News | Medicare Payment and Reimbursement

OPPS final rule keeps site-neutral payments and 340B cuts; finalizes transparency requirements separately

News | Medicare Payment and Reimbursement

OPPS final rule keeps site-neutral payments and 340B cuts; finalizes transparency requirements separately

This news story is updated from a previous version: OPPS final rule keeps site-neutral payments and 340B cuts, leaves out transparency requirement


Medicare kept two major hospital payment cuts in a 2020 final payment rule, released Nov. 1. In addition, on Nov. 15, CMS finalized a requirement for hospitals to share negotiated health plan payment rates.

The controversial major hospital payment cuts in the Outpatient Prospective Payment System (OPPS) final rule were retained from the proposed rule even though hospitals successfully have challenged them in federal court.

Although CMS initially split off the highest-profile provision requiring hospitals to make public a list of their standard charges, the administration eventually finalized it.

Site-neutral payments

CMS completed a two-year phase-in of payment cuts for clinic visits furnished in off-campus hospital outpatient departments, which comprise the most common OPPS billed service. The cut was estimated to save Medicare and enrollees $800 million in 2020. CMS said it will pay back the 2019 cuts after they were struck down by a district court, but the agency will continue them for 2020, pending possible appeal.

340B cuts

CMS also will continue the 340B program’s reduced Medicare and health plan payments, which were cut from average sale price (ASP) plus 6% to ASP minus 22.5% for separately payable drugs or biologicals.The cut is being maintained even though a court rejected the policy. The administration is appealing the decision. CMS plans a survey of 340B hospitals to collect cost data for CY18 and CY19, which “may be used to craft a remedy,” CMS stated.

OPPS rates for hospitals that meet applicable quality-reporting requirements will increase by 2.6% in 2020. Similarly, the agency increased ambulatory surgical center (ASC) rates for CY20 by 2.6%.

Other significant policy changes

Other changes affecting hospital finances:

  • Removing total hip arthroplasty, six spinal surgical procedures and certain anesthesia services from the Inpatient Only (IPO) list, which will allow those procedures to be performed in the hospital outpatient setting
  • Establishing a two-year exemption, beginning in CY20, from certain medical-review activities relating to patient status for procedures removed from the IPO list beginning in CY20
  • Barring Beneficiary Family Centered Care-Quality Improvement Organizations from denying claims for those procedures for two years
  • Barring for two years referral of those procedures to recovery audit contractors for noncompliance with the two-midnight rule
  • Adding total knee arthroplasty, knee mosaicplasty, six additional coronary intervention procedures and 12 procedures with new CPT codes to the ASC Covered Procedures List
  • Continuing the policy of assigning procedures involving skin substitutes to the low-cost or high-cost group
  • Changing the minimum required level of supervision for hospital outpatient therapeutic services furnished by all hospitals and critical access hospitals from direct supervision to general supervision. 

About the Author

Rich Daly

is HFMA's senior writer/editor and is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

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