The Centers for Medicare and Medicaid Services (CMS) released the proposed calendar year (CY) 2021 payment policy for ambulatory surgery centers (ASCs) and hospital outpatient departments (HOPD) on August 3. Click here to reference the proposal.

AAOS will provide a full summary and stakeholder feedback.

The following is a look at TOA’s initial summary of the proposed rule.

Proposed Additions to the ASC Covered Procedures List: THA

CMS is proposing to add 11 codes to the ASC-CPL list in 2021, including THA. CMS’s commentary can be found on page 471.

The proposed codes include:

• 0266T (Implt/rpl crtd sns dev total)
• 0268T (Implt/rpl crtd sns dev gen)
• 0404T (Trnscrv uterin fibroid abltj)
• 21365 (Opn tx complx malar fx)
• 27130 (Total hip arthroplasty)
• 27412 (Autochondrocyte implant knee)
• 57282 (Colpopexy extraperitoneal)
• 57283 (Colpopexy intraperitoneal)
• 57425 (Laparoscopy surg colpopexy)
• C9764 (Revasc intravasc lithotripsy)
• C9766 (Revasc intra lithotrip-ather)

As CMS indicated on page 472:

In this CY 2021 OPPS/ASC proposed rule, we are seeking to continue to promote site neutrality, where possible, between the hospital outpatient department and ASC settings, and expanding the ASCCPL to include as many procedures that can be performed in the HOPD as reasonably possible will advance that goal. Further, we believe that there are at least a subset of Medicare beneficiaries who may be suitable candidates to receive THA procedures in an ASC setting based on the beneficiaries’ clinical characteristics. We believe physicians should continue to play an important role in exercising their clinical judgment when making site-of-service determinations, including for THA. We believe THA would meet our existing regulatory requirements established under 42 CFR 416.2 and 416.166(b) and (c) for covered surgical procedures in the ASC setting. In light of this information and the public comments submitted in support of adding THA to the ASC-CPL in response to our CY 2018 public comment solicitation, we propose to add THA to the ASC-CPL in CY 2021, as shown in Table 40.

Addressing the Future ASC Covered Policy List

CMS is proposing two alternatives for adding codes to the ASC-CPL:

• Establish a nomination process for CY 2021, through which external stakeholders, such as professional specialty societies, would nominate procedures for addition to the ASC-CPL. CMS would review and finalize procedures through annual rulemaking, beginning with the CY 2022 rule.
• Revise the ASC-CPL criteria under 42 CFR 416.166, retaining the general standard criteria and eliminating five of the general exclusion criteria. Using these revised criteria, CMS proposes to add approximately 270 potential surgery or surgery-like codes to the CPL that are not on the CY 2020 IPO list.

Elimination of the Inpatient Only List (IPO): Approximately 300 Musculoskeletal Services

CMS has proposed to eliminate approximately 300 musculoskeletal services on the IPO in CY 2021 as a part of its goal to eventually eliminate the IPO over the next few years:

Therefore, we propose to eliminate the IPO list over a transitional period beginning in CY 2021. While we believe that the list could be eliminated in its entirety at this point, as explained in further detail below, we propose a transitional period.

Given the significant number of services on the list and that they will be newly priced under the OPPS, we recognize that stakeholders may need time to adjust to the removal of procedures from the list. Providers may need time to prepare, update their billing systems, and gain experience with newly removed procedures eligible to be paid under either the inpatient prospective payment system or outpatient prospective payment system. Therefore, we propose to transition services off of the IPO list over a 3-year period, with the list completely eliminated by 2024. In accordance with this proposal, we propose to amend 42 CFR 419.22(n) to state that effective beginning on January 1, 2021, the Secretary shall eliminate the list of services and procedures designated as requiring inpatient care through a 3-year transition, with the full list eliminated in its entirety by January 1, 2024.

CMS made the following comments regarding potential complications that the IPO creates:

• Furthermore, some stakeholders have shared concerns with us that removing procedures from the IPO list and allowing them to be paid under the OPPS when performed in the outpatient setting may result in an increased financial burden for beneficiaries for certain complex services.

• After careful consideration of the need for the IPO list and taking into account the feedback that we have received since the OPPS was implemented, we believe that instead of maintaining a list of services that typically require inpatient care and are not paid under the OPPS, physicians should continue to use their clinical knowledge and judgment to appropriately determine whether a procedure can be performed in a hospital outpatient setting or whether inpatient care is required for the beneficiary based on the beneficiary’s specific needs and preferences, subject to the general coverage rules requiring that any procedure be reasonable and necessary, and that payment should be made pursuant to the otherwise applicable payment policies. We also believe that developments in surgical technique and technological advances in the delivery of services may obviate the need for the IPO list.

• Finally, we believe physician judgment, state and local regulations, accreditation requirements, hospital conditions of participation (CoPs), medical malpractice laws, and other CMS quality and monitoring initiatives will continue to ensure the safety of beneficiaries in both the inpatient and outpatient settings in the absence of the IPO list.

Musculoskeletal Services Will Be First in 2021

CMS indicated that it would like to start by eliminating 266 musculoskeletal services from the IPO list in CY 2021. The list can be found on page 386.

Keep in mind the just because a service has been removed from the IPO list does not mean that it will automatically be paid for in an ASC. CMS will have to generate a process to pay for a service to make it ASC payable.

CMS indicated the following:

For CY 2021, we propose that musculoskeletal services would be the first group of services that would be removed from the IPO list. We believe it is appropriate to remove this group of services first for several reasons. In recent years, due to new technologies and advances in surgical care protocols, expedited rehabilitation protocols, and significant enhancements to postoperative processes we have removed TKA and THA, which are both musculoskeletal services, from the IPO list. During the process of proposing and finalizing removing TKA and THA from the IPO list, stakeholders have continuously requested that CMS remove other musculoskeletal services from the IPO list as well, citing shortened length of stay times, advancements in technologies and surgical techniques, and improved postoperative processes. Additionally, we note that, more often than not, stakeholders’ historical requests for removals were for musculoskeletal services. We also recognize that there is already a set of comprehensive APCs for musculoskeletal services for payment in the outpatient setting, which facilitates the removal of these types of services for CY 2021. Specifically, because we have previously removed codes from the IPO list that are similar clinically and in terms of resource cost and assigned them to these comprehensive APCs, these APCs generally describe appropriate ranges and placements for these musculoskeletal codes being proposed for removal in CY 2021, which will allow for appropriate payment. We have identified 266 musculoskeletal services that we propose to remove from the IPO list for CY 2021.

Physician-Owned Hospitals (POHs): New Provisions

CMS’s proposal begins on page 680.

Despite all of the major issues found in the proposal, minor changes for POHs led to the American Hospital Association dedicating an entire paragraph to the issue in its press release:

In addition, we strongly oppose attempts to loosen the current restrictions on physician-owned hospitals. The Congressional Budget Office, Medicare Payment Advisory Commission and independent researchers have concluded that physician self-referral to facilities in which they have an ownership stake leads to greater per capita utilization of services and higher costs for the Medicare program. Further, physician-owned hospitals tend to cherry-pick the most profitable patients, jeopardizing communities’ access to full-service care. This trend creates a destabilizing environment that leaves sicker and less-affluent patients to community hospitals, threatening the health care safety net.

The proposed rule would make it easier for grandfathered POHs to expand. Current law makes it very challenging to expand; only a handful of POHs in Texas are allowed to expand by qualifying as either an “applicable hospital” or “high Medicaid facility” by meeting certain Medicaid population requirements.

This proposal would likely help one Texas POH expand beyond its main campus. Those POHs that do have the waiver (“high Medicaid facilities”) would be able to add additional operating rooms, procedure rooms, and beds under this proposal by eliminating the 200 percent baseline growth restriction. For all other POHs that would not qualify for the waiver, the proposal does take an additional look at the number of beds that are provided to a hospital based on the March 23, 2010, baseline date in his proposal may make a difference for some POHs.

CMS also proposes to allow physician-owned hospitals with a high Medicaid population to apply for an expansion more frequently, as they are currently restricted to applying once every two years.

Grandfathered POHs: Expansion on Other Campuses

For grandfathered POHs that are granted expansion, CMS is proposing to allow those hospitals to expand beyond their main campuses. This would address at least one POH in Texas that has been attempting to expand beyond its main campus.

Per CMS’s proposal:

We believe that our current regulations impose unnecessary burden on high Medicaid facilities which, by definition, serve significant numbers of Medicaid patients relative to other hospitals in the counties in which they are located. Because the statute does not apply to high Medicaid facilities those requirements related to the frequency of permitted requests for exceptions to the prohibition on expansion of facility capacity, the total amount of permitted expansion of facility capacity, or the location of permitted expanded facility capacity, using the Secretary’s authority under sections 1871 and 1877(i)(3)(A)(i) of the Act, we propose to remove certain regulatory requirements for high Medicaid facilities that are not included in the statute.

Grandfathered POHs: What Is the Bed Capacity?

When the Affordable Care Act was signed into law on March 23, 2010, the existed POHs were grandfathered in and were not allowed to expand above their existing combination of beds, operating rooms, and procedure rooms. However, a debate has ensued over how to determine what is a “licensed” bed.

In March 2020, CMS published an FAQ regarding stakeholder inquiries regarding how a grandfathered POH’s number of beds was determined on March 23, 2010. (CMS’s commentary can be found on page 688.)

CMS indicated that it has deferred to state licenses for determining the March 23, 2010, baseline. However, the question, which originated in Kansas, has asked if CMS would recognize additional beds that were being used.

CMS concluded in this proposed rule:

In order to ensure stakeholders’ awareness of our interpretation regarding the determination of the number of beds for which a hospital was licensed on March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in effect as of this date, but does have a provider agreement in effect on December 31, 2010, the effective date of such agreement), we propose to revise the definition of “baseline number of operating rooms, procedure rooms, and beds” at § 411.362(a) to include a statement that, for purposes of determining the number of beds in a hospital’s baseline number of operating rooms, procedure rooms, and beds, a bed is included if the bed is considered licensed for purposes of State licensure, regardless of the specific number of beds identified on the physical license issued to the hospital by the State. We seek comment on our proposal to include this language in regulation text at § 411.362(a) generally, and specifically whether the inclusion of this language is necessary or could be perceived as inadvertently limiting the definition of “baseline number of operating rooms, procedure rooms, and beds.”

ASC Payment Updates Will Continue to Mirror Hospital Outpatient Updates

The ASC industry secured one of its greatest victories several years ago when Medicare agreed to tie an ASC’s annual payment update to the payment update for hospital outpatient departments. Prior to that decision, ASCs were updated based on the consumer price inflation index, which is less than the hospital market basket update, which is higher.

As a result of the delta between the consumer price inflation index and the hospital market basket update, a wide gulf has grown between ASC and HOPD payments. While they will continue to receive different payments, the gulf will no continue to grow.

CMS indicated in this proposed rule that it will continue to provide the same update through 2023:

ASC Payment Update: For CYs 2019 through 2023, we adopted a policy to update the ASC payment system using the hospital market basket update. Using the hospital market basket methodology, for CY 2021, we propose to increase payment rates under the ASC payment system by 2.6 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This proposed increase is based on a hospital market basket percentage increase of 3.0 percent minus a proposed multifactor productivity adjustment required by the Affordable Care Act of 0.4 percentage point. Based on this proposed update, we estimate that total payments to ASCs (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2021 would be approximately 5.45 billion, an increase of approximately 160 million compared to estimated CY 2020 Medicare payments.

Hospital Outpatient Department Prior Authorization Approval

TOA told you several years ago about a proposal by Medicare and Congress to require surgeons to be granted prior authorization approval before performing certain services in a hospital outpatient department (as opposed to taking it directly to an ASC).

Medicare’s 2020 payment rule for HOPDs/ASCs approved several services for prior authorization approval (they were not musculoskeletal services).

The CY 2021 proposal would add the following to the prior authorization requirement to be performed in an HOPD:

Addition of New Service Categories for Hospital Outpatient Department Prior
Authorization Process: We propose the addition of the following two categories of services to the prior authorization process beginning for dates of service on or after July 1, 2021: (1) cervical fusion with disc removal and (2) implanted spinal neurostimulators.

HOPD/ASC Non-Opioid Pain Management Packaging Policies

CMS provided an overview of its new policies:

• In the CY 2018 OPPS/ASC final rule with comment period (82 FR 52485), we reiterated our position with regard to payment for Exparel®, a non-opioid analgesic that functions as a surgical supply, stating that we believed that payment for this drug is appropriately packaged with the primary surgical procedure. We also stated in the CY 2018 OPPS/ASC final rule with comment period that we would continue to explore and evaluate packaging policies under the OPPS and consider these policies in future rulemaking.

• In the CY 2019 OPPS/ASC final rule with comment period (83 FR 58855 through 58860), we finalized a policy to unpackage and pay separately at ASP+6 percent for the cost of non-opioid pain management drugs that function as surgical supplies when they are furnished in the ASC setting for CY 2019 due to decreased utilization in the ASC setting.

• In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61173 through 61180), after reviewing data from stakeholders and Medicare claims data, we did not find compelling evidence to suggest that revisions to our OPPS payment policies for non-opioid pain management alternatives were necessary for CY 2020. We finalized our proposal to continue to unpackage and pay separately at ASP+6 percent for the cost of non-opioid pain management drugs that function as surgical supplies when furnished in the ASC setting for CY 2020. Under this policy, the only drug that meets these criteria is Exparel.

In this proposed rule for 2021 payments, Medicare concluded:

Our updated review of claims data showed a continued decline in the utilization of Exparel® in the ASC setting, which supported our proposal to continue paying separately for Exparel® in the ASC setting. Decreased utilization could potentially indicate that the packaging policy is discouraging use of that treatment and that providers are choosing less expensive treatments. However, it is difficult to attribute causality of changes in utilization to Medicare packaging payment policy only. We believe that unpackaging and paying separately for Exparel addresses decreased utilization because it eliminates any potential Medicare payment disincentive for the use of this non-opioid alternative, rather than prescription opioids.

We believe we fulfilled the statutory requirement to review payments for opioids and evidence-based non-opioid alternatives to ensure that there are not financial incentives to use opioids instead of non-opioid alternatives in CY 2020 OPPS/ASC rulemaking. We are committed to evaluating our current policies to adjust payment methodologies, if necessary, in order to ensure appropriate access for beneficiaries amid the current opioid epidemic. However, we do not believe conducting a similar CY 2021 review would yield significantly different outcomes or new evidence that would prompt us to change our payment policies under the OPPS or ASC payment system.

Therefore, for CY 2021, we propose to continue our policy to pay separately at ASP+6 percent for the cost of non-opioid pain management drugs that function as surgical supplies in the performance of surgical procedures when they are furnished in the ASC setting and to continue to package payment for non-opioid pain management drugs that function as surgical supplies in the performance of surgical procedures in the hospital outpatient department setting for CY 2021.

Two-Midnight Rule

Per CMS:

Medical Review of Certain Inpatient Hospital Admissions under Medicare Part A for CY 2021 and Subsequent Years (2-Midnight Rule): For CY 2021, we propose to continue a 2-year exemption from Beneficiary and Family-Centered Care Quality Improvement Organizations (BFCC-QIOs) referrals to Recovery Audit Contractors (RACs) and RAC reviews for “patient status” (that is, site-of- service) for procedures that are removed from the inpatient only (IPO) list under the OPPS beginning on January 1, 2021. We are also seeking comments on whether the 2-year exemption period continues to be appropriate, or if a longer or shorter period may be more warranted.

The SpineJack® Expansion Kit

CMS provided commentary on Stryker’s product and asked for the following:
“We are inviting public comment on whether the SpineJack® Expansion Kit meets the device pass-through payment criteria discussed in this section, including the cost criterion.”