Three Key Things in Health Care

• The Center for Medicare & Medicaid Services (“CMS”) finalized phase out of the more than 1,700 services Inpatient Only List (“IPO List”) and expanded the ASC Covered Procedures List (“ASC CPL”), with the intention of expanding choice and reducing beneficiary out-of-pocket expenses.
  • On December 2, 2020, CMS issued its Calendar Year 2021 Outpatient Prospective Payment System/Ambulatory Surgery Center Payment System final rule (the “CY 2021 OPPS/ASC Final Rule”). Among other notable measures, the CY 2021 OPPS/ASC Final Rule made good on CMS’s proposal, first described last summer, to eliminate the IPO List.
  • Commencing January 1, 2021, CMS will phase out the IPO List over a three-year period, beginning with the removal of 298 services (including 266 musculoskeletal-related services). As of January 1, 2024, the IPO List will be eliminated in its entirety, meaning that some 1,740 services previously eligible for payment by Medicare only when performed on an inpatient basis will be eligible for reimbursement under OPPS when performed on an outpatient basis.
  • In recognition that the phase-out of the IPO List has the potential to create headaches, particularly under the “two-midnight rule,” CMS also finalized a policy to exempt procedures removed from the IPO List beginning on January 1, 2021, from site-of-service claim denials, Beneficiary and Family-Centered Care Quality Improvement Organization (“BFCC-QIO”) referrals to Recovery Audit Contractor (“RAC”) for persistent noncompliance with the two-midnight rule, and RAC reviews for “patient status” (i.e., site-of-service).
    • Subject to certain limited exceptions, the two-midnight rule generally considers a patient appropriate for inpatient admission and reimbursement under Medicare Part A when the patient is admitted based on an expectation that their hospital stay will cross at least two midnights. Procedures listed on the IPO List, however, are from the two-midnight rule requirement and associated medical review and are reimbursed under Medicare Part A regardless of the expected length of stay.
    • The exemption established by the CY 2021 OPPS/ASC Final Rule for services removed from the IPO List is slated to remain in place until such procedures are more commonly performed in the outpatient setting than in the inpatient setting.
  • CMS is also finalizing its proposal to add 11 additional procedures, including total hip arthroplasty, to the ASC CPL. In addition, effective January 1, 2021, CMS is revising the criteria it utilizes for adding procedures to the ASC CPL, and pursuant to the revised criteria is adding 267 surgery and surgery-like procedures to the ASC CPL.  Finally, CMS is incorporating a new notification process by which additional procedures may be added to the ASC CPL.
  • Key Takeaway: The elimination of the IPO List, expansion of the ASC CPL, and modification to the criteria for adding procedures to the CPL create greater flexibility and choice for physicians and patients alike, offering the potential for reduced out-of-pocket costs, but place greater responsibility on physicians to ensure the site of service for a particular patient is appropriate to meet the patient’s care needs.
• In a recent final rule, the Centers for Medicare & Medicaid Services (“CMS”) signals its support for the continuation of valuable telehealth services during the COVID-19 pandemic and beyond.
  • Following the COVID-19 public health emergency (“PHE”) declaration, CMS has steadily broadened access to telehealth services in an effort to ensure Medicare beneficiaries may receive the services they need while limiting their potential exposure to COVID-19. On December 1, 2020, CMS issued a final rule that provides revised payment policies under the Medicare Physician Fee Schedule and updates the Medicare telehealth services list (the “Final Rule”).
  • Generally, when services are considered for addition to the Medicare telehealth services list, they are labeled as either Category 1 or Category 2. Category 1 includes services that are similar to professional consultations, office visits, and office psychiatry services currently on the Medicare telehealth services list.  Category 2 includes services that are not similar to those on the current Medicare telehealth services list.  Before such services may be added to the Medicare telehealth services list, they must satisfy certain criteria within their respective category.
  • In the Final Rule, CMS finalized the permanent addition of numerous telehealth services to the Medicare telehealth services list under Category 1, including, but not limited to, Group Psychotherapy (CPT code 90853), Cognitive Assessment and Care Planning Services (CPT code 99483), and Prolonged Services (HCPCS code G2212).
  • In addition, CMS finalized the creation of a Category 3 for services that would be included on the Medicare telehealth services list on a temporary basis. CMS stated that it “would include in this category the services that were added during the PHE for COVID-19 for which there is likely to be clinical benefit when furnished via telehealth, but for which there is not yet sufficient evidence available to consider the services as permanent additions under Category 1 or Category 2 criteria.”  CMS finalized the addition of services such as Home Visits, Established Patient (CPT codes 99349-99350) and Emergency Department Visits, Levels 1-5 (CPT codes 99281-99285), among others, on a Category 3 basis.  Such services will remain on the list through the calendar year in which the PHE ends.
  • CMS expressed that it would continue to consider whether Category 3 services should be retained on the Medicare telehealth services list following the end of the COVID-19 PHE.
  • Key Takeaway: The utilization of telehealth services skyrocketed during the pandemic and, in light of the Final Rule, shows no sign of abating.  CMS will continue to assess which services should be added to the Medicare telehealth services list on a permanent basis.

With Rebound in Revenues, Providers Will Need to Focus More Closely on Identifying Expenses Attributable to Coronavirus When Reporting on Use of Provider Relief Funds (“PRFs”)

• The current version of the General and Targeted Distribution Post-Payment Notice of Reporting Requirements (“Reporting Requirements”) published by the Centers for Medicare and Medicaid Services (“CMS”) allows providers to account for use of PRF with healthcare-related expenses attributable to coronavirus not reimbursed by another source and with lost patient care revenues for calendar year 2020.
• Many providers may have previously anticipated that significant lost revenues during March, April and May would account for most of PRF received, but third quarter financial reports from health systems are showing a significant rebound in patient care revenues during the second half of the year that may end up offsetting those lost revenues from early on in the pandemic. This is likely a driver in why HCA Healthcare announced that it would repay all of its PRF and why other health systems have been having to adjust previous accountings for the earned portion of PRF.
  • CMS has indicated that the amount of lost revenues eligible for use of PRF is capped at the change in 2019 to 2020 patient care revenue for each provider receiving PRF, without consideration for other factors that might have contributed to a budgeted increase in revenues for 2020 (such as the opening of a new location or expansion of facilities or services).
  • CMS has also indicated that the calculation of lost revenues will take into account coronavirus relief from other governmental agencies, business interruption insurance claims paid to cover losses and fundraising revenues, grants, or donations that contribute to funding patient care services.
• Given the fairly stringent approach of CMS on calculating lost revenues and the rebound in patient revenues during the second half of the year, many providers may have to rely on healthcare expenses attributable to coronavirus to account for a substantial portion of their use of PRF.  This means providers need to be focusing on properly accounting for all the potential expenses that can be classified as attributable to coronavirus based on guidance from CMS.  Among other things, CMS has indicated:
  • PRF can be used for reimbursement of marginal increased expenses related to coronavirus, which might be calculated as an overall average increase in the cost for providing an office visit or another type of service.
  • Expenses for capital equipment, inventory, and facilities may be fully expensed in cases where the purchase was directly related to preventing, preparing for, and responding to the coronavirus.
  • Providers may allocate normal and reasonable overhead costs to their subsidiaries, which may be an eligible expense if attributable to coronavirus and not reimbursed from other sources.
  • PRF may be used to support the distribution of a COVID-19 vaccine, including costs incurred prior to the vaccine becoming available.
• Key Takeaway: Providers may not be able to rely on lost revenues to account for most of their PRF, so they need to be paying careful attention to accounting for all healthcare expenses attributable to coronavirus ahead of reporting deadlines on the use of PRF payments.