OPPS Final Rule Eliminates Inpatient Only List

The 2021 OPPS final rule seeks to increase patient choice and lower out-of-pocket costs.

On Dec. 2, 2020, the Centers for Medicare & Medicaid Services (CMS) released the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule for calendar year (CY) 2021. The final rule aims to provide Medicare recipients with more choices when it comes to surgery, including lower-cost options.

The rule will put decisions about the best site for care in the hands of the physicians, allowing more procedures to be done in an outpatient setting when appropriate. “It allows doctors and patients to make decisions about the most appropriate site of care, based on what makes the most sense for the course of treatment and the patient without micromanagement from Washington,” said CMS Administrator Seema Verma.

CMS has finalized most of its proposed policies or continued with current policies, which should help hospitals quickly comply with the changes.

Eliminating the IPO List

CMS finalized its proposal to eliminate the inpatient only (IPO) list — a list of services that require inpatient care due to the nature of the procedure and health of the patient. This list of 1,700 procedures, for which Medicare will only pay when performed in the hospital inpatient setting, will be completely phased out over the next three years; beginning with some 300 primarily musculoskeletal-related services in 2021. CMS deemed the list no longer necessary based on the evolution of medical practices and innovations.

This will make these procedures eligible to be paid by Medicare whether they are furnished in the hospital outpatient or inpatient setting, as deemed appropriate by a physician. CMS surmises that the scheduling of more outpatient surgeries will help reduce the burden on hospitals and ambulatory surgical centers — a great boon for hospitals currently facing surges in patients with complications from COVID-19.

Additionally, CMS will finalize its policy to exempt procedures that have been removed from the IPO list. Services removed from the list become subject to the two-midnight rule, which determines whether inpatient admission is reasonable and necessary for purposes of payment under Medicare Part A. The exemption will last until Medicare data indicates that these procedures are more commonly billed (more than 50 percent of the time) in the outpatient setting. The rule ensures that newly removed services utilized by inpatients cannot be denied on a claim — giving providers time to update their systems and procedures to come into compliance.

Additions to the ASC Covered Procedures List

CMS finalized the addition of 11 procedures to the ASC covered procedures list (CPL) under the standard review process, most notably total hip arthroplasty (CPT® code 27130).

CMS also proposed eliminating five of the general exclusion criteria used to add covered surgical procedures to the CPL. Using the revised criteria, CMS is considering adding an additional 267 surgical procedures to the CPL list in CY 2021. See the final rule (CMS-1736-FC) on CMS’ website for the proposed list of codes.

OPPS Payment Methodology for 340B Purchased Drugs

Section 340B of the Public Health Service Act allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices. In the 2021 final rule, CMS says it will reduce hospital reimbursement under the 340B program and pay the average sales price (ASP) minus 22.5 percent for 340B-acquired drugs. The 340B payment policy continues to exempt rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals.

Patients Over Paperwork

CMS is also set to remove certain restrictions under its current methodology to simplify the Overall Hospital Quality Star Rating (Star Rating) beginning in 2021. According to CMS, the changes being finalized will:

• Simplify the methodology by reducing the total number of measure groups and create an explicit approach to calculating measure group scores;
• Improve predictability of the Star Rating over time through a simple average of measure scores with equal measure weightings that hospitals can better anticipate; and
• Improve the comparability of the Star Rating through updating the reporting threshold, and peer grouping.

CMS is also including critical access hospitals (CAHs) in the Star Rating, as well as veterans’ health administration (VHA) hospitals.

Payment Updates

Based on the CY 2019 final rule, CMS will continue to apply the hospital market basket update to ASC payment rates through CY 2023. For CY 2021, CMS is increasing OPPS and ASC payment rates by 2.4 percent. This increase factor is based on the final hospital inpatient market basket percentage increase of 2.4 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS) and includes no multi-factor productivity (MFP) adjustment.

COVID-19 Addition

Finally, to address the ongoing public health emergency, CMS is finalizing a new requirement for the nation’s 6,200 hospitals and CAHs to report information about their inventory of therapeutics to treat COVID-19. This reporting will provide the information needed to track and accurately allocate therapeutics to the hospitals that need additional inventory to care for patients and meet surge needs.

For More Information: 52571 opps final rule eliminates inpatient only list