On December 2, 2020, CMS released its CY 2021 Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center (“ASC”) Payment System final rule. In some areas (e.g., payment methodology for 340B purchased drugs), CMS commented on the need to maintain consistent and reliable payment for the remainder of the public health emergency to give hospitals some certainty. In other areas, CMS extended prior policies to promote patient choice and site neutrality (e.g., elimination of the inpatient only list, additions to the ASC covered procedures list, etc.). A summary of the key OPPS updates follows below.
- Payment Methodology for 340B Purchased Drugs
CMS continued its current policy of paying an adjusted amount of Average Sale Price (“ASP”) minus 22.5 percent for drugs and biologicals acquired under the 340B program. Rural sole community hospitals, PPS-exempt cancer hospitals, and children’s hospitals continue to be exempt from the 340B payment policy.
- Elimination of the Inpatient Only List
CMS is eliminating the Inpatient Only (“IPO”) list over the course of three calendar years, with the list to be completely phased out by 2024. CMS will instead defer to physicians’ clinical knowledge and judgement to appropriately determine whether a procedure can be performed in a hospital outpatient setting or whether inpatient care is required based on patient needs and preferences. This will make procedures eligible to be paid by Medicare in the hospital outpatient setting when outpatient care is appropriate. To start, for CY 2021, CMS removed 266 musculoskeletal-related services and some additional related anesthesia codes.
Also, CMS finalized its policy that procedures removed from the IPO list on or after January 1, 2021 will be indefinitely exempted from site-of-service claim denials under Medicare Part A, eligibility for Beneficiary and Family-Centered Care Quality Improvement Organization (“BFCC-QIO”) referrals to RACs for noncompliance with the 2-Midnight rule, and RAC reviews for “patient status” (e.g., site-of-service), until the procedure is more commonly performed in the outpatient setting.
- ASC Covered Procedures List
CMS added 11 procedures to the ASC covered procedures list (“CPL”) under its standard review process. This includes total hip arthroplasty (CPT 27130). CMS also revised the criteria for adding surgical procedures to the ASC CPL. Based on changes to the regulatory criteria, CMS also added 267 procedures to the ASC CPL.
- Physician-Owned Hospitals
CMS eased restrictions on expansion of physician-owned hospitals. The Affordable Care Act amended the rural provider and whole hospital exceptions to provide that a physician-owned hospital may not increase the number of operating rooms, procedure rooms, and beds beyond that for which the hospital was licensed on March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in effect as of this date, but did have a provider agreement in effect on December 31, 2010, the effective date of such provider agreement), unless CMS has granted an exception to the prohibition on expansion.
For CY 2021, CMS removed various provisions in the expansion exception that are applicable to hospitals qualifying as a “high Medicaid facility”. Specifically, CMS removed:
- The cap on the number of additional operating rooms, procedure rooms, and beds that can be approved in an exception; and
- The restriction that expansion must occur only in facilities on the hospital’s main campus.
Hospitals qualifying as a “high Medicaid facility” may apply for an exemption more than once every two years from the time of a decision by CMS, so long as the hospital submits only one expansion exception request at a time.
- OPPS and ASC Payment Increases
For facilities meeting applicable quality reporting requirements, CMS increased OPPS and ASC payment rates by 2.4%.
- Prior Authorization for Various Covered Outpatient Department Services
CMS added the following two categories of services to the prior authorization process for hospital outpatient departments (for dates of service on or after July 1, 2021): cervical fusion with disc removal and implanted spinal neurostimulators.
- Hospital and Critical Access Hospital Reporting
CMS finalized new reporting requirements for hospitals to provide information on inventory of therapeutics to treat COVID-19. This information will assist in further allocation of therapeutics to hospitals needing additional inventory to care for patients and to meet surge needs. The reporting requirements are effective January 1, 2021 and include:
- The hospital’s current inventory supplies of any COVID-19-related therapeutics that have been distributed and delivered to the hospital under the authority and direction of the HHS Secretary; and
- The hospital’s current usage rate for any COVID-19-related therapeutics that have been distributed and delivered to the hospital under the authority and direction of the HHS Secretary.
In addition, CMS finalized a new requirement for hospitals to report information on acute respiratory illness (e.g., seasonal influenza, influenza-like illness, and severe acute respiratory infection).
8. Updates to Methodology Used to Calculate Overall Hospital Quality Star Rating
A hospital’s Overall Star Rating is a summary of certain hospital quality information based on publicly available quality measure results reported through CMS programs. CMS assigns hospitals between one and five stars. CMS updated certain parts of the methodology used to calculate the Overall Star Rating, including the elements listed below. According to CMS, the updates will simplify the methodology, improve predictability of Overall Star Rating, and increase comparability of Overall Star Rating.
- Combine three existing process measure groups into one new Timely and Effective Care group (the Overall Star Ratings will consist of five groups: Mortality, Safety of Care, Readmission, Patient Experience, Timely and Effective Care);
- Use of a simple average of measure scores instead of the Latent Variable Model;
- Standardize measure group scores (this is a way to make varying scores directly comparable by putting them on a common scale);
- Change in reporting threshold to receive an Overall Star Rating – hospitals must report at least three measures for three measures groups (one of the groups must specifically be the Mortality or Safety of Care outcome groups); and
- Peer grouping hospitals such that after the minimum reporting thresholds are applied, hospitals would be grouped into one of three peer groups based on the number of measure groups for which they report at least three measures – three measure groups, four measure groups, and five measure groups.
For any questions regarding the CY 2021 OPPS and ASC Payment System final rule, or for organizational assistance with any other healthcare regulatory or operational matter, please call 708-478-7030.
Published: December 7, 2020