OPPS Final Rule

The Medicare Outpatient Prospective Payment System (OPPS) final rule for calendar year (CY) 2021 continues cuts to hospitals in the 340B Drug Pricing Program and off-campus provider-based departments (PBDs), and updates the overall hospital star ratings methodology, effective Jan. 1, 2021.

Payment Update

CMS will increase base payment rates under the OPPS by 2.4 percent for CY 2021. The agency will reduce payment rates an additional 2 percentage points for hospitals that fail to meet Hospital Outpatient Quality Reporting Program requirements.

Partial Hospitalization Update

For CY 2021 OPPS/ASC final rule with comment period, CMS is maintaining the unified rate structure established in CY 2017, with a single PHP APC for each provider type for days with 3 or more services per day. We are using the CMHC and hospital-based PHP (HB PHP) geometric mean per diem costs, consistent with existing policy, using updated data for each provider type. Accordingly, we are calculating the CY 2021 PHP APC per diem rates for HB PHPs and CMHC PHPs based on updated cost and claims data. Given that the final calculated geometric mean per diem costs are much higher than the proposed cost floors, we are not extending the cost floors to CY 2021 and subsequent years.

The policies should help lower costs for Medicare beneficiaries by allowing services to be performed in lower-cost settings compared to the inpatient setting. They should also help hospitals facing capacity issues because of the COVID-19 pandemic, CMS explained in the rule.

340B Reimbursement Cuts

For a fourth year, CMS will continue Medicare Part B reimbursement cuts for separately payable drugs purchased through the 340B program. Since 2018, CMS has reimbursed 340B hospitals at 77.5 percent of average sales price (ASP) for most separately payable Part B drugs. In 2021, CMS will use this existing methodology to pay 340B hospitals at 77.5 percent of ASP.

CMS had proposed using data the agency collected through an average acquisition cost survey of 340B hospitals to reduce payments for 340B drugs by 34.7 percent of ASP, with a 6 percent of ASP add-on, resulting in a net reduction of 28.7 percent of ASP. CMS decided not to finalize what would have constituted a deeper cut to 340B hospitals due to a court decision upholding its 2018 policy. However, the agency will continue to evaluate whether it should use 340B hospital survey data to set payment rates in future years. Click to read more about OPPS final rule.

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