Course | Basic | Medicare Payment and Reimbursement
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Course | Overview | Medicare Payment and Reimbursement
This course provides a brief history and overview of Medicare and Medicaid. It describes government organizations that regulate and administer this program. This course also discusses Medicare reimbursement. In addition, it highlights recen...
Course | Intermediate | Medicare Payment and Reimbursement
This course provides an overview of the prospective payment systems used in the Medicare program and as well as Medicare fee schedules. This course provides a general discussion and overview of Medicare reimbursement under the Inpatient Pro...
Course | Intermediate | Medicare Payment and Reimbursement
This course provides a general discussion and overview of reimbursement provided by Medicare under the outpatient prospective payment system. It also discusses the use of ambulatory payment classifications in the outpatient prospective paym...
On Demand Webinar | Intermediate | Medicare Payment and Reimbursement
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News | Medicare Payment and Reimbursement

OPPS proposed rule would eliminate 'inpatient only' list of procedures

News | Medicare Payment and Reimbursement

OPPS proposed rule would eliminate 'inpatient only' list of procedures

  • As outlined in the Outpatient Prospective Payment System proposed rule for CY21, a three-year elimination of the inpatient-only list would start in 2021 with 300 musculoskeletal services.
  • Hospitals would receive a 2.6% OPPS payment increase for 2021.
  • Medicare would increase the 340B payment cut from average sales price (ASP) minus 22.5% to ASP minus 28.7%.

Medicare has proposed to eliminate the list of procedures that providers are required to perform in inpatient hospital settings and instead allow those services to be performed on an outpatient basis. 

Eliminating the “inpatient only” (IPO) list over three years, as outlined in the Outpatient Prospective Payment System (OPPS) proposed rule for CY21, will give clinicians the option to perform 1,700 more types of procedures in the hospital outpatient setting.

“Patients should have as many options as possible for lowering their costs while getting quality care,” Seema Verma, administrator of CMS, said in a release. “These proposed changes, if finalized, would do exactly that, help put patients and doctors back in the driver’s seat and in a position to make decisions about their own care.”

The phased-in elimination would start in 2021, allowing outpatient procedures for about 300 musculoskeletal services, such as certain joint replacement procedures.

The American Hospital Association (AHA) expressed concern about eliminating the IPO list.

“Many of the services on the inpatient-only list are surgical procedures that may be complex, complicated, and require the care and coordinated services provided in the inpatient setting of a hospital,” Tom Nickels, executive vice president of AHA, said in a written statement.

Chad Mulvany, director of healthcare finance policy, strategy and development, for HFMA, said the process for reviewing IPO items seemingly works well and is based on reasonable criteria.

“It’s concerning that CMS is now electing to do away with this,” Mulvany said.

The changes to the IPO list in 2021 alone would represent the largest onetime reduction. From 2017 through 2020, about 30 services were removed.

Although procedures removed from the IPO list would be subject to the two-midnight rule used to determine eligibility for admission, the OPPS proposed rule includes a two-year exemption for removed procedures from medical review activities relating to patient status, according to a CMS fact sheet.

After the two-year moratorium, Mulvany expects “increased administrative burdens from [quality improvement organization] reviews of site-of-service necessity” for the procedures.

“Also, it also feels like a back-door force for site-neutral payment, which if Congress wanted to do that, it would have done that,” Mulvany said, referencing the administration’s push to equalize payment for care delivered in different settings.

CMS would boost OPPS payment rates by 2.6% for 2021, representing a $7.5 billion increase.

Rule would expand ASC utilization 

The proposed rule also would allow ambulatory surgical centers (ASCs) to perform 11 more procedures, including total hip arthroplasty, that previously were limited to hospital settings but weren’t on the IPO list. Those would add to 28 procedures that Medicare has made ASC-eligible since 2018.

CMS would create a process for the public to suggest what additional services ASCs should be allowed to perform “based on certain quality and safety parameters.”

The agency also may revise the criteria used to determine which procedures ASCs can perform, potentially adding 270 procedures that currently are limited to hospital outpatient departments.

More 340B cuts in store

After a recent appeals court victory on previous 340B payment cuts, CMS would expand those cuts. The agency proposed further reducing Medicare payments to hospitals for 340B-acquired drugs from average sales price (ASP) minus 22.5% to ASP minus 28.7%.

Hospital advocates sounded the alarm on the latest cuts.

“There is no reasonable basis to further reduce payments to hospitals in the 340B Drug Pricing Program — the same hospitals that are now straining under the heavy costs of responding to COVID-19,” Bruce Siegel, MD, president and CEO of America’s Essential Hospitals, said in a written statement. “This ill-conceived payment policy flouts congressional intent for the 340B program, undermines program savings for hospitals that operate with little or no margin and ultimately jeopardizes access to care in underserved communities.”

According to the rule, the $427 million additional cut was justified by a 2020 survey of 62% of 340B hospitals, with results indicating the typical acquisition cost for 340B drugs is ASP minus 34.7%. The proposed rule includes a 6% add-on payment, producing the net rate of ASP minus 28.7%.

Exempt from the 340B cuts are rural sole community hospitals, PPS-exempt cancer hospitals and children’s hospitals.

Alternatively, CMS said it may maintain the current cut of ASP minus 22.5%.

Other proposed provisions

CMS would overhaul the Overall Hospital Quality Star Rating system on in 2021. Changes would include grouping hospitals in the readmission measure by percentage of patients dually enrolled in Medicare and Medicaid.

Hospital advocates were glad CMS finally revamped the rating system but had not yet reviewed the details of the changes in time to comment on them.

CMS would continue to increase the wage index for certain low-wage-index hospitals. The agency estimated the latest increase would boost rural hospitals’ outpatient service payments by 3%, compared with an average national increase of 2.5%.

In previous comments to CMS, rural hospitals voiced support for the wage index changes, but urban hospitals and national groups insisted CMS use new funds to boost those payments instead of offsetting them with cuts to other hospitals.

About the Author

Rich Daly, HFMA Senior Writer and Editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


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