On the evening of July 29, 2019, the Centers for Medicare and Medicaid Services (CMS) released Hospital Outpatient Prospective Payment System (OPPS) calendar year (CY) 2020 proposed rule. The rule also includes updates to the ambulatory surgical center (ASC) payment system. Policies in the proposed rule focused on site neutrality and transparency, administration priorities. This proposed rule was released simultaneously with the proposed CY 2020 physician fee schedule (PFS) and updates to the ESRD and DME payment systems.

Comments on the proposed rule are due on September 27, 2019.

Hospitals to See Over Two Percent Increase in Payments for CY 2020

For FY 2020, CMS is proposing to increase payment rates under the OPPS by 2.7 percent. Facilities that do not meet the reporting requirements of the Hospital Outpatient Quality Reporting (OQR) Program will be subject to a reduction of 2 percentage points in their annual payment update.

CMS estimates that this will lead to a total of approximately $79 billion in payments to OPPS providers, which is an approximately $6 billion increase compared to CY 2019.

340B Payment to Remain at ASP Minus 22.5 Percent; Prescription Drug Payment Policies to Stay Consistent in CY 2020

CMS is proposing to continue paying average sales price (ASP) minus 22.5 percent for 340B drugs when furnished in certain facilities. The payment level of ASP minus 22.5 percent was adopted in CY 2018 and was lower than the previous level of ASP plus 6 percent. In the proposed rule, CMS acknowledged the ongoing litigation relating to the lower payment amount, including a district court ruling that the agency exceeded statutory authority in adjusting the payment rate for 340B drugs. CMS is asking for public comments related to payment options for 340B drugs in CY 2020 as well as potential fixes for CY 2018 and CY 2019 payment rules should the agency receive an adverse ruling by the appeals court.

For FY 2020, CMS is proposing a drug packaging threshold of $130, meaning drugs with a per-day cost less than or equal to that level are packaged. This would be an increase of $5 from the CY 2019 level.

The rule continues existing payment policies for many drugs and biologicals. Separately payable drugs and biologicals, including products with pass-through status, will continue to be paid at a rate of ASP plus 6 percent.  Prior to the availability of ASP data, drugs and biologics will be paid at wholesale acquisition cost (WAC) plus three percent.

No Changes to Packaging Rules for Non-Opioid Pain Management

Manufacturers of non-opioid pain management alternatives have repeatedly requested that CMS unpackage these payments in OPPS to incentivize their use over opioid analgesics. CMS has again declined to do so, stating that there is no clear evidence of systematic incentives for opioid usage, but inviting comments on other alternatives for which CMS should pay separately. However, CMS is continuing its policy of unpackaging and paying at ASP plus 6 percent for these drugs in the ASC setting.

Publication of Standard Hospital Charges to Be Required

In line with the Administration’s efforts to make healthcare costs more transparent, CMS is proposing to require all non-federally owned hospitals to publish two different price lists of their services. These two charge lists would represent:

• Charges that reflect full un-negotiated rates; and
• Rates negotiated with a “third-party”, such as health insurers.

CMS estimates that the level of effort for this will be approximately 12 hours per hospital per year for a total of $1,017 per hospital.

CMS proposes that this new requirement will apply to all hospitals in the U.S. except federally owned hospitals such as Veterans Administration or Indian Health Service facilities as well as ambulatory surgical centers (ASCs) or other non-hospital sites-of-care.

In order to account for the wide range of charges, CMS proposes to require hospitals to publish their “standard charges” which include both a “gross” charge, which is an un-negotiated rate that an individual who is “self-paying” would be charged as well as a “payer-specific” negotiated charge.  This latter represents what the hospital has negotiated with payer entities such as insurance companies.

Hospitals will deliver this data to public in two ways:

• A comprehensive machine-readable file format that includes all “standard charges” the hospital charges, and separately
• A consumer-friendly display that patients, who are choosing a service in advance of care, can compare.
  • This more limited list of services would include all costs associated with the care, both primary services, ancillary services, facility fees etc.
  • CMS will require 70 specific services to be included and allow hospitals to list an additional 230 “shoppable” services.

CMS proposes up to a $300 per day penalty for hospitals that do not comply and to allow appeals to be filed in a similar manner to other circumstances where civil and monetary penalties are assessed.

Site-Neutral Policy for Clinic Visits in Off-Campus Provider-Based Departments to Enter Year Two

CMS proposes to continue current payment policies for critical care services and hospital outpatient visits.  In the CY 2019 OPPS final rule, CMS finalized a payment reduction policy to pay off-campus provider-based departments (PBDs) at the Physician Fee Schedule (PFS) rate for clinic visits for which hospital outpatient departments were previously reimbursed at a higher level. CY 2020 will be the second year of the two-year transition period in payment reduction. This is part of the Agency’s site-neutrality efforts.

Hospital Outpatient Wage Index Policy Mirrors Proposal for Inpatient Facilities

CMS will continue its policy to use the wage index policies and adjustments proposed in the Inpatient Prospective Payment System (IPPS) for non-IPPS facilities paid under the OPPS. For FY 2020 IPPS wage index, CMS proposed to increase the wage index for certain low-wage hospitals at the expense of payments made to hospitals with the highest wage index. Under this policy, the hospitals in the bottom 25th percentile of wage index would be increased by 50% of the difference between current policy and the wage index for the 25th percentile for all hospitals. Hospitals with a wage index in the 75th percentile or higher would see their wage index decreased. However, CMS proposed a 5% cap on reduction of any hospital’s wage index in a given year. The proposed payment changes will be phased in over four years, if finalized. CMS also proposed to change the rural floor calculation by removing reclassification of hospitals as “rural” (vs. “urban”) in FY 2020 IPPS proposed rule.

No Major Changes to Quality Reporting Programs

For CY 2020 Hospital Outpatient Quality Reporting (OQR) Program, CMS proposes to remove one web-based measure for the CY 2022 program year and requests comments on adding to Hospital OQR program four patient safety measures existing in the ASC Quality Reporting. For the ASC Quality Reporting (ASCQR) Program, CMS proposes to adopt one claims-based measure and requests comments on potential submission methods for certain patient safety measures in future rulemaking.

Ambulatory Surgical Centers to See Over Two Percent Bump to Foster Site Neutrality

CMS proposes to update Ambulatory Surgical Center (ASC) rates by 2.7 percent and states that the update will encourage site-neutrality between hospitals and ASCs as well as encourage the movement of services from hospital to lower cost ASC settings. As finalized in the CY 2019 OPPS/ASC final rule, CMS will continue to use the hospital market basket update for ASC payment rates for CY 2020 to 2023.