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Final rule for CY 2020 OPPS


On November 1, 2019, CMS issued the Outpatient Prospective Payment System (OPPS) final rule for Calendar Year (CY) 2020. The final rule continues to focus on patient choice and accessibility based on directives set forth in the proposed rule released earlier this year. As was proposed, the ruling completes the two-year phase-in of site neutrality discounts in contradiction to recent legal rulings. The ruling also finalizes the proposal to adjust 340B drug pricing while in the midst of litigation. As a revision to the inpatient only list, the rule authorizes outpatient reimbursement for a total hip replacement and other procedures that previously required an inpatient stay.

Payment update

The final payment update is as follows: 

  • Increase 2020 outpatient payment rates by 2.6% compared to 2019. 
  • The update is based on the projected hospital market basket increase of 3.0 percent minus a 0.4 percentage point adjustment for multi-factor productivity.

Pricing transparency

Pricing transparency was a significant focus of the proposed rule which included an initiative requiring hospitals to disclose payer-specific negotiated rates. In the OPPS Final Rule, CMS postponed concluding on the requirement noting it would issue a separate final rule specific to this issue.

Site neutrality

In the 2nd and final year of the phase-in of site neutrality rule making, CMS will reduce payments to off-campus hospital-based physician practices. The adjustment for CY 2020 will 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. CMS acknowledged ongoing litigation associated with this rule.

340B drug pricing

As previously indicated, CMS cut the payment rate for 340b drugs to the average sales price minus 22.5%. CMS acknowledged the ruling was subject to litigation and indicated its intention to appeal. 

Wage index

Further measures to address rural health payment disparities are extended to the Outpatient Final Rule. CMS will 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 effective January 1, 2020.   As part of the OPPS final rule, CMS is applying the same wage index policies adopted in the FY 2020 IPPS final rule.

Supervision at Critical Access Hospitals (CAHs)

The required level of supervision for hospital outpatient therapeutic services at a CAH was changed from direct supervision to general supervision. General supervision is defined as: “furnished under the physician’s overall direction and control, but that the physician’s presence is not required during the performance of the procedure.” This change establishes the minimum level of supervision required but providers can opt for a greater level if deemed appropriate.

The inpatient only list

CMS authorized 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. 

Source: Fact sheet,

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