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Federal Register / Vol. 86, No. 147 / Wednesday, August 4, 2021 / Rules and Regulations psychiatric unit, the IPF receives the 1.19 adjustment factor as the variable per diem adjustment for the first day of the patients stay in the IPF. For FY
2022, we are finalizing our proposal to continue to retain the 1.31 adjustment factor for IPFs with qualifying EDs. A
complete discussion of the steps involved in the calculation of the ED
adjustment factors are in the November 2004 IPF PPS final rule 69 FR 66959
through 66960 and the RY 2007 IPF
PPS final rule 71 FR 27070 through 27072.

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F. Other Final Payment Adjustments and Policies 1. Outlier Payment Overview The IPF PPS includes an outlier adjustment to promote access to IPF
care for those patients who require expensive care and to limit the financial risk of IPFs treating unusually costly patients. In the November 2004 IPF PPS
final rule, we implemented regulations at 412.424d3i to provide a percase payment for IPF stays that are extraordinarily costly. Providing additional payments to IPFs for extremely costly cases strongly improves the accuracy of the IPF PPS in determining resource costs at the patient and facility level. These additional payments reduce the financial losses that would otherwise be incurred in treating patients who require costlier care, and therefore, reduce the incentives for IPFs to under-serve these patients. We make outlier payments for discharges in which an IPFs estimated total cost for a case exceeds a fixed dollar loss threshold amount multiplied by the IPFs facility-level adjustments plus the Federal per diem payment amount for the case.
In instances when the case qualifies for an outlier payment, we pay 80
percent of the difference between the estimated cost for the case and the adjusted threshold amount for days 1
through 9 of the stay consistent with the median LOS for IPFs in FY 2002, and 60 percent of the difference for day 10 and thereafter. The adjusted threshold amount is equal to the outlier threshold amount adjusted for wage area, teaching status, rural area, and the COLA adjustment if applicable, plus the amount of the Medicare IPF
payment for the case. We established the 80 percent and 60 percent loss sharing ratios because we were concerned that a single ratio established at 80 percent like other Medicare PPSs might provide an incentive under the IPF per diem payment system to increase LOS in order to receive additional payments.

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After establishing the loss sharing ratios, we determined the current fixed dollar loss threshold amount through payment simulations designed to compute a dollar loss beyond which payments are estimated to meet the 2
percent outlier spending target. Each year when we update the IPF PPS, we simulate payments using the latest available data to compute the fixed dollar loss threshold so that outlier payments represent 2 percent of total estimated IPF PPS payments.
2. Final Update to the Outlier Fixed Dollar Loss Threshold Amount In accordance with the update methodology described in 412.428d, we are finalizing our proposal to update the fixed dollar loss threshold amount used under the IPF PPS outlier policy.
Based on the regression analysis and payment simulations used to develop the IPF PPS, we established a 2 percent outlier policy, which strikes an appropriate balance between protecting IPFs from extraordinarily costly cases while ensuring the adequacy of the Federal per diem base rate for all other cases that are not outlier cases.
Our longstanding methodology for updating the outlier fixed dollar loss threshold involves using the best available data, which is typically the most recent available data. For this final rulemaking, the most recent available data are the FY 2020 claims. However, during FY 2020, the U.S. healthcare system undertook an unprecedented response to the PHE declared by the Health and Human Services Secretary on January 31, 2020 in response to the outbreak of respiratory disease caused by a novel new coronavirus that has been named SARS CoV 2 and the disease it causes, which has been named coronavirus disease 2019 abbreviated COVID19. Therefore, as discussed in section VI.C.3 of the FY 2022 IPF PPS
proposed rule 86 FR 19524 through 195266, we considered whether the most recent available year of claims, FY
2020, or the prior year, FY 2019, would be the best for estimating IPF PPS
payments in FY 2021 and FY 2022. We compared the two years claims distributions as well as the impact results, and based on that analysis determined that the FY 2019 claims appeared to be the best available data at this time. We refer the reader to section VI.C.3 of the FY 2022 IPF PPS proposed rule 86 FR 19524 through 195266 FR
for a detailed discussion of that analysis.
Comment: We received 2 comments on our analysis of the FY 2019 and FY
2020 claims in determining the best available data for estimating IPF PPS

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payments in FY 2021 and FY 2022. Both comments were supportive of our proposal to use the FY 2019 claims for this purpose. One of these commenters expressed appreciation for the proposed reduction in the outlier fixed dollar loss threshold. Another commenter agreed with our assessment that FY 2020
claims were heavily impacted by the intensity of the COVID19 pandemic.
Response: We appreciate these commenters support. Based on the revised impact analysis discussed in section VI.C.3 of this final rule, we continue to believe that the FY 2019
claims are the best available data for estimating FY 2021 and FY 2022
payments.
Final Decision: We are finalizing as proposed to use the June 2020 update of the FY 2019 IPF claims for updating the outlier fixed dollar loss threshold.
Based on an analysis of the June 2020
update of FY 2019 IPF claims and the FY 2021 rate increases, we believe it is necessary to update the fixed dollar loss threshold amount to maintain an outlier percentage that equals 2 percent of total estimated IPF PPS payments. We are finalizing our proposal to update the IPF
outlier threshold amount for FY 2022
using FY 2019 claims data and the same methodology that we used to set the initial outlier threshold amount in the RY 2007 IPF PPS final rule 71 FR 27072
and 27073, which is also the same methodology that we used to update the outlier threshold amounts for years 2008
through 2021. Based on an analysis of these updated data, we estimate that IPF
outlier payments as a percentage of total estimated payments are approximately 1.9 percent in FY 2021. Therefore, we are finalizing our proposal to update the outlier threshold amount to $14,470 to maintain estimated outlier payments at 2 percent of total estimated aggregate IPF payments for FY 2022. This final update is a decrease from the FY 2021
threshold of $14,630. In contrast, using the FY 2020 claims to estimate payments, the final outlier fixed dollar loss threshold for FY 2022 would be $22,720, which would have been an increase from the FY 2021 threshold of $14,630. We refer the reader to section VI.C.3 of this final rule for a detailed discussion of the estimated impacts of the final update to the outlier fixed dollar loss threshold.
We note that our use of the FY 2019
claims to set the final outlier fixed dollar loss threshold for FY 2022
deviates from what has been our longstanding practice of using the most recent available year of claims, which is FY 2020 data. However, we are finalizing this policy in a way that remains otherwise consistent with the
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