2021 OPPS Proposed Rule

To the Honorable Administrator Verma and Secretary Azar,

The American College of Physician Advisors (ACPA) appreciates the opportunity to comment on CMS 1736-P, the 2021 OPPS Proposed Rule. We are pleased to offer the following comments.

IX. Services That Will Be Paid Only as Inpatient Services


ACPA supports the phasing out of the Inpatient Only (IPO) list. The IPO list was necessary when the OPPS was created in 2000, when the distinction between inpatient and outpatient services was a fairly new concept outside of “observation” for certain medical diagnoses. It ensured that patients undergoing significant procedures were guaranteed inpatient benefit protections, such as receiving the Important Message from Medicare (IM), knowing their rights as hospital inpatients, and having discharge appeal rights.

In October 2013, CMS effectuated the “Two Midnight Benchmark” and the “Two Midnight Presumption,” which defined appropriateness for Part A payment based on 1) the need for medically necessary hospital care and 2) the expectation that the care is expected to span the interval between two consecutive midnights. CMS felt that patients who did not require hospital care through a second midnight were unlikely to require SNF rehabilitation care, less likely to have serious and protracted illnesses where cost-sharing responsibilities could snowball, and less likely to be impacted by not having discharge appeal rights.

With the introduction of the “Two Midnight Rule,” the IPO list became less necessary, as most procedures that entail significant risk and recovery would be appropriate for Part A payment through this rule. The addition of the “case-by-case” exception in 2016 made the IPO list theoretically even more obsolete, as attending providers could use their judgment of the patient’s needs and specific circumstances to provide appropriate care as an inpatient, even if the need for care crossing 2 midnights is not expected.

Furthermore, CMS has allowed Medicare Advantage Organizations (MAOs) to determine the site of service for “inpatient only” surgeries performed on their enrollees, including at ambulatory surgical centers (ASC), since at least 2018. The same surgery cannot be both safe for an MA enrollee in an ASC yet only safe to be performed in an inpatient hospital setting for a FFS Medicare beneficiary.

Thus, ACPA agrees with the plan to remove the inpatient only list and the corresponding regulation at 42 CFR §412.3. This will provide administrative simplification to hospitals in the long term. While ACPA supports removing this list, we would like to raise several operational concerns that must be addressed:

  1. The multitude of bundled payment programs that apply only to inpatient surgery will create consternation by hospitals and physicians if performance periods lose less complicated and less costly surgeries to outpatient status, compared with the baseline periods. Those who have devoted time and effort to streamline processes and create value may face losing all of the shared savings they worked so hard to earn, due only to a policy shift. This needs to be addressed contemporaneously with the removal of any surgery from the IPO list, not “after review of the data” a year or two later.
  2. The payment differential between inpatient DRG and outpatient APC can be significant. For one spine surgery, CPT 22612, the payment differential is approximately $10,000. How is a $10,000 cut in payment for the same surgery justified? For some surgeries, such as joint replacement, the base C-APC and DRG rates are similar. However, the C-APC is not supplemented with IME, DSH, uncompensated care, etc. For many hospitals, that amount is significant. For example at UCSF, there is a $10,000 payment differential between inpatient and outpatient total joint replacement once all of these factors are included.
  3. Throughout the Preamble, the Two Midnight Benchmark and Presumption are repeatedly referenced, but the case-by-case exception for patients with a one midnight expectation is mentioned only once. When the IPO list is phased out, the regulations at §412.3 will contain only two scenarios appropriate for Part A payment – the Two Midnight Rule and the case-by-case exception. CMS had tasked BFCC-QIOs with education on the case-by-case exception. However, providers still lack clear sub-regulatory guidance on this regulation, and most providers feel confused regarding it
    • Some high risk and complex surgeries, such as carotid endarterectomy, transcatheter aortic valve replacement, and elective cardiac stent placement with temporary left ventricular assist device support can be accomplished in one midnight. Once removed from the IPO list, physicians and auditors will need specific guidance on which patients can be admitted as inpatient and which should be outpatient. The regulatory guidance indicates four factors - complex medical factors such as history and comorbidities; the severity of signs and symptoms; current medical needs; and the risk of an adverse event. But these factors are not only vague but also the same ones used to guide the Two Midnight decision – how do the same set of factors inform mutually exclusive
    • The Preamble guidance on the use of the case-by-case exception was specific to total knee arthroplasty. Total knee arthroplasty is a surgery that is always performed electively on patients whose medical condition has been optimized prior to surgery. Since these patients are medically optimized and the use of the case-by-case exception is permitted, there must be a category of patient who is medically optimized and an appropriate use of the case-bycase exception. This might suggest to some that a patient with end-stage heart failure who develops acute appendicitis could be admitted as inpatient even if the expected stay is one day because their surgery will be higher risk. But does it also mean that a patient with diabetes and sleep apnea, who has been optimized and undergoes total knee arthroplasty, can also be admitted as inpatient with a one day expectation since their diabetes and sleep apnea also increase the perioperative risk?
    • Conversely, for patients who have surgery as an outpatient with a one midnight expectation and then require a second midnight of hospital care, we have seen the BFCC-QIOs deny inpatient admission stating the care was not intensive enough to warrant admission despite the physician’s reasonable judgement that hospital care was needed. That contradicts guidance CMS offered with the Two Midnight Rule that auditors will be “generally agnostic” to the intensity of services provided, as the need for hospital care is no longer dependent on a “level” but now a yes/no question to be coupled with a reasonable expectation of “for how long”?
  4. There is considerable variation in practice patterns, and the two-midnight expectation for inpatient admission allows those hospitals and physicians that are less efficient and practice below the prevailing standard of care to be potentially financially rewarded for that by being paid a DRG rather than an APC for a similar hospitalization. Efficient doctors and hospitals may quickly become frustrated by what they may see as an unfair payment system that penalizes efficiency. ACPA would appreciate CMS providing clear and practical guidance on these issues, such as the case examples provided in MLN Matters SE19002 (revised), to be used by providers and audit agencies as the inpatient only list is phased out. As we have expressed in the past, we would be happy to work with CMS in developing instructions, case examples, and education.

Effect of Removal of Inpatient Only List on Medicare Advantage Enrollee

ACPA also has significant concerns on how removal of the IPO list will affect Medicare Advantage beneficiaries and the providers who serve them. In essence, there are 4 stakeholders in this Medicare Advantage space – the MAO itself, the enrollee, the contracted provider, and the non-contracted provider.

MAOs as a group have chosen not to adopt the “Two Midnight Rule” for determining Inpatient payment. While the Preamble states that “it would be increasingly important for physicians to exercise their clinical judgment in determining the generally appropriate clinical setting for their patient to receive a procedure… as always, the physician should use his or her complex medical judgment to determine the generally appropriate setting,” For procedures not currently on the IPO list, MAOs currently may make decisions regarding the appropriate setting of care that may go against the physician and/or patient wishes. By creating an APC payment for every surgery, CMS opens the door for MAOs to make even more such decisions regarding setting of care, which we do not believe is CMS’ intent. Already today, many MAOs consider any procedure that has an OPPS payment to be an outpatient procedure by default, absent a serious post-surgical complication of care, regardless of the risk involved, the duration of uncomplicated recovery which may span several days, or the resources required. We remind CMS that in creating the Two Midnight Rule, the purpose was not only to provide guidance on short inpatient stays, but also to prevent medically necessary hospitalizations from continuing for long periods (beyond 2 Midnights) in an outpatient setting where beneficiaries lack inpatient rights, minimize the risk of excessive beneficiary co-pays and improve access to post-acute care SNF benefits.

MAO enrollees already do not enjoy the advantages of the Two Midnight Rule’s consistently applied definition of the inpatient benefit. Since the Two Midnight Rule is generally not followed by MAO plan contracts, enrollees might face long outpatient stays that the attending provider will feel compelled to follow the MAO plans “recommendations” and thus never receive an Important Message from Medicare (IM), never being informed during the hospital stay of how to voice a quality concern to Medicare, and never having formal discharge appeal rights. Unaddressed, this situation will exacerbate with the phasing out of the IPO list. Furthermore, if the hospital stay crosses into a new plan year where the beneficiary has chosen not to re-enroll with the MAO, the beneficiary will face a lack of SNF part A coverage because the prolonged stay was all outpatient time, at the direction of the MAO.

Non-contracted providers, who have not signed an agreement with the MAO, are being increasingly subjected to plan rules intended for contracted providers. While the regulations stipulate that a non-contracted provider must accept, as payment in full, the amount the provider could have received under Original (Traditional FFS) Medicare, the regulations do not stipulate that the MAO must offer that amount. CMS has confirmed to ACPA that even for non-contracted providers, MAOs need not follow the Two Midnight Rule, and need not offer the Original Medicare payment. In other words, MAOs are allowed to attempt to strong-arm non-contracted providers into accepting a smaller payment amount. The recourse of the non-contracted provider is either billing the enrollee directly, or using the CMS 5 step appeals process - time-consuming, uncertain, and costly - merely to be paid the Original Medicare amount.

In eliminating the IPO list, the Preamble reiterated the protection of beneficiaries afforded by the Two Midnight Rule and the treating physician’s autonomy to determine the proper setting of care. For MAO enrollees, neither safeguard exists, even for non-contracted providers. Inpatient care is a Medicare program benefit with safeguards that are afforded to those that require inpatient care. Because IMs and discharge appeal rights are not afforded to Medicare outpatients, there is an inconsistent standard within the Medicare system today between Original Medicare and Medicare Advantage. That inconsistent standard will worsen as the IPO list is phased out as MAOs eye lower outpatient payment amounts for previously inpatient procedures.

The best way to prevent this issue, and preserve beneficiary rights and the rights of noncontracted providers, is to standardize the definition of inpatient care across all of Medicare, including Medicare Advantage Organizations. ACPA requests that CMS make the Two Midnight Rule and case-by-case exception applicable to all Medicare beneficiaries, regardless of whether they are enrolled in Medicare Part C. The phasing out of the IPO list over 3 years is the perfect opportunity to make these changes to the Part C program, in a revenue-neutral and thoughtful manner, to ensure that beneficiary rights are preserved within the Part C program.

Concurrent Appeals of MAO Inpatient Denials Being Dismissed

ACPA is aware that CMS is generally forbidden from interfering in payment issues between MAOs and contracted providers, but it is important to point out the adverse effects on beneficiary rights. The loss of the aforementioned inpatient benefits and rights demonstrates that status determination is not simply a payment issue that can be addressed in an MAO-provider contract. ACPA strongly recommends that patients who are 1) currently hospitalized and 2) receive a concurrent inpatient authorization denial by an MAO be granted their appeal rights as outlined in CFR 42 §§422.578, 592 without dismissal. Currently, these appeals are often being dismissed by MAOs (based on Part C and D Enrollee Grievances, Organization Coverage Determinations, and Appeals Guidance §§50.8- 50.9), because the service in question is already being received. Beneficiaries and beneficiary advocates then are instructed to submit retrospective appeals, which CMS regards as payment appeals. However, the status determination in question does not simply impact payment. It deprives beneficiaries of their concurrent inpatient protections and rights, as communicated by the IM that the beneficiary would never have received.

Allowing this process to apply to concurrent inpatient denials would ensure that beneficiaries have access to full beneficiary appeal rights without prejudice, including automatic escalation to the IRE. The resultant level of MAO accountability would help prevent patients from enduring prolonged outpatient hospital stays without the protections intended by CMS. Without addressing this issue, these situations will only worsen with the phasing out of the IPO list. The financial incentives for MA plans to encourage long outpatient hospital stays will expand to many major surgical procedures. If this continues to be incorrectly viewed simply as a payment issue, CMS’ current MAO monitoring systems may not adequately protect the inpatient rights of MAO enrollees.

X. B. Proposed Medical Review of Certain Inpatient Hospital Admissions Under Medicare Part A for CY 2021 and Subsequent Years

ACPA agrees with the proposed 2 year exemption from BFCC-QIO referral to RACs and RAC “patient status” reviews for procedures removed from the IPO list. We feel that the opportunity to have reviews performed by the BFCC-QIO and to learn from these discussion sessions is a valuable opportunity. However, due to the short stay review contract awards being delayed by vendor protests, we believe few hospitals have actually had the opportunity to engage with the BFCC-QIOs to review cases recently removed from the IPO list, such as TKAs and THAs. It will be important to ensure that these discussion sessions can occur so that the 2 year exemption can serve its intended purpose. If not, a one-time exemption of 3 years may be needed if BFCC-QIOs are not able to start reviewing by January 2021.

XVII. Addition of New Service Categories for Hospital Outpatient Department (OPD) Prior Authorization Process

ACPA supports the 5 “cosmetic” procedural categories for which a prior authorization process through the MACs has been implemented. However, ACPA urges CMS to consider more than just the increase in volume of cervical fusions with discectomy and spinal stimulators before implementing a prior authorization process.

For spinal cord stimulators, only 4 of the 7 MACs currently have an LCD outlining requirements for this procedure, and there is no NCD. In order for a prior authorization program to be effective, there should be standard and accepted indications for the service requested. This procedure is not done for cosmesis, and CMS should consider the alternatives that physicians and beneficiaries will consider if the request is not approved – such as more opioid therapy and more extensive spinal surgeries in an attempt to deal with the chronic pain. Without a clear plan to ensure appropriate utilization across all treatment options, a prior authorization program for spinal stimulators may yield unintended consequences.

Anterior cervical discectomy and fusion (ACDF) is generally used to treat cervical instability, radiculopathy, spondylosis, or myelopathy. ACDFs are not the only surgeries that can alleviate these problems. Posterior cervical surgeries and cervical disc replacement are more invasive and extensive procedures that can potentially treat a similar spectrum of patients. Spine surgeons use their training and expertise to decide which one is the best for patients. A prior authorization program looking at ACDFs alone could have the unintended consequence of leading to more extensive surgeries that do not require prior authorization. Additionally, ACDFs also suffer from the same issue of not having standard Medicare guidance. In fact, ACPA did not locate any NCDs or LCDs addressing suitability for ACDF procedures.

Also, although ACDFs are predominantly outpatient procedures today, a few years ago they were on the IPO list. Inpatient ACDFs would not be subject to this OPD prior authorization process, and CMS should consider that this program may result in unintended shifting of outpatient ACDF procedures to inpatient ones. ACPA recommends consultation with spine specialty societies such as the North American Spine Society, the American Academy of Orthopaedic Surgery, and the American Association of Neurological Surgeons, prior to implementing a prior authorization process on these two spinal procedures. The risk of unintended consequences in the form of alternative, more extensive surgical procedures, or exacerbating the opioid crisis, is simply too great to base this decision on a claim volume increase alone.


Charles Locke, MD

Chair – Government Affairs Committee

Co-Chair – Government Affairs Committee

Advisory Board

Board of Directors