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OPPS Final Rule Extends Site Neutral, 340B Cuts

The Medicare Outpatient Prospective Payment System (OPPS) final rule for calendar year (CY) 2019 broadens the scope of cuts to hospitals in the 340B Drug Pricing Program and to off-campus provider-based departments (PBDs) starting Jan. 1, 2019.

In a statement, America’s Essential Hospitals strongly objected to the additional payment cuts and committed to working to reverse the harm caused by these cuts.

Site-Neutral Payment Cuts

Under Section 603 of the Bipartisan Budget Act of 2015 (BBA), Congress instructed the Centers for Medicare & Medicaid Services (CMS) to pay certain, non-excepted, off-campus PBDs under a payment system other the OPPS. CMS determined that these facilities should be paid under the Medicare Physician Fee Schedule (PFS) at 40 percent of the OPPS payment rate. The agency finalized a policy to continue this payment rate in this year’s PFS final rule.

Until now, off-campus PBDs that were providing OPPS services before Nov. 2, 2015, were considered excepted and paid under the higher OPPS rate. CMS is finalizing a proposal to reduce payment for outpatient office visits (health care common procedure coding system code G0463) at excepted, off-campus PBDs but will phase in this policy over two years. In CY 2019, CMS will pay excepted PBDs for clinic visits at 70 percent of the OPPS payment rate, resulting in $380 million in reduced reimbursement. Beginning in CY 2020, CMS will pay excepted PBDs at the non-excepted payment rate, which is 40 percent of the OPPS payment rate. In response to criticism from America’s Essential Hospitals and other stakeholders, CMS decided against finalizing a proposal to pay excepted, off-campus PBDs at the site-neutral payment rate for new service lines.

340B Reimbursement Cuts

The final rule expands CMS’ policy of reducing Medicare Part B reimbursement for separately payable drugs purchased through the 340B program.

CMS will continue its CY 2018 reduced payment rate of 77.5 percent of average sales price (ASP) for most separately payable Part B drugs administered at 340B hospitals. Before 2018, CMS paid for these drugs at 106 percent of the ASP under the OPPS.

The rule also expands CMS’ reduced payment rate for separately payable drugs purchased through the 340B program. Specifically, CMS will apply the reduced reimbursement rate for 340B drugs to non-excepted, off-campus PBDs. Last year, CMS decided to exclude these off-campus PBDs from the payment cut, as they are paid under the PFS, which reimburses for separately payable drugs at 106 percent of ASP. Although they are paid under the PFS and not the OPPS, in CY 2019 CMS will begin paying for drugs administered in non-excepted PBDs at 77.5 percent of ASP.

The agency continues to exclude children’s hospitals, certain cancer hospitals, and rural sole community hospitals from the payment cut.

Outpatient Payment, Quality Reporting Provisions

Regarding outpatient payment and quality reporting, the final rule:

  • incorporates the Meaningful Measures Initiative, which CMS launched last year to identify high-priority areas for quality measurement and improvement;
  • removes eight measures from the Outpatient Quality Reporting (OQR) Program (one from the CY 2020 payment determination and seven from the CY 2021 payment determination);
  • codifies measure removal policies for the OQR Program, including adoption of a factor assessing costs versus benefits of a measure; and
  • removes four procedures from and adds one procedure to the inpatient-only list.

Hospital Inpatient Quality Reporting (IQR) Program Update

CMS will modify the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) patient experience of care survey measure by removing the three recently revised pain communication questions, starting with October 2019 discharges — earlier than proposed. The change comes in response to continued concerns that providers might feel pressure to offer opioids to raise their HCAHPS score.

Interoperability and Transparency Requests for Information (RFIs)

CMS sought feedback through two RFIs: one on the possibility of revising conditions of participation related to interoperability as a way to increase providers’ electronic data sharing; and one focused on transparency and whether to require providers and suppliers to inform patients about charges and payment information. No policies were finalized related to either RFI.

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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