The proposed rule for the CY 2021 Outpatient Prospective Payment System (“OPPS”) was recently released by CMS. The rule proposes to update policies and payment rates for services rendered in hospital outpatient departments (“HOPDs”) and ambulatory surgical centers (“ASCs”).

CMS is accepting public comments on the proposed rule until October 5, 2020. If you have any questions or would like to discuss in detail the proposed changes, please reach out to the experts at Advis.

If finalized, this rule could have considerable impact on reimbursements. It would take effect on January 1, 2021. A high-level summary follows below.

1. 340B Purchased Drugs Payment Methodology: The recent July 31, 2020 decision issued by the United States District Court for the District of Columbia overturned a lower court decision and held that the previous CY 2018 OPPS/ASC Final Rule cuts to 340B outpatient drug payments were legal.The CY 2021 OPPS/ASC Proposed Rule would further slash payment rates for 340B-acquired drugs: by an additional 6% in 2021 for safety net providers, resulting in a net payment loss of ASP minus 28.7%. CMS claim that this decision is based off a 340B hospital survey administered in the beginning of 2020.Rural sole community hospitals, some cancer hospitals, and children’s hospitals would continue to be exempt from the payment reductions so long as they continue to report a “TB” modifier for 340B-acquired drugs. This exception also applies to Critical Access Hospitals, which are not reimbursed under the OPPS.

2. Updates to OPPS and ASC Payment Rates:  CMS has proposed an OPPS payment rate boost for hospitals that meet quality reporting requirements by 2.6%. The Partial Hospitalization Program (PHP) would also receive an increase in payment rates for mental health services in HOPDs and Community Mental Health Centers (CMHCs). Overall OPPS payments to providers would increase approximately $7.5 billion.Similarly, if the proposed rule is finalized ASCs stand to receive a 2.6% pay bump for a total raise in payments of approximately $160 million. CMS has noted that updates to ASC payment rates are a direct effort to encourage site neutrality and migration of services from a hospital to a lower cost ASC when appropriate.

3. Elimination of Inpatient-Only List to Increase Choice and Site Neutrality: CMS has proposed a 3-year plan to completely phase out the inpatient-only list (“IPO”). By CY 2024, 300 musculoskeletal-related services would become eligible for Medicare payments in HOPDs. CMS has specifically solicited comment from external stakeholders regarding the feasibility of this 3-year transitional plan. It also requested comments on other procedures that could be removed from the IPO list and reimbursed in a HOPD with physician approval. CMS contends that the elimination of the IPO list would have positive long-term impacts regarding patient choice and site neutrality by allowing patients to seek care from a greater variety of providers at a lower cost to beneficiaries. CMS portends that moving forward the physician should use his or her 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.

4. Physician-Owned Hospitals: CMS has proposed a reduction of restrictions on facility expansion for physician-owned hospital (“POH”) with high shares of Medicaid patients. The lifted restrictions on high Medicaid POHs would include:

    • Removal of the existing cap on operating and procedures rooms; and
    • Removal of the current restriction that expansion can only occur in facilities located on the hospital’s main campus.

CMS has also proposed permitting high Medicaid facilities to request an expansion of capacity more frequently than once every 2 years. The increase would be limited to 200% of the baseline number of operating rooms, procedures, and beds. Furthermore, the determination of the number of beds within a facility be altered to include a licensed bed regardless of the number of beds listed on the physical license issued to the hospital.

5. ASC Covered Procedure List: ASC providers could expect to see an additional 11 procedures covered in their facilities. These procedures would include total hip replacements (CPT 27130) as well as an expansion of services that are payable in ASCs in an effort to provide beneficiaries with more low-cost health care choices. The 11 new CPT codes include: 0266T; 0268T; 0404T; 21365; 27130; 27412; 57282; 57425; C9764; C9766.CMS has also proposed two new methods for adding procedures to the Ambulatory Surgical Center-Covered Procedure List (“ASC-CPL”). In light of the recommendation of the removal of the IPO list (See, Section 3 above) the first proposal would involve soliciting recommendations from external stakeholders, like medical specialty societies and other members of the public, for procedures that may be suitable candidates to add to the ASC-CPL. CMS would provide new specific guidelines for nominating procedures for the ASC-CPL. The second proposed method would result in a more immediate impact to the CPL and would amend 42 CFR 416.166 to remove certain requirements to add a surgery to the ASC-CPL.

6. Updated to the Quality Star Rating Methodology: If finalized, the OPPS rule could initiate a streamlined overall hospital quality star rating system for the first time in 2021. The improved hospital quality star rating system would calculate ratings with less variables, including a decrease in the number of measure groups and a new approach to the dual-eligible population measure group. CMS has claimed the changes to the star rating system would simplify data collection for providers while also improving the rating system’s reliability.

In addition to the changes above, CMS has also provided updates to the following:

  • CMS has proposed refinements to the current Hospital Outpatient Quality Reporting (“QR”) Program as well as the ASC QR Program that are in line with efforts to shift the health care delivery system to a value-based model;
  • Establishment of new comprehensive APCs – C-APC 5378 (Level 8 Urology and Related Services) and C–APC 5465 (Level 5 Neurostimulator and Related Procedure);
  • Approval of New Device Pass Through Payments – The following have received preliminary approval: CUSTOMFLEX® ARTIFICIALIRIS and EXALT™ Model D Single-Use Duodenoscope;
  • Changes to the Level of Supervision of Outpatient Therapeutic Services in Hospitals and Critical Access Hospitals;
  • Cancer Hospital Payment Adjustment – A target Price to Charge Ratio (“PCR”) of 0.89% rather than 1% be used to determine the CY 2021 cancer hospital payment adjustment to be paid at cost report settlement;
  • Addition of New Service Categories for Hospital Outpatient Department Prior Authorization Process, including: cervical fusion with disc removal and implanted spinal neurostimulators; and a
  • Proposal to exclude cancer-related protein-based MAAAs from the OPPS packaging policy and add them to the laboratory Date of Service (“DOS”) Policy.


The OPPS Proposed Rule could bring about critical changes for health care providers, particularly those who purchase 340B drugs.

For any questions regarding the CY 2021 Proposed Rule, or for any organizational assistance with any other health care regulatory or operational matter, please call 708.478.7030 or simply contact Advis.

Published: August 5, 2020