December 16, 2020

As we head toward the end of another year, there are the obligatory “year in review” offerings provided via television, print media and websites.  Some might argue that there are years we’d just as soon forget—2020 perhaps being one of them.  However, end-of-the-year stories aren’t always about the year that was, but about the year ahead.  That is especially true when it comes to the rash of releases by the federal government concerning changes for the healthcare industry slated for the new year.  In that spirit, we want to bring you a summary of a set of regulations that will impact hospitals in 2021.

On December 2, 2020, the Centers for Medicare & Medicaid Services (CMS) produced the 2021 OPPS/ASC Payment System Final Rule, which includes several changes affecting the nation’s healthcare facilities.  The highlights of this rule are summarized below.

Inpatient-Only List Eliminated

The Final Rule will eliminate the so-called Inpatient Only (IPO) list over a three-year transitional period, beginning with the removal of approximately 300 primarily musculoskeletal-related services.  These procedures will thus become eligible for Medicare payment in the hospital outpatient setting where appropriate, as well as continuing to be payable in the inpatient setting.

In addition, procedures removed from the IPO list may become subject to medical review based on the “2-midnight rule.”  In the 2020 OPPS/ASC Final Rule, CMS had finalized a two-year exemption from certain medical review activities related to the 2-midnight rule for procedures newly removed from the IPO list.  In the 2021 Rule, CMS finalized a policy which provides the following:

[P]rocedures removed from the IPO list beginning January 1, 2021 will be indefinitely exempted from site-of-service claim denials under Medicare Part A, eligibility for Beneficiary and Family-Centered Care-Quality Improvement Organization (BFCC-QIO) referrals to Recovery Audit Contractors (RACs) for noncompliance with the 2-midnight rule, and RAC reviews for “patient status” (that is, site-of-service). This exemption will last until we have Medicare claims data indicating that the procedure is more commonly performed in the outpatient setting than the inpatient setting.

ASC Covered Procedures List

For CY 2021, the Final Rule adds 11 procedures to the ambulatory surgery center (ASC) covered procedures list (CPL), including total hip arthroplasty (CPT 27130), under the standard review process.  In addition, CMS is adding 267 surgical procedures to the ASC CPL beginning in CY 2021, using a revised set of criteria.  This change should be closely monitored by hospital executives as it may portend a gradual movement of such procedures away from hospitals to ASCs, which will, in turn, have a negative impact on hospital revenues.

OPPS Payment Methodology for 340B Purchased Drugs

The Final Rule stipulates that the current 340B payment policy of paying ASP minus 22.5 percent for 340B-acquired drugs will be maintained.  The 340B payment policy continues to exempt rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals. According to a CMS press release, “these hospitals would continue to report informational modifier “TB” for 340B-acquired drugs, and continue to be paid ASP+6 percent.”

Updates to OPPS Payment Rates

CMS will update OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.4 percent.  The CY 2021 OPPS/ASC final rule updates Medicare payment rates for Partial Hospitalization Program (PHP) services furnished in hospital outpatient departments and Community Mental Health Centers (CMHCs). The PHP is a structured intensive outpatient program consisting of a group of mental health services paid on a per diem basis under the OPPS, based on PHP per diem costs.  CMS is finalizing the CY 2021 PHP APC per diem rates for CMHCs and HB PHPs based on the updated cost data for each provider type.

Device Pass-Through Applications

Effective January 1, 2021, CMS is approving five device pass-through applications that meet the criteria to be granted transitional pass-through status:  BAROSTIM NEO™ System, Hemospray® Endoscopic Hemostat, the SpineJack® Expansion Kit, CUSTOMFLEX® ARTIFICIALIRIS, and EXALT™ Model D Single-Use Duodenoscope.

Prior Authorization

According to CMS, the agency is “continuing to focus on reducing unnecessary increases in the volume of covered outpatient department services through the use of prior authorization.”  Accordingly, the Final Rule will require prior authorization for cervical fusion with disc removal, as well as implanted spinal neurostimulators, for dates of services on or after July 1, 2021.

Physician-Owned Hospitals

The press release provided by CMS concerning the Final Rule states the following:

An order for a physician-owned hospital to submit claims and receive Medicare payment for services referred by a physician owner or investor (or a physician whose family member is an owner or investor), the physician-owned hospital must satisfy all of the requirements of either the whole hospital exception or the rural provider exception to the physician self-referral law, commonly referred to as the “Stark Law.”

The agency notes that, “to qualify for the rural provider or whole hospital exception, a physician-owned hospital may not increase the aggregate number of operating rooms, procedure rooms, and beds above that for which the hospital was licensed on March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in effect as of March 23, 2010, but did have a provider agreement in effect on December 31, 2010, the effective date of such agreement), unless CMS has granted an exception to the prohibition on expansion.”  CMS further notes that “a hospital may request an exception to the prohibition on expansion of facility capacity using the process established in the CY 2012 OPPS/ASC final rule.”

The Final Rule removes certain provisions in the expansion exception process that are applicable to hospitals that qualify as “high Medicaid facilities.”  These include the following:

• The cap on the number of additional operating rooms, procedure rooms and beds that can be approved in an exception; and
• The restriction that the expansion must occur only in facilities on the hospital’s main campus.

The final regulations also provide that, for purposes of determining the number of beds in a hospital’s baseline number of operating rooms, procedure rooms and beds, a bed is included if the bed 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.

Updates to Hospital and Critical Access Hospital Reporting

Due to the public health emergency (PHE), CMS is finalizing a new requirement for the nation’s 6,200 hospitals and critical access hospitals to report information about their inventory of therapeutics to treat COVID-19.  CMS is also finalizing a new requirement that hospitals and critical access hospitals report information about the impact of acute respiratory illnesses, such as seasonal influenza, on hospital resources.

The full fact sheet addressing the major provisions of the final rule can be downloaded at: https://www.cms.gov/files/document/12220-opps-final-rule-cms-1736-fc.pdf.  If you have questions about this Final Rule or are interested in seeking solutions to your current business needs, please reach out to us at info@miramedgs.com.