Health Reform WK-EDGE OPPS final rule eliminates inpatient-only list, maintains reimbursement rate for 340B drugs
Friday, December 11, 2020

OPPS final rule eliminates inpatient-only list, maintains reimbursement rate for 340B drugs

By Sheila Lynch-Afryl, J.D., M.A.

CMS added new COVID-related reporting requirements for hospitals and eliminated the inpatient-only list over the next three years.

Total payments under the hospital outpatient prospective payment system (OPPS) for calendar year (CY) 2021 will be approximately $83.9 billion, an increase of $7.5 billion compared to estimated CY 2020 OPPS payments. In the advance release of the OPPS final rule, CMS also removed requirements in 42 C.F.R. §411.362 for "high Medicaid facilities" that are not included in the Stark law and updated the methodology used to calculate the Overall Hospital Quality Star Rating beginning in 2021.

Annual update. For CY 2021, CMS will increase the payment rates under the OPPS and the ambulatory surgical center (ASC) PPS by an increase factor of 2.4 percent, which is based on the hospital inpatient market basket increase of 3.0 percent. CMS estimated that total payments to ASCs for CY 2021 will be approximately $5.42 billion, an increase of $120 million compared to estimated CY 2020 payments.

Inpatient-only list. CMS will eliminate the inpatient-only (IPO) list over three years, beginning in CY 2021 with the removal of 266 musculoskeletal-related services. It also removed 32 HCPCS codes from the list for 2021. CMS will exempt procedures that are removed from the IPO list beginning on January 1, 2021 from site-of-service claim denials, Beneficiary and Family-Centered Care Quality Improvement Organization referrals to the recovery audit contractor (RAC) for persistent noncompliance with the two-midnight rule, and RAC reviews for "patient status" until these procedures are more commonly billed in the outpatient setting.

340B-acquired drugs. For CY 2021, CMS will continue to pay for drugs acquired under the 340B program at average sales price (ASP) minus 22.5 percent, a payment rate that CMS implemented beginning in 2018. Rural sole community hospitals, PPS-exempt cancer hospitals, and children’s hospitals are exempt from this payment policy. In August the D.C. Circuit ruled that CMS had the authority to change its reimbursement policy for separately payable drugs and biologics acquired through the 340B Program from ASP plus 6 percent to ASP minus 22.5 percent (see HHS had the authority to reduce 340B SCOD hospital rates by 28.5 percent, August 3, 2020). CMS had proposed for CY 2021 to pay for drugs acquired under the 340B program at ASP minus 34.7 percent, plus an add-on of 6 percent of the product's ASP, for a net payment rate of ASP minus 28.7 percent (see CMS proposes $5B OPPS increase, modifications to reimbursement for 340B-acquired drugs, August 12, 2020).

Reporting requirements. Amended 42 C.F.R. §§482.42 and 485.640 require hospitals and critical access hospitals (CAHs) to report the following information during the COVID-19 public health emergency (PHE): (1) the hospital’s current usage rate and inventory of any COVID-19-related therapeutics that have been distributed and delivered to the hospital; and (2) acute respiratory illness (including, but not limited to, seasonal influenza virus, influenza-like illness, and severe acute respiratory infection).

Radiation Oncology Model. In September CMS announced the Radiation Oncology Model, which will test whether bundled, prospective, site-neutral payments to radiotherapy providers can reduce Medicare expenditures for cancer treatment (see CMS wraps up a new bundled payment for radiotherapy, September 18, 2020). While the model was set to begin January 1, 2021, CMS revised the model's performance period to begin July 1, 2021 and end December 31, 2025, to ensure that participation during the COVID-19 PHE does not further strain participants' capacity.

Supervision for outpatient therapeutic services. To be consistent with the requirement that applies for most outpatient hospital therapeutic services, CMS changed the minimum level of supervision for non-surgical extended duration therapeutic services in hospitals and CAHs to general supervision for the entire service. This includes the initiation portion of the service, for which CMS had previously required direct supervision. In addition, CMS amended 42 C.F.R. §410.27 to permit direct supervision for pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac rehabilitation services through audio/video real-time communications technology until the end of the calendar year in which the PHE ends or December 31, 2021, whichever is later.

Quality reporting. While CMS did not add or remove any measures for the hospital outpatient or ASC quality reporting programs, it amended 42 C.F.R. §§416.310 and 419.46 to update to reporting requirements and codify current procedures.

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