This evening, the Centers for Medicare and Medicaid Services (CMS) released the final calendar year (CY) 2020 payment rule for hospital outpatient departments. The rule also includes the annual payment update for Ambulatory Surgical Centers as well as policies for 340B, wage index, and laboratory date of service. Provisions of the final rule go into effect on January 1, 2020.
Notably, CMS did not include policies relating to hospital standard charges list. In the proposed hospital outpatient rule, CMS proposed requiring hospitals to publicly post standard charges for a defined set of procedures. The proposal would have required publication of both gross charges and payer-specific negotiated charges. This proposal was cited as part of the administration’s efforts to increase transparency in health care costs. Instead, CMS says it will release additional rulemaking focusing on price transparency. A final rule related to price transparency with standard charges is currently under review by the Office of Management and Budget (OMB).
Hospitals, Ambulatory Surgical Centers Can Expect 2.6% Payment Increase in 2020
CMS is finalizing a 2.6% payment increase for hospital outpatient department services and ambulatory surgical centers (ASCs) for 2020. Additionally, per diem rates for Partial Hospitalization Program (PHP) services and Community Mental Health Centers (CMHCs) will now be identified by a single APC code for each provider type for days with three or more services per day.
In 2019, CMS finalized a policy of applying the hospital market basket update to the ASC payment system rates through 2023. The goal of the policy change was to encourage more services to be performed in the lower-cost ASC setting.
340B Cuts Stay for Now
CMS is maintaining the payment policy implemented in 2018 that reduced payment rates for physician-administered drugs purchased through the 340B program to average sales price (ASP) less 22.5% (ASP-22.5%). The policy is currently subject to a lawsuit, which CMS is currently appealing to the U.S. Court of Appeals. The agency plans to survey hospitals on actual acquisition costs for 340B drugs in the near future; a Paperwork Reduction Act (PRA) notice on the survey was released in September.
Potential Revisions to Lab Date of Service (DOS) Policy Rejected
In 2018, CMS finalized a policy excluding certain molecular pathology and advanced diagnostic lab tests (ADLTs) from the OPPS packaging policy if they met certain exceptions. The exception would allow the laboratories performing the test to bill Medicare directly for the test, instead of the hospital where the test was ordered. However, due to administrative difficulties, implementation of the policy was delayed.
The agency had proposed exempting a test from the DOS policy when the ordering physician determines that the results of the test are intended to guide treatment during a hospital outpatient encounter. Due to “overwhelming” opposition to the proposal, CMS has decided to not finalize this policy. Additionally, CMS is not finalizing a proposal to limit the DOS exception only to ADLTs, and not include molecular pathology tests in the exception.
Hospital Outpatient Wage Index Policy Conforms with FY 2020 Inpatient Prospective Payment System Policy
CMS continues its policy to use the wage index policies and adjustments proposed in the Inpatient Prospective Payment System (IPPS) for non-IPPS hospitals paid under the OPPS. This update will result in an estimated payment increase of 0.7 percent for rural hospitals and no changes in payment for urban hospitals. For FY 2020 IPPS wage index, CMS finalized adjustments to address what they see as the disparity between urban and rural hospitals. Hospitals in the bottom 25th percentile of the wage index will receive a boost of 50% of the difference between current applicable wage index value for the hospital and the 25th percentile wage index value for all hospitals. The agency originally proposed to offset this higher spending by decreasing the wage index for hospitals in the 75th percentile or higher. However, responding to concerns of commenters, CMS instead finalized a budget neutrality adjustment by decreasing payment across the board. Cuts will be capped at a maximum of 5% decrease from a hospital’s FY 2019 wage index. In addition, the removal of urban to rural hospital reclassifications from the calculation of the rural floor wage index that was finalized in the FY 2020 IPPS rule is also reflected in this final rule.
Site Neutral Policy Enters Second Year
CMS will continue the payment reduction policy started in 2019 which pays off-campus provider-based departments (PBDs) at the Physician Fee Schedule (PFS) rate for clinic visits. CY 2020 will be the second year of the two-year transition period in payment reduction. The effected clinic visits are described by HCPCS code G0463 when billed with the modifier “PO.” CMS estimates that the payment reduction will result in lower copayments for beneficiaries and reduced program costs of $800 million for 2020.
Additional Drugs to Have Pass Through in 2020; New Breakthrough Device Alternative Pathway Finalized
A total of 80 drugs and biologics will have pass-through status in 2020. Of these, three are new injectables effective January 1, 2020: lefamulin, brexanolone, polatuzumab.
Seven applications for device pass-through payment were received. In addition, there will be a new additional pathway for devices to quality for pass-through status; devices would not need to meet the substantial clinical improvement criterion, but would still need to meet the other criteria. Two applications were approved for pass-through status under the breakthrough device alternative pathway. They are the Optimizer® System and ARTIFICIALIris®.
After Eight Years of Non-Enforcement in Rural Hospitals, CMS Eliminates Direct Supervision for Outpatient Therapeutic Services
Most recently in the CY 2018 OPPS final rule, CMS stated that hospital outpatient therapeutic services require direct supervision by a physician, including in critical access hospitals (CAHs). However, since 2010, CMS has not enforced this provision against CAHs or rural hospitals with fewer than 100 beds and required only general supervision (the most lenient level of supervision). As the most recent nonenforcement period is coming to an end, CMS is finalizing its proposal to change the requirement for all hospitals to allow general supervision of outpatient therapeutic services. This would require care to be furnished under the overall direction and control of a physician but does not require their physical presence. This comes as a result of eight years of experience with rural hospitals providing adequate care under this lower standard of supervision and will eliminate the current two-tier system of outpatient therapy services.
Hip Replacements Removed from Inpatient Only List
Total Hip Arthroplasty (THA), six spinal procedure codes, and five anesthesia codes are removed from the Inpatient Only List (IPO) for CY 2020. These procedures may now be performed in either inpatient or outpatient settings.
For the procedures removed from IPO list for CY 2020 and subsequent years, CMS finalizes a two-year exemption from medical review activities pertaining to patient status. CMS had originally proposed a one-year exemption.
ASCs Get 2.6 Percent Increase as Part of Site Neutrality Efforts; CMS Adds Knee Replacements to ASC Covered Procedures List (CPL)
CMS updates the Ambulatory Surgical Center (ASC) rates by 2.6 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. Total payments to ASCs will increase by $230 million in CY 2020.
Additionally, CMS adds total knee arthroplasty (TKA), a mosaicplasty procedure, six coronary intervention procedures, and 12 surgical procedures, to the list of procedures that may be performed at ASCs.
One New Measure Added to ASC Quality Reporting Program
For the ASC Quality Reporting (ASCQR) Program, CMS adds one claims-based measure beginning with the CY 2024 payment determination: ASC-19- facility-level 7-day hospital visits after general surgery procedures performed at an ASC (NQF #3357). CMS states that the quality measurement of the number of unplanned hospital visits following general surgery procedures performed at ASCs is important for providing transparent data to beneficiaries who are choosing ambulatory sites of care. There were no measures removed from ASCQR Program.