December 7, 2020

On December 2, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued its annual Medicare Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center (“ASC”) Payment System final rule.  Highlights of the CY 2021 OPPS/ASC Payment System final rule include, but are not limited to, commencement of the elimination the Inpatient Only (IPO) list to be accomplished over a three-year period, the addition of procedures to the ASC Covered Procedures List (“CPL”), updated payment rates for both hospitals and ASCs, changes applicable to physician-owned hospitals that are considered “high Medicaid facilities,” and the continuation of the 340B Program.    

In the CY 2021 OPPS/ASC Payment System final rule, CMS finalized its proposal to begin the phasing out of the IPO list over a three-year period, beginning with approximately 300 musculoskeletal-related services, with the list phased out by CY 2024.  The procedures on the current IPO list will become eligible for payment by Medicare in the hospital outpatient setting when outpatient care is appropriate, as determined by the physician. 

For CY 2021, CMS is adding eleven procedures to the ASC CPL under its standard review process, including total hip arthroplasty (CPT 27130).  CMS is also revising its criteria utilized to add procedures to the ASC CPL; and, under the revised criteria, CMS is adding an additional 267 surgical procedures to the ASC CPL beginning in CY 2021.

CMS is updating the OPPS payments rates for hospitals that meet applicable quality reporting requirements by 2.4%.  The ASC rates for CY 2021 will also be increased by 2.4% for ASCs meeting relevant quality reporting requirements. 

CMS removed what it deems “unnecessary regulatory restrictions” from 42 C.F.R. § 411.362 related to the expansion exception process that are applicable to physician-owned hospitals that qualify as “high Medicaid facilities.”  In particular in the final rule and with respect to a hospital that qualifies as a high Medicaid facility, CMS eliminated (a) the cap on the number of additional operating rooms, procedure rooms, and beds that may be approved in an exception, and (b) the restriction that an expansion only occur in facilities on the hospital’s main campus. In addition, a high Medicaid facility may request an exception from the prohibition on facility expansion at any time, provided that it has not submitted another request for an exception to the prohibition on facility expansion for which CMS has not issued a decision. 

CMS will continue paying hospitals for drugs acquired under the 340B Program at the average sale price minus 22.5%. The policy continues to exempt rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals. This policy has been subject to ongoing litigation but was upheld by the United States Court of Appeals for the D.C Circuit Court on July 31, 2020.

For additional information on the CY 2021 OPPS/ASC Payment System final rule, including facts on other policy changes, please visit here.  To view an unpublished PDF version of the CY 2021 OPPS/ASC Payment System final rule, see here.