CMS proposes eliminating inpatient-only list

UPDATE: Aug. 4, 2020: Hospital groups on Tuesday expressed frustration with the outpatient rule, especially the continued rate cut for 340B hospitals.

The American Hospital Association said it also opposes nixing the inpatient-only list, saying many of those services “are surgical procedures that may be complex, complicated, and require the care and coordinated services provided in the inpatient setting of a hospital.”

AHA’s statement also condemned proposed changes to loosen regulations on physician-owned hospitals with a large proportion of Medicaid patients, allowing them to apply to expand more often and lifting some restrictions on how much they expand and where. “This trend creates a destabilizing environment that leaves sicker and less-affluent patients to community hospitals, threatening the health care safety net,” the group wrote.

Dive Brief:

  • CMS is proposing to eliminate the list of services that can be done on an inpatient-only basis for Medicare patients over the next three years, beginning by removing about 300 musculoskeletal-related services, according to proposed rulemaking out Monday evening. It is seeking comment on whether three years is enough time to make the transition and in what order services should be removed.
  • Also in the Outpatient Prospective Payment System proposed rule, outpatient payments to providers will increase 2.6% next year, with overall payments estimated to go up $1.6 billion from this year. That’s larger than the rate increase the Medicare Payment Advisory Commission suggested in its March report to Congress.
  • The proposed rule retains a nearly 30% cut to payment of certain drugs for 340B hospitals, following a Friday decision by the U.S. Court of Appeals for the District of Columbia upholding the rate reduction despite a challenge from hospital groups. It also continues a legally disputed policy of site neutral payments.

Dive Insight:

The outpatient payment rule, if finalized, would continue a move of care away from the hospital setting by eliminating the requirement that hundreds of services be done only on an inpatient basis for Medicare beneficiaries. The American Hospital Association said it is still reviewing the proposal and does not yet have a comment.

CMS stated it has received stakeholder requests for that action in previous rulemaking and determined that “significant developments in the practice of medicine” have allowed more procedures to be done safely on an outpatient basis and it should be up to physicians to determine when inpatient care is required.

“As medical practice continues to develop, we believe that the difference between the need for inpatient care and the appropriateness of outpatient care has become less distinct for many services,” the agency wrote. “Therefore, we believe that the IPO list is no longer necessary to identify services that require inpatient care.”

Last year CMS proposed removing services from the inpatient only list and making them available on an outpatient basis, which it said would help lower costs. Finalized in November, the rules removed hip replacements, six spinal procedure codes and five anesthesia codes from the inpatient only list.

Those procedures are increasingly taking place at ambulatory surgery centers, taking business away from acute care hospitals.

In the proposal, ambulatory surgical centers would get a payment increase of 2.6%, and CMS estimates total payments to them for 2021 will be about $5.45 billion, an increase of $160 million from this year.

The agency is also planning to add 11 procedures to the ASC covered procedure list, including total hip arthroplasty, and is also suggesting changes to the way procedures are added. One method would be a nomination process and the other would add about 270 surgery or surgery-like codes to the list by eliminating five general exclusions.

CMS wrote the COVID-19 pandemic has “highlighted the need for more healthcare access points throughout the country” and suggested more flexibility for patients to choose ASCs as a site of care will alleviate concerns of access for elective procedures and emergency services at hospital outpatient departments.

However, the agency is also seeking comment on whether ASCs should be required to have present staff who can provide advance cardiac life support in the case a medical resuscitation is necessary before a patient can be taken to the nearest hospital.

For the controversial hospital star ratings program, CMS is proposing to reduce the total number of measure groups and stratify the readmission measure based on the proportion of dual-eligible patients. “These changes will simplify the methodology, and therefore, reduce provider burden, improve the predictability of the star ratings, and increase the comparability between hospital star ratings,” the agency wrote.

It also suggests including Veterans Health Administration hospitals in the program beginning in 2023 and continuing to update the Hospital Compare data annually.

Overall outpatient expenditures for 2021 are expected to increase $7.5 billion from this year to reach nearly $84 billion.

Comments on the proposed OPPS are due Oct. 5 and a final draft will be released later this year. CMS is waiving the normal 60-day delay after final rules are issued before they become effective in light of the COVID-19 pandemic. A 30-day delay for this set of proposals is expected.

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