Skip to Main Content

Proposed rule for CY 2020 OPPS


On July 29, 2019, CMS issued the Outpatient Prospective Payment System (OPPS) proposed rule for calendar year 2020. The proposed rule provides more detail regarding pricing transparency and completes the two-year phase-in of site neutrality regulations.
The proposed changes are as follows:

Payment update

  • Increase 2020 outpatient payment rates by 2.7% compared to 2019. Approximately $6 billion more than the prior year.
  • The update is based on the projected hospital market basket increase of 3.2 percent minus a 0.5 percentage point adjustment for multi-factor productivity.

Pricing transparency
The industry has grappled with pricing transparency for years and struggled to make advancements. Building on the directive set forth by the Trump administration, the proposed rule confronts the issue with several new requirements focused on empowering the healthcare consumer.  Rule makers calculate that increased transparency would level the playing field within markets and not result in anticompetitive behavior. Provisions of the rule are broad sweeping including the following major components:

  • Hospitals would be required to make all standard charges public in a digital and machine-readable file posted online. Standard charges are defined as the hospital’s gross charge and payer-specific negotiated charge for an item or service.
  • CMS also focuses on what it describes as shoppable services, defined as any hospital service a healthcare consumer would seek out and schedule in advance. In order to help consumers make informed decisions about cost, the rule requires that hospitals display payer-specific negotiated charges for at least 300 shoppable services including 70 services identified by CMS and 230 selected by the hospital itself.  In addition, the information must include charges for services that the hospital customarily provides in conjunction with the primary service that is identified by a common billing code.
  • The information would be required to be displayed prominently on a publicly available webpage and updated at least annually.
  • CMS proposes a process for monitoring compliance and assessing penalties not in excess of $300 per day.

Site neutrality
In the 2nd year of the phase-in of site neutrality rule making, CMS will continue to reduce payments to off-campus hospital-based physician practices. The adjustment for CY 2020 would equate to 40% of the OPPS payment rate whereas the amount in CY 2019 represented an adjustment of 70%. CMS argues these provider-based clinic visits are the most common service billed under OPPS and both Medicare and its beneficiaries pay more in a hospital-based physician practice for the same type of service provided in a physician office setting.

340B program
Beginning January 1, 2018, Medicare began payment cuts for drugs under the 340B program by applying a discount of 22.5% of the Average Sale Price (ASP).  Although the legality of this change was successfully challenged, CMS proposes to maintain this policy within the calendar year 2020 rule. CMS acknowledges the ongoing litigation and is soliciting comment on alternative payment options.

Wage index
In an attempt to address rural health payment disparities, CMS proposes to apply the post-reclassified wage index for urban and rural areas as set forth in the FY 2020 hospital Inpatient Prospective Payment System (IPPS) to the OPPS payment rate. This measure would increase payment to rural hospitals in the lowest 25th percentile and decrease payments for hospitals above the 75th percentile.

CMS also proposed to change the “rural” floor calculation within the FY 2020 IPPS rule noting that certain States have used the existing method to manipulate wage index values. 

The inpatient only list
CMS proposes that Total Hip Arthroplasty [Replacement] could be performed in either an inpatient or outpatient setting. This procedure was previously reimbursed on an inpatient-basis only and the change is anticipated to reduce cost in the system by opening the procedure to lower cost ambulatory surgical centers.

CMS is currently soliciting public comments regarding the proposed rule. The comment ends September 27, 2019.  

Related Industries

Related Professionals

This site uses cookies to provide you with an improved user experience. By using this site you consent to the use of cookies. Please read our Privacy Policy for more information on the cookies we use and how you can manage them.