Regulatory Advisor 2020 Proposed OPPS ASC Rule

CMS finalizes site-neutral payment policies, 340B reductions among other policies.

Navigating health reform

CMS’ 2020 Final OPPS/ASC Rule Now Available for Review

  • Jennifer Boese
  • 1/20/2020

Update: 1/20/20
This regulatory advisor was originally published on September 4, 2019, and covered the Proposed OPPS/ASC Rule. All updates were made to reflect the final rule.

On November 1, 2019, the Centers for Medicare & Medicaid Services (CMS) released the 2020 final Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment system rule (CMS-1717-FC). CMS did not release its proposed price transparency policy on this date. Instead, on November 15, CMS released a separate, final transparency rule for hospitals and proposed another rule related to insurers. The following includes a high-level overview of key provisions in the final rule.

Key takeaways

CMS continues to embrace policies that further advance site neutrality and cost efficiency. 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, continues reduced 340B payments, and site-neutral payment for a common clinic visit in off-campus, provider-based departments.

CMS included price transparency policies in two related rules released on November 15, 2019. For hospitals, the rule aggressively pushes price transparency. As expected, hospital groups quickly filed a lawsuit. The price transparency provisions are not covered in this summary, but please reach out if you have questions.

Key OPPS Payment Updates

OPPS update. CMS proposes a marketbasket increase of 2.6%. This increase factor is based on the finalized hospital inpatient marketbasket percentage increase of 3% for inpatient services paid under the hospital inpatient prospective payment system (IPPS), minus the proposed multifactor productivity (MFP) adjustment of 0.4%. CMS will use a conversion factor of $80.784 in the calculation of the national unadjusted payment rates for those items and services for which payment rates are calculated using geometric mean costs.

Wage index. CMS applies the previously finalized wage index changes in the 2020 Final Inpatient Prospective Payment System rule (IPPS) to the OPPS. Those include increasing the wage index for the lowest quartile of hospitals in a budget-neutral manner, removing urban-to-rural hospital reclassifications from the calculation of the rural floor wage index value beginning in FY20, and placing a 5% cap on any reductions under these changes.

Rural adjustment. CMS continues the rural adjustment amount of 7.1% to the OPPS payments for certain rural sole community hospitals (SCH), including essential access community hospitals for 2020 and subsequent years.     

Ambulatory payment classifications (APCs). CMS finalizes various status indicators and APC assignments for CPT codes along with payment changes. CMS also finalizes for CY 2020 the creation of two new comprehensive APCs (C-APCs): C-APC 5182 (Level 2 Vascular Procedures) and C–APC 5461 (Level 1 Neurostimulator and Related Procedures).  There are now 67 C-APCs.

Site neutral payments (G0463). CMS makes no changes to the policy initiated in last year’s final rule related to payment for G0463 at accepted off-campus, provider-based departments (PBDs). In other words, reimbursement for G0463 will be reduced to 40% of the OPPS rate when provided at an off-campus PBD. CMS began phasing in this policy during 2019 and finalizes full implementation in 2020. CMS specifically notes this policy is the subject of an ongoing lawsuit.

340B-acquired drugs. CMS will continue its current payment reduction policy for 340B drugs of Average Sales Prices (ASP) minus 22.5% into 2020 as it awaits pending litigation. Though CMS believes in its authority to make this payment reduction, it solicited comments earlier about an appropriate remedy should the agency be unsuccessful in the litigation. Various commenters provided thoughts on lump-sum payments or prospective payments, and on CMS’s proposed option of ASP+3%. CMS also referenced its intention to seek survey data from hospitals on drug acquisition costs as a means to determine reimbursement.

Wholesale acquisition cost (WAC)-based drug payments. CMS will continue 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 finalizes 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). The five categories include 40 different codes. This will apply to dates of service on and after July 1, 2020. 

Device pass-through payment status. CMS finalizes 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 approved for transitional pass-through status on or after January 1, 2020. CMS approves one device under this alternative pathway along with four others via its standard review. They are: Surefire® Spark™ Infusion System; Optimizer® System; AquaBeam® System; AUGMENT® Bone Graft and ARTIFICIALIris®. 

Drugs or biologicals pass-through payment status. CMS allows transitional pass-through payment status to expire for six drugs and biologicals.

Inpatient-only list (IPO). CMS finalizes 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 removes 11 other CPT codes from the IPO list, including related anesthesia codes suggested by commenters. (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 finalizes a two-year exemption from Beneficiary and Family-Centered Care Quality Improvement Organization (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. CMS had originally proposed a one-year exemption, but was swayed by stakeholder feedback to increase that to two years. 

Outpatient therapeutic services supervision level. An issue for multiple years, CMS finalizes changing the minimum supervision level from direct to general. Further, CMS finalizes the change applies to critical access and prospective payment system hospitals beginning in 2020 and continuing into subsequent years.

Organ Procurement Organizations (OPOs) Conditions for Coverage (CfCs). CMS finalizes 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 does not finalize the reduced time period for the second outcome measure. Instead, CMS will require OPOs to meet one of the two other outcome measures in order to be recertified (the OPO’s donation rate measure and aggregate donor yield measure) for the 2022 recertification cycle only.  

OPPS Hospital Outpatient Quality Reporting (OQR) Program

CMS finalizes removal of one measure (OP-33: External Beam Radiotherapy for Bone Metastases) beginning with January 2020 encounters for the CY 2022 payment determination and subsequent years. 

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 finalizes increasing payment rates under the ASC payment system by 2.6% for ASCs that meet the quality reporting requirements under the ASC Quality Reporting Program (ASCQR).  

Changes to the list of ASC-covered surgical procedures. For CY 2020, CMS finalizes adding multiple procedures to the ASC list of covered surgical procedures. Additions to the list include total knee arthroplasty (CPT code 27447), knee arthroscopy - osteochondral allograft (CPT code 29867), three coronary intervention procedures (CPT codes 92920, 92928, and HCPCS code C9600) and three associated add-on procedures (CPT code 92921, 92929, and HCPCS code C9601). Twelve other procedures with new CPT codes were also added to the list.  

Non-opioid pain management. CMS finalizes it will unpackage and pay separately at ASP+6% for the cost of non-opioid pain management drugs that function as surgical supplies when they are furnished in the ASC setting for CY 2020. Under this policy, the only FDA-approved drug that meets this criteria is Exparel.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program

CMS finalizes adoption of a 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.

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 on these or other issues, we can help.