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CMS Releases Proposed OPPS 2021 Rule

The Centers for Medicare & Medicaid Services (CMS) released the proposed Outpatient Prospective Payment System (OPPS) 2021 Rule on August 4th 2020. CMS uses the OPPS to decide the amount a hospital will receive for outpatient care for Medicare beneficiaries. Prior to the OPPS, payments for Medicare outpatient services were calculated using hospitals’ costs. Now, using the OPPS, payments for healthcare services are based on certain relative weights, a conversion factor, and geographic and input price adjustments. The goal of the proposed rule is to increase the opportunities for patient choice in healthcare, allow patients to be more active consumers in their healthcare, strengthen the power and success of Medicare, and decrease the burdens on providers. CMS is expected to release the final rule in December. The public comment period ended on October 5th 2020. The key changes in the proposed rule include:

  • Increasing Healthcare Options for Beneficiaries: One important change in the proposed rule is the complete removal of the Inpatient Only list (IPO) by 2024. Traditionally, the procedures and services on this list are only offered in the inpatient setting and thus not paid for under The Outpatient Prospective Payment System. The removal of the IPO would make about 300 services eligible to be paid for by Medicare in hospital outpatient situations. This change would also increase the amount of procedures that would be covered by Medicare in Ambulatory Surgical Centers (ASCs), offering patients more choice in deciding where to receive care and reducing any bias in CMS payment policies that might favor a certain type of care location compared to another.
  • 2021 OPPS Payment Methodology: Participating hospitals and certain healthcare providers can purchase specific Medicare covered outpatient medications at discounted prices under Section 340B of the Public Health Service Act (340B). In the 2018 OPPS final rule, a policy was adopted that Medicare would pay an adjusted Average Sale Price (ASP) minus 22.5% for specific drugs that are payable separately or biologicals obtained through 340B. The 2021 OPPS updates would change this to a proposed rate of ASP minus 28.7% for the same drugs and biologicals.
  • 2021 OPPS Payment Rates: The 2021 proposed rule intends to increase payment rates by 2.6% for hospitals that obtain certain quality reporting standards, based on the Affordable Care Act (ACA) mandated 0.4 percentage point adjustment for multi-factor productivity (MFP) subtracted from an expected hospital market basket increase of 3%.
  • 2021 ASC Payment Rates: Similar to OPPS payment rates, the rule proposes to increase ASC payment rates by 2.6% for hospitals that obtain certain quality reporting standards based on an expected hospital market basket rise of 3% less the ACA mandated 0.4 percentage point adjustment for multi-factor productivity (MFP). In addition to reducing bias towards certain hospitals and ASCs, this change also incentivizes a higher utilization of cost-effective ASCs as opposed to costly hospital services.
  • Ensure the Proper use of Tax Dollars: In this rule, CMS seeks to increase the number of outpatient services covered by Medicare by adding Cervical Fusion with Disc Removal and Implanted Spinal Neurostimulators to the procedures requiring preauthorization. Preauthorization safeguards beneficiary access to essential care while shielding Medicare funds from needless increases in volume due to inappropriate payments.

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


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