On December 2, 2020, the Centers for Medicare & Medicaid Services (“CMS”) finalized policies that “aim to increase choice, lower patients’ out-of-pocket costs, empower patients, and protect taxpayer dollars” with changes to the Medicare Hospital Outpatient Prospective Payment System (“OPPS”) and the Ambulatory Surgical Center (“ASC”) Payment System in the Medicare OPPS and ASC Final Rule (“Final Rule”). These changes include: elimination of the “Inpatient Only List” and additions and revisions to the “ASC Covered Procedures List” – two key areas of “site neutrality”. Site neutrality is a move to diminish or eliminate the reimbursement differences between different sites of service.

The Final Rule will be published December 29, 2020.

Eliminating the Inpatient Only List

The Final Rule includes finalizing CMS’ proposal to eliminate the Inpatient Only list over a three-year transitional period. The Inpatient Only list is a list of services designated by Medicare as only appropriate to be furnished in a hospital inpatient setting. Generally, but not always, “inpatient only” services are surgical services that require inpatient care because of the:

• Nature of the procedure,

• Typical underlying physical condition of patients who require the service, or

• Need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged.

The change will make all services on the Inpatient List available to be provided in the outpatient setting, when outpatient care is appropriate, as determined by the physician. CMS will start the phase-out beginning with the removal of approximately 300 primarily musculoskeletal-related services, with the list completely phased out by 2024.

Additionally, the Final Rule establishes that procedures removed from the Inpatient Only list beginning January 1, 2021, will be indefinitely exempted from site-of-service claim denials under Medicare Part A, certain referrals for noncompliance with the “2-midnight rule” (inpatient admission and payment are appropriate when the treating physician expects the patient to require a stay that crosses two midnights and admits the patient based on that expectation), and reviews for site-of-service (“patient status”). CMS intends this exemption to last until there is data indicating that the exempted procedure is being more commonly performed in the outpatient setting than the inpatient setting, to allow providers more time to become accustomed to the new ability to bill Medicare for services that were previously only paid on an inpatient basis.

Additions and Revisions to the ASC Covered Procedures List

The Final Rule also makes changes to the ASC Covered Procedures list to offer patients more choices for services at ASCs. Under CMS’ standard review process, the Final Rule adds 11 procedures to the list for 2021. In addition, the Final Rule revises the criteria for adding covered surgical procedures to the ASC Covered Procedures list, and provides that certain criteria CMS used to add covered surgical procedures to the list will now be factors for physicians to consider in deciding whether a specific beneficiary should receive a covered surgical procedure in an ASC, and adopts a notification process for surgical procedures the public believes can be added to the ASC Covered Procedures list under the criteria CMS is retaining. Using this revised criteria, the Final Rule also adds an additional 267 surgical procedures to the ASC Covered Procedures list beginning in 2021.