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CMS Releases CY 2021 Outpatient Prospective Payment System Final Rule

December 4, 2020

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CONTACTS
Andrew Amari, Hospital Policy and Regulatory Specialist

The Centers for Medicare and Medicaid Services (CMS) released the Calendar Year (CY) 2021 Outpatient Prospective Payment System (OPPS) final rule with comment period on Dec. 2. 

The AAMC submitted comments on a number of policies in the proposed rule this past October [see Washington Highlights, Oct. 9]. Provisions of the final rule with comment period are effective Jan. 1, 2021, unless otherwise noted in the rule. CMS also included an interim final rule with comment as part of the finalized rule. 

Notably, for CY 2021, CMS will continue to reimburse 340B-acquired drugs at the average sales price (ASP) minus 22.5%, instead of reducing payment based on a spring 2020 survey sent to 340B hospitals during the public health emergency (PHE). Additionally, the CMS is finalizing the Medicare Conditions of Participation (CoP) requirement that hospitals report COVID-19 and influenza data. The final rule also announces the closure of two teaching hospitals — Westlake Hospital and Astria Regional Medical Center — and the opportunity to apply for available slots through rounds 18 and 19 of the section 5506 slot redistribution process.  

Listed below are provisions of importance to AAMC member institutions.

Payment Provisions

Payment Update. Increase OPPS payment rates for CY 2021 by 2.4% for hospitals that successfully meet the hospital outpatient reporting requirements. 

340B-acquired Drugs. Continue current policy to pay for drugs acquired under the 340B program at the ASP minus 22.5%. However, rural sole community hospitals, prospective payment system-exempt cancer hospitals, and children’s hospitals continue to be exempted from the 340B payment policy for CY 2021. CMS notes that it may still modify payment rates based on the 340B hospital survey in future rulemaking.

COVID-19 and Influenza Reporting. stablish new reporting requirements in hospital and critical access hospitals CoPs for tracking COVID-19 therapeutic inventory and usage. Tracking of influenza incidence and impact is also required during the COVID-19 PHE.

Site Neutral. Continue reduced reimbursement rates for hospital outpatient clinic visit services (HCPCS code G0463) when furnished in excepted off-campus provider-based departments. 

Wage Index. Use the fiscal year 2021 Inpatient Prospective Payment System post-reclassified wage index for urban and rural areas, including the application of the Office of Management and Budget wage index delineations, to determine the wage adjustments for both the OPPS payment rate and the copayment standardized amount for CY 2021.

Changes to Level of Supervision. Establish general supervision as the minimum required supervision level for all nonsurgical extended duration therapeutic services, including the initiation portion of the service. Permit direct supervision requirement of pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac rehabilitation services through use of the virtual presence of the physician through audio/video real-time communications technology, subject to the clinical judgment of the supervising physician until the end of the calendar year in which the PHE ends or Dec. 31, 2021, whichever comes last.

Ambulatory Surgical Center (ASC) Covered Surgical Procedures. Add 11 procedures to the ASC covered procedures list (ASC-CPL), including total hip arthroplasty. Additionally, revise current criteria used to add procedures to the ASC-CPL and convert criteria to “factors” that physicians will consider in deciding whether a specific beneficiary should receive a covered surgical procedure in an ASC. Under the revised criteria, 267 surgical procedures will be added to the list in CY 2021. Furthermore, institute a “notification process” through which entities can inform the CMS of surgical procedures it believes can be added to the ASC CPL.

Physician-owned Hospitals. Remove several regulatory requirements for high Medicaid facilities seeking to meet the “whole hospital” or “rural provider” exceptions to the physician self-referral law, otherwise known as the “Stark Law.” Additionally, for purposes of determining the baseline number of beds in meeting either exception, a bed will be counted if it is considered licensed for purposes of state licensure, regardless of the specific number of beds identified on the physical license issued to the hospital by the state.

Inpatient Only (IPO) List. Eliminate the IPO list over three years beginning in CY 2021. Procedures removed from the IPO list beginning Jan. 1, 2021, will be indefinitely exempted from site-of-service claim denials, eligibility for Beneficiary and Family-Centered Care-Quality Improvement Organization referrals to Recovery Audit Contractors (RACs) for noncompliance with the two-midnight rule, and RAC reviews for “patient status” (otherwise referred to as “site-of-service”). This exemption will last until Medicare claims data indicates that a procedure is more commonly performed in the outpatient setting than the inpatient setting.

Hospital Outpatient Department (HOPD) Prior Authorization. Require prior authorization for two additional categories of services — cervical fusion with disc removal and implanted spinal neurostimulators — performed in the HOPD beginning for dates of service on or after July 1, 2021. 

Hospital Closures and Opportunity to Apply for Available Slots. Initiate rounds 18 and 19 of CMS’ section 5506 application and selection process to redistribute slots from two closed hospitals: Westlake Hospital in Melrose Park, Illinois, and Astria Regional Medical Center in Yakima, Washington. Hospitals have the opportunity to apply for available slots using the Section 5506 application and can find additional information on applying for the slots.

Quality Provisions

Overall Hospital Quality Star Rating Methodology for Public Release in CY 2021. Codify the Star Ratings and its methodology at 42 CFR § 412.190. Largely finalize changes as proposed, including:

  • Introduce a peer grouping approach based on the number of measure groups a hospital has been scored on (three measure groups, four measure groups, or five measure groups).
  • Combine process measure groups into one measure group (now called Timely and Effective Care) and retain four existing measure groups (Mortality, Safety of Care, Readmission, and Patient Experience) to calculate ratings from five measure groups instead of seven.
  • Apply a minimum threshold for ratings, requiring at least three measures in three measure groups — one of which must be Mortality or Safety of Care.
  • Use a simple average of measure scores to calculate measure group scores (instead of latent variable modeling).
  • Begin to include Veterans Health Administration hospitals beginning in CY 2023. Details on the inclusion of VHA hospitals in the ratings will be provided in future rule-making.

Notably, CMS did not finalize its proposal to stratify the readmissions group by proportion of dual-eligible patients, similar to the stratification in the Hospital Readmissions Reduction Program. CMS notes that it will continue to study the issue in order to increase comparability of the Star Ratings.

CMS retained the following aspects of the current system and methodology, as proposed:

  • Adopt an annual publication cycle, using data posted to the Care Compare website.
  • Publicly display measure group level information and the overall rating.
  • Use K-means clustering to assign a rating between one and five stars.
  • Apply z-standardization to measure scoring prior to being combined into an aggregate measure score.
  • Include Critical Access Hospitals that elect to submit hospital quality measure data sufficient to meet the minimum threshold for receiving a rating.

CMS reiterated its intent to update the Star Ratings in CY 2021 based upon the updated methodology. However, CMS announced on Nov. 10 that it will not update the Star Ratings with the January 2021 refresh to the data reported publicly on the Care Compare website.

Hospital Outpatient Quality Reporting Program. Finalize technical changes that generally do not change hospital responsibilities or burdens, including revising codification of the program to include statutory authority, clarifying applicability of data submission and reconsideration deadlines that fall on nonworking days, and expanding the review and corrections policy for web-based measures. The CMS did not propose, and thus did not finalize, any changes to the measures for the program.

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