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Issue Brief: Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule CY 2021

Centers for Medicare & Medicaid Services

August 17, 2020


This proposed rule makes changes to hospital outpatient prospective payment system (OPPS), which governs payment policy in Medicare Part B for hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). The proposed rule also includes updates to quality reporting requirements for HOPDs and ASCs. CMS updates these rules annually, so many of the policy changes outlined for 2021 build on existing policies.

Major Proposed Changes for CY 2021

  • Continuation of 340B Drug Pricing Program Reimbursement Cuts: CMS continues to implement cuts to reimbursement that were first rolled out in 2018. For 2021, CMS is proposing two options for reimbursing drugs purchased under the 340B drug discount program – either maintaining the current average sales prices (ASP) minus 22.5% that was imposed last year, or imposing a new rate, based on this year’s hospital survey, of ASP minus 34.7% plus an overhead payment set at 6% of ASP for a net rate of ASP minus 28.7%. Based on the proposed rule’s phrasing, it seems like that CMS is floating the higher cut as means to induce hospitals to accept ASP minus 22.5%.

CMS is proposing to exempt rural sole community hospitals, certain cancer hospitals, and children’s hospitals from the changes, but will still require them to report the informational TB modifier.

The 340B cuts are the subject on ongoing litigation between CMS and hospitals – a lower court ruled in favor of hospitals, but the D.C. Circuit Court recently reversed that decision, finding that CMS had the authority to reduce 340B reimbursement. Although it is unclear whether hospitals will appeal to the U.S. Supreme Court, ASHP and other stakeholders will continue to aggressively pursue legislative and regulatory remedies to stop the cuts and reinstate full ASP + 6% reimbursement.

  • Elimination of Inpatient Only List: CMS is proposing to eliminate the inpatient only list over three years in order to allow the services to be provided in the hospital outpatient setting when appropriate. In effect, this will allow hospitals to shift services that could previously only be provided to inpatients to hospital outpatient settings. ASHP is still analyzing the full impact of the change and we invite members to provide feedback as to how this shift might affect their practices.
  • Star Rating Changes: CMS is proposing a number of significant Star Ratings changes, designed to “update and simplify how the ratings are calculated, reduce the total number of measure groups, and stratify the Readmission measure group based on the proportion of dual-eligible patients.” Specifically, CMS is proposing to replace its current measure calculation process with a basic averaging methodology that calculates measure group scores with equal measure weightings. Additionally, the agency is proposing to expand the Star Ratings process to critical access and Veterans’ Administration hospitals.

Applicability and Timing

In general, policy proposals adopted in an OPPS proposed rule become effective on January of the next calendar year (so January 1, 2021 for this proposed rule). However, the timeframe for adoption of certain policies set forth in this year’s proposed rule is likely to be extended due to COVID-19. Similarly, with the exception of the 340B cuts, which CMS has pursued aggressively since they were initially proposed several years ago, CMS may provide more flexibility than usual around implementation of new policies that receive substantial pushback from stakeholders.

We strongly encourage members to submit feedback, questions, or concerns to ASHP to assist in the development of our written comments on the proposed rule. Comments are due to CMS on October 5, so please send any input to Jillanne Schulte Wall at [email protected] by September 21. ASHP will keep members updated regarding next steps in our advocacy to safeguard 340B, and will also provide a revised issue brief when CMS releases a final OPPS rule in late fall 2020.