The 2020 OPPS Final Rule makes several changes to Medicare reimbursement rates and policies for hospital outpatient departments. Key changes include a 2.6% increase in OPPS payment rates, removal of some procedures from the inpatient only list, changes to device pass-through payments and 340B drug payments, and the adoption of a new quality measure for ambulatory surgical centers. The rule also implements prior authorization for certain frequently furnished clinic visit services to control unnecessary volume increases.

1. 2020 OPPS Final Rule
KEY POINTS

2. The 2020 Hospital Outpatient Prospective Payment System (OPPS) Final Rule has
been issued and changes are on the way that can affect your organization’s
Medicare reimbursement.
As part of our commitment to help protect and enhance your Medicare revenue, we’ve
developed this expert analysis of the FY 2020 OPPS Final Rule to quickly give you
insight into the most important changes.
BESLER remains your trusted advisor and we look forward to helping you identify
areas of revenue opportunity for your facility.
Jonathan Besler
President & CEO

3. The Medicare Hospital Outpatient Prospective Payment System (OPPS) rates are required by law to be updated annually.
This report contains key changes to the FY2020 OPPS Final Rule.
You can access the final rule on the Federal Register:
https://www.federalregister.gov/documents/2019/11/12/2019-24138/medicare-program-changes-to-hospital-
outpatient-prospective-payment-and-ambulatory-surgical-center

4. • Background
• Key themes
• Payment rates
• 2-Midnight Rule
• Comprehensive APCs
• Inpatient only list
• Method to Control Unnecessary Increases in the Volume of Clinic
Visit Services Furnished in Excepted Off-Campus Provider-Based
Departments (PBDs)
• Pass-through payments for devices
• Cancer hospital payment adjustment
• Rural adjustment
• 340B Acquired drugs
• ASC payment update
• Proposed Changes to the List of ASC Covered Surgical Procedures
• Proposed Changes to the Level of Supervision of Outpatient Therapeutic
Services in Hospitals and Critical Access Hospitals
• Hospital Outpatient Quality Reporting (OQR) Program
• Ambulatory Surgical Center Quality Reporting (ASCQR) Program
• Proposed Prior Authorization Process and Requirements for Certain Hospital
Outpatient Department (OPD) Services
• Organ Procurement Organizations (OPOs) Conditions for Coverage (CfCs)
Proposed Revision of the Definition of “Expected Donation Rate”
• Request for Information Regarding Potential Changes to the Organ
Procurement Organization and Transplant Center Regulations
Contents

5. Background

6. The CMS Medicare Hospital Outpatient Prospective Payment System (OPPS) rates are legislatively required to
be updated at least annually.
The OPPS system was established by the Balanced Budget Act of 1997 with the intent to create a prospective
or forward-looking predictive payment system that allows CMS to assign payment amounts for outpatient
procedures in advance of the services being provided and consequently better manage the related
expenditures.
CMS generally pays for hospital Part B services on a rate-per-service basis that varies according to the
service’s assigned Ambulatory Payment Classifications (APC) group.
CMS uses the Healthcare Common Procedure Coding System (HCPCS) that includes certain Current Procedural
Terminology (CPT) codes. These codes are used to assign and group the services to the applicable APC.

7. OPPS is designed to consider and address the various components of cost that affect hospital outpatient
services being provided including changes in: wages, medical protocols, technology, new services, new cost
data, etc.
The OPPS CY 2020 rule update addressed refining requirements for the Hospital Outpatient Quality Reporting
(OQR) and ASC Quality Reporting (ASCQR) Programs.
Additionally, this rule established criteria for: increased payment transparency by making hospital standard
charges publicly available (via adding a new Part 180—Hospital Price Transparency to Title 45 of the Code of
Federal Regulations (CFR) ); prior authorization for select covered outpatient department services; revised
conditions for coverage for organ procurement organizations; and updated regulations to allow grandfathered
children's hospitals-within-hospitals to increase bed size without losing their “grandfathered” status.

8. Key themes

9. Payment
Rates
As in 2019, CMS is continuing to increase the payment rates under the
OPPS. This will be accomplished by an increase in the Outpatient
Department (OPD) fee schedule factor of 2.6 percent.
This increase factor is based on the final hospital inpatient market basket
percentage increase of 3 percent for inpatient services paid under the
hospital inpatient prospective payment system (IPPS), minus the proposed
multifactor productivity (MFP) adjustment of 0.4 percentage point.
CMS expects an increase in CY 2020 payments to OPPS providers of
approximately $6.3 billion (estimate includes beneficiary cost sharing and
other considerations) compared to estimated CY 2019 OPPS payments to
result from the updates .
This would place total CY 2020 OPPS payments at approximately
$79 billion based on CMS’s determination.
CMS will continue its support of the
hospital outpatient quality reporting
requirements by implementing a statutory
2.0 percentage point reduction in
payments for hospitals that do not meet
those requirements. This will be
accomplished by applying a reduction
factor of 0.981 to OPPS payments and
copayments for all applicable services.

10. CMS established a 2-year exemption for certain medical review activities for procedures that are removed from
the inpatient only (IPO) list under the OPPS beginning on January 1, 2020 and including subsequent years.
These procedures would be exempt from referrals by Beneficiary and Family-Centered Care Quality
Improvement Organizations (BFCC-QIOs) to Recovery Audit Contractors (RACs) and RAC patient status reviews,
claim and site-of-service denials.
2-Midnight Rule

11. CMS created two new comprehensive APCs (C-APCs) C-APC 5182 (Level 2 Vascular Procedures)
C-APC 5461 (Level 1 Neurostimulator and Related
Procedures)
This increased the total number of C-APCs to 67
Comprehensive
APCs

12. Changes to the Inpatient Only (IPO) List
CMS removed one procedure from the inpatient only list (CPT code 27130) based on its evaluation
and conclusion that this procedure can be performed on an outpatient basis.
CMS removed the following six additional procedures from the inpatient only (IPO) list based on public
comments received: CPT codes 22633 and 22634, 63265,63266,63267 and 63268.
In addition, CMS received unsolicited public comments and consequently removed the following anesthesia
codes: 00670, 00802, 00865, 00944 and 01214.

13. Method to Control
Unnecessary
Increases in the
Volume of Clinic Visit
Services Furnished in
Excepted Off-Campus
Provider-Based
Departments (PBDs)
In an effort to control what it considered unnecessary
volume increases, CMS completed the phase-in of the
reduction in payment for the clinic visit services
furnished in expected off-campus provider-based
departments described by HCPCS code G0463
(Hospital outpatient clinic visit for assessment and
management of a patient used in Medical Care).
The payment for this code is equal to the site-
specific Medicare Physician Fee Schedule (PFS)
payment rate for the clinic visit service.

14. Pass-Through Payments for Devices
CMS is approving four applications received by the applicable quarterly deadline of March
1, 2019 and were considered during the CY 2020 OPPS proposed rule period for device pass-
through payments. Additionally, CMS is approving an application that was not discussed in
the CY 2020 OPPS/ASC proposed rule but qualifies for the alternative pathway process
because it received a Breakthrough Devices designation from the Food and Drug
Administration (FDA). CMS 's evaluation process includes considering whether a device
provides “substantial clinical improvement” in addition to public comments received.
CMS revised paragraph CFR Section 419.66 (c ) (2) of the regulations to institute an
alternative pathway for the assignment of device pass-through payment status to new
devices considered transformative for treating serious health conditions. New devices that
have received FDA marketing authorization and are part of the FDA Breakthrough Devices
Program would be exempt from being evaluated for substantial clinical improvement by
CMS. The devices would still have to meet the other applicable criteria for approval. CMS
believes this change is consistent with its commitment to ensuring Medicare beneficiaries
have access to critical technologies that will improve their healthcare outcomes.
This rule will
become effective
with applications
received on or after
January 1, 2020

15. Based on the most recently submitted or settled cost report data, CMS will continue to make additional
payments to cancer hospitals to ensure that their payment-to-cost ratio (PCR) equals the weighted average
PCR for the other OPPS hospitals.
Due to the requirement (per section 16002(b) of the 21st Century Cures Act) that the weighted average PCR be
reduced by 1.0 percentage point, the targeted PCR of 0.89 is used to determine the CY 2020 cancer hospital
payment adjustment at the time of cost report settlement. Consequently, additional payments or a payment
adjustment will be made to each cancer hospital to ensure a PCR equal to 0.89.
Cancer Hospital Payment Adjustment

16. Rural Adjustment
For 2020 and subsequent years, CMS
will continue the 7.1 percent
adjustment to OPPS payments for
certain rural SCHs, including
essential access community hospitals
(EACHs). The 7.1 percent adjustment
has been applied to rural SCHs and
EACHs CY 2007 through 2019.
In the CY 2006 OPPS final rule CMS stated
it would not change the adjustment on an
annual basis but would review and revise
the adjustment, if appropriate. The
adjustment is intended to address the
difference in costs by APC between
SCHs/EACHs and urban hospitals. CMS has
stated that unless contradictory data is
presented, it will continue to apply the 7.1
percent adjustment (in subsequent years).

17. 340B
Acquired Drugs CMS solicited public comments in the proposed rule on the appropriate
OPPS payment rate for 340B-acquired drugs, including whether a rate of
ASP+3 percent is considered an appropriate payment amount for these
drugs for CY 2020 and for purposes of remediating CYs 2018 and 2019.
CMS also sought public comment on how to structure the remedy for CYs
2018 and 2019 (i.e. retrospectively or prospectively).
CMS presented using 340B hospital survey data, in addition to considering
the public comments received, in the advent CMS’s pending litigation on
this issue warrants such a remedy (i.e. it receives an adverse decision).
In light of ongoing litigation regarding its
OPPS payment policy for 340B-acquired
drugs, CMS will to continue to pay
ASP−22.5 percent for 340B-acquired
drugs including when furnished in
nonexcepted off-campus PBDs paid
under the PFS.

18. ASC Payment Update
CMS estimates that this rule update will result in total
payments to ASC’s of approximately $4.96 billion
which represents an increase of approximately $230
million compared to estimated CY 2019 Medicare
payments (estimate includes beneficiary cost sharing
and other considerations).
CMS updates the ASC payment system using
the hospital market basket update for CYs
2019 through 2023. Based on this approach,
CMS increased payment rates under the ASC
payment system by 2.6 percent for ASCs that
meet the quality reporting requirements under
the ASCQR Program for CY 2020.
The increase was the result of a hospital
market basket of 3 percent less a multifactor
productivity adjustment required by the
Affordable Care Act of 0.4 percentage point.

19. Changes to the List of ASC Covered Surgical
Procedures
CMS added 8 procedures to the ASC list of covered surgical procedures. Additions to the
list include a total knee arthroplasty procedure (CPT 27447), a mosaicplasty procedure
(29867), as well as six coronary intervention procedures (92920,92921,92928,92929,
C9600 and C9601). CMS also added 12 procedures with new CPT codes.
In making such decisions, CMS performs reviews and considers consultations with
stakeholders and clinical advisors to ascertain the risk to Medicare beneficiaries in an ASC
setting. Considerations include issues such as clinical appropriateness, requirements for
medical monitoring and care after midnight and post-operative care.

20. Changes to the Level
of Supervision of
Outpatient
Therapeutic Services
in Hospitals and
Critical Access
Hospitals
CMS changed the minimum required level of supervision from
direct supervision to general supervision for all hospital
outpatient therapeutic services provided by all hospitals and
CAHs. The change is the result of CMS’s experience indicating
that Medicare providers provide a similar quality of services
whether direct, or general minimum levels of supervision are
provided.
CMS believed that the current supervision requirements placed
a heavier burden along with reduced flexibility primarily on
CAHs and rural hospitals due to staffing issues. This has
created a tiered system in comparison to the minimum effect on
larger hospitals. This change ensures a standard minimum
level of supervision for each hospital outpatient service
furnished incident to a physician's service.

21. For the Hospital OQR Program, CMS is finalizing removing OP-33: External Beam Radiotherapy (EBRT) for Bone
Metastases under removal Factor 8.
The cost associated with this measure, originally adopted to address the performance gap in EBRT treatment
variation and prevent overuse, is considered to outweigh the benefits of the measure.
The challenges for proper reporting were numerous including complexities such as manual intervention, proper
sampling and substantial administrative burdens. The change is effective for the CY 2022 payment
determination and subsequent years.
Hospital Outpatient Quality Reporting (OQR) Program

22. Ambulatory Surgical
Center Quality
Reporting (ASCQR)
Program
The expected result of this measure is
to provide greater transparency of
outcomes to both beneficiaries in
their consideration of the ASC sites
and the ASCs related to their quality
improvement initiatives.
For the ASCQR Program, CMS adopted one new
measure, ASC-19: Facility-Level 7-Day Hospital
Visits after General Surgery Procedures
Performed at Ambulatory Surgical Center.
This measure provides for a risk adjusted
outcome review of acute, unplanned hospital
visits which includes an emergency room visit,
a stay in observation or an unplanned hospital
visit.
The applicable visits being monitored occur
within 7 days of a general surgery procedure
performed at ASC.
This update is
effective beginning
with the
CY 2024 payment
determination and
for subsequent
years.

23. Prior Authorization
Process and
Requirements for
Certain Hospital
Outpatient
Department (OPD)
Services
CMS instituted a prior authorization process using the authority
in section 1833(t)(2)(F) of the Act as a method for controlling
unnecessary increases in the volume of the following five
categories of services:
(1) blepharoplasty
(2) botulinum toxin injections
(3) panniculectomy
(4) rhinoplasty
(5) vein ablation
CMS’s data indicates the volume of utilization is greater than
expected compared to the average rate of increase in the
Medicare beneficiaries. CMS is not aware of clinical factors that
support the increased volume and consequently considers the
increases unnecessary.

24. Organ Procurement
Organizations
(OPOs) Conditions
for Coverage (CfCs)
Proposed Revision
of the Definition of
“Expected Donation
Rate”
CMS is finalizing its revision of the definition of “expected donation rate”
that is included in the second outcome measure to match the Scientific
Registry of Transplant Recipients (SRTR) definition.
This change accommodates payment to OPOs for organ donor costs under
the Medicare and Medicaid programs. It will also not have an administrative
affect on OPOs related to the information currently collected.
CMS is also finalizing a policy that will suspend the requirement OPOs meet
the second outcome measure for the 2022 recertification cycle only.
Consequently OPOs will only have to meet one of the remaining measures
during this timeframe. Not withstanding additional changes to the outcome
measure requirements, the new definition of expected donation rate will be
applicable following the 2022 recertification cycle.

25. CMS solicited public comments regarding what revisions may be appropriate for the current OPO CfCs and the current
transplant center CoPs. CMS also solicited public comments on the validity of two potential outcome measures for OPOs. The
first measure includes actual deceased donors as a percentage of inpatient deaths for patients 75 years or younger. The
second measure includes actual organs transplanted as a percentage of inpatient deaths for patients 75 years or younger.
The populations considered in both measures entails those deaths consistent with organ donations. CMS believes these
measures represent a significant improvement over current measures and would lead to both; greater maximization of total
organ procurement and improved placements of all procured organs. CMS concluded it will continue to review the public
comments for future rulemaking and potential revisions.
Request for Information Regarding Potential Changes to
the Organ Procurement Organization and Transplant
Center Regulations

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