CMS Issues Medicare 2022 Final Rules

By Wendy Smith Fuss, MPH
Health Policy Solutions

Medicare Physician Fee Schedule

CMS released the 2022 Medicare Physician Fee Schedule (MPFS) final rule on November 2, 2021. The MPFS specifies payment rates to physicians and other providers, including freestanding cancer centers. It does not apply to hospital-based facilities.

The 2022 conversion factor is $33.60. This represents a decrease of $1.29 or 3.75 percent from the 2021 MPFS conversion factor of $34.89.

CMS finalized its proposal to update the clinical labor pricing for 2022, in conjunction with the final year (year 4 of the transition period) of the medical equipment and supply pricing update (see table below).

CMS believes it is important to update the clinical labor pricing to maintain relativity with the recent equipment and supply pricing updates. Clinical labor rates were last updated for 2002 using Bureau of Labor Statistics (BLS) data and other supplementary sources where BLS data were not available. CMS recognizes that the BLS survey of wage data does not cover all the staff types, including Medical Physicists and Dosimetrists. CMS updated the Medical Physicist clinical labor rate based on salary data submitted by the American Association of Physicists in Medicine (AAPM).

After consideration of stakeholder comments, CMS finalized the proposal to implement the clinical labor pricing update through the use of a 4-year transition, with modifications. Rather than using the proposed BLS fringe benefits multiplier and the BLS mean wage data, in response to public comments, CMS will apply the BLS private industry fringe benefits multiplier for 2019 of 1.296 (1.366 multiplier in the proposed rule) and use the BLS median wage data.

CMS isolated the anticipated effects of the clinical labor pricing update on specialty payment impacts by comparing the 2022 MPFS rates with and without the clinical labor pricing updates in place, including with both the fully implemented pricing update and the first year of a 4-year transition. The estimated impacts for several specialties, including radiation oncology, reflect decreases in payments relative to payment to other physician specialties which are largely the result of the redistributive effects of the clinical labor pricing update. The services furnished by these specialties involve practice expense (PE) costs that rely primarily on medical equipment or supply items and therefore are affected negatively by the updates to clinical labor pricing. Since PE is budget neutralized within itself, increased pricing for clinical labor holds a corresponding relative decrease for other components of PE such as medical equipment and supplies. In the final rule, CMS revised the radiation oncology overall impact from this policy as minus 3.0 percent (over 4 years) and minus 1.0 percent for 2022 (year 1 of phase-in).

The 2022 MPFS policy changes result in estimated overall cuts of 6.75 to 7.75 percent to radiation oncology services. Given the 4-year transition to update clinical labor pricing, the 2022 estimated impact is a 4.75 to 5.75 percent payment reduction to radiation oncology. The reduction is associated with three specific actions:

1. The December 31, 2021 expiration of the Consolidated Appropriations Act, which established a 3.75 percent rate increase to the Conversion Factor in 2021. The expiration of the 3.75 percent increase to the conversion factor legislative provision for 2022 is a statutory change that takes place outside of budget neutrality.
2. A 1.0 percent cut associated with the final year of the pricing update to medical equipment and supplies.
3. A 3.0 percent cut associated with the update to the clinical labor price inputs, which will be phased in over a four-year period. CMS estimates the impact of the clinical labor pricing update in 2022 (year 1) is 1.0 percent.

Hospital Outpatient Payment System

The 2022 Medicare Hospital Outpatient Prospective Payment System (HOPPS) final rule, which provides facility payments to hospital outpatient departments was published on November 2^nd. The finalized policies and payments are effective January 1, 2022.  This rule does not impact payments to physicians or freestanding cancer centers.

CMS estimates an overall 2.0 percent increase in hospital outpatient facility payments in 2022. Radiation oncology related Ambulatory Payment Classifications (APCs) have payment increases that range from 1.5 to 2.3 percent in 2022 (see table below). Payment for brachytherapy treatment delivery codes increase 2.1 to 2.3 percent. Due to the COVID-19 public health emergency, CMS used 2019 outpatient claims data to calculate 2022 payments. Typically, CMS would have used 2020 outpatient claims data to determine 2022 payments.

Summary of 2022 Radiation Oncology HOPPS Payments

CMS did not propose any changes to the brachytherapy insertion code Comprehensive-APCs for 2022.

Comprehensive APCs Related to Brachytherapy Insertion Procedures

Beginning in 2022, CMS designates standard clinical APCs, brachytherapy APCs, and New Technology APCs with fewer than 100 single claims that can be used for ratesetting purposes as Low Volume APCs. Under the Low Volume APC policy, the payment rates for these APCs would be set at the highest amount among the geometric mean, median, or arithmetic mean, calculated using up to four years of data, which for 2022 would be claims data from 2016 through 2019. This policy designates 5 brachytherapy source APCs Low Volume APCs under the HOPPS.

Low Volume Brachytherapy APCs

Radiation Oncology Alternative Payment Model

The Radiation Oncology Alternative Payment Model (RO Model) final rule was issued on November 2^nd in conjunction with the 2022 Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center (ASC) Payment System final rule.

The RO Model will begin on January 1, 2022, with a five-year model performance period ending December 31, 2026. The RO Model remains a mandatory model encompassing 30 percent of all eligible radiotherapy (RT) episodes. CMS estimates that 500 Physician Group Practices (including 275 freestanding radiation therapy centers) and 450 Hospital Outpatient Departments will furnish radiation therapy services in the selected zip codes.

The RO Model is designed to test whether prospective, site-neutral, modality agnostic, episode-based payments to physician group practices (PGPs), freestanding radiation therapy centers and hospital outpatient departments (HOPDs) for RT episodes of care reduces Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries.

Under the RO Model, Medicare would pay participating providers specified professional and technical RT services furnished during a 90-day episode of care to Medicare beneficiaries diagnosed with 15 cancer types.

The Centers for Medicare and Medicaid Services (CMS) notes that they are finalizing the majority of the proposals without modification, and there are two proposals that they finalizing with modification. These include the definitions for RO Track One and RO Track Two, as well as the extreme and uncontrollable circumstances (EUC) policy.

CMS included in the model an extreme and uncontrollable circumstances policy, associated with the COVID-19 Public Health Emergency (PHE), that will grant RO participants some flexibility on quality reporting and monitoring requirements in the first performance year (PY1).

According to the final rule, the EUC policy will provide RO participants with the option to collect and submit quality measures and clinical data elements (CDEs) in PY1. As a result, the 2 percent quality withhold will be removed from the payment methodology. Additionally, the Agency is making the requirements associated with participating in an AHRQ-listed Patient Safety Organization (PSO) and conducting peer review optional in PY 1. Should the Secretary of Health and Human Services terminate the renewal of the PHE prior to January 1, 2022, then the EUC policy will also be terminated, and quality measure and CDE reporting will be mandatory.

As a result of the flexibility granted through the EUC, RO participants will not have to comply with these reporting requirements in order to be deemed eligible for Advanced APM status and to receive the 5 percent bonus associated with Advanced APM participation.

Other key changes include:

• The baseline period is 2017-2019.
• The Discount Factors are 3.5 and 4.5 percent, for the professional component and technical component, respectively. The discount factor reserves savings for Medicare and reduces beneficiary cost-sharing.
• Brachytherapy is not included under the RO Model; it will still be paid fee-for-service (FFS). Brachytherapy sources will continue to be paid separately in addition to the procedure.
• Liver cancer will not be included in the RO Model as it does not satisfy the model’s cancer inclusion criteria.
• The RO Model will include an Extreme and Uncontrollable Circumstances policy. This policy will provide CMS the flexibility to delay the model performance period, reduce administrative burden of RO Model participation, including reporting requirements, and adjust the payment methodology as necessary.
• There are three tracks related to status under the Quality Payment Program (QPP), based on RO participant type and compliance with RO Model requirements. CMS finalized with modification to define Track Three of the RO Model.
  • Track One will be for RO participants who comply with all RO requirements, including certified electronic health record technology (CEHRT). Track One RO participants will be considered Advanced APMs and MIPS APMs. Only Track One is eligible for the 5 percent bonus payment.
  • Track Two will be for those RO participants who comply with all RO Model requirements except for CEHRT, therefore making these participants MIPS APMs only.
  • Track Three will be for all other RO participants who will not be considered either an Advanced APM or MIPS APM.

CMS estimates that on net the Medicare program would save $150 million over the 5-year model performance period, which is a modest decrease from the anticipated $160 million in savings anticipated in the 2022 proposed rule.

CMS estimates that on average, Medicare payments to Physician Group Practices will increase by 6.3 percent and Medicare payments to Hospital Outpatient Departments will decrease by 9.9 percent over the duration of the model demonstration period. The shifts in payment are due to the site neutral payment methodology that the RO Model seeks to test, which increases PGP Medicare FFS payments and decreases HOPD Medicare FFS payments. These estimates do not include changes to the Clinical Labor Price inputs that were included in the 2022 Medicare Physician Fee Schedule (MPFS) final rule. According to the final rule, the clinical labor price input updates would result in an increase of 10.2 percent for PGPs and a decrease of 11.3 percent for HOPDs over the lifetime of the RO Model.

The concerns of the radiation oncology community were largely ignored in the final rule. ASTRO and other stakeholders are asking Congress to intervene before the demonstration model begins on January 1^st.

For additional information visit the Center for Medicare and Medicaid Innovation (CMMI) RO Model website at: https://innovation.cms.gov/innovation-models/radiation-oncology-model

For additional information including detailed Medicare rule summaries, 2022 final payments and impacts visit the ABS website.