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2020 OPPS/ASC TOA Summary

November 5, 2019

The Centers for Medicare and Medicaid Services (CMS) released its final payment rule for the calendar year (CY) 2020 hospital outpatient (OPPS)/ASC payment policy on Friday, November 1.

CMS finalized most of the orthopaedic-related proposals that were published in this summer’s proposed rule.

Click here to review TOA’s summary of the proposed rule.

Click here to read AAOS’s stakeholder letter.

Click here to read CMS’s final rule.

The following is an overview of some of the key concepts in the final rule.

CMS finalized payment for TKAs in ASCs. Per CMS:

After considering the public comments we received, and in response to commenters’ support for this proposal, we are finalizing our proposal without modification to add TKA, CPT code 27447 (Arthroplasty, knee, condyle and plateau; medial and lateral compartments with or without patella resurfacing (total knee arthroplasty)), to the ASC CPL for CY 2020 and subsequent years.

Based on the public comments we received, we are not finalizing any of the additional requirements on which we sought comment, such as adding a modifier or requiring an ASC to have a certain amount of experience in performing a procedure before being eligible for payment for performing the procedure under Medicare.

AAOS provided the following response in its stakeholder comments for the proposed rule:

We support the proposal to add TKA (CPT code 27447) to the ASC Covered Procedures List (CPL). AAOS recognizes that a certain group of Medicare beneficiaries may be strong candidates for TKA in the ASC setting. Though, we are concerned about the implementation of this policy change given the historical confusion surrounding the removal of TKA from the IPO. A TKA procedure in an ASC would be appropriate only for carefully selected patients who are in excellent health, with no or limited medical comorbidities and sufficient caregiver support.

CMS provided responses from stakeholders regarding the concept of adding TKAs to ASCs. They can be found here. CMS’s responses can be found here:

Comment #1 – TKA in ASCs
Comment: One commenter requested that we delay adding TKA to the ASC CPL until more data can be collected on the impact of case-mix and patient populations for participants in the CMS Innovation Center’s Bundled Payments for Care Improvement Initiative.

Response: We believe there are a small number of less medically complex TKA patients that could appropriately receive TKA in an ASC setting. Because we believe this group will be small, we do not believe our proposal would have a substantial impact on the patient-mix for the Bundled Payments for Care Improvement Advanced (BPCI Advanced) or the Initiative and Comprehensive Care Joint Replacement (CJR) models. Therefore, we do not believe any delay in the implementation of our proposed addition to the ASC CPL is warranted.

Comment #2 – TKA in ASCs
Comment: Some commenters opposed our proposal to add TKA to the ASC CPL. These commenters stated that the Medicare population would not be suitable candidates to receive TKA in an ASC setting and that complications arising from TKA could be devastating and life-threatening if not performed in a hospital setting. Specifically, patients could be at risk for the development of deep vein thrombosis with the potential to propagate lethal pulmonary embolus, anesthesia-related risks, as well as other risks. Some commenters also noted that CMS eliminated the requirement that ASCs have a written transfer agreement with a nearby hospital and the requirement that their physicians have admitting privileges at a hospital. Further, some commenters noted that in the absence of the physician self-referral law, which does not apply to procedures performed in an ASC, there will be no other safeguard against a physician’s profitable, but clinically inappropriate, referral to an ASC in which the physician has an ownership interest.

Response: We agree with commenters that the majority of Medicare beneficiaries would not be suitable candidates to receive TKA procedures in an ASC setting. Factors such as age, comorbidity, and body mass index are among the many factors that must be taken into account to determine if performing a TKA procedure in an ASC would be appropriate for a particular Medicare beneficiary. However, we believe there are a small number of less medically complex beneficiaries that could appropriately receive the TKA procedure in an ASC setting and we believe physicians should continue to play an important role in exercising their clinical judgment when making site-of-service determinations, including for TKA. While we acknowledge that the physician selfreferral law does not apply to TKA performed in an ASC, physicians should be aware of other Federal and state laws that may potentially limit this activity, such as the Anti-Kickback Statute.

Comment #3 – TKA in ASCs
Comment: Commenters also noted that beneficiary coinsurance for TKA procedures could be higher in the ASC setting and therefore did not support our proposal, or recommended that we notify beneficiaries that the coinsurance for a TKA procedure could be lower in a hospital outpatient setting.

Response: We are aware that beneficiaries may incur greater cost-sharing for TKA procedures in an ASC setting under our proposal. However, this would not be an occurrence that is unique to TKA. Section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure paid under the OPPS (including items such as drugs and biologicals) performed in a year to the amount of the inpatient hospital deductible for that year. We note that this section of the Act does not apply to the ASC payment system. Rather, ASC cost-sharing is described by 1833(a)(4) of the Act and there may be instances where beneficiary cost-sharing in an ASC may be higher than beneficiary cost-sharing in a hospital outpatient department for the same procedure. We note that the ASC payment rate for a TKA procedure is $8,609.17 for CY 2020 while the CY 2020 OPPS payment rate is $11,899.39. This means that ASC coinsurance would be $1,721.83 while hospital OPPS coinsurance would have been $2,379.88, but for the statutory cap limiting it to the inpatient deductible amount ($1,364
in CY 2019). However, the payment rates are publicly available and despite the higher cost-sharing, some beneficiaries, especially those with supplemental insurance, may still choose to have their procedure performed in the ASC setting.

In addition, as we stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59389), section 4011 of the 21st Century Cures Act (Pub. L. 114-255) requires the Secretary to make available to the public via a searchable website, with respect to an appropriate number of items and services, the estimated payment amount for the item or service under the OPPS and ASC payment system and the estimated beneficiary liability applicable to the item or service. We implemented this provision by providing our Outpatient Procedure Price Lookup tool available via the Internet at This webpage allows beneficiaries to compare their potential cost-sharing liability for procedures performed in the hospital outpatient setting versus the ASC setting. We believe this tool allows beneficiaries to be informed of potential cost-sharing amounts and therefore mitigates the commenters’ concern about providing payment for procedures in an ASC setting even if the beneficiary cost-sharing in an ASC would be greater than in the hospital outpatient department setting.

Comment #4 – TKAs in ASCs
Comment: Some commenters suggested that CMS work closely with specialty societies regarding best practices and any appropriate limitations or conditions for Medicare Part B payment for TKA in the ASC setting. Other commenters stated that our suggestions, such as requiring a modifier or a plan of care, were unnecessary and would increase administrative burden by complicating the processes for scheduling, performing and billing for ASCs, without improving beneficiary safety because physicians are best equipped to determine the clinical appropriateness of the site of service for their patients. Some commenters did not support our suggested approaches and believed that such requirements would be superfluous and provide no beneficial oversight to ensure patient safety. Two orthopedic specialty societies supported the concept of having defined plans of care for each beneficiary following a surgical procedure. One orthopedic specialty society requested that we re-establish the requirement that ASCs have formal arrangements with a nearby hospital in case a patient is unable to go home following a procedure. Other commenters suggested that a defined plan of care requirement is
already an existing Condition for Coverage for ASCs.

Response: We agree with commenters that ASCs are currently required to follow the discharge protocols following a surgical procedure, as set out at 42 CFR 416.52(c). For example, our regulations require that each patient be provided written discharge instructions and overnight supplies; prescription and physician contact information; and post-operative instructions; and that patients be discharged in the company of a responsible adult, except those patients exempted by the attending physician.

We remind ASCs that beneficiaries should receive discharge care instructions that meet our requirements following a TKA procedure as well as other surgical procedures. ASCs should also review our State Operations Manual for further guidance on this condition for coverage, as well as others.

With respect to reinstating the requirement that ASCs have a formal transfer agreement with a nearby hospital, we note that such issue is related to Conditions for Coverage and is outside the scope of this final rule with comment.

Removing THA from the Inpatient-Only List
CMS finalized its proposal to remove THA from the inpatient-only (IPO) list. Now that THA has been removed from the IPO list, CMS can add THA as an ASC-payable service at a future date.

AAOS provided the final comment in response to the proposed rule:

Notwithstanding our support of patient choice, the proposal to move total hip arthroplasty (THA) to an outpatient hospital setting is rash. THA is an invasive procedure for which a limited set of patients are strong candidates for the hospital outpatient department (HOPD). Considering the confusion precipitated by the removal of total knee arthroplasty (TKA) from the inpatient only (IPO) list in 2018, it is troubling to imagine the ways this change may be misconstrued by payers. AAOS strongly opposes the removal of THA (CPT code 27130), from the Medicare inpatient-only list at this time.

AAOS went on to comment:

We are particularly surprised that CMS would propose this change based on the conclusion that it meets just two of the five criteria for removal from the IPO. Although the five criteria for removal are:
“1. Most outpatient departments are equipped to provide the services to the Medicare population.
2. The simplest procedure described by the code may be performed in most outpatient departments.
3. The procedure is related to codes that we have already removed from the IPO list.
4. A determination is made that the procedure is being performed in numerous hospitals on an outpatient basis.
5. A determination is made that the procedure can be appropriately and safely performed in an ASC and is on the list of approved ASC procedures or has been proposed by us for addition to the ASC list.”

It is troublesome that CMS chose only criteria 2 and 3 as the basis for the decision. While those factors are important, as they speak to the nature of the procedure in relation to other procedures, it does not bode well that the rationale omits whether or not outpatient facilities are equipped and appropriate, or whether or not the procedure is performed safely in these settings a majority of the time.

CMS’s discussion related to the removal of THA from the IPO list begins on page 660. CMS provided the following commentary in the final rule:

Some commenters did not support the proposal, citing both clinical and operational concerns based on their experience with the removal of TKA from the IPO in 2018. Those commenters believe that it would be hasty to remove THA without waiting for providers and MACs to have a better handle on performing TKA in the outpatient setting and developing better skill at performing appropriate patient selection. One commenter suggested delaying the removal of THA from the IPO list for a year, until CMS could provide greater evidence, specifically, a rigorous medical literature review, that THA could be performed safely in the outpatient or ASC setting, especially for beneficiaries with multiple co-morbidities.

Some commenters, including two major orthopaedic associations, raised concerns about whether the THA procedure meets the criteria required to be removed from the IPO list. One commenter, an orthopaedic surgery specialty society for hips and knees, shared that they do not believe THA meets criterion 2 (the simplest procedure described by the code may be performed in most outpatient departments) — they argued that there is no such thing as a simple THA and that all procedures described by CPT code 27130 have moderate risks for complications. The commenter further argues that criterion 3 (the procedure is related to codes that we have already removed from the IPO list) is also not met since they do not believe that THA and TKA are similar, except for the risks associated with each in moving the site of surgery. The commenter expressed additional concerns regarding criterion 4 (a determination is made that the procedure is being performed in numerous hospitals on an outpatient basis) and the lack of peer-reviewed literature that would provide supportive data. Finally, the commenter expressed concerns regarding criterion 5 (a determination is made that the procedure can be appropriately and safely performed in an ASC and is on the list of approved ASC procedures or has been proposed by us for addition to the ASC list), stating that there is a lack of peer-reviewed literature and the ability to guarantee excellent patient selection and education, tailored anesthetic techniques, well-done surgery, good medical care, and exceptional postoperative care coordination in the ASC setting. The commenter conceded that performance of THA in the outpatient setting is possible, but does not believe that data and guidance on appropriate patient selection and education, patient-specific anesthetic techniques, and post-operative care coordination are well demonstrated in peer-reviewed literature. This commenter did note that appropriate patient selection for outpatient THA candidates could mitigate some of its concerns.

Another orthopaedic surgery specialty society called the removal of THA from the IPO list “rash,” and expressed extensive concern that CMS would remove a procedure from the IPO list based on only two of the five criteria used to determine appropriate removals for the IPO list. The commenter further expressed concern that the rationale behind removing THA from the IPO list – specifically that CMS believes it meets criteria 2 and 3—fails to consider whether or not outpatient facilities are equipped and appropriate for outpatient THA, and whether or not THA is performed safely in outpatient settings a majority of the time.

Response: We thank commenters for providing public comments on the appropriateness of removing THA from the IPO list and providing it in outpatient settings. We appreciate the support for the proposal. We also recognize concerns for ensuring patient health and quality care. As we have stated numerous times, like most surgical procedures, the appropriate site of service for THA should be based on the physician’s assessment of the patient and tailored to the individual patient’s needs. As we stated in the proposed rule (84 FR 39524), patients with a relatively low anesthesia risk and without significant comorbidities who have family members at home who can assist them may likely be good candidates for an outpatient THA procedure. On one hand, it may be determined that these patients will also be able to tolerate outpatient
rehabilitation either in an outpatient facility or at home postsurgery. On the other hand, patients that require a revision of a prior hip replacement, and/or have other complicating clinical conditions, including multiple co-morbidities such as obesity, diabetes, heart disease, may not be strong candidates for outpatient THA. We also recognize that elective THA, necessitated, for example, by osteoarthritis, for a generally healthy patient with at-home support is different than THA for a hip fracture that is performed on either an emergent or scheduled basis. While the former may be appropriate for outpatient THA if the physician believes that the patient may be safely discharged on the same or next day, the latter may be more appropriate for hospital inpatient admission.

As previously stated in the discussion of the CY 2018 OPPS/ASC final rule (82 FR 59383), we continue to believe that the decision regarding the most appropriate care setting for a given surgical procedure is a complex medical judgment made by the physician based on the beneficiary’s individual clinical needs and preferences and on the general coverage rules requiring that any procedure be reasonable and necessary. We also reiterate our previous statement that the removal of any procedure from the IPO list does not require the procedure to be performed only on an outpatient basis. That is, when a procedure is removed from the IPO, it simply means that Medicare will pay for it in either the hospital inpatient or outpatient setting; it does not mean that the procedure must be performed on an outpatient basis. The 2-midnight rule, which is discussed in section X.B. of this final rule with comment period, provides general guidance on when payment under Medicare Part A (that is, hospital inpatient) may be appropriate. However, the 2-midnight rule also recognizes the importance of the attending physician’s clinical judgment regarding the appropriate setting of care for a procedure to be performed.

While we continue to expect providers who perform outpatient THA on Medicare beneficiaries to use comprehensive patient selection criteria to identify appropriate candidates for the procedure, we believe that the surgeons, clinical staff, and medical specialty societies who perform outpatient THA and possess specialized clinical knowledge and experience are most suited to create such guidelines. Therefore, we do not expect to create or endorse specific guidelines or content for the establishment of providers’ patient selection protocols.

With respect to certain criteria not being met, we remind commenters that not all criteria must be met for a service to be removed from the IPO. We continue to believe that THA meets criteria 2 and 3.

Six Spine Codes Were Removed from the IPO List
CMS also finalized its proposal to remove several spine services from the IPO list. CMS’s commentary, which begins on page 672 of the final rule, can be found here:

Response: After reviewing clinical evidence and the public comments, including input from multiple spinal specialty societies and ASCs we have determined that the services described by CPT codes 22633, 22634, 63265, 63266, 63267, and 63268 are appropriate candidates for removal from the IPO list. CMS notes the overall support and for the reasons cited in the proposed rule, we believe that it is appropriate to remove CPT codes 22633 and 22634 from IPO list because they meet criteria one and two: most outpatient departments are equipped to provide the services to the Medicare population and the simplest procedure described by the code may be performed in most outpatient departments. We also believe that it is appropriate to remove CPT codes 63265, 63266, 63267, and 63268 from the inpatient only list, based on criterion one; most outpatient departments are equipped to provide the services to the Medicare population. Therefore, we are finalizing the removal of CPT codes 22633, 22634, 63265, 63266, 63267, and 63268, and assigning the procedures as follows.

Prior Authorization
As TOA mentioned in the summary of the proposed rule, CMS proposed to add prior authorization for certain fee-for-service outpatient services (blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation). ASCs would be exempt from the prior authorization process.

Congress attempted to add prior authorization that would have forced several services to automatically go to an ASC. However, Congress ultimately backed away.

AAOS provided the following feedback in its comment letter for the proposed rule:

Despite the increasing costs of health care spending in the United States, AAOS does not support the implementation of enhanced prior authorization requirements as a means for controlling spending. Prior authorization processes are burdensome for physicians and undermine their training and professional judgment and create critical delays in the care of patients. The proposals outlined in this rule for new prior authorization processes for certain covered outpatient procedures suggest additional burdensome requirements, including provisional affirmations for procedures that will certainly lead to greater confusion when claims are denied. CMS’ proposal to issue non-emergent decisions within 10 business days and within two business days for expedited reviews “when a delay could seriously jeopardize the beneficiary’s life, health, or ability to regain maximum function” is simply too long. Such delays create undue barriers to care for patients, particularly older adults or those in rural areas, if they have to return to a physician’s office for multiple visits as a result of the delays.

CMS did finalize this proposal, and CMS provided the following response to AAOS and other stakeholders:

Response: The process we are establishing specifically relates to Medicare FFS, not Medicare Advantage, and we have had demonstrated success in implementing prior authorization processes in the Medicare FFS for DMEPOS. As with our other prior authorization processes, we believe that the OPD prior authorization process for certain discrete, often cosmetic procedures can be implemented without the referenced delays in patient care. This is because we are establishing timeframes for contractors to render decisions on prior authorization requests as well as an expedited review process when the regular review timeframe could seriously jeopardize the beneficiary’s health that we believe will enable hospitals to receive timely provisional affirmations. Additionally, we note that our prior authorization policy does not create any new documentation or administrative requirements. Instead, it will just require the same documents that are currently required to be submitted earlier in the process. Resources should not need to be diverted from patient care. We note that prior authorization has the added benefit of giving hospitals some assurance of payment for services for which they received a provisional affirmation. In addition, beneficiaries will have information regarding coverage prior to receiving the service, and will benefit by knowing in advance of receiving a service if they will incur financial liability for non-covered services. We believe that some assurance of payment and some protection from future audits will ultimately reduce burdens associated with denied claims and appeals.

Phasing in Site-Neutral Rates
CMS finalized its proposal to fully phase in site-neutral rates (40 percent of the OPPS rate) for clinic visits provided in grandfathered off-campus departments for CY 2020. The original site-neutral payment policy was created by Congress.

CMS expects this provision to save Medicare over $800 million.

The American Hospital Association successfully sued CMS over its attempt to add additional site-neutral payment policies in the CY 2019 OPPS/ASC rule that would have added additional hospital-owned clinics to the site-neutral payment policy. The court indicated that Congress, not CMS, had the authority to create site-neutral payment policies.

Hospital Price Transparency
CMS removed its proposed related to hospital pricing from the final rule and indicated that it will address transparency in a separate rule.