OPPS Proposed Rule Poses Provider Quandary

What to do with the proposed rule – adopt, wait, adapt?

After years of suggestions from various parties, the Centers for Medicare & Medicaid Services (CMS) went ahead and in the 2021 Outpatient Prospective Payment System (OPPS) Final Rule, effective Jan. 1, 2021, removed 298 surgeries from the Inpatient-Only List (IPO). In past years, CMS would assess a small number of surgeries for potential removal on an individual basis, using their standard criteria established almost 20 years ago, including an evaluation of the safety of performing the surgery as outpatient. But in the 2021 OPPS Final Rule, CMS stated that “we do not believe it is necessary for CMS to maintain a list of services that typically require inpatient care and are not paid under the OPPS, nor do we currently believe that it is necessary to require specific HCPCS codes to remain payable only when furnished in the inpatient setting.” The removal of these surgeries and the plans to completely eliminate the list by 2024 led to significant process changes by hospitals, as they were suddenly tasked with determining the correct status, based on the two-midnight rule, for every patient having a surgery not on the Inpatient-Only List.

Most hospitals have adapted their processes for determining Medicare patients’ admission status for non-inpatient surgery based on CMS’s guidance in the 2021 final rule. That process included assessing the patient’s expected length of stay, the complexity of the surgery specific to the patient’s condition, the risks imposed by the patient’s comorbidities, and the patient’s expected post-discharge needs.

Then, on July 19, 2021, CMS released the 2022 OPPS Proposed Rule. In that, CMS stated that “we propose to halt the elimination of the IPO list and, after clinical review of the services removed from the IPO list in CY 2021 as part of the first phase of eliminating the IPO list, we propose to add the 298 services removed from the IPO list in CY 2021 back to the IPO list beginning in CY 2022.”

CMS goes on to justify their stance, stating that “we propose to halt the elimination of the IPO list in order to allow for greater consideration of the impact removing services from the list has on beneficiary safety, and to allow providers impacted by the COVID-19 PHE (public health emergency) additional time to prepare to furnish appropriate services safely and efficiently before continuing to remove large numbers of services from the list.”

This proposal poses a dilemma for hospitals. As a proposed rule, it must go through the required regulatory process with public display, a 60-day comment period, and a review of comments by CMS before publication of the final rule becomes effective on Jan. 1. As such, it is not certain that CMS will reverse its stance and stop the elimination of the IPO, placing the 298 surgeries back on the list. They may choose to proceed as planned, scale back the plan, or abandon the plan and continue on with the elimination.

In the meantime, until CMS publishes the final rule, expected at the beginning of November, hospitals must decide how to determine status for those 298 surgeries that are proposed to be placed back on the IPO. The following factors must be considered:

  • Compliance: The current 2021 rules remain in effect until Dec. 31. Compliance with these rules is not optional.
  • Training: The process to educate physicians on proper status determination is complex, and takes physicians away from patient care. If the education will only be applicable until Dec. 31, it may be a futile investment.
  • Financial: For many of the surgeries, the payment for the surgery as inpatient (as a DRG) can exceed the outpatient payment (as an APC) by tens of thousands of dollars.
  • Risk: If CMS is stating that they are unsure of the safety of performing these surgeries as outpatient, there is a potential patient safety risk by continuing to perform them as outpatient.
  • Uncertainty: While CMS is proposing to restore all 298 surgeries back on the IPO, they also note in the 2022 OPPS Proposed Rule, “we recognize that there may be a subset of Medicare beneficiaries who, on a case-by-case basis, may nonetheless be appropriate to treat in the outpatient setting; and we seek comment below on whether any services that were removed in CY 2021, but are being proposed to be added back to the IPO for CY 2022, should in fact, remain off the IPO list.”
  • Ambiguity: It is clear that there is a patient safety difference when discussing a surgery performed in a hospital compared to one performed at an ambulatory surgery center or physician office. CMS does not explain in any of their commentary how they consider the safety of a patient having a surgery at a hospital as an inpatient different from the same patient having the same surgery at a hospital as an outpatient. While the outpatient designation for providers can include off-campus, provider-based departments, it is unlikely that any of these departments would have the capability of performing these procedures – and this can be prevented by specifying applicability to outpatient on-campus contiguous facilities.

These factors all must be taken into consideration as each hospital formulates its approach.

One resolution would protect the “potential” safety of the patient while also maintaining compliance with the applicable regulations. Any patient undergoing any of the 298 surgeries proposed to be placed back on the IPO should be admitted as an inpatient for surgery, with the surgery performed under inpatient status. After discharge, the patient’s medical record should be reviewed by the utilization review staff for determination of whether the inpatient admission meets the two-midnight rule, either based on the two-midnight expectation, the two-midnight benchmark, or the case-by-case exception. If it is determined that none of the provisions of the two-midnight rule were met, the hospital should follow the self-denial and rebilling provisions allowed per CMS-1599-F. This will result in the claim being billed as inpatient, with the surgery performed as inpatient, but payment will be made under Part B.

As we wait for CMS to review comments and release a final rule, it is important to note that the proposed reversal will not have any effect on status determinations for patients undergoing either total hip or knee arthroplasty. Both of those surgeries, along with several spine surgeries, including many laminectomies and spinal fusions, remain off the IPO and are not being proposed to be added back in 2022. Status for such patients should continue to be designated based on the provisions of the two-midnight rule.

Hospitals should gather a team together – with representation from risk, compliance, case management, physician advisors, and service line leaders – and develop their approach. The key factor that appears to be often overlooked is that the vast majority of these surgeries are scheduled “elective” surgeries, and the proper admission status should be determined far in advance of the actual surgery date, utilizing both internal and external resources for expert guidance and education (and to ensure compliance with all applicable rules and regulations). This is also an opportunity to ensure that documentation supporting the medical necessity of the surgery itself is present in the hospital medical record, as audits by multiple contractors are ongoing, looking not to deny the improper status (which can then be rebilled), but rather payment for the whole surgery, resulting in no revenue at all.

In November, when the OPPS Final Rule is released, the same group can gather, but it will then be faced with two decisions. First, they will need to determine how to proceed from the date of release of the Final Rule until Dec. 31 – when CMS may tell us that they determined that some surgeries are not safe to be performed as outpatient, and will be added back to the IPO (but are still not officially designated as “inpatient only”). Second, they then will have to decide how to proceed starting Jan. 1 with a more permanent process.

And while CMS has told us that surgeries newly removed from the IPO will be exempt from denial for two years, rather than indefinitely, that does not mean that compliance is optional.

Programming Note: Listen to Dr. Ronald Hirsch as he makes his Monday rounds live during Monitor Mondays, 10 Eastern.


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