Knowledge Base Article

The Calendar Year (CY) 2021 Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule (CMS-1736-P) was released on August 4, 2020.

CMS estimates “that total OPPS payments for CY 2021, including beneficiary cost-sharing, to the approximately 3,628 facilities paid under the OPPS (including general acute care hospitals, children’s hospitals, cancer hospitals, and CMHCs) would increase by approximately 1.6 billion compared to CY 2020 payments, excluding our estimated changes in enrollment, utilization, and case-mix.”

Inpatient Only Procedure List

In years past, this is where I would remind you that CMS has specific criteria for determining whether or not a procedure should be removed from the Inpatient Only (IPO) List and assigned to an Ambulatory Payment Category (APC) group. However, not this year because this year CMS is proposing to:  

• Eliminate the IPO list over a three-year transitional period with the list completely phased out by CY 2024, and
• Begin with the removal of nearly 300 musculoskeletal-related services,

CMS is requesting comments on “whether three years is an appropriate time frame for transitioning to eliminate the IPO list; other services that are candidates for removal from the IPO list for CY 2021; and the sequence in which to remove additional clinical families and/or specific services from the IPO list in future rulemaking.”

Short Inpatient Hospital Stays

The Two-Midnight Rule, as finalized in the FY 2014 IPPS Final Rule, clarified when an inpatient admission is considered reasonable and necessary for purposes of Medicare Part A payment. This policy established a benchmark for when a patient is considered appropriate for inpatient hospital admission and payment.

CMS also clarified that “when a beneficiary enters a hospital for a surgical procedure not designated as an inpatient-only (IPO) procedure as described in 42 CFR 419.22(n), a diagnostic test, or any other treatment, and the physician expects to keep the beneficiary in the hospital for only a limited period of time that does not cross 2 midnights, the services would be generally inappropriate under Medicare Part A.”

In the CY 2016 OPPS/ASC Final Rule CMS “finalized a proposal to allow for case-by case exceptions to the 2-midnight benchmark, whereby Medicare Part A payment may be made for inpatient admissions where the admitting physician does not expect the patient to require hospital care spanning 2 midnights, if the documentation in the medical record supports the physician’s determination that the patient nonetheless requires inpatient hospital care.” The following criteria are relevant to making this determination:

• Complex medical factors such as history and comorbidities;
• The severity of signs and symptoms;
• Current medical needs; and
• The risk of an adverse event.

Medical Review of Certain Inpatient Hospital Admissions under Medicare Part A for CY 2021 and Subsequent Years (2-Midnight Rule)

Once a surgical procedure has been removed from the IPO List, documentation in the record must support the need for the inpatient admission. CMS once again reminds providers in this proposed rule that “removal of a service from the IPO list has never meant that a beneficiary cannot receive the service as a hospital inpatient – as always, the physician should use his or her complex medical judgment to determine the generally appropriate setting.”

In the CY 2020 OPPS Final Rule, CMS finalized a two-year exemption from site-of-service claim denials, Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) referrals to RACs, and RAC reviews for “patient status” (that is, site-of-service) for procedures that are removed from the IPO list under the OPPS beginning on January 1, 2020.

For CY 2021, CMS is proposing to continue the two-year exemption for procedures removed from the IPO list beginning on January 1, 2021. They are also requesting comments on whether this continues to be the appropriate time frame, or if a longer or shorter period may be warranted.

As a provider, it is important to be mindful that this exemption is specific to site-of-service claim denials. This exemption does not include medical necessity based on a National or Local Coverage Determinations (NCDs and LCDs) meaning irrespective of site-of-service, a short stay claim can still be denied for lack of documentation supporting medical necessity of the procedure.

Hospital Outpatient Department Prior Authorization Program: Proposed New Service Categories

With the CY 2020 OPPS/ASC Final Rule (CMS-17-17-FC), CMS established the nationwide prior authorization process and requirements for certain hospital outpatient department (OPD) services.  Effective July 1, 2020 the following services now require prior authorization:

• Blepharoplasty,
• Botulinum toxin injections,
• Panniculectomy,
• Rhinoplasty, and
• Vein Ablation.

As part of their responsibility to protect the Medicare Trust Funds, CMS routinely monitors the utilization of services. Through claims analysis, CMS notes in the proposed rule that they have identified an increase in volume of cervical fusion with disc removal procedures and implanted spinal neurostimulator procedures that was significantly higher than overall trends for all OPD services.

CMS notes they “researched possible causes for the increase in volume that would indicate the services are increasingly necessary.” However, CMS notes that “after reviewing all available data, we found no evidence suggesting other plausible reasons for the increases, which we believe means financial motivation is the most likely cause. We believe utilizing codes because of financial motivations, as opposed to medical necessity reasons, has resulted in an unnecessary increase in volume.”

CMS continues to believe prior authorization “is an effective mechanism to ensure Medicare beneficiaries receive medically necessary care while protecting the Medicare Trust Funds from unnecessary increased in volume by virtue of improper payments, without adding onerous new documentation requirements.”

Therefore, CMS is proposing to add cervical fusion with disc removal and implanted spinal neurostimulators to this program effective for services provided on or after July 1, 2021. Following are the specific procedure codes being proposed for inclusion in this program:

Cervical Fusion with Disc Removal

• 22551: Fusion of spine bones with removal of disc at upper spinal column, anterior approach, complex, initial, and
• 22552: Fusion of spine bones with removal of disc in upper spinal column below second vertebra of neck, anterior approach, each additional interspace

Implanted Spinal Neurostimulators

• 63650: Implantation of spinal neurostimulator electrodes, accessed through the skin,
• 63685: Insertion or replacement of spinal neurostimulator pulse generator or receiver, and
• 63688: Revision or removal of implanted spinal neurostimulator pulse generator or receiver

Be on the lookout for additional highlights from the proposed rule in next week’s newsletter. In the meantime, I encourage key stakeholders at your facility to take the time to review the proposed rule. For those wishing to submit comments, CMS is accepting them up until 5 p.m. EST on October 5, 2020.