Regulatory Advisor 2020 Proposed OPPS ASC Rule

CMS proposes and seeks feedback on significant requirements to further price transparency and site neutral payment policies. Submit your comments before the September 27 deadline.

Navigating health reform

CMS’s 2020 Proposed OPPS/ASC Rule Now Available for Review

  • Jennifer Boese
  • 9/4/2019

On July 29, 2019, the Centers for Medicare & Medicaid Services (CMS) released the 2020 proposed Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment system rule (CMS-1717-P), which includes price transparency and site neutral payments policies. The following includes a high level overview of key provisions in the proposed rule.

Providers should review these proposed changes and may submit comments to CMS before the September 27, 2019, deadline.

Key takeaways

CMS continues to prioritize price transparency and site-neutral payments. Adding onto last year’s requirement that all hospitals post their chargemasters online in a machine-readable format, CMS proposes to further define those requirements and extend them by proposing a new requirement for hospitals to post-negotiated rates for 300 “shoppable” services in an easy-to-find, easy-to-understand, machine-readable format. CMS will require 70 of those services, and then allow the hospital to determine the other 230.

CMS will also continue to embrace policies that further advance site neutrality. For example, it removes total hip arthroplasty (THA) from the inpatient-only list, adds new procedures (including total knee arthroplasty) to the covered procedures list for ASCs, initiates a prior authorization process for certain services, and continues site-neutral payment for a common clinic visit in off-campus, provider based departments.

OPPS price transparency

Under the final 2019 OPPS rule, now in effect, all hospitals are required to post their chargemasters online in a machine-readable format. In the proposed 2020 OPPS rule, CMS describes key terms and policies for this requirement, and, not without opposition, the department aggressively pushes forward with new requirements that hospitals post more meaningful information on prices.

Health care consumers continue to lack the meaningful pricing information they need to choose the healthcare services they want and need despite prior requirements for hospitals to publicly post their chargemaster rates online. Therefore, in response to stakeholders and in accordance with President’s Executive Order on “Improving Price and Quality Transparency in American Healthcare to Put Patients First” (June 24, 2019), we are proposing an expansion of hospital charge display requirements to include charges and information based on negotiated rates and for common shoppable items and services, in a manner that is consumer-friendly. CMS Final 2019 OPPS Rule

Hospital price transparency

CMS proposes a new Part 180 – Hospital Price Transparency be added to Title 45 of the Code of Federal Regulations (CFR) and contain the price transparency policies. This new section would cover the following areas:

  • Defines “hospital” for Purposes of Part 180. CMS proposes to define hospital “as an institution in any State in which State or applicable local law provides for the licensing of hospitals, (1) is licensed as a hospital pursuant to such law or (2) is approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing (which we propose to codify in new 45 CFR 180.20).” The new definition covers institutions beyond what is considered a hospital for Medicare purposes. CMS also specifically mentions the requirements impact Critical Access Hospitals (CAHs), Inpatient Psychiatric Hospitals (IPH), Inpatient Rehabilitation Facilities (IRFs) and Sole Community Hospitals (SCHs).
  • Exempts federally owned or operated hospitals (e.g., Indian Health Services, Veterans Affairs) from these requirements. 
  • Defines items and services as “all items and services, including individual items and services and service packages that could be provided by a hospital to a patient in connection with an inpatient admission or an outpatient department visit for which the hospital has established a standard charge.” CMS gives various examples, including facility fees.
  • Defines standard charges to mean the hospital’s gross charge and payor-specific negotiated charge for an item or service.
  • Defines “shoppable services” as a service that can be scheduled by a health care consumer in advance.
  • Requires a machine-readable file be posted online containing all hospital standard charge information (both gross charges and payor-specific negotiated charges) for all items and services provided by the hospital. These must be presented in a consumer-friendly format that displays and packages payor-specific negotiated charges for a limited set of shoppable services.
  • Requires the following information when posting each item or service provided by the hospital:
    • Description of each item or service provided by the hospital
    • Gross charge that applies to each individual item or service
    • Payor-specific negotiated charge that applies to each item or service; each list of payor-specific charges must be clearly associated with the name of the third party payor
    • Any code used by the hospital for purposes of accounting or billing for the service (e.g., CPT, HCPCS, DRG)
    • Revenue codes, as applicable
    • Payor-specific negotiated charges for at least 300 shoppable services. CMS will determine 70 of those and the hospital will select the remaining 230. For hospitals that don’t provide one of the required 70, it must select additional shoppable services such that the total number of shoppable services is at least 300.
  • Requires monitoring for hospital noncompliance, which could include warnings, corrective action plans, civil monetary penalties ($300 per day) and publicizing penalties on CMS website. CMS would create an appeals process.

Chargemaster and relationship to cost reports, payments

CMS is examining the relationship of the hospital chargemaster to the Medicare cost report and its use in setting Medicare payment for hospital services. As such, CMS is seeking public comments, including “from hospitals and revenue cycle management experts, cost report experts, accounting firms, or others who understand hospital cash flows, on innovative and streamlined methods for establishing hospital payment to the extent permitted by law.”

CMS specifically asks about:

  • The value of the chargemaster in setting hospital payment and its value to other stakeholders.
  • Whether it would be possible to modernize or streamline the Medicare cost reporting process by replacing it with other processes, or if it could be modified in content, methodology, or approach.
  • Whether and how the replacement or modification of the chargemaster might affect the submission of data used by CMS to calculate these payments, as well as alternative sources that could be used for the information necessary to calculate these payments. CMS also seeks comments whether the chargemaster should be updated more frequently than on an annual basis.

Key OPPS payment updates

  • OPPS update. CMS proposes a marketbasket increase of 2.7%. This increase factor is based on the proposed hospital inpatient marketbasket percentage increase of 3.2% for inpatient services paid under the hospital inpatient prospective payment system (IPPS), minus the proposed multifactor productivity (MFP) adjustment of 0.5% . CMS estimates this will translate into an increase of $6 billion compared to the 2019 OPPS payments.
  • Rural adjustment. CMS continues the rural adjustment amount of 7.1% to the OPPS payments for certain rural SCHs, including essential access community hospitals for 2020 and subsequent years.
  • Site neutral payments (G0463). CMS makes no changes to the policy initiated in last year’s final rule related to payment for G0463 at excepted off-campus, provider-based departments (PBDs). CMS finalized its policy to extend a site-neutral payment policy to off-campus PBDs for HCPCS code G0463 (clinic visit). In other words, the Physician Fee Schedule rate of 40% of the OPPS rate will now apply to G0463 provided at an off-campus PBD. CMS began phasing in this policy during 2019 and proposes to fully implement it in 2020. As such, payment for G0463 will be reduced to 40% of the OPPS rate in CY 2020. (Note: This policy is the subject of an ongoing lawsuit between hospitals and HHS.)
  • 340B-acquired drugs. CMS continues its current payment reduction policy for 340B drugs of Average Sales Prices (ASP) minus 22.5% into 2020. CMS has appealed an initial ruling in this case and further discusses this pending litigation. Though CMS believes in its authority to make this payment reduction, it is soliciting comments on an appropriate remedy should the agency be unsuccessful in the litigation. One option CMS seeks comments on is whether a rate of ASP+3% would be an appropriate payment amount for these drugs in CY 2020 and for purposes of determining the remedy for CYs 2018 and 2019. CMS also seeks comments on structuring these payments for the affected years (e.g., prospectively paid, retrospectively paid, or an alternative approach).
  • Wholesale acquisition cost (WAC)-based drug payments. CMS continues to utilize a 3% add-on instead of a 6% add-on for WAC-based drugs. WAC is used in the case of a drug or biological during an initial sales period in which data on the prices for sales for the drug or biological are not sufficiently available from the manufacturer.

Other key OPPS updates

  • Prior authorization for certain covered outpatient department (OPD) procedures. CMS proposes instituting a prior authorization procedure for five categories of OPD procedures, which tend to be cosmetic in nature but have experienced large increases in volume (e.g., blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation). A prior authorization decision would be given within 10 business days.
  • This proposal is unique to Medicare Fee-For-Service programs, and CMS could be forecasting a direction the agency will continue to move in order to contain volume and cost controls.
  • Alternative pathway for device pass-through. CMS proposes an alternative pathway for device pass-through payment status. If a device is part of the FDA’s Breakthrough Devices Program and has received FDA marketing authorization (that is, the device has received PMA, 510(k) clearance, or the granting of a De Novo classification request), it will not be evaluated for substantial clinical improvement for the purposes of determining device pass-through payment status. However, it would still need to meet other criteria, such as cost. This would apply to applications for new medical devices received on or after January 1, 2020. CMS finalized a similar proposal in the FY 2020 IPPS/LTCH PPS final rule.
  • Inpatient-Only List (IPO). CMS proposes removing THA from the IPO list and would assign the THA procedure (CPT code 27130) to C-APC 5115 with status indicator J1. In addition, CMS is seeking public comment on another six CPT codes it believes should be removed from the IPO list. (See ASC changes for procedures that are added to the covered procedures list.)
  • Exemption from Two-Midnight rule. In a corollary to the IPO change, CMS proposes to establish a one-year exemption from Beneficiary and Family-Centered Care Quality Improvement Organizations (BFCC-QIOs) referrals to Recovery Audit Contractors (RACs) and RAC reviews for patient status (site-of-service) for procedures that are removed from the IPO list under the OPPS beginning on January 1, 2020. If CMS finalizes the removal of THA from the IPO list, it would be exempt from the Two-Midnight rule review by the BFCC-QIO and RACs.
  • Outpatient therapeutic services supervision level. An issue for multiple years, CMS proposes changing the minimum supervision level from direct to general. Further, CMS proposes this change for all hospital types, critical access and prospective payment.
  • Comprehensive ambulatory payment classifications (APCs). CMS proposes that for CY 2020, it would create two new comprehensive APCs (C-APCs). These proposed new C-APCs are C-APC 5182 (Level 2 Vascular Procedures) and C–APC 5461 (Level 1 Neurostimulator and Related Procedures). This proposal would increase the total number of C-APCs to 67.
  • Organ Procurement Organizations (OPOs) Conditions for Coverage (CfCs). CMS proposes a revision to the definition of “expected donation rate” that is included in the second outcome measure to match the Scientific Registry of Transplant Recipients (SRTR) definition. CMS would also reduce the time period for the second outcome measure and calculate the expected donation rate using 12 out of the 24 months of data (from January 1, 2020 through December 31, 2020) for the 2022 recertification cycle only. Further, CMS requests information and comments on what revisions may be appropriate for the current OPO CfCs and the current transplant center Conditions of Participation.

OPPS Hospital Outpatient Quality Reporting (OQR) Program

  • CMS proposes to remove one measure (OP-33: External Beam Radiotherapy for Bone Metastases) from the CY 2022 payment determination and subsequent years.
  • CMS seeks comments on the potential future adoption of four patient safety measures for the Hospital OQR Program that were previously adopted for the ASCQR Program: ASC-1: Patient Burn; ASC-2: Patient Fall; ASC-3: Wrong Site, Wrong Side, Wrong Procedure, Wrong Implant; and ASC-4: All-Cause Hospital.
  • CMS notes it will continue to move towards outcomes-based measures over clinical process measures across its Medicare programs in the future.

Ambulatory Surgical Centers

  • ASC payment update. For CYs 2019 through 2023, CMS is updating the ASC payment system using the hospital market basket update. For CY 2020, CMS proposes to increase payment rates under the ASC payment system by 2.7% for ASCs that meet the quality reporting requirements under the ASC Quality Reporting Program (ASCQR). CMS estimates that total payments to ASCs (including beneficiary cost sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2020 would be approximately $4.89 billion, an increase of approximately $200 million compared to estimated CY 2019 Medicare payments.
  • Proposed changes to the list of ASC covered surgical procedures. For CY 2020, CMS proposes adding multiple procedures to the ASC list of covered surgical procedures. Additions to the list include total knee arthroplasty, mosaicplasty, and six coronary intervention procedures. CMS seeks comments on whether cardiovascular system surgical procedures should be added to the list.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program

  • CMS proposes to adopt one new measure (ASC-19: Facility-Level 7-Day Hospital Visits after General Surgery Procedures Performed at Ambulatory Surgical Centers) beginning with the CY 2024 payment determination and for subsequent years.
  • CMS is seeking comment on the burden associated with potentially updating the data submission method for four measures to a CMS online data submission tool (for example, the QualityNet website) in future years. The four measures would be ASC-1: Patient Burn, ASC-2: Patient Fall, ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant, and ASC-4: All-Cause Hospital Transfer/Admission measures.

How we can help

Staying abreast of ongoing payment and regulatory changes is important as you plan for the future. CLA is watching the latest CMS developments and can help you understand the ongoing regulatory environment. If you need insights or assistance in writing and submitting your comments or planning for the future, we can help.