CMS Releases Calendar Year 2021 Outpatient Prospective Payment System and Ambulatory Surgical Center Final Rule

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On December 2, 2020, CMS issued the calendar year (CY) 2021 Medicare Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule. Through these policy changes, CMS seeks to provide Medicare beneficiaries and their healthcare providers with more choices to obtain care at a lower cost in an outpatient setting. The provisions of the final rule are effective January 1, 2021.

Through the final rule, CMS is eliminating the Inpatient Only (IPO) list over the course of three calendar years, beginning with the removal of 266 musculoskeletal related services. When removed from the IPO list, these procedures will become eligible for Medicare when provided in a hospital outpatient setting when outpatient care is appropriate. These services will continue to be reimbursed when furnished in the inpatient setting if inpatient care is deemed appropriate by the physician. Procedures removed from the IPO list will now be indefinitely exempted from: (i) site-of-service claim denials under Medicare Part A; (ii) Beneficiary and Family-Centered Care-Quality Improvement Organization (BFCC-QIO) referrals to Recovery Audit Contractors (RACs) for noncompliance with the 2-Midnight rule; and (iii) RAC reviews for “patient status,” i.e., site of service. CMS is additionally removing thirty-two additional HCPCS codes from the IPO list for CY 2021.

CMS also finalized the addition of eleven procedures to the ASC covered procedures list (CPL), including total hip arthroplasty. CMS is revising the criteria that it uses to add covered surgical procedures to the ASC CPL, providing that previously used criteria will be considered by physicians when deciding whether a specific beneficiary should receive a covered surgical procedure in an ASC. CMS additionally finalized a 2.4 percent increase in reimbursements to ASCs in 2021.

In addition, CMS is continuing to pay for drugs and biologicals acquired under the 340B program at an adjusted amount of the average sales prices minus 22.5 percent. CMS is continuing to exempt Rural Sole Community Hospitals, PPS-exempt cancer hospitals and children’s hospitals from the 340B payment policy.

Despite the payment cuts for 340B drugs, hospitals should see increased reimbursements for services provided in accordance with the Outpatient Department (OPD) fee schedule. CMS is increasing the payment rates under the OPPS by an OPD fee schedule increase factor of 2.4 percent. CMS estimates that total payments to OPPS providers for CY 2021 will amount to $83.888 billion, approximately $7.541 billion compared to estimated CY 2020 OPPs payments.

CMS has additionally removed certain provisions in the expansion exception process for hospitals that qualify as “high Medicaid facilities.” In particular, CMS removed: (i) the limit on the number of additional operating rooms, procedure rooms, and beds that can be approved in an exception; and (ii) the limitation that the expansion must occur only in facilities on the hospital’s main campus. A “high Medicaid facility” may now apply for an exception for the prohibition on facility expansion more than once every two years from the time that CMS makes a decision, provided that the hospital submits only one expansion exception request at a time.

The final rule additionally updates the methodology utilized to calculate the Overall Hospital Quality Star Ratings. The changes to the methodology are intended to increase comparability between hospital star ratings, as well as predictability of the ratings themselves. CMS is also adding critical access hospitals and Veterans Health Administration hospitals to the Overall Star Rating.

CMS is adding two categories of services to the prior authorization process for hospital outpatient departments beginning for dates of services on or after July 1, 2021. These categories include cervical fusion with disc removal and implanted spinal neurostimulators. Effective January 1, 2021, CMS is additionally approving five device pass-through applications for BAROSTIM NEO™ System, Hemospray® Endoscopic Hemostat, the SpineJack® Expansion Kit, CUSTOMFLEX® ARTIFICIALIRIS, and EXALT™ Model D Single-Use Duodenoscope.

The final rule is available here, and the CMS fact sheet is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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