CMS Releases 2020 Hospital OPPS And ASC Payment System Proposed Rule

Miranda A. Franco is a Senior Policy Advisor in our Washington, D.C. office.

Highlights

The Centers for Medicare & Medicaid Services (CMS) has published the Calendar Year (CY) 2020 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule. Among notable changes, CMS proposes to continue payment reductions to hospitals purchasing 340B drugs, builds on price transparency guidance by including payer-specific negotiated rates and continues the last phase of site-neutral payment reductions for hospital outpatient clinic visits provided at off-campus, provider-based departments. Comments on the proposed rules are due by Sept. 27, 2019. The Final Rule will likely be released in early November, and new payment provisions will go into effect on Jan. 1, 2020. The Centers for Medicare & Medicaid Services (CMS) on July 29, 2019, published the Calendar Year (CY) 2020 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule.

Among notable changes, CMS proposes to continue payment reductions to hospitals purchasing 340B drugs, builds on price transparency guidance by including payer-specific negotiated rates and continues the last phase of site-neutral payment reductions for hospital outpatient clinic visits provided at off-campus, provider-based departments.

To learn more about the OPPS and ASC proposals, review the following resources:

Proposed Rule CMS Press Release CMS Fact Sheet Comments on the proposed rules are due by Sept. 27, 2019. The Final Rule will likely be released in early November, and new payment provisions will go into effect on Jan. 1, 2020.

Below is a summary of the highlights of the Proposed Rule:

Proposed HOPD Payment Updates

CMS proposes a 2.7 percent increase in the OPPS conversion factor (CF). The increase is based on the proposed hospital inpatient market basket increase of 3.2 percent for inpatient services reimbursed under the Inpatient Prospective Payment System (IPPS), minus the proposed multifactor productivity (MFP) adjustment of 0.5 percent. CMS anticipates the CY 2020 CF update, along with changes in enrollment, utilization and case mix, will result in total payments of approximately $79 billion to HOPD providers, an increase of approximately $6 billion from CY 2019 payment estimates. Hospital outpatient departments (HOPDs) failing to meet quality-reporting requirements will continue to receive a 2.0 percent reduction in payments for OPPS services.

Rural Adjustment

CMS proposes to continue the 7.1 percent adjustment for OPPS payments to certain rural sole community hospitals (SCHs), including essential access community hospitals (EACHs). The proposed adjustment would apply to all services paid under OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, items paid at charges reduced to costs and devices paid under the pass-through payment policy.

Proposed ASC Payment Updates

CMS proposes to update 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.

Proposed Payment Adjustment for Certain Cancer Hospitals

CMS proposes to continue to provide additional payments to cancer hospitals so that the cancer hospital's payment-to cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data.

Beginning CY 2018, Section 16002(b) of the 21st Century Cures Act requires the weighted average PCR be reduced by 1.0 percentage point.

A proposed target of 0.89 would be used to determine the CY 2020 cancer hospital payment adjustment to be paid at cost report settlement. The proposed payment adjustment would be the additional payments needed to result in PCR equal to 0.89 for each...