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CMS Issues CY 2021 OPPS Proposed Rule

For CEOs, CFOs, government relations, quality & patient safety, and finance & reimbursement staff 

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The Centers for Medicare & Medicaid Services (CMS) has issued its calendar year (CY) 2021 outpatient prospective payment system (OPPS) proposed rule. In addition to annual payment and quality updates, CMS proposes significant cuts for drugs purchased under the 340B drug savings program, would eliminate the inpatient-only (IPO) list over three years, expand the list of outpatient services subject to prior authorization, and make significant changes to the hospital star ratings methodology.

Comments on the proposed rule are due Oct. 5. 

A CMS fact sheet provides additional information, and CHA will provide members with a detailed summary of the proposed rule in the coming weeks. Key proposals are highlighted below:  

Annual Payment Update: CMS proposes an annual payment adjustment that includes a market-basket update of 3%, as well as a productivity cut of 0.4 percentage points. These payment adjustments, in addition to other proposed changes in the rule, are estimated to result in an overall increase of 2.6% for OPPS payments, compared to CY 2020. 

340B Drug Payment Policy: CMS proposes to pay certain 340B hospitals for drugs purchased through the 340B program at Average Sales Price (ASP) minus 34.7%, plus an add-on of 6% of the product’s ASP, for a net payment rate of ASP minus 28.7%. Currently, these hospitals are currently paid for 340B drugs at ASP minus 22.5%. The new proposed payment is based on the results of the Hospital Acquisition Cost Survey for 340B-Acquired Specified Covered Drugs. The proposed payment policy would also apply to 340B-acquired drugs furnished in non-grandfathered off-campus provider-based departments and to biosimilar drugs and other drugs without an ASP purchased through the 340B program. Critical access hospitals, rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals would continue to be excluded from the payment policy.  

Inpatient-Only List: CMS proposes a phased elimination – over the course of three years – of the IPO list. CMS proposes to begin with the removal of 266 musculoskeletal-related services (including total hip arthroplasty) in CY 2021. CMS also proposes to continue its two-year exemption from site-of-service claim denials, Beneficiary and Family-Centered Care Quality Improvement Organizations referrals to Recovery Audit Contractors (RACs), and RAC reviews for patient status for procedures that are removed from the IPO list under the OPPS beginning on Jan. 1, 2021. 

Addition of New Service Categories for OPPS Authorization Process: CMS proposes to add two new categories of services – cervical fusion with disc removal and implanted spinal neurostimulators – to the prior authorization process starting with dates of service on or after July 1, 2021.  

Hospital Overall Star Ratings: CMS proposes significant changes to the hospital overall star ratings methodology starting in CY 2021. Among the changes, CMS would calculate measure group scores using a simple average of the measures in the group, eliminating the use of latent variable modeling. CMS also proposes to calculate hospitals’ readmission measure group scores by placing them into one of five peer groups based on the proportion of dual-eligible patients that they treat, similar to the Hospital Readmissions Reduction Program methodology. Finally, CMS would place each hospital into one of three peer groups based on the number of measure groups it reports before determining the final overall star rating. 

Level of Supervision of Outpatient Therapeutic Services: CMS proposes to change the minimum default level of supervision for non-surgical extended duration therapeutic services, such as certain infusion services, to general supervision for the entire service, including the initiation portion of the service. Previously the initiation of these services required direct supervision, with the balance of the service requiring general supervision. CMS also proposes that direct supervision for pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac rehabilitation services would include virtual presence of the physician through audio/video real-time communications technology subject to the clinical judgment of the supervising physician. 

Physician-Owned Hospitals: CMS proposes to remove certain restrictions on the expansion of physician-owned hospitals for those that qualify as “high Medicaid facilities.”