CMS Introduces Proposed FY2020 Outpatient Rule

Continues cuts to 340B, site-neutral; sweeping new cost transparency provisions

August 06, 2019

The Centers for Medicare & Medicaid Services (CMS) has introduced its annual proposed update to the Outpatient Prospective Payment System (OPPS). While the proposal does include a welcome payment rate increase of 2.7%, this increase is blunted by continued cuts to 340B hospitals and hospital outpatient departments, and a new requirement that hospitals post payment rates negotiated with insurers.

For 340B hospitals, CMS is proposing to continue reimbursement cuts of around 30% that began in the FY2018 OPPS rule, despite two recent court decisions ruling those cuts illegal. CMS has appealed the court decisions, and rather than pausing with the payment cuts until the litigation is decided, it proposes to continue them for FY2020. It also requests comment on a potential remedy CMS may prepare should it lose its appeals.

In addition, CMS is proposing to extend the site-neutral cuts proposed in the FY2019 OPPS rule despite litigation also challenging their legal authority to make such cuts. In the FY2019 rule, CMS proposed to reduce payments to off-campus hospital outpatient departments (HOPDs). WHA has been advocating for reversing this policy, particularly since Congress previously specifically exempted these HOPDs from such payment cuts.

After hearing such concerns, CMS decided to phase in the impact of these site-neutral payment cuts by half in the first year. In
the 2020 proposed rule, CMS proposes allowing the phase-in to expire and would institute the full cut in 2020 and subsequent years, which is projected to cut payments to Wisconsin hospitals by more than $40 million annually.

Perhaps the most significant proposed change in this rule is the proposal to require hospitals to make payment rates negotiated with insurers available both in machine-readable and consumer-friendly formats. This would include charges for all hospitals (including those not reimbursed under the OPPS rule) and would cover all items and services provided by a hospital, including physician and other professional charges for hospital-employed providers, as well as facility fees, supplies, procedures, and room and board. Hospitals would be required to make 300 “shoppable” services available in a consumer-friendly format. This would include a list of 70 services defined by CMS, as well as 230 additional shoppable services hospitals choose based on the populations they serve. Failure to comply would result in corrective action plans and ultimately civil monetary penalties of up to $300 per day if not corrected.

Over the coming weeks, WHA staff will analyze the rule in its entirety and submit comments to CMS which are due by September 27, 2019. For further information on the proposed rule, contact WHA’s Director of Federal and State Relations Jon Hoelter.

This story originally appeared in the August 06, 2019 edition of WHA Newsletter