CMS issues hospital outpatient/ASC final rule, maintains 340B cuts

The Centers for Medicare & Medicaid Services today released the calendar year 2021 outpatient prospective payment system/ambulatory surgical center final rule. 

The rule updates OPPS rates by 2.4% in CY 2021 compared to CY 2020, which includes a 2.4% market basket update and no cut for productivity. It also will maintain the payment rate of average sales price minus 22.5% for certain drugs purchased under the 340B drug savings program.

CMS finalized as proposed the removal of certain restrictions on the expansion of physician-owned hospitals that qualify as “high Medicaid facilities.” It also increased these facilities' flexibility for counting certain beds toward their baseline number of operating rooms, procedure rooms, and beds. In addition, CMS finalized its proposal to eliminate the inpatient-only list over three years. This change will begin with the removal of about 300 musculoskeletal-related services in CY 2021. The agency also finalized its proposal to expand the list of outpatient services subject to prior authorization. Specifically, it will require prior authorization for two new service categories (cervical fusion with disc removal and implanted spinal neurostimulators) for dates of service on or after July 1, 2021.

CMS finalized significant revisions to the hospital star ratings methodology that it will implement during 2021. This includes calculating measure group scores as a simple average and peer-grouping hospitals by the number of reported measure groups. The agency did not adopt its proposal to stratify hospitals by proportion of dual-eligible patients.

Concurrent with the OPPS, CMS also issued an interim final rule expanding the Medicare condition of participation that requires hospitals and critical access hospitals to report certain COVID-19-related data. Specifically, CMS will require hospitals to report information about their inventory of certain COVID-19 therapeutics, and the incidence and impact of acute respiratory illnesses, such as seasonal influenza. The data must be provided in a manner that will be specified by the Secretary of Health and Human Services.

In a statement, AHA Executive Vice President Tom Nickels said the following:

“Today’s final rule from CMS is a blow to America’s hospitals and health systems as they strive to continue to provide care for patients during the coronavirus pandemic.

The continuation of deep cuts in payments for 340B drugs undermines the effectiveness of the 340B program and exacerbates the strain placed on hospitals serving vulnerable communities. These cuts conflict with Congress’ clear intent, perpetuate the Administration’s inaccurate interpretation of the law, as well as its failure to protect the program from continued assaults by drug companies. For nearly 30 years, the 340B program has helped hospitals stretch scarce federal resources to reach more patients and provide more comprehensive services to vulnerable communities. Continued cuts will result in the further loss of resources for 340B hospitals at the very worst possible time as COVID-19 cases and hospitalizations continue to climb across the country.

“The AHA also continues to oppose CMS’s loosening of longtime restrictions on physician-owned hospitals, as today’s rule does. The Congressional Budget Office, Medicare Payment Advisory Commission and independent researchers all agree that physician self-referral to facilities in which they have an ownership stake leads to greater utilization of services and higher costs. In addition, physician-owned hospitals have a tendency to cherry-pick their patients, which leaves sicker and less-affluent patients to community hospitals, threatening the health care safety net.

“Finally, we have concerns about the elimination over three years of the inpatient-only list, which serves to protect patients. The services on the inpatient-only list are often complex and complicated surgical procedures that require the close care and coordinated services provided in a hospital inpatient setting.

“We do appreciate that CMS has made changes to the hospital star ratings methodology that address many – but not all of its substantial flaws. We urge the agency to continue exploring ways to ensure the methodology is fair to hospitals, and meaningful to patients.