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OPPS Proposed Rule Continues 340B, Site-Neutral Cuts

The Medicare Outpatient Prospective Payment System (OPPS) proposed rule for calendar year (CY) 2020 would 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 and called on the administration to withdraw its damaging proposal.

340B Reimbursement Cuts

For a third year, the Centers for Medicare & Medicaid Services (CMS) proposes continued 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 CMS’ statutory authority. Specifically, CMS proposes to reimburse 340B hospitals 77.5 percent (down from the previous rate of 106 percent) of the average sales price (ASP) for most separately payable Part B drugs.

Acknowledging the possibility that the agency’s appeal could fail in the courts, CMS seeks comment on whether they should change the reimbursement rate for CY 2020 and what would be an appropriate remedy for CYs 2018 and 2019. The agency specifically offered reimbursement at 103 percent of the ASP as an alternative policy that they believe would survive legal challenge.

Site-Neutral Payment Cuts

Under Section 603 of the Bipartisan Budget Act of 2015 (BBA), 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). The agency does not comment on this provision in the CY 2020 PFS proposed rule, leading to the assumption of a continuation of the current payment rate. We will confirm that information upon further review.

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. As promised, CMS now proposes reducing payment to 40 percent in CY 2020.

Outpatient Payment, Quality Reporting Provisions

Regarding outpatient payment and quality reporting, the proposed rule:

  • continues to incorporate the Meaningful Measures Initiative, which CMS launched in 2017 to identify high-priority areas for quality measurement and improvement;
  • removes one web-based measure from the Outpatient Quality Reporting (OQR) Program for the CY 2022 program year;
  • suggests removing total hip arthroplasty from the inpatient-only list; and
  • requests comment on adding to the OQR Program four patient-safety measures previously adopted for ambulatory surgery center quality reporting.

Price Transparency

Included in the FY 2019 Hospital Inpatient Prospective Payment System final rule, and effective Jan. 1, 2019, hospitals are required to make public a list of their standard charges via the internet.

In June, the administration issued an executive order on price and quality transparency that directs the Health and Human Services Secretary to propose a regulation requiring hospitals publicly post standard charge information.

The OPPS proposed rule includes policies that build on hospitals’ existing requirements on posting charges. Price transparency proposals include:

  • definitions of “hospital,” “standard charges,” and “items and services”;
  • requirements for making public a machine-readable file online that includes all standard charges for all hospital items and services;
  • requirements for making public payer-specific negotiated charges for a limited set of “shoppable” services, displayed and packaged in a consumer-friendly manner; and
  • actions to monitor compliance and address hospital noncompliance.

America’s Essential Hospitals is analyzing the proposed rule for comment and will send members a detailed Action Update in the coming days. CMS is accepting comments on the proposed rule until Sept. 27.

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



About the Author

Maryellen Guinan is a principal policy analyst at America's Essential Hospitals.

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