CMS Releases Final Physician Fee Schedule and Outpatient Rules for Calendar Year 2021

December 03, 2020

The Centers for Medicare & Medicaid Services (CMS) released the annual Physician Fee Schedule (PFS) and Outpatient Prospective Payment System (OPPS) final rules on December 1 and 2 respectively. CMS finalized a number of positive changes for telehealth and quality ratings but also continued down the path of reducing reimbursements in some concerning areas.

Under the final PFS rule, CMS increased reimbursement for primary care and chronic disease management services, including many services that are similar to Evaluation and Management  office visits such as maternity care bundles, emergency department visits, end-stage renal disease capitated payment bundles, and physical and occupational therapy evaluation services.  

The final 2021 PFS conversion factor is $32.41, a decrease of $3.68 from the 2020 conversion factor of $36.09. The PFS conversion factor reflects the statutory update of 0.00 percent and the budget-neutrality adjustment, as required by law, necessary to account for changes in relative value units and expenditures that would result from finalized policies.  This decrease in the conversion factor, coupled with increased reimbursement for primary care and chronic disease management, has resulted in payment cuts to certain specialties to maintain budget neutrality.

Since the beginning of the public health emergency for COVID-19, CMS has added 144 telehealth services such as emergency department visits, initial inpatient and nursing facility visits, and discharge day management services, that are covered by Medicare through the end of the public health emergency. In this final rule, CMS is adding more than 60 services to the Medicare telehealth list that will continue to be covered beyond the end of the PHE, as urged by WHA in its comment letter, and CMS will continue to gather more data and evaluate whether more services should be added in the future.

In the OPPS rule, CMS finalized many of the proposed changes to the Overall Star Ratings it uses to publicly report quality of hospitals. The changes, many of which WHA supported, will simplify the calculation methods of the ratings. Hospitals will be able to more easily replicate the data results, translate the results for consumers and hospital providers, and discover actionable opportunities for improvement.

Unfortunately, CMS also decided to continue the concerning cuts surrounding the 340B prescription drug discount program, and site-neutral payment policies. On 340B cuts, CMS opted to continue the policy of paying the average sales price (ASP) minus 22.5%, rather than the proposed ASP minus 28.7%. It also opted to continue the site-neutral payment cuts which originated in the 2019 OPPS rule. WHA has continued to oppose such cuts, noting AHA’s continued lawsuits challenging their legality, and the financial stresses hospitals are already facing due to COVID-19 in its comment letter.

CMS also finalized its proposals to allow more flexibility for physician-owned hospitals, eliminating the inpatient-only list, and adding to the list of procedures allowed in ambulatory surgical centers (ASCs). WHA noted concerns for how these changes could impact hospital patient-mixes and finances if cherry picking of more lucrative patients and services results, and strongly urged CMS to consider ensure an adequate realignment of hospital payments to account for continued losses from government payors that such changes could exacerbate.

Lastly, CMS included two new topics for required data reporting to HHS as an interim final rule concurrent with the OPPS rule. Beginning January 1, hospitals will need to report their distribution and use of therapeutic COVID treatments, and include the numbers of patients with other respiratory and flu-like illnesses.

WHA will provide more details on both rules in a future communication. Please contact WHA’s Laura Rose for more information on the PFS final rule and WHA’s Jon Hoelter for more information on the OPPS rule.

This story originally appeared in the December 03, 2020 edition of WHA Newsletter