On August 12, 2020, the Centers for Medicare & Medicaid Services (CMS) published the proposed rule for Hospital Outpatient Prospective Payment System (OPPS) for calendar year (CY) 2021 in the Federal Register. This rule impacts hospital outpatient services.

When finalized, this rule will be effective January 1, 2021. An overview of the proposed rule follows.

Public Comments

Public comments can be submitted through 5:00 p.m. EST on October 5, 2020. When commenting, reference CMS-1736-P. Refer to the proposed rule for different ways to submit your comments.

Proposed Changes to Hospital OPPS

CMS proposed the following updates to the regulations wage index, conversion factors, outlier thresholds, and other outpatient payment factors.

The proposed wage index update matches the 2021 Medicare Inpatient IPPS wage index numbers. The updates will impact both rural and urban core-based statistical areas, which are known as CBSAs, as well as the wage index and the copayment amounts for 2021.

Other Notable Proposals

Economic Impact

CMS proposed overall OPPS payments for hospitals to be $83.9 billion. Table 55 of the rule has additional information regarding this impact. For hospitals, this will be a 2.6% increase overall.

CMS also proposed to continue the 2% reduction in payments for hospitals that fail to meet the quality reporting requirements.

Inpatient Only List

CMS proposed to remove the Inpatient Only list over the next three years, beginning with the removal of 300 musculoskeletal-related services.

Conversion Factor

For hospitals and ambulatory surgery centers (ASC), CMS proposed the following updates:

• Hospitals. The conversion factor would change from $80.7841 to $83.6970. This is a $2.9129, or 3.6%, increase from 2020.
• ASC. The conversion factor would change from $47.7470 to $48.9840. This is a $1.2370, or 2.3%, increase from 2020.

340B Program

CMS proposed to continue the reduction in the payment rate for 340B program drugs for FY 2021. This would be a reduction in payments of 22.5% less than the average sales price for drugs purchased through the program.

CMS also proposed to continue to exclude rural, sole community, critical access, children’s, and cancer hospitals from the payment policies.

Outlier Threshold

CMS proposed to update the outlier threshold from $5,075 to $5,300. This is a $225, or 4.4%, increase from 2020.

Other Noted Items

CMS completed the implementation of the two-year phase in of applying the physician fee schedule payment rates to the hospital outpatient clinic visit evaluation and management code (G0463). The implementation was due to this code being the most common service provided at an offsite hospital-based clinic.

CMS proposed to continue paying nonexempt provider-based clinics at 40% of the OPPS rates for evaluation and management services.

We’re Here to Help

For more information about the proposed rule and how it might affect your organization, contact your Moss Adams professional.