At the Margins

You don't have to list your negotiated rates (yet): Our 3 key takeaways from the HOPPS final rule

By Eric Fontana, managing director, Revenue Cycle Advancement Center, and Rachel Hollander, senior analyst, Health Care Advisory Board

On Friday evening, CMS released its latest set of finalized regulations for hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) in calendar year (CY) 2020. Our team is in the midst of breaking down the full implications of the rule, including new prior authorization requirements and ongoing cuts to the 340B drug program. We'll cover all of the details in our November 13th webinar.

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In the meantime, here are three important takeaways based on our initial scan of the finalized regulations:

1. CMS kicks the can on finalizing the price transparency proposals.

The provision that undoubtedly garnered the most attention from July's proposal was a requirement for the nation's 6,002 hospitals to publish both gross charges and payer-specific negotiated charges for all inpatient and outpatient items and services, along with a proposed requirement to prominently display charges for at least 300 "shoppable services" online in a "consumer-friendly" manner. Not surprisingly, these proposals ignited tremendous industry pushback—both from hospitals and payers—with many expressing skepticism about the likely efficacy and legitimacy of the mandates.

However, it seems the flood of public feedback has forced CMS to delay implementation of any price transparency efforts for the time being. The price transparency proposals were not addressed in the final rule at all, as CMS plans to summarize and respond to the more than 1,500 public comments in a separate forthcoming final rule, date TBD.

According to the Wall Street Journal, the Trump administration is delaying the price transparency rule because officials said they are working to expand the plan to include insurers. On Friday, CMS Administrator Seema Verma said the administration preferred a less disjointed approach and would act swiftly to release a combined plan this year. Whatever the outcome, it seems unlikely at this stage that any major shifts on price transparency will take effect in CY 2020 as originally proposed.

2. CMS moves ahead with site neutral payment cuts for outpatient clinic visits.

Medicare payments in the hospital outpatient setting have surged in recent years, more than doubling between 2010 and 2020. To counteract this trend, CMS is seeking to reduce HOPD reimbursement for services that can be performed in a lower-cost setting, and in doing so, furthering payment equalization between HOPDs and physician offices.

In this year's final rule, CMS is completing the two-year phase-in of site-neutral rate cuts for all providers for routine evaluation and management clinic visit code G0463. Provider-based departments that were previously exempt from site-neutral payment cuts will now be paid at just 40% of the full HOPPS rate for this high-volume clinic visit. Things get complicated here because just a few weeks ago, a judge presiding over a lawsuit  filed by a group of hospitals seeking to block implementation of the 2019 regulation sided with the hospitals, ruling CMS exceeded its authority when it targeted a specific service for payment reductions.  

In this final rule, CMS acknowledges the district court's decision and said that it is still evaluating the rulings and considering whether to appeal the final judgement. The challenge for CMS will now be to figure out a method that achieves the same goal of payment equalization in the outpatient setting, while not running afoul of its statutory authority. This means that hospitals shouldn't breathe a sigh of relief just yet. Site-neutral payments in some form or fashion are here to stay. The recent court decision will just send CMS back to the drawing board on how to get there.

Our take: A federal judge just struck down Medicare's site-neutral payment rule

3. CMS opens the door to more outpatient procedural migration in CY 2020.

Perhaps unsurprisingly, CMS finalized all proposals to remove procedures from the IPO list and expand eligibility for select procedures to the ASC in CY 2020. After several years of consideration, CMS finalized removing total hip arthroplasty (THA) from the IPO list for CY 2020, and in a small win for providers, finalized a two-year exemption from recovery audit contractor (RAC) patient status review—up from a one-year exemption in the proposed rule—to allow providers time to gain experience with the application of the 2-midnight rule to these procedures. On the ASC front, CMS finalized several additions to the ASC Covered Procedures list, including total knee arthroplasty (TKA), knee mosaicplasty, and three coronary intervention procedures, which we'll discuss in further depth during the upcoming webinar.

To learn more about the final rule, including what the shift of cardiovascular procedures to the ASC setting means for providers and how hospitals can prepare for future price transparency requirements, register for our upcoming webinar on November 13th where we'll be joined by subject matter experts from our Cardiovascular Roundtable and Revenue Cycle Advancement Center memberships for in-depth discussion and Q&A.

Overwhelmed by 2,000+ pages of new Medicare rules? Here's what you need to know.

Download our one-page cheat sheets for a quick overview of each rule's scope: