On the morning of August 4, 2020, the Centers for Medicare and Medicaid Services (CMS) released the Hospital Outpatient Prospective Payment System (OPPS) calendar year (CY) 2021 proposed rule. The rule also includes updates to the ambulatory surgical center (ASC) payment system and other specified policies:

• Update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program;
• Establish and update the Overall Hospital Quality Star Rating beginning with the CY 2021;
• Eliminate the Inpatient Only (IPO) list over a three-year period;
• Remove certain restrictions on the expansion of physician-owned hospitals that qualify as “high Medicaid facilities,” and clarify that certain beds are counted toward a hospital’s baseline number of operating rooms, procedure rooms, and beds; and
• Add two new service categories to the OPD Prior Authorization Process.

Comments on the proposed rule are due on October 5, 2020.

Outpatient and ASC Rates Increase By 2.6 Percent

CMS proposes an increase of 2.6 percent for OPPS payment rates in CY 2021, which it estimates will result in a total of approximately $83.9 billion in payments to OPPS providers ($7.5 billion more than CY 2020). CMS will continue the statutory 2.0 percentage point reduction for hospitals failing to meet the hospital outpatient quality reporting requirements.

CMS proposes an increase of 2.6 percent for ASC payment rates in CY 2021, which is consistent with CMS’ policy for CYs 2019 through 2023 to update the ASC payment system using the hospital market basket update. CMS estimates this will result in a total of approximately $5.45 billion in payments to ASC providers ($160 million more than CY 2020). CMS believes that continuing this policy as well as other changes will help to promote site-neutrality between hospitals and ASCs and encourage the migration of services from the hospital setting to the lower-cost ASC setting.

CMS Aligns High Medicaid Facility Process With Statutory Basis and Defers to State Licensure

Generally, physician-owned hospitals (POHs) may not increase the number of operating rooms, procedure rooms, and beds beyond those that were licensed on March 23, 2010. In the original statutory language, an exception process to this prohibition was included for POHs that qualify as an “applicable hospital.” Later, an additional exception was created for POHs that qualified as a “high Medicaid facility.” The requirements and statutory direction for these two exceptions were different but CMS implemented a single process to address both needs.

As part of its Patients over Paperwork initiative to remove regulatory obstacles, CMS reviewed the basis of the two exceptions and realized that certain statutory provisions only applied to “applicable hospitals” and their extension to high Medicaid facilities was not specifically in statute but were implemented using the Secretary’s authority. Though CMS believes the treatment of the two exceptions was consistent with Congressional intent and within the Secretary’s authority, they believe that additional flexibility should be provided to POHs that by definition, serve significant numbers of Medicaid patients relative to other hospitals.

CMS proposes to remove certain regulatory requirements for high Medicaid facilities that are not specifically included in the statute, including:

• Frequency of permitted requests;
• Total amount of permitted expansion of facility capacity; and
• Location of permitted expanded facility capacity.

CMS also reiterates that it defers to state law regarding the determination of whether a bed is licensed as of a certain date and proposes to acknowledge this in a regulatory revision.

CMS to Phase-out Inpatient Only List Over Next 3 Years

The Inpatient Only (IPO) List was created to identify services that require inpatient care because of the invasive nature of the procedure, the need for postoperative recovery time, or the underlying physical condition of the patient. After considering feedback from stakeholders, CMS concluded that the list is not necessary to identify services that require inpatient care because of changes in medical practice, including new technologies and innovations, which blur the lines between inpatient and outpatient care.

Beginning with CY 2021, CMS proposes to eliminate the IPO list over 3 calendar years, starting with the removal of 300 musculoskeletal-related services in CY 2021. They are asking for comments on whether 3 years is an appropriate timeframe for the elimination; any other services that are candidates for removal in CY 2021; and the sequence of removal over the three-year period. CMS also proposes to continue the 2-year exemption from site-of-service claims denials and recovery audit contractor referrals for services removed from the IPO. Given the significant surge in the number of newly removed services due the proposed elimination of the IPO, CMS requests comments on whether the 2-year exemption is still adequate.

CMS Simplifies Hospital Star Ratings

CMS includes their long-awaited proposed changes to the hospital Star Rating methodology in this rule. CMS proposes a methodology to calculate the Overall Hospital Quality Star Rating utilizing data collected on hospital inpatient and outpatient measures that are publicly reported on a CMS website. CMS also proposes to update and simplify how the ratings are calculated, reduce the total number of measure groups, and stratify the readmission measure group based on the proportion of dual-eligible patients. CMS states they believe these changes will reduce provider burden and improve the predictability and comparability of ratings.

No Major Changes to Quality Reporting Programs 

For the Hospital Outpatient Quality Reporting (OQR) and ASC Quality Reporting (ASCQR) programs, CMS does not propose any measure additions or removals for either program. CMS does propose to revise and codify previously finalized administrative procedures, clarify requirements, and expand the review and corrections process to further align and reduce burden for the two programs.

New Service Categories for OPD Prior Authorization

For CY 2021, CMS is proposing the addition of two new categories of services to the prior authorization process beginning for dates of service on or after July 1, 2021: (1) cervical fusion with disc removal and (2) implanted spinal neurostimulators. CMS added these new categories as they noted the outpatient claims volume for insertion or replacement of Implanted Spinal Neurostimulators increased by 174.6 percent between 2007 and 2018,  while claims volume for the initial level of spinal fusion of the cervical spine with removal of the corresponding intervertebral disc had a 124.9 percent average annual increase from 2012 to 2018.

CMS Proposes Significant Expansion for ASC-CPL

The Covered Procedures List (CPL) includes covered surgical procedures eligible for Medicare payment when performed in an ASC. Covered surgical procedures are those that are not expected to pose significant patient risk and for which patients would not typically be expected to require active medical monitoring and care at midnight following the procedure. For CY 2021, CMS proposes to add 11 new codes including total hip arthroplasty to the CPL.

CMS also proposes two alternative plans that would greatly increase the number of procedures on the CPL starting in 2022. CMS is requesting comment on the two alternative plans. The first plan would allow stakeholders to nominate procedures to be added via an annual comment and rulemaking process. The alternative plan would be for CMS to eliminate five existing general exclusions from the current criteria. CMS estimates that this latter option would immediately add 270 new codes to the CPL.

Changes to Level of Supervision For OPD Therapy

For CY 2021 and subsequent years, CMS proposes to change the minimum default level of supervision for non-surgical extended duration therapeutic services (NSEDTS) to general supervision for the entire service, including the initiation portion of the service, for which they had previously required direct supervision. CMS notes that this would be consistent with the minimum required level of general supervision that currently applies for most outpatient hospital therapeutic services.

For CY 2021 and subsequent years, 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.

Further Reduction in 340B Reimbursement Proposed

In CY 2018, CMS adopted a lower reimbursement rate of average sales price (ASP) minus 22.5 percent for 340B drugs when purchased in certain facilities. This was lower the previous reimbursement rate of ASP plus 6 percent. The lower reimbursement of ASP minus 22.5 percent is the subject of an ongoing lawsuit. The most recent activity saw the U.S. Appeals Court uphold the policy and state that HHS acted within its statutory authority to cut 340B.

CMS conducted a survey to gather data on hospital acquisition costs for 340B drugs following a district court ruling that found that CMS acted beyond its statutory authority but also acknowledged that CMS may base the payment amount of average acquisition cost when survey data are available. Stakeholders criticized the survey, with some saying it unlawfully collects data from a subset of hospitals and included a flawed design and others saying that it should be withdrawn because of the COVID-19 pandemic.

However, based on the results of this survey of hospital acquisition costs for 340B drugs, CMS is now proposing the pay for 340B drugs for CY 2021 and subsequent years at ASP minus 34.7 percent, plus an add-on of 6 percent of the ASP. This results in a net payment rate of ASP minus 28.7 percent for 340B drugs. For biosimilars, CMS is proposing to set net reimbursement at ASP minus 28.7 percent of the biosimilar’s ASP, not minus 28.7 percent of the reference product’s ASP.

Similar to the CY 2018 policy, rural sole community hospitals, PPS-exempt cancer hospitals, and children’s hospitals are exempt from this lower 340B reimbursement. WAC will be used for products without an ASP available.

Prescription Drug Policies for Non-340B Drugs to Remain Consistent in CY 2021

This proposed rule continues existing payment policies for many drugs and biologicals. Separately payable drugs and biologicals, including products with pass-through status, will continue to be paid at a rate of ASP plus 6 percent.  Prior to the availability of ASP data, drugs and biologics will be paid at wholesale acquisition cost (WAC) plus three percent.

For biosimilars, CMS will continue to pay ASP plus 6 percent of the reference product’s ASP for separately payable biosimilars without pass-through and not acquired under the 340B program. If the biosimilar is subject to WAC pricing, reimbursement will be WAC plus 3 percent of the biosimilar’s WAC. All biosimilar products will continue to be eligible for pass-through, not just the first biosimilar for a reference product.

No Changes to Packaging Rules for Non-Opioid Pain Management Products

CMS is proposing to continue existing payment policies for non-opioid pain management products. This means that these products will be packaged with the surgical bundle in the hospital outpatient department setting but will be unpackaged and reimbursed as ASP plus 6 percent in the ASC setting.

NO CHANGES TO DRUG PACKAGING THRESHOLD 

CMS proposes to maintain the drug packaging threshold of $130, meaning drugs with estimated per-day cost less than or equal to this level are packaged. Drugs and biologicals, including those with pass-through status, with estimated costs greater than the packaging threshold of $130 per-day are considered separately payable at ASP plus six percent for non-340B drugs.

Cancer-related Protein-Based MAAA Lab Test Proposed To Be Excluded From OPPS Packaging Policy

CMS proposes to exclude cancer-related protein-based Multianalyte Assays with Algorithmic Analyses (MAAAs) laboratory tests from being packaged into the OPPS payment. Results of these tests are typically used to determine posthospital care and the tests, therefore, are not connected to the primary hospital outpatient service during which a specimen is collected. Cancer-related protein-based MAAAs will be paid under the Clinical Laboratory Fee Schedule (CLFS). The CPT codes for the cancer-related protein-based MAAAs included in this proposed policy and subject to exception from the laboratory date of service (DOS) requirements are 81500, 81503, 815353, 81536 and 81539.

CMS Considering Pass-Through Time Extension Due to COVID-19

CMS is requesting comments on whether pass-through status should be extended for an additional time period due to the effects of COVID-19 on the use of those items with pass-through status. CMS is also proposing to clarify that a new medical device is part of the Food and Drug Administration’s (FDA’s) Breakthrough Devices Program and has received marketing authorization for the indication covered by the Breakthrough Device designation does not need to meet the substantial clinical improvement criterion.

 

In its proposal, CMS discusses its evaluation of 5 devices for potential pass-through payment status in 2021 and is seeking public comments on them:

 

Device	Manufacturer	Estimated Pass-Through Payments	CMS concerns, if any	FDA Breakthrough
Barostim NEO® System	CVRx, Inc.	$4m	May be appropriately described by C1767	X
Hemospray® Endoscopic Hemostat	Cook Medical	$40m	CMS questioning whether it meets the substantial clinical improvement criterion
EXALT™ Model D Single-Use Duodenoscope	Boston Scientific	$40m	Preliminarily approved	X
The SpineJack® Expansion Kit	Stryker	$14m	May be described by HCPCS code C1821 and CMS questions whether it meets substantial clinical improvement criterion
Customflex® Artificial Iris	HumanOptics	$600k	Preliminarily approved	X

 

 

CMS also noted the expiration of pass-through for products described in the table below.

 

HCPCS Codes	Long Descriptor	Effective Date	Pass-Through Expiration Date
C1823	Generator, neurostimulator (implantable), nonrechargeable, with transvenous sensing and stimulation leads	1/1/2019	12/31/2021
C1824	Generator, cardiac contractility modulation (implantable	1/1/2020	12/31/2022
C1982	Catheter, pressure-generating, one-way valve, intermittently occlusive	1/1/2020	12/31/2022
C1839	Iris prosthesis	1/1/2020	12/31/2022
C1734	Orthopedic/device/drug matrix for opposing bone-to-bone or soft tissue-to bone (implantable)	1/1/2020	12/31/2022
C2596	Probe, image-guided, robotic, waterjet ablation	1/1/2020	12/31/2022
C1748	Endoscope, single-use (that is, disposable), Upper GI, imaging/illumination device (insertable)	7/1/2020	6/30/2023

 

 

New Drugs, Biologics and Biosimilars with Pass-Through Approved in 2020

 

2020 Code	2021 Code	Description	Status Indicator	APC	Pass-through approved	Pass-through ends
C9054	C9054	Injection, lefamulin (xenleta), 1 mg	G	9332	01/01/2020	12/31/2022
C9055	C9055	Injection, brexanolone, 1mg	G	9333	01/01/2020	12/31/2022
J9309	J9309	Injection, polatuzumab vedotin-piiq, 1 mg	G	9331	01/01/2020	12/31/2022
Q5107	Q5107	Injection, bevacizumab-awwb, biosimilar, (mvasi), 10 mg	G	9329	01/01/2020	12/31/2022
Q5117	Q5117	Injection, trastuzumab-anns, biosimilar, (kanjinti), 10 mg	G	9330	01/01/2020	12/31/2022
J0179	J0179	Injection, brolucizumab-dbll, 1 mg	G	9340	04/01/2020	03/31/2023
C9056	J0223	Injection, givosiran, 0.5 mg	G	9343	04/01/2020	03/31/2023
C9053	J0791	Injection, crizanlizumab-tmca, 1 mg	G	9342	04/01/2020	03/31/2023
C9057	J1201	Injection, cetirizine hydrochloride, 1 mg	G	9344	04/01/2020	03/31/2023
J7331	J7331	Hyaluronan or derivative, synojoynt, for intra-articular injection, 1 mg	G	9337	04/01/2020	03/31/2023
Q5114	Q5114	Injection, Trastuzumab-dkst, biosimilar, (ogivri), 10 mg	G	9341	04/01/2020	03/31/2023
Q5115	Q5115	Injection, rituximab-abbs, biosimilar (truxima), 10 mg	G	9336	04/01/2020	03/31/2023
C9058	Q5120	Injection, pegfilgrastim-bmez, biosimilar, (ziextenzo) 0.5 mg	G	9345	04/01/2020	03/31/2023
C9059	C9059	Injection, meloxicam, 1 mg	G	9371	07/01/2020	06/30/2023
C9061	C9061	Injection, teprotumumab-trbw, 10 mg	G	9355	07/01/2020	06/30/2023
C9063	C9063	Injection, eptinezumab-jjmr, 1 mg	G	9357	07/01/2020	06/30/2023
C9122	C9122	Mometasone furoate sinus implant, 10 micrograms (Sinuva)	G	9346	07/01/2020	06/30/2023
J0742	J0742	Injection, imipenem 4 mg, cilastatin 4 mg and relebactam 2 mg	G	9362	07/01/2020	06/30/2023
J0896	J0896	Injection, luspatercept-aamt, 0.25 mg	G	9347	07/01/2020	06/30/2023
J1429	J1429	Injection, golodirsen, 10 mg	G	9356	07/01/2020	06/30/2023
J7204 J7204	J7204 J7204	Injection, factor VIII, antihemophilic factor (recombinant), (esperoct), glycopegylated-exei, per iu	G	9354	07/01/2020	06/30/2023
J9177	J9177	Injection, enfortumab vedotin-ejfv, 0.25 mg	G	9364	07/01/2020	06/30/2023
J9358	J9358	Injection, fam-trastuzumab deruxtecan-nxki, 1 mg	G	9353	07/01/2020	06/30/2023
Q5116	Q5116	Injection, trastuzumab-qyyp, biosimilar, (trazimera), 10 mg	G	9350	07/01/2020	06/30/2023
Q5119	Q5119	Injection, rituximab-pvvr, biosimilar, (Ruxience), 10 mg	G	9367	07/01/2020	06/30/2023