Published on:

CMS Finalizes 2021 OPPS Rule, Officially Phasing Out the Inpatient Only List

On December 2, 2020, The Centers for Medicare & Medicaid Services (CMS) released the 2021 Outpatient Prospective System (OPPS) Final Rule. The main goals of the rule are to (1) provide patients more choice in where they can receive affordable, quality health care, and (2) reduce their out-of-pocket costs. The new rule furthers CMS’s recent goal to expand patient choice by increasing the locations that accept Medicare payment for newly added services.

The rule finalizes the proposal to eliminate the Inpatient Only List (IPO),—giving beneficiaries more choice in where they can receive care. The IPO designated specific surgical procedures that necessitate inpatient care due to the nature of the procedure. Therefore, the procedures on the IPO were not covered by Medicare through the OPPS. By phasing out the list, these procedures will now be eligible for Medicare reimbursement in an inpatient setting as well as a hospital outpatient environment, if appropriate, based on the determination of the provider. The phase out of the IPO will occur over three years, beginning with 300 musculoskeletal services, and complete removal of the list by CY 2024. The rule also finalizes other provisions to offer beneficiaries additional choice in their healthcare options, including adding 11 procedures to the Ambulatory Service Center (ASC) Covered Procedures List (CPL).

Furthermore, the rule continues the current 340B purchased drugs payment policy. Under Section 340B of the Public Health Service Act, participating hospitals and other providers can purchase specific outpatient covered drugs directly from the manufacturer at a lower price. The 2018 OPPS Final Rule adopted a policy that Medicare will pay an adjusted Average Sales Price (ASP) less 22.5 percent for separately payable drugs purchased through the 340B program. According to CMS, keeping this current policy will be necessary to maintain stable payment during the COVID-19 public health emergency. Rural community hospitals, children’s hospitals, and Prospective Payment System (PPS) cancer hospitals will remain exempt from the 340B payment policy. These hospitals will continue to report a modifier for drugs acquired through the 340B program and be paid the ASP plus 6 percent.

Under the final rule, CMS will also update and simplify the Overall Hospital Quality Star Rating (Overall Star Rating) starting in 2021. CMS will now merge three existing measuring groups to create a new Timely and Effective Care group. As a result of this change, Overall Star Ratings will now comprise 5 groups: Mortality, Safety of Care, Readmissions, Patient Experience, and Timely and Effective Care. Other updates to the methodology include: (1) the calculation of measure group scores using a simple average rather than the Latent Variable Model, (2) the standardization of group member scores, allowing them to be directly comparable, and (3) requiring hospitals to report a minimum of three measures for three measures groups, however, one group must be specifically reported as the Mortality or Safety of Care group. Additionally, critical access hospitals (CAHs) and Veterans Health Administration (VHA) hospitals will now be included in the Overall Star Rating. Ideally, these new measures will simplify the star calculation methodology, create an easily defined approach and improve the Overall Star Rating predictability as well as comparability.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in Medicare and other CMS rules and regulations. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or

Contact Information