently contained in our administrative data. Indirect estimation of race and ethnicity is envisioned as an intermediate step, filling the pressing need for more accurate demographic information for the purposes of exploring inequities in service delivery, while allowing newer approaches, as described in the next section, for improving demographic data collection to progress. We are interested in learning more about, and soliciting comments about, the potential benefits and challenges associated with measuring facility equity using indirect estimation to enhance existing administrative data quality for race and ethnicity until self-reported information is sufficiently available.

(a) Improving Demographic Data Collection

Stratified facility-level reporting using indirectly estimated race and ethnicity would represent an important advance in our ability to provide accurate equity reports to facilities. However, self-reported race and ethnicity data remain the gold standard for classifying an individual according to race or ethnicity. The CMS Quality Strategy outlines our commitment to strengthening infrastructure and data systems by ensuring that standardized demographic information is collected to identify disparities in health care delivery outcomes. Collection and sharing of a standardized set of social, psychological, and behavioral data by hospitals, including race and ethnicity, using electronic data definitions which permit nationwide, interoperable health information exchange, can significantly enhance the accuracy and robustness of our equity reporting. This could potentially include expansion of stratified reporting to additional social risk factors, such as language preference and disability status, where accuracy of administrative data is currently limited. We are mindful that additional resources, including data collection and staff training may be necessary to ensure that conditions are created whereby all patients are comfortable answering demographic questions, and that individual preferences for non-response are maintained.

We note that facilities participating in the Medicare Promoting Interoperability Program must use CEHRT that has been certified to the 2015 Edition of health IT certification criteria as defined at 45 CFR 170.102. As noted earlier, the certification criterion for Demographics under the 2015 Edition (45 CFR 170.315(a)(5)) supports collection of data using both the OMB standards for collecting data on race and ethnicity as well as the more granular “Race & Ethnicity—CDC” standard. In the 2020 ONC 21st Century Cures Act final rule, ONC also adopted a new framework for the core data set which certified health IT products must exchange, called the USCDI (85 FR 25669). The USCDI incorporates the demographic data and associated code sets finalized for the 2015 Edition certification criteria.

As noted previously, ONC also finalized a certification criterion in the 2015 Edition which supports a certified health IT product's ability to collect social, psychological, and behavioral data (45 FR 170.315(a)(15)). However, this functionality is not included as part of the CEHRT required by the Medicare Promoting Interoperability Program. While the technical functionality exists to achieve the gold standard of data collection, we understand challenges and barriers exist in using the technologies with these capabilities.

We solicited comment on current data collection practices by facilities to capture demographic data elements (such as race, ethnicity, sex, sexual orientation and gender identity (SOGI), primary language, and disability status). Further, we are interested in potential challenges facing facility collection, on the day of service, of a minimum set of demographic data elements in alignment with national data collection standards (such as the standards finalized by the Affordable Care Act) and standards for interoperable exchange (such as the USCDI incorporated into certified health IT products as part of the 2015 Edition of health IT certification criteria). Advancing data interoperability through collection of a minimum set of demographic data collection, and incorporation into quality measure specifications, has the potential for improving the robustness of the disparity method results, potentially permitting reporting using more accurate, self-reported information, such as race and ethnicity, and expanding reporting to additional dimensions of equity, including stratified reporting by disability status.

(b) Solicitation of Public Comments

In the CY 2022 OPPS/ASC proposed rule (86 FR 42252), we sought comment on the possibility of expanding our current disparities methods to include reporting by race and ethnicity using indirect estimation. We also sought comment on the possibility of facility collection of standardized demographic information for the purposes of potential future quality reporting and measure stratification to permit more robust equity measurement. Additionally, we sought comment on the design of a Facility Equity Score for presenting combined results across multiple social risk factors and measures, including race/ethnicity and disability. Any data pertaining to these areas that are recommended for collection for measure reporting for a CMS program and potential public disclosure on Care Compare or successor website would be addressed through a separate and future notice-and-comment rulemaking. We plan to continue working with the Office of the Assistant Secretary for Planning and Evaluation, facilities, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences.

Specifically, we invited public comment on the following:

• The potential future application to the Hospital OQR Program measures of the two disparity methods currently used to confidentially report stratified measures in HRRP.
• The possibility of reporting stratified results confidentially in Facility-Specific Reports (FSRs) using dual eligibility as a proxy for social risk.

• The possibility of reporting stratified results using dual eligibility as the proxy for social risk publicly on Care Compare in future years.

• The 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.
• The possibility of facility collection, on the day of service, of a minimum set of demographic data using standardized and interoperable electronic health record standards.

We received comments on these program-specific topics to address health equity.

Comment: Many commenters expressed support for the potential future application of the two disparity methods to the Hospital OQR Program, noting appreciation for CMS' recognition of the importance of closing the health equity gap. Commenters noted the importance of addressing health equity gaps in the outpatient settings and of providing hospitals with detailed data on their patient's dual eligibility status to enable tracking as procedures shift from acute care to outpatient. A few commenters expressed support for confidential reporting of stratified results in facility specific reports as it would result in actionable data for quality improvement. Several commenters stressed the importance of continued stakeholder engagement in projects designed to address structural and socioeconomic barriers to health, particularly to help policymakers understanding current practice trends and data collection challenges. Other commenters also recommended engagement through advisory groups and subject matter experts to test and pilot the application of the disparity methods to the Hospital OQR program to thoughtfully scale initiatives and promote nationwide standardization. One commenter requested CMS communicate their goals for future application of the disparity methods and inquired whether the goals are for accountability or resource assessment.

Some commenters expressed concern with any potential administrative burden placed onto providers and requested time to implement data collection efforts. A few commenters noted that many contributors to health inequities and related disparities are outside of the control of the health care system. Two commenters urged CMS to invest resources for data collection and in software upgrading.

While several commenters supported the proposed six measures as high-priority for stratified reporting, several commenters recommended thoughtful consideration of measurement gaps in identifying measures to be stratified, in addition to quality outcome benchmarks being developed prior to stratifying overused measure to avoid unintended consequences. Several commenters also recommended additional measure types for future stratification from additional data sources, such as experience surveys, or measurement domains, such as resource utilization/cost, access to surgical care, time of diagnosis or those that consider referrals to specialty care from a primary care setting. One commenter requested procedure-specific disparity reporting related to endoscopy, chemotherapy, or outpatient surgeries. One commenter recommended considering reinstating some quality measures where performance is felt to already be high, and to stratify these by social risk factors to assess additional room for improvement.

Response: We appreciate the feedback provided by the commenters regarding the potential future application of the two disparity methods in the Hospital OQR Program. We continue to prioritize minimizing provider burdened in efforts to improve equity, and to ensure stakeholder involvement in all initiatives. Confidential reporting of the disparity methods for the proposed six measures would use existing administrative records to calculate facility-level results, and as such, the provider burden would be minimal. In the upcoming year, we intend to begin confidential reporting for a number of the aforementioned measures stratified by dual eligibility status, if technically feasible, adequately representative, and statistically reliable.

Comment: Many commenters were generally supportive of our health equity initiatives and provided helpful recommendations on improving disparity measurement. Two commenters recommended structural and process measures to drive health equity improvement. One commenter recommended stratification methodologies compare safety net systems solely with other safety net systems to allow for a fairer comparison between hospitals treating similar patients and that are subject to similar levels of available resources. One commenter noted that current hospital-specific reports are based on outdated data and suggested data should be timely.

One commenter recommended leveraging technology, such as machine learning and artificial intelligence (AI), to analyze quality-of-care and outcomes using both patient demographics and clinical data to identify and address disparities. One commenter, however, disagreed noting that bias can manifest in machine learning and artificial learning if the AI algorithm is trained with incomplete data, and recommended a framework to guide the development and validation of algorithms to reduce bias. One commenter provided examples of how their organization has developed a social determinants of health framework to facilitate implementation of robust interventions through multi-stakeholder engagement. Another commenter discussed a local program that leverages data-driven approaches to confront and overcome health disparities.

Response: We appreciate the feedback provided by the commenters regarding future potential approaches to investigate disparities in our quality programs, and analyze outcomes data, and agree that adequate attention must be paid to limit the potential for unintended consequences. We will take commenters' feedback into consideration in future policy development.

Comment: Several commenters supported the expansion of the CMS Disparity Methods beyond dual eligibility for the potential future application of an algorithm to indirectly estimate race and ethnicity in the Hospital OQR Program. A few commenters requested that stratification by race and ethnicity begin with confidential reporting, as it would allow healthcare organizations an opportunity to improve planning for needed services; understand patterns in access and outcomes for different patients; and engage in quality improvement for new policies to reduce disparities. Two commenters preferred any stratified data be publicly available to allow stakeholders to assess the diverse needs of different patient populations.

While some commenters acknowledged that it is important to understand disparity by race and ethnicity, several commenters noted concern with the validity of using race and ethnicity data identified through indirect estimation, adding that it could lead to misleading results and introduce measurement bias. Three commenters noted concern with the use of first and last names to impute data as the results may be unreliable due to the various naming conventions commonly, noting that some beneficiaries, women or children in particular, may take the name of their husband or father, or an adopted individual may take their adoptive family's surname. Another commenter raised concerns with the use of the proposed indirect estimation MBISG approach, sharing an opinion that this method may raise questions about informed consent and that if the approach were to measure smaller racial/ethnic groups it may lose accuracy. Another commenter suggested that the existing limitations in using race-estimation algorithms outweigh the potential benefit of their use. Another commenter noted concern with the application of the indirect estimation of race and ethnicity data to MIPS measures due to the different levels of measurement, adding that imputed data can only be attributed to groups, while measures are often at the patient- or encounter-level. Several commenters did not support the confidential reporting of measure results by race and ethnicity as there was concern with the accuracy and actionability of the data. Three commenters did not support the use of indirect estimation of ethnicity and race in public reporting, however two commenters supported use in confidential reporting.

A few commenters recommended that CMS pursue standardized collection of race and ethnicity since there variation exists in the race and ethnicity categories collected by institutions and suggested advisory stakeholder engagement to inform a unified approach. Some commenters recommended that standards include more granular information about race and ethnicity. Several commenters requested CMS indicate short-term and long-term objectives for stratification by race and ethnicity to reduce inequities through heath care payment and delivery. One commenter suggested that the use of place-based risk factors may be a better approach. Another stated it was important that hospitals have the opportunity to address self-identified inaccuracies and a process to appeal data and outcomes.

Response: We appreciate the feedback provided by the commenters regarding stratification by race and ethnicity, the use of a model to estimate patient race and ethnicity and expanded disparity stratification. We will take commenters' feedback into consideration in future policy development.

We are sensitive to the concerns raised by stakeholders about indirect estimation. As referenced in the CY 2022 OPPS/ASC proposed rule (86 FR 42018) and summarized in the FY 2022 IPPS final rule (86 FR 25070), the Medicare program does not directly collect information from beneficiaries on race and ethnicity, instead relying on data collected by the Social Security Administration. A number of barriers contribute to this information being insufficiently accurate to examine hospital-level disparities. For example, prior to 1980, only three categories (White, Black, and Other) were available for individuals to self-report race, and respondents were not able to indicate other identities such as Asian, American Indian/Alaska Native, Hispanic, or Pacific Islander. As a result of these constrained response options, many current beneficiaries may not have had the opportunity to accurately self-report their race and ethnicity. Although we have undertaken significant efforts to update incorrect race and ethnicity information many inaccuracies remain limiting our ability to measure disparities.

In recent years we have sponsored the development of two indirect estimation algorithms, both intended to correct and improve administrative information on race and ethnicity. Indirect estimation methods such as these can generally be used in two different ways: (a) To estimate race/ethnicity in the absence of self-reported data; or (b) to improve administrative data in which beneficiaries provided a self-report of race/ethnicity but were not permitted a full set of response options (post-1980). While there is evidence supporting the validity of both approaches, accuracy and performance is particularly high in situation (b), where indirect estimation allows the administrative variables to better match the responses people would give when permitted a full set of response options. The approach for indirect estimation we intend to apply is situation (b), which uses an algorithm to augment existing data to allow a constrained administrative self-reported variable to better match what Medicare beneficiaries themselves may have chosen when given a comprehensive set of response options on race and ethnicity.

The Medicare Bayesian Improved Surname Geocoding Version 2.1 (MBISG 2.1) uses the original beneficiary self-report, but uses additional information supplied by Medicare beneficiaries and information about neighborhood composition, to make this variable better match what Medicare beneficiaries themselves self-report when given a full set of response options. With respect to Asian and Pacific Islander, Black, Hispanic, and White Medicare beneficiaries, the improved version of the administrative variable has 96-99 percent concordance with what Medicare beneficiaries themselves report when allowed a full set of response options, matching much better than the original self-reported variable in which most Medicare beneficiaries were not allowed to indicate Asian, American Indian/Alaska Native, Hispanic, or Pacific Islander identities. The MBISG 2.1 also offers distinct advantages because it generates probabilities of identification in each racial and ethnic group for each beneficiary, rather than assigning a single identification.

The MBISG 2.1 incorporates multiple sources of information to develop racial and ethnic probabilities. In addition to the information on race and ethnicity which that person reported to the SSA, the model also considers the person's first and last name, the composition of the census block group where they live, and other demographic information that Medicare beneficiary shared. Through such a holistic approach, the MBISG 2.1 can make accurate comparisons between groups of Medicare beneficiaries regarding the quality of care received, including people whose surnames are common among several racial and ethnic groups, and people who changed their surnames upon marriage. The MBISG 2.1 is also designed to consider those who identify as Multiracial and allows measurement in Census categories that distinguish those who chose single or multiple racial identity, as well as considering endorsement of Hispanic ethnicity separately. Notably, we only intend to use the MBISG 2.1 to make inferences about aggregated groups at the hospital level, and do not intend to use it to make inferences about any single individual, validation studies indicate that these aggregate estimates further improve upon the higher predictive accuracy of the model.

We believe that use of statistical imputation models, such as the MBISG 2.1 will permit us to provide more accurate, less biased information on disparities in hospital outcomes when reported confidentially. We plan to report results confidentially to facilities in Spring 2022 where results are technically feasible, meaningful, and statistically reliable. Any potential future proposal to publicly display the disparity results on Care Compare would be made through future rulemaking. We are sensitive to the concerns raised by stakeholders and will continue to evaluate the validity of the readmission measures when stratified by indirect estimation during the confidential reporting period.

We appreciate the feedback provided by the commenters regarding measuring health equity in our hospital outpatient and ambulatory surgical center quality measurement programs. We will continue to take all concerns, comments, and suggestions into account in our future policies.

Comment: Several commenters supported the facility collection of patient demographics. Many commenters recommended healthcare workforce education regarding data collection to ensure accurate and culturally sensitive collection of patients' demographic information. Other commenters urged education to beneficiaries on the need to share sensitive and personal information and the use of such data. Three commenters recommended use of EHR capabilities to facilitate data collection and routinely collect race, ethnicity, and language preference data, noting that the use of these capabilities can reduce administrative burden on healthcare facilities. One commenter recommended CMS engage nurses to identify and capture demographics for data collection to address health equity. A few commenters encouraged alternative collection methods such as updating the common working file (CWF) or utilizing HIPAA transaction sets to capture race and ethnicity. Other commenters recommended development of additional billing codes for social needs and evaluation of existing social determinants of health (SDOH) billing codes and International Classification of Diseases, Tenth Revision (ICD-10) Z codes, which identify non-medical factors that may influence a patients' health status. Further, commenters recommended using screening tools such as the Protocol for Responding to and Assessing Patients' Assets, Risks, and Experiences (PRAPARE) tool or the Accountable Health Communities Health-Related Social Needs Screening Tool developed by CMS.

Commenters urged CMS to expand data collection to include factors such as sexual orientation, gender identity, language preference, tribal membership, disability status, socioeconomic status (SES), education, social support, food security, transportation access, and housing stability to provide a more comprehensive assessment of health equity. A few commenters included the need for information on language spoken, health literacy, incarceration status and veteran status. Other commenters expressed support for expanding stratification to additional social risk factors and demographic variables, such as primary language, geographic location, socioeconomic status, gender identity, sexual orientation, age, and ability status. Additionally, a few commenters recommended CMS require data collection methods that rely only on self-reported data. Another commenter asserted that emerging evidence suggests that healthcare disparities may be rooted in lived experiences and recommended CMS include questions specific to experiences of certain racial or ethnic groups within the healthcare system, such as mistrust of the healthcare system and providers, experiences of microaggression and perceived discrimination or injustices. Additionally, a few commenters encouraged improvement of hospital data collection by mandating a minimum data collection threshold. Similarly, one suggested limiting the number of social risk factors collected to ensure consistent reliable data prior to expanding the number of factors. Others recommended CMS set reasonable goals and timelines for the collection of self-reported demographic data. Finally, a commenter suggested that CMS work with state Medicaid agencies to improve the consistency of data collection at the time of Medicaid enrollment and another noted unique challenges to collecting data from certain sub-populations of beneficiaries such as homeless patients.

Two commenters did not support an expanded data collection, noting concern with the burden and costs that would impact hospitals, or providers in QPP. Three commenters urged for alternative methods of capturing patient demographics via facility collection to reduce administrative burden on providers and encouraged leveraging of data in certified electronic medical records, adding that physicians should not have to invest resources for any modifications. A few commenters encouraged investment in interoperable and secure data infrastructure. One commenter suggested rather than health systems, payers such as CMS take the lead in collecting demographic data as a more efficient approach.

Several commenters urged CMS to develop information technology standards and consistent guidance across programs for the capture, use, and exchange of relevant data such as the use of electronic health records and FHIR standards. Three commenters recommended CMS adopt the Office of the National Coordinator for Health Information Technology's (ONC) 2015 Edition Health Information Technology Certification standards across all CMS quality programs including the Promoting Interoperability Program, to leverage existing infrastructures for data collection.

While supportive of collecting and utilizing demographic and SDOH data to measure and improve health equity, several commenters expressed concerns about protecting patient privacy. One of these commenters recommended CMS increase beneficiary education on the sharing of their sensitive health information with their providers. Another of these commenters asked that CMS address privacy considerations related to privacy, confidentiality and alignment with other federal standards related to data sharing and interoperability.

Response: We appreciate the feedback provided by the commenters regarding expanded demographic and social risk factor data collection. We will take commenters' feedback into consideration in future policy development.

Comment: We received mixed feedback from commenters about a potential facility equity score. A few commenters supported a facility equity score, noting a composite score is helpful to gauge disparities in large populations. One commenter noted that the composite equity score, however, depends on the comprehensiveness of the data and requires a broad spectrum of factors to avoid inaccuracies and undermining of the scoring methodology. One commenter recommended a patient-level equity score to identify patient populations that require additional services such as nutritional counseling, access to healthy foods, or transportation. Additional commenters suggested using tools such as the Health Equity Report Card or developing an SDOH report based on U.S Department of Health and Human Services (HHS') Health People 2030 framework. One commenter also suggested CMS consider the recommendations that identified by the American Hospital Association for improving care for vulnerable communities, such as including screening patients for social needs, offering navigation services to help patients access community services, and partnering with community stakeholders to align with local needs.

A majority of commenters did not believe a facility equity score would provide actionable information to the patients or hospitals and encouraged other mechanisms for health equity advancement be developed, such as further stratification of quality measures by race, ethnicity, and dual eligibility. Several commenters noted concern that a facility equity score may inadvertently obscure lower performances on quality measures or impact reimbursements of facilities with greater proportions of vulnerable populations. Other commenters were concerned with the accuracy of facility scores that use data which may not be uniformly collected across hospitals. One commenter requested local customization of the hospital health equity score that would allow an accurate reflection of hospital's commitment to its community, and a hospital-specific methodology, versus the application of the Medicare Advantage hospital health equity score.

Response: We appreciate the feedback provided by the commenters regarding the potential creation of a facility equity score. We will take commenters' feedback into consideration in future policy development.

Comment: Commenters also provided broad feedback to us around other approaches, beyond quality measurement, that we may undertake to ensure more equitable care for Medicare beneficiaries in the hospital outpatient setting. One commenter suggested CMS consider developing and implementing measures that are stratified by access to healthcare, access to primary care, and quality of care. Three commenters noted that many safety net systems operate with limited resources that can impact patient access to care, forcing patients to wait months for screening and prevention or advanced imaging, adding that to improve the care of this population both acute and primary care must improve care coordination and CMS must provide necessary resources.

Response: We appreciate the feedback provided by the commenters regarding equitable access to care in the outpatient setting. We will take commenters' feedback into consideration in future policy development.

8. Maintenance of Technical Specifications for Quality Measures

CMS maintains technical specifications for previously adopted Hospital OQR Program measures. These specifications are updated as we modify the Hospital OQR Program measure set. The manuals that contain specifications for the previously adopted measures can be found on the QualityNet website at: https://qualitynet.cms.gov/outpatient/specifications-manuals . We refer readers to the CY 2019 OPPS/ASC final rule with comment period (83 FR 59104 through 59105), where we changed the frequency of the Hospital OQR Program Specifications Manual release beginning with CY 2019 and subsequent years, such that we will release a manual once every 12 months and release addenda as necessary. We did not propose any changes to these policies in the CY 2022 OPPS/ASC proposed rule.

In section XV.B.4. of the CY 2022 OPPS/ASC proposed rule (86 FR 42244), we proposed the adoption of eCQMs into the Hospital OQR Program measure set beginning with the CY 2023 reporting period. Therefore, we also proposed the manner to update the technical specifications for eCQMs. We proposed that the technical specifications for eCQMs used in the Hospital OQR Program would be contained in the CMS Annual Update for the Hospital Quality Reporting Programs (Annual Update). The Annual Update and implementation guidance documents are available on the eCQI Resource Center website at: https://ecqi.healthit.gov/ . For eCQMs, we would generally update the measure specifications on an annual basis through the Annual Update which includes code updates, logic corrections, alignment with current clinical guidelines, and additional guidance for hospitals and EHR vendors to use in order to collect and submit data on eCQMs from hospital EHRs.

Hospitals would be required to register and submit quality data through the Hospital Quality Reporting (HQR) System (formerly referred to as the QualityNet Secure Portal). The HQR System is safeguarded in accordance with the HIPAA Privacy and Security Rules to protect submitted patient information. See 45 CFR parts 160 and 164, subparts A, C, and E, for more information.

We received comments on these topics.

Comment: A few commenters supported our proposal, expressing agreement with the alignment of the Hospital OQR Program's eCQM technical specification updates with other quality reporting programs, specifically, the Hospital IQR Program.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

We also refer readers to section XIV. of the CY 2022 OPPS/ASC proposed rule (86 FR 42232) where we requested information on potential actions and priority areas that would enable the continued transformation of our quality measurement enterprise toward greater digital capture of data and use of the FHIR standard (as described in that section).

9. Public Display of Quality Measures

a. Background

We refer readers to the CY 2009, CY 2014, and CY 2017 OPPS/ASC final rules with comment period (73 FR 68777 through 68779, 78 FR 75092, and 81 FR 79791, respectively) for our previously finalized policies regarding public display of quality measures. We did not propose any changes to these policies in the proposed rule.

b. Overall Hospital Quality Star Rating

In the CY 2021 OPPS/ASC final rule (85 FR 86182), we finalized a methodology to calculate the Overall Hospital Quality Star Rating (Overall Star Rating). We refer readers to section XVI. (“Overall Hospital Quality Star Rating Methodology for Public Release in CY 2021 and Subsequent Years”) of the CY 2021 OPPS/ASC final rule with comment period for details. We did not propose any changes to this policy in the proposed rule.

C. Administrative Requirements

1. QualityNet Account and Security Administrator/Security Official

a. Background

The previously finalized QualityNet security administrator requirements, including setting up a QualityNet account and the associated timelines, are described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75108 through 75109). We codified these procedural requirements at § 419.46(b) in that final rule with comment period. In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86182), we finalized to use the term “security official” instead of “security administrator” to denote the exercise of authority invested in the role. The term “security official” would refer to “the individual(s)” who have responsibilities for security and account management requirements for a hospital's QualityNet account. This update in terminology did not change the individual's responsibilities or add burden. We did not propose any changes to this policy in the CY 2022 OPPS/ASC proposed rule.

b. Active Security Official Account and Maintenance Requirements for Data Submission

The previously finalized QualityNet security administrator (now referred to as a security official) requirements, including those for setting up a QualityNet account and the associated timelines, are described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75108 through 75109).

In the CY 2011 OPPS/ASC final rule with comment period (75 FR 72099) and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74479), we indicated that hospitals would be required to maintain a current QualityNet security administrator (now referred to as a security official) for as long as the hospital participates in the Program. In the CY 2022 OPPS/ASC proposed rule (86 FR 42257), we clarified that failing to maintain an active QualityNet security official once a hospital has successfully registered to participate in the Hospital OQR Program will not result in a finding that the hospital did not successfully participate in the Hospital OQR Program. Again, we refer readers to requirements at § 419.46(b).

2. Requirements Regarding Participation Status

We refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75108 through 75109), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70519), and the CY 2019 OPPS/ASC final rule with comment period (83 FR 59103 through 59104) for requirements for participation and withdrawal from the Hospital OQR Program. We codified these requirements at § 419.46(b) and (c). We did not propose any changes to these policies in the proposed rule.

D. Form, Manner, and Timing of Data Submitted for the Hospital OQR Program

1. Hospital OQR Program Annual Submission Deadlines

We refer readers to the CYs 2014, 2016, and 2018 OPPS/ASC final rules with comment period (78 FR 75110 through 75111; 80 FR 70519 through 70520; and 82 FR 59439, respectively) where we finalized our policies for clinical data submission deadlines. We codified these submission requirements at § 419.46(d). The clinical data submission deadlines for the CY 2024 payment determination are illustrated in Table 67.

We did not propose any changes to these policies in the proposed rule.

2. Requirements for Chart-Abstracted Measures Where Patient-Level Data Are Submitted Directly to CMS for the CY 2024 Payment Determination and Subsequent Years

We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68481 through 68484) for a discussion of the form, manner, and timing for data submission requirements of chart-abstracted measures for the CY 2014 payment determination and subsequent years. We did not propose any changes to these policies in the proposed rule.

The following previously finalized Hospital OQR Program chart-abstracted measures will require patient-level data to be submitted for the CY 2023 payment determination and subsequent years:

• OP-2: Median Time from ED Arrival to ED Departure for Discharged ED Patients (NQF #0496);

• OP-3: Median Time from ED Arrival to ED Departure for Discharged ED Patients (NQF #0496);

• OP-18: Median Time from ED Arrival to ED Departure for Discharged ED Patients (NQF #0496); and
• OP-23: Head CT Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke Patients who Received Head CT Scan Interpretation Within 45 Minutes of ED Arrival (NQF #0661).

3. Claims-Based Measure Data Requirements for the CY 2024 Payment Determination and Subsequent Years

Currently, in addition to the proposed Breast Cancer Screening Recall Rates measure (OP-39), the following previously finalized Hospital OQR Program claims-based measures are required for the CY 2023 payment determination and subsequent years:

• OP-8: MRI Lumbar Spine for Low Back Pain (NQF #0514);
• OP-10: Abdomen CT—Use of Contrast Material;
• OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low Risk Surgery (NQF #0669);
• OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy (NQF #2539);
• OP-35: Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy;
• OP-36: Hospital Visits after Hospital Outpatient Surgery (NQF #2687); and

• OP-39: Breast Cancer Screening Recall Rates.

We refer readers to the CY 2019 OPPS/ASC final rule with comment period (83 FR 59106 through 59107), where we established a 3-year reporting period for OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy beginning with the CY 2020 payment determination and for subsequent years. In that final rule with comment period (83 FR 59136 through 59138), we established a similar policy under the ASCQR Program. We did not propose any changes to these policies in the proposed rule. We refer readers to section XV.B.4.b. of this final rule with comment period where we are finalizing a 3-year reporting period for the Breast Cancer Screening Recall Rates measure (OP-39).

4. Data Submission Requirements for the OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2024 Reporting Period/CY 2026 Payment Determination and Subsequent Years

a. Background

We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79792 through 79794) for a discussion of the previously finalized requirements related to survey administration and vendors for the OAS CAHPS Survey-based measures. In addition, we refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59432 through 59433), where we finalized a policy to delay implementation of the OP-37a-e OAS CAHPS Survey-based measures beginning with the CY 2020 payment determination (2018 reporting period) until further action in future rulemaking.

b. Form, Manner, and Timing for OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures Beginning With the CY 2024 Reporting Period/CY 2026 Payment Determination

As discussed in section XV.B.5.a. of this final rule with comment period, we are finalizing to begin data collection of five survey-based measures derived from the OAS CAHPS Survey beginning with voluntary data collection and reporting for the CY 2023 reporting period/CY 2025 payment determination, followed by mandatory reporting beginning with the CY 2024 reporting period/CY 2026 payment determination and for subsequent years. The OAS CAHPS Survey contains three OAS CAHPS composite survey-based measures and two global survey-based measures. In this section, we proposed requirements related to survey administration, vendors, and oversight activities.

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79792 through 79794), we previously discussed the form, manner, and timing of this survey. In the CY 2022 OPPS/ASC proposed rule (86 FR 42258), we reaffirmed our approach to the form, manner, and timing which OAS CAHPS information will be submitted and proposed to add two additional data collection modes (web with mail follow-up of non-respondents and web with telephone follow-up of non-respondents), beginning with voluntary data collection for the CY 2023 reporting period/CY 2025 payment determination and continuing for mandatory reporting for subsequent years. For more information about the modes of administration, we refer readers to the OAS CAHPS Survey website: https://oascahps.org . We reiterated our clarification from when we adopted these measures in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79773) that, when implemented, hospital outpatient departments that anticipate receiving more than 300 surveys would be required to either: (1) Randomly sample their eligible patient population; or (2) survey their entire OAS CAHPS eligible patient population. We also refer readers to section XVI.D.1.d. of this final rule with comment period where we are finalizing similar policies for the ASCQR Program.

(1) Survey Requirements

The data collection modes as currently specified for the survey include three administration modes: (1) Mail-only; (2) telephone-only; and (3) mixed mode (mail with telephone follow-up of non-respondents). We refer readers to the Protocols and Guidelines Manual for the OAS CAHPS Survey ( https://oascahps.org/Survey-Materials ) for materials for each mode of survey administration. In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59433), we expressed interest in investigating the feasibility of offering the OAS CAHPS Survey using a web-based format. As a result, we designed a mode experiment to assess the impact of adding web-based survey administration. This mode experiment tested five administration modes with patients who receive outpatient surgical care: (1) Mail-only; (2) telephone-only; (3) web-only; (4) web with mail follow-up; and (5) web with a telephone follow-up. Data collection was completed in the fall of 2019. Response rates by mode in the experiment were: 35 percent (mail-only); 19 percent (telephone-only); 29 percent (web-only); 39 percent (web with mail follow-up); and 35 percent (web with telephone follow-up).

Based on these results, in addition to the three previously established modes, in the CY 2022 OPPS/ASC proposed rule (86 FR 42258), we proposed to incorporate two more administration methods: (1) Mixed mode web with mail follow-up of non-respondents, and (2) mixed mode web with telephone follow-up of non-respondents. This would allow a total of five methods of survey administration for reporting beginning with voluntary data collection and reporting as part of the Hospital OQR Program for the CY 2023 reporting period/CY 2025 payment determination and mandatory reporting for the CY 2024 reporting period/CY 2026 payment determination—the first year the survey would be required. We did not propose a purely web-based format at this time because the use of a web-based mode is included in the two mixed modes options being proposed and the purely web-based format would create response bias since not all patients have the ability to respond by web.

For all five proposed modes of administration as part of the Hospital OQR Program, we proposed that data collection must be initiated no later than 21-calendar days after the month in which a patient has a surgery or procedure at a hospital and completed within 6 weeks (42 days) after initial contact of eligible patient begins, beginning with voluntary reporting in the CY 2023 reporting period/CY 2025 payment determination and subsequent years. Under this proposal, hospitals, via their CMS-approved vendors (discussed in section XV.D.4.b.(2). of the CY 2022 OPPS/ASC proposed rule (86 FR 42259)), must make multiple attempts to contact eligible patients unless the patient refuses or the vendor learns that the patient is ineligible to participate in the survey. In addition, we proposed that hospitals, via their CMS-approved survey vendor, collect survey data for eligible patients using the established quarterly deadlines to report data to CMS for each data collection period unless the hospital has been exempted from the OAS CAHPS Survey requirements under the low volume exemption. We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79774) where we previously established the low volume exemption, which exempts hospital outpatient departments with fewer than 60 survey-eligible patients during the “eligibility period,” (which is the calendar year before the data collection period), that submit the participation exemption request form, which would be made available on the OAS CAHPS Survey website ( https://oascahps.org ) on or before May 15 of the data collection year. As finalized previously, all exemption requests would be reviewed and evaluated by CMS (81 FR 79774). For hospitals that do not have an exemption, the submission deadlines would be posted on the OAS CAHPS Survey website ( https://oascahps.org ). Late submissions would not be accepted.

As discussed in more detail in this section, compliance with the OAS CAHPS Survey protocols and guidelines, including this monthly data collection requirement as part of each quarterly data submission, would be overseen by CMS or its contractor who would receive approved vendors' monthly submissions, review the data, and analyze the results. We previously finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79774) all data collection and submission for the OAS CAHPS Survey measures would be reported at the Medicare participating hospital level, as identified by its CCN. Once data collection and reporting become mandatory beginning with the CY 2024 reporting period as finalized in section XV.B.5.a of this final rule with comment period, all locations that offer outpatient services of each eligible Medicare participating hospital would be required to participate in the OAS CAHPS Survey finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79793) except for those that meet and receive an exception for having fewer than 60 survey-eligible patients during the year preceding the data collection period as finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79773). Therefore, the survey data reported using a Medicare participating hospital's CCN must include all eligible patients from all outpatient locations (whether the hospital outpatient department is on campus or off campus) of an eligible Medicare participating hospital; or if more than 300 completed surveys are anticipated, a hospital can choose to randomly sample their eligible patient population as finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79784).

In the CY 2022 OPPS/ASC proposed rule (86 FR 42259), we also proposed that survey vendors acting on behalf of hospitals must submit data by the specified data submission deadlines, which generally would be posted on the OAS CAHPS Survey website located at https://oascahps.org/Data-Submission/Data-Submission-Deadlines . If a hospital's data are submitted after the data submission deadline, it would not fulfill the OAS CAHPS Survey quality reporting requirements. Therefore, in regard to any OAS CAHPS Survey reporting, we would strongly encourage hospitals to be fully apprised of the methods and actions of their survey vendors—especially the vendors' full compliance with OAS CAHPS Survey administration protocols—and to carefully inspect all data warehouse reports in a timely manner.

We reiterate that the use of predictive or auto dialers in telephonic survey administration is governed by the Telephone Consumer Protection Act (TCPA) (47 U.S.C. 227) and subsequent regulations promulgated by the Federal Communications Commission (FCC) (47 CFR 64.1200) and the Federal Trade Commission. We refer readers to the FCC's declaratory ruling released on July 10, 2015 further clarifying the definition of an auto dialer, available at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-72A1.pdf . In the telephone-only and mixed mode survey administration methods involving telephone, hospitals and vendors must comply with the regulations and any other applicable regulations. To the extent that any existing CMS technical guidance conflicts with the TCPA or its implementing regulations regarding the use of predictive or auto dialers, or any other applicable law, CMS would expect vendors to comply with applicable law.

We received comments on these topics.

Comment: A commenter supported the proposal that the CAHPS data collection must be “initiated no later than 21-calendar days after the month in which a patient has a surgery or procedure at a hospital and completed within 6 weeks (42 days) after initial contact of eligible patient begins, beginning with voluntary reporting in the CY 2023 reporting period/CY 2025 payment determination and subsequent years.”

Response: We thank the commenter for its support.

Comment: A commenter recommended that CMS consider adopting “real time surveys” or surveys performed within 48 hours as a survey option for OAS CAHPS Survey.

Response: Under the current guidelines, HOPDs can request to do continuous sampling to receive more “real time” feedback, which could include initiating their own surveys within 48 hours.

Comment: Many commenters supported the two additional survey administration modes taking advantage of web-based technology: Web with mail follow-up of non-respondents and web with telephone follow-up of non-respondents. Among the reasons for support were the belief that these additional modes will enable providers to reach a larger patient population, to receive more and timelier information to improve patient experience, to reduce burden associated with this measure, and to provide greater flexibility for providers to collect data and patients to respond. A few commenters encouraged CMS to monitor the data and patient response rates, particularly of the two additional web-based survey modes, and data.

Response: We thank the commenters for their support. We agree that as we expand the use of additional OAS CAHPS Survey modes, it will be important to monitor data, patient responses and ensure that the OAS CAHPS Survey is refined as appropriate. We will continue to monitor and evaluate methods available to assess and collect patient experience feedback in a reliable manner.

Comment: Many commenters appreciated the proposal for the additional two new mixed mode options that include web-based collection, but expressed the belief that there needs to be a web-only or additional digital modes to reduce financial burden of the survey and make the survey easier for patients to complete. Several commenters recommended that CMS should permit a web-only survey administration mode and noted that web-only would likely be popular form of administration, has a better response rate and could achieve minimum surveys more efficiently than telephone only and would also reduce the financial burden of administration. One commenter specifically noted that these modes of survey distribution could help reach younger and minority populations.

Response: We agree that the web-based mode interactions with smart phones, email, texting and other electronic distribution create the potential for new and engaging ways to connect with patients, especially to traditionally underserved communities. We believe that the potential to expand and increase access to patient feedback is of the utmost importance and will continue to evaluate the potential refinement to methods of contact for the OAS CAHPS Survey. However, as we stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42258), we did not propose a purely web-based format at this time because the purely web-based format would create response bias since not all patients have access and the ability to respond via website. Additionally, the use of a web-based mode is included in the two mixed modes options being proposed and we believe that providing the additional follow-up provides patients with a greater opportunity to respond to the OAS CAHPS Survey, if they so choose.

Comment: A few commenters expressed concern that patients may be confused by web-based surveys and CMS should ensure that patients understand the survey.

Response: We note that an objective of the OAS CAHPS Survey is to obtain data on a patient's experience of care received from a facility, specifically from an HOPD. While there is always potential that a patient gets confused, we believe that the OAS CAHPS Survey is focused on patients' experience of care received for their ambulatory surgery or procedure. A physician/surgeon who performs surgeries/procedures at a facility is a member of that facility with both rights and responsibilities. We believe it is the facility's responsibility to ensure that someone—whether the doctor, nurse, or other facility staff member—provide patients with information about preparing for their procedure, about the procedure itself, as well as what to expect following the procedure/surgery. Therefore, we believe it is appropriate to include these important communications with patients in the OAS CAHPS Survey and believe experience with the provider attributed to the facility is appropriate.

Further, we believe that the information provided in the OAS CAHPS Survey “Instructions” is sufficient to inform the patient regarding the purpose of the OAS CAHPS Survey and provides sufficient instruction and details for the patient to correctly identify and relate the survey to the facility and procedure that patient received. CMS began developing the Outpatient and Ambulatory Surgery Survey in 2012 using the principles and guidelines established by the Agency for Healthcare Research and Quality's (AHRQ) CAHPS program and AHRQ approved this instrument as a CAHPS Survey in February 2015.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

(2) Vendor Requirements

We did not propose any new vendor requirements in the CY 2022 OPPS/ASC proposed rule (86 FR 42018), but reiterate the vendor requirements finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79793 through 79794) to ensure that patients respond to the survey in a way that reflects their actual experiences with outpatient care, and is not influenced by the hospital. We finalized that hospitals must contract with a CMS-approved OAS CAHPS Survey vendor to conduct or administer the survey. We believe that a neutral third-party should administer the survey for hospitals, and it is our belief that an experienced survey vendor would be best able to ensure reliable results. CAHPS Survey-approved vendors are also already used or required in the following CMS quality programs: The Hospital IQR Program (71 FR 68203 through 68204); the Hospital VBP Program (76 FR 26497, 26502 through 26503, and 26510); the End Stage Renal Disease Quality Improvement Program (76 FR 70269 through 70270); the Home Health QRP (80 FR 68709 through 68710); and the Hospice QRP (80 FR 47141 through 47207).

Information about the list of approved survey vendors and how to authorize a vendor to collect data on a hospital's behalf is available through the OAS CAHPS Survey website at: https://oascahps.org . The web portal has both public and secure (restricted access) sections to ensure the security and privacy of selected interactions. As mentioned previously, requirements for survey vendors were previously finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79793 through 79794) and codified at § 419.46(h)(2). Hospitals will need to register on the OAS CAHPS Survey website ( https://oascahps.org ) in order to authorize the CMS-approved vendor to administer the survey and submit data on their behalf. Each hospital must then administer (via its vendor) the survey to all eligible patients (or for those anticipating more than 300 completed surveys, randomly sample their eligible patient population) treated during the data collection period on a monthly basis according to the guidelines in the Protocols and Guidelines Manual ( https://oascahps.org ) and report the survey data to CMS on a quarterly basis by the deadlines posted on the OAS CAHPS Survey website.

Comment: A few commenters opposed the use of third-party survey vendors to administer OAS CAHPS data and stated the belief that many organizations have the capacity to build more secure, more patient-friendly, more community focused surveying platforms and questions, and that the financial expense of third-party vendors is not needed as evidenced by HCAHPS.

Response: In order to meet the survey administration requirements for these measures, the HOPD must administer the OAS CAHPS Survey in accordance with the requirements listed in the OAS CAHPS Survey Protocols and Guidelines Manual.

OAS CAHPS Survey requires that the survey be administered by an approved survey vendor to ensure that patients respond to the survey in a way that reflects their actual experiences with outpatient surgical care and is not influenced by the facility. If vendors were removed as neutral third parties, there could be concerns of objectivity and bias.

We believe that OAS CAHPS Survey vendors have gained experience during the voluntary reporting as part of the voluntary National OAS CAHPS program, and approved vendors will be able to support HOPDs. We post the list of the approved OAS CAHPS vendors on https://oascahps.org , and we encourage HOPDs to contact vendors for cost and service information pertaining to OAS CAHPS as there may be differences among vendors and multiple modes of conducting the survey provide greater economical choice.

Comment: A commenter requested clarification on the ramifications if a HOPD does not receive enough completed surveys despite vendor attempts to collect information from eligible patients.

Response: We agree with commenters that patient response is largely out of the control of the facility. We clarify we did not propose to penalize HOPDs for patients' decision not to complete the survey. An HOPD will not receive a payment reduction as long as it participates in the survey, its vendor administers the survey according to the OAS CAHPS Survey Protocol and Guidelines Manual, and submits that data to CMS by the data submission deadline.

5. Data Submission Requirements for Measures Submitted via a Web-Based Tool for the CY 2023 Payment Determination and Subsequent Years

a. Data Submission Requirements for Measures Submitted via a CMS Web-Based Tool

We refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75112 through 75115), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70521), and the QualityNet website available at: https://qualitynet.cms.gov for a discussion of the requirements for measure data submitted via the HQR System (formerly referred to as the QualityNet Secure Portal) for the CY 2017 payment determination and subsequent years. We did not propose any changes to these policies in the proposed rule.

The following previously adopted quality measures require data to be submitted via a CMS web-based tool for the CY 2022 reporting period/CY 2024 payment determination and subsequent years:

• OP-22: Left Without Being Seen (NQF #0499); and
• OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients (NQF #0658).

(1) Form, Manner, and Timing for Reporting OP-31: Cataracts: Improvement in Patient's Visual Function Within 90 Days Following Cataract Surgery (NQF #1536)

In the CY 2022 OPPS/ASC Proposed rule (86 FR 42259) we proposed that this measure be submitted according to our existing policies for data submitted via the HQR System (formerly referred to as the QualityNet Secure Portal). As noted earlier, we did not propose changes to those policies in the proposed rule.

We received no comments on this proposal regarding the form, manner, and timing for the OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery measure be submitted through the HQR System. As discussed in section XV.B.5.b. of this final rule with comment period, we are finalizing our proposal to require the reporting of the OP-31 measure with modification.

b. Data Submission Requirements for Measures Submitted via the CDC NHSN Website

We refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75097 through 75100) for a discussion of the previously finalized requirements for measure data submitted via the CDC NHSN website. While we did not propose any changes to those policies in the CY 2022 OPPS/ASC proposed rule (86 FR 42018), we did propose policies specific to the proposed COVID-19 Vaccination Coverage Among HCP measure (OP-38), which will be submitted via the CDC NHSN website.

(1) Form, Manner, and Timing for the COVID-19 Vaccination Coverage Among HCP Measure (OP-38) Beginning With the CY 2022 Reporting Period/CY 2024 Payment Determination and Subsequent Years

For the COVID-19 Vaccination Coverage Among HCP measure (OP-38), in the CY 2022 OPPS/ASC proposed rule (86 FR 86 FR 42260), we proposed to require reporting data on the number of HCP who have received the completed vaccination course of a COVID-19 vaccine by each individual facility's CCN.

For the COVID-19 Vaccination Coverage Among HCP measure (OP-38), we proposed that facilities would report COVID-19 vaccination data to the NHSN for at least one week each month, beginning with the January 1, 2022 through December 31, 2022 reporting period affecting the CY 2024 payment determination and continuing with quarterly reporting deadlines for subsequent years. If facilities report more than one week of data in a month, the most recent week's data would be used for measure calculation purposes. We proposed that hospitals would report the measure through the NHSN web-based surveillance system. Specifically, hospitals would use the COVID-19 vaccination data reporting modules in the NHSN Healthcare Personnel Safety (HPS) Component to report the number of HCP eligible to have worked at the facility that week (denominator) and the number of those HCP who have received COVID-19 vaccination (numerator). Specific details on data submission for this measure can be found in the CDC's Overview of the Healthcare Safety Component, available at https://www.cdc.gov/nhsn/PDFs/slides/NHSN-Overview-HPS_Aug2012.pdf . We refer readers to the CY 2014 OPPS/ASC final rule (78 FR 75097 through 75100) for details about requirements for measure data submitted via the NHSN. In the CY 2022 OPPS/ASC proposed rule (86 FR 42260), we contemplated each quarter, the CDC would calculate a summary measure of COVID-19 vaccination coverage from the reporting periods for the quarter in four-quarter increments, when four quarters of data are available.

We refer readers to section XV.B.4.a.2. of this final rule with comment period received on the COVID-19 Vaccination Coverage Among HCP Measure (OP-38). We did not receive public comments on the form, manner, and timing for the COVID-19 Vaccination Coverage Among HCP Measure (OP-38); as such, we are finalizing our proposal to adopt the COVID-19 Vaccination Coverage Among HCP measure (OP-38) beginning with the CY 2022 reporting period/FY 2024 payment determination and subsequent years with the modifications described in section XV.B.4.a. of this final rule with comment period.

6. eCQM Reporting and Submission Requirements

a. Background

We believe that collection and reporting of data through health information technology would greatly simplify and streamline reporting for many CMS quality reporting programs. Through electronic reporting, hospitals will be able to leverage EHRs to capture, calculate, and electronically submit quality data to CMS for the Hospital OQR Program.

We believe that automated electronic extraction and reporting of clinical quality data would significantly reduce the administrative burden on hospitals for the Hospital OQR Program. We believe that the use of CEHRT can effectively and efficiently help providers improve internal care delivery practices, support management of patient care across the continuum, and support the reporting of eCQMs. In previous rules, we stated our intent and assessment of the inclusion of eCQMs into the Hospital OQR Program, and we have sought public comment on the addition of such measures into the measure set. We refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75106 through 75107), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66956 through 66961), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70516 through 70518), the CY 2017 OPPS/ASC final rule with comment period (81 FR 79785 through 79790), and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59435 through 59438) for more details on previous discussion regarding future measure concepts related to eCQMs and electronic reporting of data for the Hospital OQR Program, including stakeholder support for the introduction of eCQMs into the Program. Measure stewards and developers have worked to advance eCQMs that would be reported in the outpatient setting and we believe the introduction of eCQMs in the Hospital OQR Program is timely. We also believe this is important in aligning the Hospital OQR Program with the Medicare Promoting Interoperability Program and the Hospital IQR Program.

b. eCQM Reporting and Data Submission Requirements Beginning With the CY 2023 Reporting Period/CY 2025 Payment Determination

In section XV.B.4.c. of the CY 2022 OPPS/ASC proposed rule (86 FR 42244) and in section XV.B.4.c. of this final rule with comment period, we discuss adoption of the STEMI eCQM (OP-40). In the CY 2022 OPPS/ASC proposed rule (86 FR 42260), we proposed a progressive increase in the number of quarters for which hospitals report eCQM data. Increasing the number of reported quarters to be reported has several benefits. Primarily, a single quarter of data is not enough to capture trends in performance over time. Evaluating multiple quarters of data would provide a more reliable and accurate picture of overall performance. Further, reporting multiple quarters of data would provide hospitals with a more continuous information stream to monitor their levels of performance. Ongoing, timely data analysis can better identify a change in performance that may necessitate investigation and potentially corrective action.

However, we believe that starting with limited voluntary reporting would give hospitals more time to gain experience with reporting data (including time to implement the eCQM and provide training to support eCQM reporting, if necessary). Similar to what was established for the Hospital IQR Program (82 FR 38355), we believe that increasing the number of quarters for which hospitals report eCQM data would produce more comprehensive and reliable quality measure data for patients and providers. In section XV.B.4.c. of this final rule with comment period, we are finalizing the adoption of the STEMI eCQM (OP-40) with voluntary reporting beginning with the CY 2023 reporting period. For the CY 2023 reporting period, we proposed that hospitals submit STEMI eCQM (OP-40) data during this reporting period voluntarily for any quarter. Hospitals that chose to submit data voluntarily must submit in compliance with the eCQM certification requirements in sections XV.D.6.c., XV.D.6.d, and XV.D.6.e. of this final rule with comment period.

For the CY 2024 reporting period/CY 2026 payment determination, we proposed that hospitals report one self-selected calendar quarter of data for the STEMI eCQM (OP-40). We note that in section XV.B.4.c. of this final rule with comment period, we are finalizing that the STEMI eCQM (OP-40) is required beginning with the CY 2024 reporting period/CY 2026 payment determination.

For the CY 2025 reporting period/CY 2027 payment determination, we proposed to increase the amount of data required. We proposed that hospitals report two self-selected calendar quarters of data for the required STEMI eCQM (OP-40).

For the CY 2026 reporting period/CY 2028 payment determination, we proposed to further increase the amount of data required for the STEMI eCQM (OP-40). Specifically, we proposed to require that hospitals report three self-selected calendar quarters of data for the CY 2026 reporting period/CY 2028 payment determination for the required STEMI eCQM (OP-40). Beginning with the CY 2027 reporting period/CY 2029 payment determination, we proposed to require that hospitals report all four calendar quarters (one calendar year) of data for the required STEMI eCQM (OP-40).

We also refer readers to Table 68 for a summary of the finalized quarterly data increase in eCQM reporting beginning with the CY 2023 reporting period.

We received comments on these topics.

Comment: One commenter suggested that we require hospitals submit one year of data instead of the incremental approach of increasing the number of quarters of data yearly.

Response: We thank the commenter for its feedback. We interpret the commenter's suggestion to mean that we should require hospitals to begin the initial data submission with one calendar year (four quarters) of eCQM data instead of the initial requirement to submit one quarter of data beginning with the CY 2024 reporting period/CY 2026 payment determination. While we appreciate the suggestion, we respectfully note that we proposed an incremental increase of data submission requirements to provide hospitals with a phased approach that would reduce reporting burden as eCQMs are new to the Hospital OQR Program.

We believe that hospitals should be given an opportunity to gain experience with reporting data (including time to implement the eCQM and provide training to support eCQM reporting, if necessary). Additionally, we aligned our approach with that of the Hospital IQR Program (82 FR 38355). In the FY 2018 IPPS/LTCH PPS final rule, we received public comment that resulted in the modification of the Hospital IQR Program's requirements to this incremental increase to alleviate stakeholder concerns and challenges with eCQM reporting (82 FR 38356). We believe it is important to learn from our approach and the public comments received regarding eCQMs in previous rulemaking for the Hospital IQR Program when proposing and finalizing equivalent requirements for the Hospital OQR Program. We believe our finalized policy to progressively increase the number of quarters of data collected over three years balances the benefit of additional eCQM data reported and allow adequate time for successful reporting experience. Any changes to eCQM reporting and submission requirements will be addressed in future notice and comment rulemaking.

Comment: One commenter recommended that we identify the time period of data submission instead of allowing hospitals to self-select which quarters of data to submit (prior to the requirement of one calendar year of data submission beginning with the CY 2027 reporting period/CY 2029 payment determination).

Response: We thank the commenter for the recommendation. We believe that allowing the flexibility to self-select quarter(s) of eCQM data to report, beginning with the CY 2024 reporting period/CY 2026 payment determination, will allow hospitals to gradually transition toward more robust electronic quality measure reporting. We believe that the ability to self-select quarters of data will provide the necessary time for quality, health IT, and clinical teams to gain experience and operationalize integration of eCQMs in the Hospital OQR Program. Additionally, we believe that smaller hospitals may require more time to become proficient in all the parameters (mapping, new workflows, education, etc.) associated with eCQM reporting. Therefore, we believe that following this same incremental approach for the Hospital OQR Program allows us to remain consistent across hospital quality reporting programs and reduce provider burden.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

c. Electronic Quality Measure Certification Requirements for eCQM Reporting

(1) Requiring Use of 2015 Edition Cures Update Certified Technology Beginning With the CY 2023 Reporting Period/CY 2025 Payment Determination

In May 2020, the ONC 21st Century Cures Act final rule (85 FR 25642 through 25961) finalized updates to the 2015 Edition of health IT certification criteria (hereto referred to as the “2015 Edition Cures Update”). These updates included revisions to the clinical quality measurement certification criterion at 45 CFR 170.315(c)(3) to refer to CMS Quality Reporting Data Architecture (QRDA) IGs and remove the Health Level 7 (HL7®) QRDA standard from the relevant health IT certification criteria (85 FR 25645). The ONC 21st Century Cures Act final rule provided health IT developers up to 24 months from May 1, 2020 to make technology certified to the updated and/or new criteria available to their customers (85 FR 25670). In November 2020, ONC issued an interim final rule with comment (85 FR 70064) which extended the compliance deadline for the update to the Clinical Quality Measures-Report criterion until December 31, 2022 (85 FR 70075). These updates were finalized to reduce burden on health IT developers under the ONC Health IT certification program (85 FR 25686) and have no impact on providers' existing reporting practices for CMS programs.

For the Hospital OQR Program, in the CY 2022 OPPS/ASC proposed rule (86 FR 42261), we proposed to require hospitals to utilize certified technology updated consistent with the 2015 Edition Cures Update for the CY 2023 reporting period/CY 2025 payment determination and subsequent years, which includes both the voluntary period and required submissions. We noted that this proposal is in alignment with the Hospital IQR Program proposal in the FY 2022 IPPS/LTCH PPS proposed rule that requires use of technology updated consistent with 2015 Edition Cures Update beginning with the CY 2023 reporting period/FY 2025 payment determination (86 FR 25595), and which has since been finalized in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45418).

We received no comments on this proposal. Therefore, we are finalizing this proposal as proposed.

d. File Format for EHR Data, Zero Denominator Declarations, and Case Threshold Exemptions

(1) File Format for EHR Data

Data can be collected in EHRs and health information technology systems using standardized formats to promote consistent representation and interpretation, as well as to allow for systems to compute data without needing human interpretation. As described in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49701), these standards are referred to as content exchange standards because the standard details how data should be represented and the relationships between data elements. This allows the data to be exchanged across EHRs and health IT systems while retaining their meaning. Commonly used content exchange standards include the QRDA. The QRDA standard provides a document format and standard structure to electronically report quality measure data. We believe electronically reporting data elements formatted according to the QRDA standard would promote consistent representation and more efficient calculation of eCQM measure results.

Therefore, in alignment with the Hospital IQR Program file format requirements (85 FR 58940), in the CY 2022 OPPS/ASC proposed rule (86 FR 42262), we proposed that, beginning with the CY 2023 reporting period/CY 2025 payment determination, hospitals: (1) Must submit eCQM data via the QRDA Category I (QRDA I) file format; (2) may use third parties to submit QRDA I files on their behalf; and (3) may either use abstraction or pull the data from non-certified sources in order to then input these data into CEHRT for capture and reporting QRDA I. Hospitals could meet the reporting requirements by submitting data via QRDA I files, zero denominator declaration, or case threshold exemptions. We discuss the zero denominator declaration and case threshold exemptions in the subsequent sections. We also refer readers to section XV.B.8. of the CY 2022 OPPS/ASC proposed rule (86 FR 42256) and in this section of this final rule with comment period where we outline the maintenance of technical specifications including those for eCQMs.

Under this proposal, we expect QRDA I files to reflect data for one patient per file per quarter with five key elements necessary to identify the file:

• CMS Certification Number (CCN);
• CMS Program Name;
• EHR Patient ID;
• Reporting period specified in the Reporting Parameters Section; and
• EHR Submitter ID.

We received comments on these topics.

Comment: One commenter supported our alignment of these requirements with other quality reporting programs, particularly the Hospital IQR Program.

Response: We thank the commenter for their support.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

(2) Zero Denominator Declarations

We understand there may be situations in which a hospital does not have data to report on a particular eCQM. Therefore, in the CY 2022 OPPS/ASC proposed rule (86 FR 42262), we proposed if the hospital's EHR is certified to an eCQM, but the hospital does not have patients that meet the denominator criteria of that eCQM, the hospital can submit a zero in the denominator for that eCQM. Submission of a zero in the denominator for an eCQM counts as a successful submission for that eCQM for the Hospital OQR Program. For example, if the hospital within the previously mentioned health system does not provide fibrinolytic therapy, but one of the eCQMs the health system's EHR is certified to is a fibrinolytic therapy measure, that hospital's EHR may render a zero in the denominator for that eCQM. The hospital will therefore report a zero denominator for that fibrinolytic therapy eCQM, and this will count toward the required eCQMs for the Hospital OQR Program. Hospitals within that health system for which that fibrinolytic therapy eCQM does apply will provide data on that measure.

We received one comment on these topics.

Comment: One commenter supported our alignment of these requirements with other quality reporting programs, particularly the Hospital IQR Program.

Response: We thank the commenter for its support.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

(3) Case Threshold Exemptions

We understand that in some cases, a hospital may not meet the case threshold of discharges for a particular eCQM. In the CY 2022 OPPS/ASC proposed rule (86 FR 42262), we proposed to align with the case threshold exemption from the Medicare Promoting Interoperability Program (77 FR 54080) and the Hospital IQR Program (79 FR 50324). As stated for the Hospital IQR Program, the case threshold exemption means that for each quality measure for which hospitals do not have a minimum number of patients that meet the patient population denominator criteria for the relevant reporting period, hospitals would have the ability to declare a “case threshold exemption” if they have five or fewer applicable discharges. Specifically, for the Hospital OQR Program we propose that beginning with the CY 2023 reporting period/CY 2025 payment determination, if a hospital's EHR system is certified to report an eCQM and the hospital experiences 5 or fewer outpatient discharges per quarter or 20 or fewer outpatient discharges per year (Medicare and non-Medicare combined), as defined by an electronic clinical quality measure's denominator population, that hospital could be exempt from reporting on that electronic clinical quality measure. Case threshold exemptions are entered on the Denominator Declaration screen within the HQR System (formerly referred to as the QualityNet Secure Portal) available during the submission period. The exemption would not have to be used; hospitals could report those individual cases if they would like to.

We received one comment on these topics.

Comment: One commenter supported our alignment of these requirements with other quality reporting programs, particularly the Hospital IQR Program.

Response: We thank the commenter for its support.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

e. Submission Deadlines for eCQM Data

In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57172), the Hospital IQR Program aligned their eCQM submission deadline with that of the Medicare Promoting Interoperability Program. The eCQM submission deadline for those two programs is the end of two months following the close of the CY (beginning with the CY 2017 reporting period/FY 2019 payment determination and for subsequent years).

In the CY 2022 OPPS/ASC proposed rule (86 FR 42262), for the Hospital OQR Program, we proposed to require eCQM data submission by the end of 2 months following the close of the calendar year for the CY 2023 reporting period/CY 2025 payment determination and for subsequent years. We believe that by aligning with the Hospital IQR and Promoting Interoperability Programs' deadlines, we would not add unnecessary burden. For example, for the CY 2023 reporting period/CY 2025 payment determination, hospitals that choose to voluntarily report that calendar year would be required to submit eCQM data by February 29, 2024, which is the end of 2 months following the close of the calendar year (December 31, 2023).

In developing this policy, we also considered proposing a submission deadline of May 15 to align with the submission deadline for Hospital OQR web-based measures. Under the Hospital OQR Program, the data submission period for web-based measures (for example, OP-29 and OP-31) extends through May 15 (we note the submission deadline may be moved to the next business day if it falls on a weekend or Federal holiday). However, we ultimately proposed instead to align eCQM data submission deadlines across quality reporting programs, because we believe that it would be less burdensome for hospitals.

We received comments on these topics.

Comment: One commenter supported our alignment of the submission deadline requirements across quality reporting programs.

Response: We thank the commenter for their support.

In the CY 2022 OPPS/ASC proposed rule (86 FR 42262), we indicated that we considered a deadline of May 15. To allow more time for data submission and for hospitals to review their data, we believe that a May 15 deadline is more appropriate. Additionally, this is consistent with the Hospital OQR Program data submission deadline for web-based measures which provides inter-program alignment. Therefore, after consideration of public comments, we are finalizing this proposal with modification, establishing May 15 as the data submission deadline for eCQMs for the CY 2023 reporting period/CY 2025 payment determination and for subsequent years. We note the submission deadline may be moved to the next business day if it falls on a weekend or Federal holiday.

7. Population and Sampling Data Requirements for the CY 2022 Payment Determination and Subsequent Years

We refer readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74482 through 74483) for discussions of our population and sampling requirements. We did not propose any changes to these policies in the proposed rule. We note that we did not propose any population and sampling data policies related to eCQM reporting, because we would expect data for all patients who meet the patient population denominator criteria to be reported.

8. Review and Corrections Period for Measure Data Submitted to the Hospital OQR Program

a. Chart-Abstracted Measures

We refer readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR 66964 and 67014) where we formalized a review and corrections period for chart-abstracted measures in the Hospital OQR Program. We did not propose any changes to these policies in the proposed rule.

b. Web-Based Measures

In the CY 2021 OPPS/ASC final rule (85 FR 86184), we finalized and codified to expand our review and corrections policy to apply to measure data submitted via the CMS web-based tool beginning with data submitted for the CY 2023 payment determination and subsequent years. We did not propose any changes to these policies in the proposed rule.

c. Electronic Clinical Quality Measures (eCQMs)

In the CY 2022 OPPS/ASC proposed rule (86 FR 42263), we proposed that hospitals would have a review and corrections period for eCQM data submitted to the Hospital OQR Program. We proposed a review and corrections period for eCQM data which would run concurrently with the data submission period. The review and corrections period is from the time the submission period opens to the submission deadline. In the HQR System (formerly referred to as the QualityNet Secure Portal), providers can submit QRDA Category I test and production data files and can correct QRDA Category I test and production data files before production data is submitted for final reporting. We encourage early testing and the use of pre-submission testing tools to reduce errors and inaccurate data submissions in eCQM reporting. The HQR System does not allow data to be submitted or corrected after the annual deadline. We refer readers to the HQR System website (available at: https://hqr.cms.gov/hqrng/login ) and the eCQI Resource Center (available at: https://ecqi.healthit.gov/ ) for more resources on eCQM reporting.

We received no comments on this proposal. Therefore, we are finalizing this proposal as proposed.

d. OAS CAHPS Measures

Each hospital administers (via its vendor) the survey for all eligible patients treated during the data collection period on a monthly basis according to the guidelines in the Protocols and Guidelines Manual ( https://oascahps.org ) and report the survey data to CMS on a quarterly basis by the deadlines posted on the OAS CAHPS Survey website as stated in section XV.D.4.b.(2). of the CY 2022 OPPS/ASC proposed rule (86 FR 42259) and this final rule. As finalized in the CY 2017 OPPS/ASC final rule with comment period, data cannot be altered after the data submission deadline but can be reviewed prior to the submission deadline (81 FR 79793).

9. Hospital OQR Program Validation Requirements

a. Background

We refer readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 72105 through 72106), the CY 2013 OPPS/ASC final rule with comment period (77 FR 68484 through 68487), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66964 through 66965), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70524), the CY 2018 OPPS/ASC final rule with comment period (82 FR 59441 through 59443), and 42 CFR 419.46(f) for our policies regarding validation.

b. Use of Electronic File Submissions for Chart-Abstracted Measure Medical Records Requests Beginning With the CY 2022 Reporting Period/CY 2024 Payment Determination and Subsequent Years

Currently, hospitals may choose to submit paper copies of medical records for chart-abstracted measure validation, or they may submit copies of medical records for validation by securely transmitting electronic versions of medical information (79 FR 66965 through 66966). Submission of electronic versions can either entail downloading or copying the digital image of the medical record onto Compact Disc (CD), Digital Video Disc (DVD), or flash drive, or submission of Portable Document Format (PDF) using a secure file transmission process after logging into the HQR System (formerly referred to as the QualityNet Secure Portal) (79 FR 66966). We reimburse hospitals at $3.00 per chart (FY 2016 IPPS/LTCH PPS final rule (80 FR 49763)).

We strive to provide the public with accurate quality data while maintaining alignment with hospital recordkeeping practices. We appreciate that hospitals have rapidly adopted EHR systems as their primary source of information about patient care, which can facilitate the process of producing electronic copies of medical records. Additionally, we monitor the medical records submissions to the CMS Clinical Data Abstraction Center (CDAC) contractor and have found that almost two-thirds of hospitals already use the option to submit PDF copies of medical records as electronic files. In our assessment based on this monitoring, we believe requiring electronic file submissions can be a more effective and efficient process for hospitals selected for validation.

Therefore, in the CY 2022 OPPS/ASC proposed rule (86 FR 42263), we proposed to discontinue the option for hospitals to send paper copies of, or CDs, DVDs, or flash drives containing medical records for validation affecting the CY 2024 payment determination (that is, beginning with data submission for Q1 of CY 2022). We proposed to require hospitals to instead submit only electronic files when submitting copies of medical records for validation of chart-abstracted measures, beginning with validation affecting the CY 2024 payment determination (that is, Q1 of CY 2022) and for subsequent years. Under this proposal, hospitals would be required to submit PDF copies of medical records using direct electronic file submission via a CMS-approved secure file transmission process as directed by CDAC. We would continue to reimburse hospitals at $3.00 per chart, consistent with the current reimbursement amount for electronic submissions of charts. We note that this process would align with that for the Hospital IQR Program (FY 2016 IPPS/LTCH PPS final rule (85 FR 58949)).

Requiring electronic file submissions reduces the burden of not only coordinating numerous paper-based pages of medical records, but also of having to then ship the papers or physical digital media storage to the CDAC. Therefore, we believe it is appropriate to require that hospitals use electronic file submissions via a CMS-approved secure file transmission process.

We received comments on these topics.

Comment: Several commenters supported the proposed changes to require the use of electronic file submissions and remove the paper submission option beginning with the CY 2022 reporting period/CY2024 payment determination and for subsequent years because this change will align the data validation process for chart abstracted measures with the Hospital IQR Program.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

c. Time Period for Chart-Abstracted Measure Data Validation for Validations Affecting the CY 2024 Payment Determination and Subsequent Years

We refer readers to the chart-abstracted validation requirements and methods we adopted in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75117 through 75118) and codified at 42 CFR 419.46(f)(1) for the CY 2024 payment determination and subsequent years. In previous years, charts were requested by the CMS CDAC contractor and hospitals were given 45-calendar days from the date of the request to submit the requested records. If any record(s) were not received by the 45-day requirement, the CMS CDAC contractor assigned a “zero” validation score to each measure in a missing record. Using data from the CDAC, we have found that a large majority of hospitals that have participated in Hospital OQR Program data validation efforts have submitted their records prior to 30 calendar days in the current process. Furthermore, outpatient records typically contain significantly fewer pages than the inpatient records that hospitals have been submitting to the Hospital IQR Program for several years, which suggests that outpatient records could be gathered in less time and use less resources.

Therefore, in the CY 2022 OPPS/ASC proposed rule (86 FR 42263), we proposed to revise § 419.46(f)(1) to change the time period given to hospitals to submit medical records to the CDAC contractor from 45-calendar days to 30-calendar days, beginning with medical record submissions for encounters in Q1 of CY 2022/validations affecting the CY 2024 payment determination and for subsequent years. We proposed this deadline modification to reduce the time needed to complete validation, provide hospitals with feedback on their abstraction accuracy in a timelier manner, and to further align with the Hospital IQR Program's validation policy (76 FR 51645).

We received comments on these topics.

Comment: Several commenters supported this change to the time period given to hospitals to submit medical records to the CDAC contractor from 45-calendar days to 30-calendar days, beginning with medical record submissions for encounters in Q1 of CY 2022/validations affecting the CY 2024 payment determination and for subsequent years.

Response: We thank the commenters for their support.

Comment: Several commenters expressed concern with the proposal to reduce the submission time for validation from 45 to 30-calendar days. A few commenters noted that it takes time to review copied charts and recompile them for CDAC review. Commenters also noted that the time allotted for preparation of files will be even more important as measures move to eCQMs. A few other commenters mentioned that they do not support reducing hospital response times to validation requests without assurances from CMS that hospitals will receive timely feedback as a result. One commenter had concerns that given the scarce resources in health care currently, this proposal will present increased hardship to many facilities. The commenters requested that CMS continue to allow 45 days for submission of medical records to CDAC.

Response: As previously noted, the majority of participating hospitals in the Hospital OQR program have submitted their records prior to 30 calendar days in the current process according to the CDAC data. Given this, we believe that this adjusted timeline will not impose hardship on those hospitals. Additionally, our findings show that outpatient records contain less pages than inpatient records therefore, we do not anticipate that HOPDs will require additional time, resources, or administrative burden compared to inpatient hospitals, which already complete this process within the 30-day timeframe. We acknowledge that the reduction in time may require some hospitals to adjust their procedures to meet the new deadline, but this proposal does not change the number of records requested, and we believe that a majority of hospitals have already shown the 30-day timeframe is feasible. Furthermore, as stated in the CY 2022 OPPS/ASC proposed rule (86 FR 42263 through 42264), this proposal would allow us to reduce the time needed to complete validation and provide hospitals with valuable and timely feedback of their results.

We also thank the commenters for their concern about the timing of this proposal as CMS shifts focus to eCQMs. As we gain more experience with eCQMs we will continue to monitor any potential challenges and adjust our validation requirements in future rulemaking if necessary.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

d. Targeting Criteria

(1) Background

In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74485), we finalized a validation selection process in which we select a random sample of 450 hospitals for validation purposes and select an additional 50 hospitals based on specific criteria. We finalized a policy in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68485 through 68486), that for the CY 2014 payment determination and subsequent years, a hospital will be preliminarily selected for validation based on targeting criteria if it fails the validation requirement that applies to the previous year's payment determination. We also refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68486 through 68487) for a discussion of finalized policies regarding our medical record validation procedure requirements. We codified at § 419.46(f)(3) that we select a random sample of 450 hospitals for validation purposes, and select an additional 50 hospitals for validation purposes based on the following criteria:

• The hospital fails the validation requirement that applies to the previous year's payment determination; or
• The hospital has an outlier value for a measure based on the data it submits. An “outlier value” is a measure value that is greater than 5 standard deviations from the mean of the measure values for other hospitals and indicates a poor score.

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59441), we clarified that an “outlier value” for purposes of this targeting is defined as a measure value that appears to deviate markedly from the measure values for other hospitals.

(2) Addition of Targeting Criteria

Beginning with validations affecting the CY 2022 reporting period/CY 2024 payment determination and subsequent years, in the CY 2022 OPPS/ASC proposed rule (86 FR 42264), we proposed to add to the two established targeting criteria used to select the 50 additional hospitals. Specifically, we proposed to revise § 419.46(f)(3) to add the following criteria for targeting the additional 50 hospitals:

• Any hospital that has not been randomly selected for validation in any of the previous 3 years.
• Any hospital that passed validation in the previous year, but had a two-tailed confidence interval that included 75 percent.

We stated in the proposed rule our belief that these proposals would allow more hospitals the opportunity for validation. First, by adding targeting criteria for any hospital that has not been randomly selected for validation in any of the previous 3 years, we can ensure that hospitals are eligible to be validated on a regular basis even if they are not selected under the randomly selected sample. Second, the option to selectively review hospitals that have a confidence interval that includes 75 percent is important because hospitals whose confidence interval includes 75 percent indicates a higher level of uncertainty as to the reliability of data for that particular hospital. By adding the targeting criteria for hospitals with two-tailed confidence interval that includes 75 percent, we can target those hospitals that are in the statistical margin of error for their accuracy (which includes hospitals that both pass and fail on this level). These proposals also align Hospital OQR Program validation with additional aspects of Hospital IQR Program validation (77 FR 53553). We believe that these proposed additional criteria would improve data quality by increased targeting of hospitals with possible or confirmed past data quality issues. Additionally, the proposal would respond to concerns that CMS does not have a methodology to address hospitals for which both passing and falling levels of accuracy were included for the statistical margin of error.

We received comments on these topics.

Comment: A few commenters supported the proposed changes to the targeting criteria used in the data validation process beginning with the CY 2022 reporting period/CY 2024 payment determination and subsequent years.

Response: We thank the commenters for their support.

Comment: One commenter did not support targeting a hospital that passed validation in the previous year with a two-tailed confidence interval that includes 75 percent.

Response: We appreciate the commenters feedback and reiterate that validation continues to be an integral part of maintaining data integrity. We believe that finalizing these additional targeting criteria will provide more hospitals the opportunity to be selected for validation and ensure data integrity.

Comment: A few commenters provided recommendations to CMS regarding the targeting criteria for validation policies. One commenter urged CMS to coordinate validation requirements between the Hospital OQR and Hospital IQR programs to ensure that hospitals that are selected for validation are only required to validate data for the Hospital OQR or Hospital IQR program, instead of both programs. Another commenter noted that validation is an intense year long process for facilities and recommended that the administration should not repeatedly require administrative processes for validation efforts in order to create additional availability for important quality improvement initiatives.

Response: We appreciate the commenters' feedback and reiterate that validation is an important part of ensuring data integrity and that the finalization of these policies will help ensure data integrity and align validation policies across quality reporting programs. Each year there are only 10-15 hospitals that overlap in selection for validation. We closely review the selected hospitals to ensure there is no overlap in the record requests between the Hospital OQR and Hospital IQR programs. This review also allows us to ensure that hospitals have sufficient time to fulfill one request at a time. These policies are intended to align the Hospital OQR Program validation process with the Hospital IQR Program, which furthers overall cross-program alignment goals.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

e. Educational Review Process and Score Review and Correction Period for Chart-Abstracted Measures

We refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59441 through 59443) and the CY 2021 OPPS/ASC final rule with comment period (85 FR 86185), where we finalized and codified a policy to formalize the Educational Review Process for Chart-Abstracted Measures, including Validation Score Review and Correction.

We did not propose any changes to these policies in the proposed rule.

10. Extraordinary Circumstances Exception (ECE) Process for the CY 2022 Payment Determination and Subsequent Years

a. Background

We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment period (78 FR 75119 through 75120), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66966), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70524), the CY 2017 OPPS/ASC final rule with comment period (81 FR 79795), the CY 2018 OPPS/ASC final rule with comment period (82 FR 59444), and 42 CFR 419.46(e) for a complete discussion of our extraordinary circumstances exception (ECE) process under the Hospital OQR Program.

b. Expanding the Extraordinary Circumstances Exemption to eCQMs

As part of our proposed policies in support of the introduction of eCQMs into the Hospital OQR Program, beginning with the CY 2024 reporting period/CY 2026 payment determination and for subsequent years, in the CY 2022 OPPS/ASC proposed rule (86 FR 42264), we proposed to expand our established Extraordinary Circumstances Exceptions policy to allow hospitals to request an exception from the Hospital OQR Program's eCQM reporting requirements based on hardships preventing hospitals from electronically reporting. We note that our proposal aligns with the Hospital IQR Program's Extraordinary Circumstances Exceptions policy for eCQMs (80 FR 49695, 42 CFR 412.140(c)(2)).

Under this proposal, applicable hardships could include, but are not limited to, infrastructure challenges (hospitals must demonstrate that they are in an area without sufficient internet access or face insurmountable barriers to obtaining infrastructure) or unforeseen circumstances, such as vendor issues outside of the hospital's control (including a vendor product losing certification). In addition, under the Hospital OQR Program, we may consider being a newly participating hospital as undergoing hardship such that newly participating hospitals can apply for an exemption for the applicable program year. Newly participating hospitals are required to begin data submission under the Hospital OQR Program procedural requirements at § 419.46(d)(1), which describes submission and validation of Hospital OQR Program data.

We also proposed that a hospital participating in the Hospital OQR Program that wishes to request an exception must submit its request to CMS by April 1 following the end of the reporting calendar year in which the extraordinary circumstances occurred. For example, if an extraordinary circumstance occurred on or by December 31, 2024, the ECE request must be submitted by April 1, 2025. Specific requirements for submission of a request for an exception would be available on the QualityNet website available at: https://qualitynet.cms.gov/ . We received comments on these topics.

Comment: A few commenters expressed support for the expansion of the ECE policy to cover eCQMs under the Hospital OQR Program.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing this proposal as proposed.

11. Hospital OQR Program Reconsideration and Appeals Procedures for the CY 2022 Payment Determination and Subsequent Years

We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68487 through 68489), the CY 2014 OPPS/ASC final rule with comment period (78 FR 75118 through 75119), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70524), the CY 2017 OPPS/ASC final rule with comment period (81 FR 79795), the CY 2021 OPPS/ASC final rule with comment period (85 FR 68185), and 42 CFR 419.46(g) for our reconsideration and appeals procedures. We did not propose any changes to these policies in the proposed rule.

E. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR Program Requirements for the CY 2022 Payment Determination

1. Background

Section 1833(t)(17) of the Act, which applies to subsection (d) hospitals (as defined under section 1886(d)(1)(B) of the Act), states that hospitals that fail to report data required to be submitted on measures selected by the Secretary, in the form and manner, and at a time, specified by the Secretary will incur a 2.0 percentage point reduction to their Outpatient Department (OPD) fee schedule increase factor; that is, the annual payment update factor. Section 1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only to the payment year involved and will not be taken into account in computing the applicable OPD fee schedule increase factor for a subsequent year.

The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that apply to certain outpatient items and services provided by hospitals that are required to report outpatient quality data in order to receive the full payment update factor and that fail to meet the Hospital OQR Program requirements. Hospitals that meet the reporting requirements receive the full OPPS payment update without the reduction. For a more detailed discussion of how this payment reduction was initially implemented, we refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68769 through 68772).

The national unadjusted payment rates for many services paid under the OPPS equal the product of the OPPS conversion factor and the scaled relative payment weight for the APC to which the service is assigned. The OPPS conversion factor, which is updated annually by the OPD fee schedule increase factor, is used to calculate the OPPS payment rate for services with the following status indicators (listed in Addendum B to the proposed rule, which is available via the internet on the CMS website): “J1”, “J2”, “P”, “Q1”, “Q2”, “Q3”, “R”, “S”, “T”, “V”, or “U”. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79796), we clarified that the reporting ratio does not apply to codes with status indicator “Q4” because services and procedures coded with status indicator “Q4” are either packaged or paid through the Clinical Laboratory Fee Schedule and are never paid separately through the OPPS. Payment for all services assigned to these status indicators will be subject to the reduction of the national unadjusted payment rates for hospitals that fail to meet Hospital OQR Program requirements, with the exception of services assigned to New Technology APCs with assigned status indicator “S” or “T”. We refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68770 through 68771) for a discussion of this policy.

The OPD fee schedule increase factor is an input into the OPPS conversion factor, which is used to calculate OPPS payment rates. To reduce the OPD fee schedule increase factor for hospitals that fail to meet reporting requirements, we calculate two conversion factors—a full market basket conversion factor (that is, the full conversion factor), and a reduced market basket conversion factor (that is, the reduced conversion factor). We then calculate a reduction ratio by dividing the reduced conversion factor by the full conversion factor. We refer to this reduction ratio as the “reporting ratio” to indicate that it applies to payment for hospitals that fail to meet their reporting requirements. Applying this reporting ratio to the OPPS payment amounts results in reduced national unadjusted payment rates that are mathematically equivalent to the reduced national unadjusted payment rates that would result if we multiplied the scaled OPPS relative payment weights by the reduced conversion factor. For example, to determine the reduced national unadjusted payment rates that applied to hospitals that failed to meet their quality reporting requirements for the CY 2010 OPPS, we multiplied the final full national unadjusted payment rate found in Addendum B of the CY 2010 OPPS/ASC final rule with comment period by the CY 2010 OPPS final reporting ratio of 0.980 (74 FR 60642).

We note that the only difference in the calculation for the full conversion factor and the calculation for the reduced conversion factor is that the full conversion factor uses the full OPD update and the reduced conversion factor uses the reduced OPD update. The baseline OPPS conversion factor calculation is the same since all other adjustments would be applied to both conversion factor calculations. Therefore, our standard approach of calculating the reporting ratio as described earlier in this section is equivalent to dividing the reduced OPD update factor by that of the full OPD update factor. In other words:

Full Conversion Factor = Baseline OPPS conversion factor * (1 + OPD update factor)

Reduced Conversion Factor = Baseline OPPS conversion factor * (1 + OPD update factor−0.02)

Reporting Ratio = Reduced Conversion Factor/Full Conversion Factor

Which is equivalent to:

Reporting Ratio = (1 + OPD Update factor−0.02)/(1 + OPD update factor)

In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 through 68772), we established a policy that the Medicare beneficiary's minimum unadjusted copayment and national unadjusted copayment for a service to which a reduced national unadjusted payment rate applies would each equal the product of the reporting ratio and the national unadjusted copayment or the minimum unadjusted copayment, as applicable, for the service. Under this policy, we apply the reporting ratio to both the minimum unadjusted copayment and national unadjusted copayment for services provided by hospitals that receive the payment reduction for failure to meet the Hospital OQR Program reporting requirements. This application of the reporting ratio to the national unadjusted and minimum unadjusted copayments is calculated according to § 419.41 of our regulations, prior to any adjustment for a hospital's failure to meet the quality reporting standards according to § 419.43(h). Beneficiaries and secondary payers thereby share in the reduction of payments to these hospitals.

In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68772), we established the policy that all other applicable adjustments to the OPPS national unadjusted payment rates apply when the OPD fee schedule increase factor is reduced for hospitals that fail to meet the requirements of the Hospital OQR Program. For example, the following standard adjustments apply to the reduced national unadjusted payment rates: The wage index adjustment, the multiple procedure adjustment, the interrupted procedure adjustment, the rural sole community hospital adjustment, and the adjustment for devices furnished with full or partial credit or without cost. Similarly, OPPS outlier payments made for high cost and complex procedures will continue to be made when outlier criteria are met. For hospitals that fail to meet the quality data reporting requirements, the hospitals' costs are compared to the reduced payments for purposes of outlier eligibility and payment calculation. We established this policy in the OPPS beginning in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60642). For a complete discussion of the OPPS outlier calculation and eligibility criteria, we refer readers to section II.G. of this final rule with comment period.

2. Reporting Ratio Application and Associated Adjustment Policy for CY 2022

We proposed to continue our established policy of applying the reduction of the OPD fee schedule increase factor through the use of a reporting ratio for those hospitals that fail to meet the Hospital OQR Program requirements for the full CY 2022 annual payment update factor. For the CY 2022 OPPS/ASC proposed rule, the proposed reporting ratio is 0.9805, which, when multiplied by the proposed full conversion factor of $84.457, equals a proposed conversion factor for hospitals that fail to meet the requirements of the Hospital OQR Program (that is, the reduced conversion factor) of $82.810. We proposed to continue to apply the reporting ratio to all services calculated using the OPPS conversion factor. We proposed to continue to apply the reporting ratio, when applicable, to all HCPCS codes to which we have proposed status indicator assignments of “J1”, “J2”, “P”, “Q1”, “Q2”, “Q3”, “R”, “S”, “T”, “V”, and “U” (other than new technology APCs to which we have proposed status indicator assignment of “S” and “T”). We proposed to continue to exclude services paid under New Technology APCs. We proposed to continue to apply the reporting ratio to the national unadjusted payment rates and the minimum unadjusted and national unadjusted copayment rates of all applicable services for those hospitals that fail to meet the Hospital OQR Program reporting requirements. We also proposed to continue to apply all other applicable standard adjustments to the OPPS national unadjusted payment rates for hospitals that fail to meet the requirements of the Hospital OQR Program. Similarly, we proposed to continue to calculate OPPS outlier eligibility and outlier payment based on the reduced payment rates for those hospitals that fail to meet the reporting requirements. In addition to our proposal to implement the policy through the use of a reporting ratio, we also proposed to calculate the reporting ratio to four decimals (rather than the previously used three decimals) to more precisely calculate the reduced adjusted payment and copayment rates.

For CY 2022, the proposed reporting ratio is 0.9805, which, when multiplied by the final full conversion factor of 84.457, equals a proposed conversion factor for hospitals that fail to meet the requirements of the Hospital OQR Program (that is, the reduced conversion factor) of 82.810.

Comment: Two commenters asserted that the proposed reduced conversion factor of $82.810 and the proposed reporting ratio of 0.9805 are incorrect. Both commenters claim the proposed reduced conversion factor should be $83.227 and the proposed reporting ratio should be 0.9854. The commenters did not provide detailed calculations to support these assertions.

Response: We reviewed our calculations from the proposed rule after receiving these comments, and we were able to reconfirm our findings from the proposed rule that the reduced conversion factor was correctly calculated at $82.810 and the reporting ratio was correctly calculated at 0.9805. We would refer the commenters to the earlier text in this section (section XV.E.1. of this final rule with comment period) that provides a detailed description of the calculations we perform to generate the reduced conversion factor and the reporting ratio. In addition, we refer readers to the Conversion Factor calculation described in Part 2 of the OPPS Claims Accounting narrative, included with each proposed and final OPPS rule, available on the CMS website at: https://www.cms.gov/ .

For this final rule with comment period, the final reporting ratio is 0.9804, which, when multiplied by the final full conversion factor of 84.177, equals a final conversion factor for hospitals that fail to meet the requirements of the Hospital OQR Program (that is, the reduced conversion factor) of 82.526. We are finalizing our proposal to continue to calculate OPPS outlier eligibility and outlier payment based on the reduced payment rates for those hospitals that fail to meet the reporting requirements. We are also finalizing our proposals to implement the policy through the use of a reporting ratio, and to calculate the reporting ratio to four decimals (rather than the previously used three decimals) to more precisely calculate the reduced adjusted payment and copayment rates for hospitals that fail to meet the Hospital OQR Program requirements for CY 2022 payment.

XVI. Requirements for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program

A. Background

1. Overview

We refer readers to section XIV.A.1. of this final rule with comment period (84 FR 61410) for a general overview of our quality reporting programs and to the CY 2019 OPPS/ASC final rule with comment period (83 FR 58820 through 58822) where we previously discussed our Meaningful Measures Framework.

2. Statutory History of the ASCQR Program

We refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492 through 74494) for a detailed discussion of the statutory history of the ASCQR Program.

3. Regulatory History of the ASCQR Program

We refer readers to the CY 2014 through 2021 OPPS/ASC final rules with comment period for an overview of the regulatory history of the ASCQR Program:

• CY 2014 OPPS/ASC final rule (78 FR 75122);
• CY 2015 OPPS/ASC final rule (79 FR 66966 through 66987);
• CY 2016 OPPS/ASC final rule (80 FR 70526 through 70538);
• CY 2017 OPPS/ASC final rule (81 FR 79797 through 79826);
• CY 2018 OPPS/ASC final rule (82 FR 59445 through 59476);
• CY 2019 OPPS/ASC final rule (83 FR 59110 through 59139);
• CY 2020 OPPS/ASC final rule (84 FR 61420 through 61434); and
• CY 2021 OPPS/ASC final rule (85 FR 86187 through 86193).

We have codified requirements under the ASCQR Program at 42 CFR, part 16, subpart H (42 CFR 416.300 through 416.330).

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures

We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68493 through 68494) for a detailed discussion of the priorities we consider for the ASCQR Program quality measure selection. We did not propose any changes to these policies in the proposed rule.

2. Retention and Removal of Quality Measures From the ASCQR Program

a. Retention of Previously Adopted ASCQR Program Measures

We previously finalized a policy that quality measures adopted for an ASCQR Program measure set for a previous payment determination year be retained in the ASCQR Program for measure sets for subsequent payment determination years, except when such measures are removed, suspended, or replaced as indicated (76 FR 74494 and 74504; 77 FR 68494 through 68495; 78 FR 75122; and 79 FR 66967 through 66969). We did not propose any changes to this policy in the proposed rule.

b. Removal Factors for ASCQR Program Measures

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59111 through 59115), we clarified, finalized, and codified at § 416.320 an updated set of factors and the process for removing measures from the ASCQR Program. We did not propose any changes to the measure removal factors in the proposed rule.

3. Proposal To Adopt a New Measure for the ASCQR Program Measure Set

In the CY 2022 OPPS/ASC proposed rule (86 FR 42267), we proposed to adopt one new measure: COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) measure (to be designated ASC-20) beginning with the CY 2022 reporting period/2024 payment determination.

a. Adoption of the COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) Measure (ASC-20) Beginning With the CY 2022 Reporting Period/CY 2024 Payment Determination

(1) Background

On January 31, 2020, the Secretary declared a public health emergency (PHE) for the United States (U.S.) in response to the global outbreak of SARS-CoV-2, a novel coronavirus that causes a disease named “coronavirus disease 2019” (COVID-19). COVID-19 is a contagious respiratory infection that can cause serious illness and death. Older individuals, some racial and ethnic minorities, and those with underlying medical conditions are considered to be at higher risk for more serious complications from COVID-19. As of July 2, 2021, the U.S. reported over 33 million cases of COVID-19- and over 600,000 COVID-19 deaths. As of October 14, 2021, the U.S. reported over 44 million cases and over 718,000 COVID-19 deaths. Hospitals and health systems have seen significant surges of COVID-19 patients as community infection levels increased. From December 2, 2020 through January 30, 2021, more than 100,000 Americans with COVID-19- were hospitalized at the same time.

Evidence indicates that COVID-19 primarily spreads when individuals are in close contact with one another. Ongoing research indicates that fully vaccinated people without immunocompromising conditions are able to engage in most activities with very low risk of acquiring or transmitting SARS-CoV-2, and the Centers for Disease Control and Prevention (CDC) issued new guidance for fully vaccinated individuals on May 28, 2021. The virus is typically transmitted through respiratory droplets or small particles created when someone who is infected with the virus coughs, sneezes, sings, talks or breathes. Thus, the CDC advises that infections mainly occur through exposure to respiratory droplets when a person is in close contact with someone who has COVID-19. Experts believe that COVID-19 spreads less commonly through contact with a contaminated surface and that in certain circumstances, infection can occur through airborne transmission. According to the CDC, those at greatest risk of infection are persons who have had prolonged, unprotected close contact (that is, within 6 feet for 15 minutes or longer) with an individual with confirmed COVID-19 infection, regardless of whether the individual has symptoms. Although personal protective equipment (PPE) and other infection-control precautions can reduce the likelihood of transmission in health care settings, COVID-19 can spread between HCP and patients or from patient to patient given the close contact that may occur during the provision of care. The CDC has emphasized that health care settings can be high-risk places for COVID-19 exposure and transmission.

Vaccination is a critical part of the nation's strategy to effectively counter the spread of COVID-19 and ultimately help restore societal functioning. On December 11, 2020, the Food and Drug Administration (FDA) issued the first Emergency Use Authorization (EUA) for a COVID-19 vaccine in the U.S. Subsequently, FDA issued EUAs for additional COVID-19 vaccines. Following the publication of the proposed rule, FDA granted full approval to Comirnaty®, the Pfizer-BioNTech COVID-19 vaccine, on August 23, 2021.

As part of its national strategy to address COVID-19, the White House stated on March 25, 2021 that it would work with states and the private sector to execute an aggressive vaccination strategy and outlined a goal of administering 200 million shots in 100 days. On April 21, 2021, it was announced that this goal had been achieved. Although the goal of the U.S. Government is to ensure that every American who wants to receive a COVID-19 vaccine can receive one, the Department of Health and Human Services, the Department of Defense, and the CDC, recommended that early vaccination efforts focus on those critical to the PHE response, including HCP, and individuals at highest risk for developing severe illness from COVID-19. The CDC's Advisory Committee on Immunization Practices (ACIP) recommended that HCP should be among those individuals prioritized to receive the initial, limited supply of the COVID-19 vaccination, given the potential for transmission in health care settings and the need to preserve health care system capacity. Reportedly most states followed this recommendation, and HCP began receiving the vaccine in mid-December of 2020.

Frontline healthcare workers, such as those employed in ASCs, have been prioritized for vaccination in most locations. There are approximately 18 million healthcare workers in the U.S. A survey of HCP found that 66 percent of hospital HCP and 64 percent of outpatient clinic HCP reported receiving at least one dose of the vaccine. As of July 2, 2021, the CDC reported that over 328 million doses of COVID-19 vaccine have been administered and approximately 155.9 million people had received full doses. Subsequently, the CDC reported that as of October 14, 2021, over 405 million doses of COVID-19 vaccine have been administered and approximately 188.3 million people had received full doses. The White House indicated on April 6, 2021 that the U.S. retains sufficient vaccine supply, and every adult became eligible to receive the vaccine beginning April 19, 2021. Finally, as part of the efforts to vaccinate those who are still unvaccinated through increasing the number of Americans covered by vaccination requirements, on September 9, 2021, the Biden Administration announced that COVID-19 vaccination will be required of all staff within Medicare and Medicaid-certified facilities to protect both patients and HCP against COVID-19.

We believe it is important to require that ASCs report HCP vaccination information for health care facilities to assess whether these facilities are taking this step to limit the spread of COVID-19 among their health care workers and to help sustain the ability of ASCs to continue serving their communities throughout the PHE and beyond. Therefore, we proposed adoption of a new measure, COVID-19 Vaccination Coverage Among HCP (ASC-20), beginning with the CY 2024 payment determination. For that payment year, ASCs would be required to report data quarterly on the measure for the January 2022 through December 2022 reporting period. The measure would assess the proportion of an ASC's health care workforce that has been vaccinated against COVID-19.

HCP are at risk of transmitting COVID-19 infection to patients, experiencing illness or death as a result of COVID-19 infection themselves, and transmitting it to their families, friends, and the general public. We believe ASCs should report the level of vaccination among their HCP as part of their efforts to assess and reduce the risk of transmission of COVID-19 within their facilities. HCP vaccination can reduce illness that leads to work absence and limit disruptions to providing care with major reductions in SARS-CoV-2 infections among those receiving a two dose COVID-19 vaccine despite a high community infection rate. Data from influenza vaccination demonstrate that provider vaccination is associated with that provider recommending vaccination to patients and we believe HCP COVID-19 vaccination in ASCs could similarly increase vaccination among that patient population. We also believe that publishing the HCP vaccination rates will be helpful to many patients, particularly those who are at high-risk for developing serious complications from COVID-19, as they choose among ASCs for treatment. Under CMS' Meaningful Measures Framework, the COVID-19 measure addresses the quality priority of “Promote Effective Prevention and Treatment of Chronic Disease” through the Meaningful Measures Area of “Preventive Care.”

(2) Overview of Measure

The COVID-19 Vaccination Coverage Among HCP measure (“COVID-19 HCP vaccination measure”) (ASC-20) is a process measure developed by the CDC to track COVID-19 vaccination coverage among HCP in non-LTC facilities including ASCs.

(a) Measure Specifications

The denominator for the HCP measure is the number of HCP eligible to work in the ASC for at least 1 day during the reporting period, excluding persons with contraindications to COVID-19 vaccination that are described by the CDC.

The numerator for the HCP measure is the cumulative number of HCP eligible to work in at the ASC for at least 1 day during the reporting period and who received a complete vaccination course against COVID-19. A complete vaccination course may require multiple doses or regular revaccination. Vaccination coverage for purposes of this measure is defined as the estimated percentage (given the potential for week-to-week variation) of HCP eligible to work at the ASC for at least 1 day who received a COVID-19 vaccine. For reporting, facilities would count HCP working in all facilities that share the same CMS certification number (CCN). The specifications for the COVID-19 HCP vaccination measure (ASC-20) are available on the NQF website at: https://www.cdc.gov/nhsn/nqf/index.html .

(b) Review by the Measure Applications Partnership

The COVID-19 HCP vaccination measure (ASC-20) was included on the publicly available “List of Measures Under Consideration for December 21, 2020,” a list of measures under consideration for use in various Medicare programs. The Measure Applications Partnership (MAP) hospital workgroup convened on January 11, 2021 and reviewed the Measures Under Consideration (MUC) List including the COVID-19 HCP vaccination measure (ASC-20). The MAP hospital workgroup agreed that the proposed measure represents a promising effort to advance measurement for an evolving national pandemic and that it could bring value to the ASCQR Program measure set by providing transparency about an important COVID-19 intervention to help prevent infections in HCP and patients. The MAP hospital workgroup also stated in its recommendations that collecting information on COVID-19 vaccination coverage among HCP and providing feedback to facilities will allow facilities to benchmark coverage rates and improve coverage in their facility, and that reducing COVID-19 infection rates in HCP may reduce transmission among patients and reduce instances of staff shortages due to illness.