Medicare Reimbursement

The 4 Things Labs Need to Know about CMS’ Newly Proposed 2021 OPPS Rule 

On Aug. 4, CMS posted the proposed Outpatient Prospective Payment System (OPPS) Rule for 2021.  In case you don’t feel like reading all 785 pages of the Rule, here’s a high level summary of the four notable changes that managers of labs providing services to hospital and ambulatory surgical center (ASC) outpatients need to know about.

  1. 2021 OPPS Payment Rates

CMS is proposing a 2.6 percent increase to overall 2021 OPPS rates based on the following factors:

  • Market basket update of +3 percent; minus
  • The Affordable Care Act (ACA)-required multifactor productivity adjustment of -0.4 percent.

And, of course, hospitals failing to meet their Outpatient Quality Reporting (“OQR”) requirements will continue to be subject to a 2 percent payments reduction.

  1. Changes to Laboratory Date of Service (DOS) Rules

 CMS wants to exclude cancer-related protein-based Multianalyte Assays with Algorithmic Analysis (MAAAs), which generally aren’t performed in the hospital outpatient setting, from the Hospital OPPS packaging policy and add them to laboratory DOS provisions instead. Result: MAAAs would be reimbursed under the Clinical Laboratory Fee Schedule (CLFS) rather than the Hospital OPPS. Such tests would have to meet the DOS requirements with the testing lab directly billing Medicare for the tests.

  1. Extension of Prior Authorization Requirements

 To curb unnecessary utilization, last year CMS implemented a mandatory new process for hospitals to submit a prior authorization request affirming that an outpatient service is covered before delivering providing and billing Medicare for it. The requirement applied to five categories of services:

  • Blepharoplasty;
  • Botulinum toxin injections;
  • Panniculectomy;
  • Rhinoplasty; and
  • Vein ablation.

CMS wants to add two new services to the prior authorization list for CY 2021: cervical fusion with disc removal and implanted spinal neurostimulators.

  1. Elimination of the Inpatient Only (IPO) List

CMS has determined that medical and technological advances have eliminated the need for the IPO List of services requiring inpatient care due to the invasive nature of the procedure, the need for postoperative recovery time or the patient’s underlying physical condition of the patient and is proposing to eliminate it over a three-year period, starting with the removal of 300 musculoskeletal services in 2021.

What’s Not Changing: The Site-Neutral Payment Policy for Clinic Visits

 For many labs, the biggest story of the proposed 2021 OPPS rules is what’s not changing, namely, the controversial site-neutral policy for payment of clinic visits. Explanation: No service is more commonly billed under the OPPS than outpatient clinic visits for patient assessment and management. More often than not, these visits occur in a physician’s office. In 2020, CMS cited its authority to restrict unnecessary increases in the volume of covered services, to complete implementation of a new rule to reimburse visits provided at an off-campus provider-based-department (PBD) under OPPS at the Medicare Physician Fee Schedule (MPFS) rate for the clinic visit service (G0463 – Hospital outpatient clinic visit for assessment and management of a patient).

Hospitals claimed that CMS lacked the authority to implement the new policy. In September  2019, a federal district court agreed; but the hospitals’ victory was short lived when in July, the U.S. Court of Appeals for the District of Columbia Circuit reversed the lower court and ruled in CMS’ favor. Bottom Line: The site-neutral policy will continue in 2021. Moreover, the agency is considering going back and reprocessing 2019 claims that were previously reprocessed at the higher OPPS rate.

Takeaway: Brace Yourself for a Quick Turnaround

The deadline to comment on the proposed Rule is Oct. 5. As per usual, CMS is expected to publish the Final Rule some time in early December. Normally, changes to the Final Rule take effect 60 days after finalization. However, due to the public health emergency, this year CMS plans to implement the Final Rule in 30 days, leaving outpatient testing labs little time to adjust to the changes.


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