Medicare Payment and Reimbursement

OPPS rule to bring many hospital financial challenges — and a little help

July 31, 2019 1:28 pm
  • For the first time, all hospitals would be required to reveal charges privately negotiated with health plans.
  • More high-margin hospital procedures can move to ambulatory surgical centers.
  • CMS will maintain 340B discount drug program payment cuts while they are appealed in court.

The long-awaited Medicare proposed rule for hospital outpatient payments includes a high-profile mandate on hospitals to release rates negotiated with commercial health plans, among other regulations that could pose financial challenges. Several smaller provisions could help hospitals.

For CY20, the Medicare Outpatient Prospective Payment System (OPPS) would increase payments by 2.7% after factoring several mandated cuts into the 3.2% initial rate increase, according to the proposed rule. That would increase OPPS payments by $6 billion, to $79 billion.

The bad news starts with the expected continuation of a two-percentage-point reduction in payments for hospitals that do not meet quality-reporting requirements.

The highest-profile provision would require hospitals to make public a list of their standard charges, which the Centers for Medicare & Medicaid Services (CMS) defined as both gross charges and payer-specific negotiated charges.

Some of the specific requirements of the proposal include:

  • Providing standard charges for all items and services at all nonfederal hospitals
  • Providing plan-specific negotiated charges for 300 “shoppable” services, including 70 CMS-selected and 230 hospital-selected services
  • Displaying searchable charges prominently on a public webpage
  • Updating the information at least annually

According to the rule, compliance with the charge-publishing requirements would cost each hospital about $1,000 annually. Noncompliant hospitals will owe a civil monetary penalty of up to $300 per day.

Rule continues transition to site-neutral payment policies

The rule also would expand on the Trump administration’s push to pay for more services at the same rate regardless of the location in which they are provided, a policy known as site-neutral payment.

Site-neutral provisions include:

  • Completion of the two-year phase-in of reduced payment for clinic visits at off-campus hospital outpatient departments, saving Medicare $810 million in CY20
  • Removing total hip arthroplasty from the Inpatient-Only (IPO) list
  • Adding total knee arthroplasty (TKA), knee mosaicplasty and coronary intervention procedures to the ambulatory surgical center (ASC) covered procedures list

340B payment cuts redux

Despite losing a legal challenge brought by hospitals, CMS proposed that Medicare continue to pay average sales price (ASP) minus 22.5% for 340B-acquired drugs, including when drugs are provided in nonexcepted off-campus provider-based departments.

In December 2018, a federal judge ruled against the same 340B cuts for 2018, but CMS said it will continue to appeal the ruling.

The proposed rule sought public comments on the appropriate OPPS payment rate for 340B-acquired drugs.

“In the event of an adverse decision on appeal, we would anticipate proposing the specific remedy for CYs 2018 and 2019, and, if necessary, to the CY 2020 rates, in the next available rulemaking vehicle, which is the CY 2021 OPPS/ASC proposed rule,” CMS officials wrote in the rule.

Some good news for hospital finances

The rule would create one-year exemptions — starting Jan. 1, 2020 — from:

  • Beneficiary Family-Centered Care Quality Improvement Organization referrals to recovery audit contractors (RACs)
  • RAC “patient status” reviews for procedures removed from the IPO list

In the hospital Outpatient Quality Reporting program, CMS would remove OP-33: External Beam Radiotherapy for Bone Metastases starting with the CY22 payment determination.

Rule carries implications for ASCs

For CY20, CMS proposed a 2.7% pay increase for ASCs that meet quality-reporting requirements. That could increase ASC payments by $200 million to total $4.89 billion.

CMS would add eight procedures to the ASC list of covered surgical procedures, including TKA, a mosaicplasty procedure and six coronary-intervention procedures. 

“We are soliciting public comments with respect to whether certain other surgical procedures related to the cardiovascular system should be added to the ASC list of covered surgical procedures,” CMS officials wrote in the rule. 


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