The Centers for Medicare & Medicaid Services late today issued a proposed rule that would increase Medicare hospital outpatient prospective payment system rates by a net 2.7% in calendar year 2020 compared to 2019. In addition, the rule would: require hospitals to disclose payer-specific negotiated rates; finish phasing in use of the site-neutral rate (40% of the OPPS rate) for clinic visits provided in grandfathered off-campus departments; and continue cuts to drugs purchased under the 340B drug savings program.

Specifically, CMS proposes to build on previous price transparency guidance by defining “standard charge” to include payer-specific negotiated rates, in addition to gross charges. These rates would be included in the list of standard charges for all items and services that hospitals are currently required to post online. In addition, hospitals would be required to publish the negotiated rates for 300 “shoppable” services, including 70 defined by CMS, in a consumer-friendly and searchable manner. CMS also proposes a process for monitoring enforcement, as well as monetary penalties for noncompliance.

“America’s hospitals and health systems are dedicated to ensuring patients have the information they need to make informed health care decisions, particularly knowing what their expected out-of-pocket costs will be,” said AHA President and CEO Rick Pollack in a statement. “However, mandating the disclosure of negotiated rates between insurers and hospitals is the wrong approach. Instead, it could seriously limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry. While we support transparency, today’s proposal misses the mark, exceeds the Administration’s legal authority and should be abandoned.”

CMS also would finish phasing-in the site-neutral cuts it made to payments for clinic visits provided in grandfathered off-campus departments. Specifically, they would be paid at the site neutral rate of 40% of the OPPS rate in CY 2020. 

“By continuing payment cuts for hospital outpatient clinic visits, CMS has not only undermined clear congressional intent, but has threatened to impede access to care, especially in rural and other vulnerable communities,” Pollack said. “These cuts clearly exceed the Administration’s legal authority, which is why the AHA has been working to overturn this rule through legal action and by working with the Congress.”

CMS also proposes to continue its current policy of cutting the payment rate for certain drugs purchased under the 340B program to average sales price minus 22.5%. The AHA, along with other hospital associations and member hospitals, successfully challenged the previous cuts to the 340B program in court. “Now that the court has ruled that those cuts are illegal and exceeded the administration’s authority, we urge CMS to refrain from doing more damage to impacted hospitals with another year of illegal cuts,” Pollack said. “Instead, as a remedy, CMS should be offering a plan to promptly restore funds to those affected by the illegal cuts.” CMS solicits comments on the implications of a remedy that would pay for 340B acquired drugs at ASP plus 3%. 

In addition, CMS proposes to change the minimum required level of supervision from direct supervision to general supervision for all hospital outpatient therapeutic services provided by all hospitals and critical access hospitals. The AHA has repeatedly advocated for such a change, which would reduce burden on rural hospitals.

CMS proposes changes to the area wage index. Among other proposals, the rule would increase the wage index for hospitals with a wage index value below the 25th percentile. It also would decrease the wage index for hospitals with values above the 75th percentile to make this policy budget neutral.

CMS also proposes a prior authorization process for five categories of hospital outpatient department services, including: blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty and vein ablation.

Finally, the agency would remove total hip arthroplasty from the inpatient only list, making it eligible to be paid by Medicare in both the hospital inpatient and outpatient settings.

CMS will accept comments on the proposed rule through Sept. 27.

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