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OPPS Final Rule Continues 340B, Site-Neutral Cuts

The Medicare Outpatient Prospective Payment System (OPPS) final rule for calendar year (CY) 2020 will continue cuts to hospitals in the 340B Drug Pricing Program and to off-campus provider-based departments (PBDs) starting Jan. 1, 2020.

In a statement, America’s Essential Hospitals strongly objected to these additional payment cuts, particularly in light of recent court decisions calling their legality into question.

340B Reimbursement Cuts

For a third year, the Centers for Medicare & Medicaid Services (CMS) will continue Medicare Part B reimbursement cuts for separately payable drugs purchased through the 340B program, even though the United States District Court for the District of Columbia ruled the cuts exceed the agency’s statutory authority. Specifically, CMS will reimburse 340B hospitals 77.5 percent of the average sales price (ASP) (compared with 106 percent for non-340B hospitals) for most separately payable Part B drugs.

Acknowledging the possibility that the agency’s appeal could fail in the courts, CMS had sought comment on an appropriate remedy for CYs 2018 and 2019. CMS indicates that it will consider using 340B drug acquisition cost data collected through a survey to devise a remedy for the affected years. Alternatively, CMS also will consider public comments it received to develop a remedy, which it will publish in the CY 2021 OPPS rule if the agency loses its appeal in court.

Site-Neutral Payment Cuts

Under Section 603 of the Bipartisan Budget Act of 2015, Congress instructed CMS to pay certain non-excepted, off-campus PBDs under a payment system other than the OPPS. CMS determined that these facilities should be paid under the Medicare Physician Fee Schedule (PFS) at a percentage of the OPPS payment rate (set at 40 percent in 2019). CMS will continue paying these non-excepted PBDs at 40 percent of the OPPS rate in CY 2020.

Last year, CMS indicated its intent to reduce over a two-year period the payment rate for outpatient office visits (health care common procedure coding system code G0463) at excepted, off-campus PBDs to 40 percent of the OPPS payment rate. In last year’s final rule, CMS reduced payments for office visits to excepted, off-campus PBDs to 70 percent of the OPPS rate for the first year of this policy. CMS proposed to reduce the payment rate in CY 2020 to 40 percent of the OPPS rate.

In a court decision since the proposed rule was issued, a district court judge vacated the 2019 policy to reduce payment to excepted PDBs to 70 percent of the OPPS rate. In response to this decision, CMS notes that it is determining how to pay hospitals for the affected 2019 claims that were deemed to be unlawful. However, CMS says it will continue to phase-in this policy to pay at a reduced rate of 40 percent in 2020 because the court did not rule on the lawfulness of the 2020 policy.

Prior Authorization

CMS finalized its proposal to require prior authorization for five categories of cosmetic services: blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation. Under this policy, a provider must submit a detailed prior authorization request with documentation demonstrating that the service meets Medicare coverage, coding, and payment rules. This is the first time that CMS has required prior authorization for OPPS services.

Outpatient Payment, Quality Reporting Provisions

Regarding outpatient payment and quality reporting, the final rule:

  • removes External Beam Radiotherapy (EBRT) for Bone Metastases (OP-33) from the Outpatient Quality Reporting Program for the CY 2022 program year; and
  • removes total hip arthroplasty from the inpatient-only list.

Price Transparency

Following the release of the OPPS proposed rule, CMS received more than 1,400 comments on proposed requirements for hospitals to make public their standard charges, including information based on rates negotiated with third-party payers. CMS intends to summarize and respond to public comments on its proposals in a forthcoming final rule.

CMS will host a webinar on the OPPS and Medicare Physician Fee Schedule final rules on Nov. 6 from 2:15–3:45 pm ET.

America’s Essential Hospitals is analyzing the final rule and will send members a detailed Action Update in the coming days.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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