2020 OPPS proposed rule: CMS looks to enforce price transparency, seeks comments on unwinding 340B policy

Tuesday, July 30, 2019

CMS released the 2020 OPPS proposed rule July 29, proposing to refine previous policies related to price transparency and the 2-midnight rule, moving forward with year two of the site-neutral payment policy for clinic visits, while also asking for comments on how to potentially undo its policy that reduced payments for drugs purchased under the 340B drug discount program by nearly 30%.

Price transparency

CMS introduced a policy requiring hospitals to post a list of standard charges for items and services online in the 2019 IPPS proposed rule that was implemented January 1, but the initial policy and subsequent 2020 IPPS proposed rule lacked penalties for noncompliance though CMS sought comments previously on what to do about enforcement.

In light of an executive order on price transparency and following outreach to stakeholders in the form of solicited comments and listening sessions, CMS is proposing numerous updates to its policy in the 2020 OPPS proposed rule, including defining terms such as “standard charges”, enforcing the policy through penalties, requiring the posting of 300 shoppable services, and asking for payer-specific information.

“It’s unfortunate that the agency and the administration continue to push hospitals to do even more burdensome work around price transparency, going against its own Patients over Paperwork initiative, given provider comments over the past two years about how useless charge information from charge description masters (CDM) is in helping patients make decisions about where to seek healthcare services or informing or reducing costs associated with healthcare,” says Jugna Shah, MPH, president of Nimitt Consulting Inc.

“What is especially odd,” says Shah, “is that those in charge don’t seem to realize or accept that CDM charges and prices have practically nothing to do with what patients pay or how they seek healthcare services. To see CMS essentially doubling down is surreal given the agency acknowledges in a separate section of the rule the issues with using charges from the CDM in setting payment rates, computing outliers, etc., and is seeking comment on the continued value of this information.”

CMS is first seeking to define “hospital” broadly so that any hospital operating in the U.S. will be required to follow the policy. The agency proposes defining a hospital as an institution in any state in which state or applicable local law provides for the licensing of hospitals and is either:

  • Licensed as a hospital pursuant to such law
  • Approved, by the agency of such state or locality responsible for licensing hospitals, as meeting the standards established for such licensing

This definition does not include ambulatory surgical centers or nonhospital sites offering laboratory or imaging services, but CMS “encourages” those sites to offer lists of standard charges to align with other facilities. CMS also proposes that the policy would not apply to federally owned or operated hospitals, such as Indian Health Service and Veterans Affairs facilities, as they do not provide services to the general public.

CMS is not proposing to exclude critical access and rural hospitals from the policy but is seeking comment on whether to apply specific exceptions.

The agency is proposing to define “items and services” as all items and services provided by hospitals “including individual items and services and service packages, that could be provided by a hospital to a patient in connection with an inpatient admission or an outpatient department visit for which the hospital has established a standard charge.” This would also include items and services provided by physicians and non-physician practitioners employed by the hospital.

In addition to individual services and DRGs, CMS is proposing to require the listing of “service packages,” which it defines as the aggregation of individual items and services into a single service with a single charge.

CMS notes that defining “standard charges” is difficult for hospitals, given that the standard charge for a service may differ depending on the method of payment or insurance for a patient. The agency is proposing to include “gross charges” and “payer-specific negotiated charges” in its definition of standard charges.

A gross charge is proposed to be defined as “as the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discount.” The proposed definition of a “payer-specific negotiated charge is “the charge that the hospital has negotiated with a third-party payer for an item or service.”

“This latter point is either poorly worded,” says Shah, “or CMS simply doesn’t understand that hospitals don’t negotiate charges with payers but payments. Furthermore, this isn’t likely to stand up if challenged in a court of law.

CMS acknowledges the effect of releasing payer-specific negotiated rates is largely unknown and would result in organizing a large and potentially unwieldy amount of data. The agency is seeking comment on the potential unintended consequences of such a policy. It is also seeking comment on other potential definitions of standard charges.

In addition to further clarifying the format of posted prices, CMS is adding enforcement and penalty proposals to its price transparency efforts. Anticipating that it will rely predominately on complaints made to CMS by individuals or entities regarding noncompliance, the agency is also considering self-initiating audits of hospital websites.

CMS proposes that noncompliant hospitals would first be notified of any deficiencies and allowed to submit a corrective action plan before the agency imposes civil monetary penalties. These penalties could include a $300 penalty per day capped at $100,000 per year, but the agency is seeking comments on its enforcement and penalty structure.

2-midnight rule clarifications

CMS is proposing minor tweaks to the 2-midnight rule, which provided a benchmark whereby CMS considered inpatient hospital admission and payment appropriate for surgical procedures, diagnostic tests, and other services when the physician expects the patient to require a stay spanning at least two midnights and admits the patient based on that expectation.

In the 2016 OPPS final rule, CMS revised the policy to allow for case-by-case exceptions to the benchmark if physicians did not expect the patient stay to span two midnights but documented that the patient still required inpatient care.

Exceptions could be due to:

  • Complex medical factors such as history and comorbidities
  • Current medical needs
  • The risk of an adverse event
  • The severity of signs and symptoms

Procedures on the inpatient-only list (IPO) under the OPPS are not subject to the 2-midnight benchmark for purposes of hospital payment, but the benchmark is applicable once procedures have been removed from the IPO list. Procedures that are removed from the IPO list are also subject to initial medical reviews of claims for short-stay inpatient admissions conducted by Beneficiary and Family-Centered Care Quality Improvement Organizations (BFCC-QIO), CMS writes in the proposed rule.

Subsequently, BFCC-QIOs could refer providers to Recovery Auditors (RA) for further medical review for having high denial rates or failing to consistently adhere to the 2-midnight benchmark, among other reasons.

In the 2020 OPPS proposed rule, CMS is proposing to establish a one-year exemption from certain medical review activities for procedures removed from the IPO list in 2020 and subsequent years. These removed procedures would not be eligible for referral to RAs for noncompliance within the first calendar year of removal from the IPO list.

This proposal would clarify some confusion regarding patient status that arose from the removal of total knee arthroplasty from the IPO list in the 2018 OPPS final rule. 

“What CMS is proposing now is a broader change which is not at the individual procedure level but at the category level–meaning any time something comes off the list, there would be a one-year exemption from being able to review it,” says Shah, adding that CMS is seeking comment on whether this timeframe is appropriate or could be longer.

340B drug payments

After a U.S. District Court ruled in May that CMS’ reduction in payment to hospitals for drugs acquired through the 340B drug discount program was unlawful, the agency is now soliciting comments on how to unwind the policy and make remedies for cuts in 2018 and 2019.

Despite facing the threat of lawsuits and opposition from numerous stakeholders, including the agency’s own advisory panel, CMS moved forward with a policy introduced in the 2018 OPPS proposed rule to cut payments for drugs acquired through the 340B program from the average sales price (ASP) plus 6% to ASP minus 22.5%. In the 2019 OPPS final rule, CMS expanded the policy to further sites.

While CMS initially sought comments on what to do with the money from this reimbursement reduction, considering even removing it from the OPPS, the agency eventually decided to redistribute the money in the OPPS. In the 2018 OPPS proposed rule, CMS projected the savings to be $900 million, but raised the projection to $1.65 billion in the final rule, distributing it to other separately payable, nondrug OPPS items and services.

CMS is currently appealing the District Court ruling but is required by the court to offer ideas on how to reimburse providers for the reduction in 2018 and 2019. With the money redistributed through the OPPS, CMS anticipates reversing the policy would have a significant economic impact on OPPS hospitals and affect beneficiary cost-sharing.

Depending on when and how the courts rule, CMS expects to consider comments for policies to be introduced in the 2021 OPPS proposed rule. In the interim, CMS is proposing to continue its current 340B drug payment policies and reimburse hospitals at ASP minus 22.5%. However, the agency is considering and seeking comment on whether paying ASP plus 3% for these drugs would be an appropriate solution going forward if it were to lose the appeal and is also seeking input on how it could most easily remedy the past reduced payments made in 2018 and 2019.

“Whatever CMS does if forced to make a change will impact all providers since the policy was made under budget neutrality, which is also why the agency seeks comments on how to structure rates for 2020 and beyond,” says Shah.   

CMS to complete clinic payment reduction phase-in

CMS intends to complete the second year of a policy to reduce reimbursement for clinic visits in off-campus provider-based departments (PBD) grandfathered under section 603 of the Bipartisan Budget Act of 2015, and previously protected from CMS’ PBD reimbursement reduction, claiming “unnecessary increases” in outpatient service volume.

In the 2019 OPPS final rule, CMS instituted a policy to pay providers the equivalent of 70% of the OPPS rate for the services described by HCPCS code G0463 (hospital outpatient clinic visit for assessment and management of a patient) in 2019. In that same rule, CMS noted its intention to reduce that payment to 40% of the OPPS rate for 2020 and subsequent years.

In the 2020 OPPS proposed rule, CMS says it is completing the second phase of this price reduction in an effort to “reduce unnecessary utilization” and save beneficiaries an average of $14 each time they visit an off-campus PBD for a clinic visit.

For more information, see CMS’ fact sheet and news release. Comments are due to CMS by September 27.

To learn more about the proposed rule’s policies and what payment impact they could have at your facility, attend HCPro’s annual OPPS proposed rule webinar on Tuesday, August 27, with Shah and Valerie A. Rinkle, MPA, lead regulatory specialist and an instructor for HCPro Medicare boot camps.


Editor's note: For more information on OPPS, stream the July 2019 NAHRI Members-Only Call

This article originally appeared on Revenue Cycle Advisor

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