2021 OPPS Final Rule: CMS Moving Forward with Inpatient-only List Elimination, Prior Authorization Expansion

For more information on the 2021 OPPS final rule, including changes to supervision for therapy services and payment rates, see CMS' fact sheet.

A version of this article was first published December 3, 2020, by HCPro's Revenue Cycle Advisor, a sibling publication to HealthLeaders.

The 2021 OPPS final rule, released December 2, doesn’t pack many surprises, with CMS generally finalizing most policies as proposed or choosing to continue with current policies.

This should aid hospitals required to implement many of its policies in just a few short weeks due to the pandemic-disrupted rulemaking cycle.

Phasing out the IPO list

CMS’ elimination of the IPO list, which is used to identify services covered upon inpatient admission and not as an outpatient paid for under the OPPS, will be moving forward in a staged approach before all services have been removed from it by January 1, 2024.

For 2021, CMS finalized the removal of the 266 proposed services related to musculoskeletal procedures, as well as an additional 16 services recommended for removal by the Hospital Outpatient Payment (HOP) Panel and additional related anesthesia services (See Table 48 for a full list of associated CPT/HCPCS codes). Currently, the IPO list has more than 1,700 services.

“Frankly,  I’m surprised that CMS decided to proceed with its full proposal to remove the list, given the comments it received, which were both in support of removal and against,” says Jugna Shah, MPH, CHRI, president of Nimitt Consulting Inc.

“What is nice to see is that CMS has finally heard at least some portion of the provider community who have been asking for the elimination of this list for more than 15 years, given the perspective that the clinical decision on patient status should be left to the physician,” she adds. “Not to mention, this at least creates parity with physicians, since they have never had an IPO list to contend with.”

CMS is also updating a policy established in the 2020 OPPS final rule that gave providers a 2-year exemption from Beneficiary Family Centered Care-Quality Improvement Organizations (BFCC-QIO) referral to Recovery Auditors and patient status reviews for services removed from the IPO list. Services removed from the list become subject to the 2-midnight rule, which is used to determine whether inpatient reimbursement is appropriate.

With so many services to be removed from the IPO list over the next three years, commenters suggested a range of timeframes for exempting these procedures, according to CMS, from two years to indefinitely. Accordingly, the agency is finalizing a policy to indefinitely delay such reviews until procedures are “more commonly performed” in an outpatient setting.  

“While CMS is indicating there will be no review, providers must continue to abide by and apply the 2-midnight rule so that clinically appropriate decisions continue to be made for patients,” says Shah.

CMS will annually review claims data and determine a procedure to be more commonly performed in an outpatient setting when more than 50% of claims come from outpatient settings. The agency notes that it will still reserve the right to perform medical reviews in cases of fraud or abuse.

Additionally, commenters suggested CMS establish a list of services that would be permanently excluded from 2-midnight rule review. While the agency did not finalize such a policy for 2021, it said it would consider establishing metrics to permanently exempt certain services in future rulemaking.

340B drug payment policy to continue

After several years of court cases alternately won by providers and CMS, attempts at collecting data through optional surveys, and proposals for even deeper cuts, CMS will continue to pay for drugs acquired through the 340B program at the average sales price (ASP) minus 22.5%.

CMS had proposed reimbursing hospitals for 340B drugs at ASP minus 34.7% with a 6% add-on payment for overhead and handling, leading to a net rate of ASP minus 28.7%, based on the results of the hospital survey. The agency also proposed continuing with its policy since 2018 to continue to pay for the drugs at ASP minus 22.5%.

Noting that “many commenters” opposed both proposals due to CMS’ statutory authority for making the cuts, the short three-week survey window at the beginning of the public health emergency, and a variety of other factors, the agency determined it would continue with its current policy of paying for the drugs at ASP minus 22.5%. However, it stated that it would continue to explore reimbursement at the lower rate of ASP minus 28.7% in future rulemaking.

“Providers should remember to view the OPPS final rule in conjunction with the “most favored nation” rule released late last month, as that rule will impact drug payment such that each hospital will need to conduct its own financial impact analysis,” says Shah. “Though, if we are lucky, perhaps that rule will somehow be delayed. Until then, providers should be prepared.”

Rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals will continue to be excepted from this policy, receive ASP plus 6%, and continue to report informational modifier -TB (drug or biological acquired with 340B drug pricing program discount, reported for informational purposes) on 340B-acquired drugs.

Prior authorization expanded

Once again citing “unnecessary increases” in volume of service for certain procedures, CMS finalized an expansion of its recently introduced prior authorization program for OPPS services for procedures related to cervical fusion with disc removal and implanted spinal neurostimulators effective July 1, 2021.

The new services requiring prior authorization are related to codes:

• 22551, fusion of spine bones with removal of disc at upper spinal column, anterior approach, complex, initial
• 22552, fusion of spine bones with removal of disc in upper spinal column below second vertebra of neck, anterior approach, each additional interspace
• 63650, implantation of spinal neurostimulator electrodes, accessed through the skin
• 63685, insertion or replacement of spinal neurostimulator pulse generator or receiver
• 63688, revision or removal of implanted spinal neurostimulator pulse generator or receiver

Claims for insertion or replacement of spinal neurostimulators pulse generators or receivers increased by nearly 175% between 2007 and 2018, according to CMS, reflecting an increase of more than 10% annually. The rate of annual increase for all outpatient services was 2.8%. The agency noted similar, or larger, increases for several other services in these two categories.

After reviewing clinical and coding data related to the codes, CMS determined “financial motivation” is the most likely cause for the increased use of these services. The two new service categories join the five that became effective July 1, 2020 (see Table 74 for the full list of 2021 codes):

• Blepharoplasty
• Botulinum toxin injections
• Panniculectomy
• Rhinoplasty
• Vein ablation

Commenters noted that service may be shifted to ambulatory surgical centers and physicians are exempt from the prior authorization requirements. CMS says it “will monitor the data and may consider additional program integrity oversight if such shifts are realized,” which could lead to expansion of this program beyond OPPS services in the future.

Some commenters also noted that Medicare Administrative Contractors (MAC) have taken longer than the 10 days specified for responding to prior authorization requests since July. CMS says when this was brought to its attention, it “worked diligently to ensure that outstanding requests were resolved as soon as possible” and that other prior authorization programs through MACs have met the established timeframe “the vast majority of the time.”

Additional information

For more information on the 2021 OPPS final rule, including changes to supervision for therapy services and payment rates, see CMS’ fact sheet.

For coverage of the 2021 Medicare Physician Fee Schedule final rule, released December 1, see coverage in Part B News.

To learn more details about the final rule’s policies and what payment impact they could have at your facility, attend HCPro’s annual OPPS final rule webinar with Shah and Valerie A. Rinkle, MPA, CHRI, lead regulatory specialist and an instructor for HCPro Medicare boot camps.