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CMS Issues Outpatient Prospective Payment System Final Rule

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The Centers for Medicare & Medicaid Services (CMS) has issued its calendar year (CY) 2021 outpatient prospective payment system (OPPS) final rule

In addition to annual payment updates, CMS maintains its current payment methodology for 340B purchased drugs, eliminates the inpatient-only (IPO) list over three years, expands the list of outpatient services subject to prior authorization, and revises the overall hospital star ratings methodology. The final rule also delays implementation of the radiation oncology model until July 1, and includes a new reporting requirement for hospitals and critical access hospitals to report information about their inventory of COVID-19 therapeutics  The final rule is effective Jan. 1. 

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 finalizes an annual payment adjustment that includes a market-basket update of 2.4%, with a 0% adjustment for multi-factor productivity. These payment adjustments, in addition to other changes in the rule, are estimated to result in an overall increase of 2.4% for OPPS payments, or approximately $1.6 billion, compared to CY 2020.  
  • 340B Drug Payment Policy: In a change from the proposed rule, CMS will maintain its current payment policy for drugs purchased through the 340B program at average sales price (ASP) minus 22.5%. CMS had proposed an additional cut that would have established a payment rate of ASP minus 28.7%. The payment policy also applies 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 continue to be excluded from the payment policy.   
  • IPO List: CMS finalizes the phased elimination – over the course of three years – of the IPO list, beginning with the removal of approximately 300 musculoskeletal-related services (including total hip arthroplasty) in CY 2021. In response to comments from CHA, CMS is modifying its proposal and will indefinitely exempt procedures that are removed from the IPO list under the OPPS beginning on Jan. 1, 2021, from site-of-service claim denials, Beneficiary and Family-Centered Care Quality Improvement Organization referrals to recovery audit contractors (RACs), and RAC reviews for patient status. The exemption will last until sufficient Medicare claims data indicate a procedure is more commonly performed in the outpatient setting than the inpatient setting. 
  • Addition of New Service Categories for OPPS Authorization Process: CMS finalizes the addition of 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 finalizes significant changes to the hospital overall star ratings methodology starting in CY 2021. Among the changes, CMS will calculate measure group scores using a simple average of the measures in the group – eliminating the use of latent variable modeling – and will 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.  
  • Radiation Oncology Model: Due to the ongoing COVID-19 public health emergency, CMS revises the radiation oncology model performance period to begin July 1, 2021, a delay from the original Jan. 1, 2021, start date.  
  • Additional COVID-19 Hospital Reporting Requirements: CMS establishes – via an interim final rule – additional reporting requirements for hospitals and critical access hospitals (CAHs), as a condition of participation in Medicare and Medicaid. CMS will now require hospitals and CAHs to report data elements that must include, but not be limited to, the following: (1) the hospital’s (or the CAH’s) current inventory of any COVID-19-related therapeutics that have been distributed and delivered to the hospital (or CAH); and (2) the hospital’s (or the CAH’s) current usage rate for any COVID-19-related therapeutics. In addition, CMS will require hospitals and CAHs to report information in a standardized format on acute respiratory illness (including, but not limited to, seasonal influenza virus, influenza-like Illness, and severe acute respiratory infection) for the duration of the public health emergency.