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CY2020 Outpatient Prospective Payment System Final Rule

The Centers for Medicare & Medicaid Services (CMS) last week issued the first​ of two separate regulations finalizing provisions for the calendar year (CY) 2020 outpatient prospective payment system (OPPS). Notably, a second final rule on previously proposed price transparency provisions is under review by the Office of Management & Budget. However, CMS has considerable flexibility on the timing of finalizing and implementing these policies.

Key highlights of the final rule; effective Jan. 1, include:

Annual payment update: CMS updates OPPS rates by 2.6% compared to CY 2019, estimating overall payments to outpatient providers will increase by approximately $6.3 billion.

Site-neutral payment: CMS finalizes continued implementation of site-neutral payment rates for clinic visits in hospital outpatient departments. Despite a recent district court decision that found the cuts unlawful, these services will be paid at 40% of OPPS rates beginning in CY 2020. In the final rule, CMS acknowledges that the district court vacated its site-neutral clinic visit cut for CY 2019 and states that it is “working to ensure affected CY 2019 claims for clinic visits are paid consistent with the court’s order,” but is still “evaluating the rulings and considering, at the time of this writing, whether to appeal from the final judgment.”

Payment for 340B drugs: For CY 2020, CMS continues its current 340B drug payment adjustment of average sales price minus 22.5%. CMS also acknowledges the ongoing litigation pertaining to the 340B payment adjustment and summarizes comments received on alternative payment options for CY 2020, and potential remedies for CY 2018 and 2019 payments in the event the agency loses its appeal at the U.S. Court of Appeals. While CMS finalizes a remedy in the final rule, it points to its recently issued notice proposing a new data collection effort on actual acquisition costs for drugs purchased by 340B hospitals. The agency states that it intends to use the information collected not only to develop a possible remedy but to pursue future policy changes related to Medicare Part B drugs acquired through the 340B program.

Wage index: CMS finalizes its proposal to adopt the federal fiscal year 2020 area wage index (AWI) policies outlined in the inpatient prospective payment system final rule. For the OPPS, wage index policies will be made budget neutral by adjusting the conversion factor.

Graduate Medical Education (GME): In the final rule, CMS announces its plans to redistribute GME slots for two closed hospitals. As required by the Affordable Care Act, CMS must permanently redistribute,according to certain criteria, all direct GME (DGME) and indirect medical education (IME) residency slots from hospitals that closed on or after March 23, 2008. In Round 16, CMS plans to redistribute Hahnemann University Hospital’s (Philadelphia, PA) DGME (556.81) and IME (574.82) full-time equivalent (FTE) caps. In Round 17, CMS will redistribute Ohio Valley Medical Center’s DGME (22.93) and IME (22.93) FTE caps. Applications for Hahnemann and Ohio Valley Hospital’s FTE resident caps must be received by the CMS Central Office by Jan. 30, 2020.

Prior authorization: CMS establishes prior authorization requirements for a number of outpatient services that it believes are overutilized and often medically unnecessary. Specifically, beginning July 1, 2020, prior authorization will be required for the following categories of services: blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation.

Site of service: CMS removes Total Hip Arthroplasty, six spinal procedure codes, and five anesthesia codes from the inpatient-only list, making these procedures eligible to be paid in both inpatient and hospital outpatient settings. In a related policy, the agency establishes a two-year exemption from Beneficiary and Family-Centered Care Quality Improvement Organizations referrals to recovery audit contractors (RACs) and RAC reviews for “patient status” for procedures removed from the inpatient-only list beginning Jan. 1, 2020.

Quality reporting programs: CMS removes one measure, External Beam Radiotherapy for Bone Metastases (OP-33), from the Hospital Outpatient Quality Reporting Program beginning with the CY 2022 payment determination.

In the coming weeks, the SDAHO will distribute an updated hospital-specific impact analysis and additional details of the final rule.​


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