2020 OPPS/ASC Proposed Rule

on Tuesday, 13 August 2019. All News Items | Outpatient Services

Give a Little, Take a Little

Some of the most significant news from the 2020 CMS Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule involves further direction and requirements for hospitals on the reporting of a public list of their standard charges. I want to leave discussion of the proposals for price transparency for another day – there is enough information for an article by itself on that subject. Today let’s look at some of the other proposals from the Proposed Rule where Medicare gives a little, takes a little, and even dances around a bit.

Comprehensive APCs

Since January 2015, CMS has had a comprehensive payment policy that packages payment for adjunctive and secondary items, services, and procedure into the most costly primary procedure under the OPPS at the claim level. Primary services are designated with an OPPS status indicator (SI) of “J1.” Observation services are also paid as a comprehensive APC when reported with a visit code designated with an SI of “J2.” The number of comprehensive APCs has grown from the original 25 C-APCs in 2015 to 65 C-APCs for 2019. This year, CMS is proposing to add two more comprehensive APCs - proposed C–APC 5182 (Level 2 Vascular Procedures); and proposed C-APC 5461 (Level 1 Neurostimulator and Related Procedures). These are additions of a lower level of an APC Group whose higher levels were already classified as a C-APC. This would bring the total number of C-APCs to 67, involving almost 3,000 individual HCPCS codes assigned an SI of “J1.”

Clinic Visit Payments in Excepted Off-Campus Provider Based Departments

In 2019, CMS adopted a payment reduction for hospital outpatient clinic visits provided in an excepted off-campus provider-based department (PBD) to be phased in over two years. CMS’s reasons for the payment reduction are “to control unnecessary increases in volume of covered outpatient department services” and to make payments more equitable with the payment rates for physician office services. The goal was for the final payment rate for clinic office visits in excepted off-campus PBDs to be the same as the Medicare Physician Fee Schedule (PFS)-equivalent payment rate for non-excepted off-campus PBDs, which is set at 40% of the OPPS payment rate. 

Last year, the reduction was 30%, half of the planned final reduction, making payment for clinic visit HCPCS code, G0463, to be 70% of the OPPS payment rate for 2019. The final payment rate for 2020, year 2 of the phase-in, will be 40% of the OPPS payment rate (a reduction of 60%). The OPPS national unadjusted payment rate for G0463 is around $117. This means clinic visits in both excepted and non-excepted off-campus PBDs will be paid approximately $47. Remember that services provided in a non-expected off-campus PBD are reported with a PN modifier and are paid under the Medicare Physician Fee Schedule (PFS)-equivalent payment rate equal to 40% of OPPS payment rate. Services provided in an excepted off-campus PBD are reported with a PO modifier and are generally paid at OPPS rates except for this clinic visit exception. Clinic visits reported with either the PN modifier or the PO modifier will be paid at the reduced rate of 40% of the OPPS payment rate. It is important to note this policy will be implemented in a non-budget neutral manner, meaning the money saved from this reduction will not be redistributed to hospitals through another means.

Payments for Drugs and Biologicals

In addition to policy-packaged drugs (anesthesia, contrast, drugs functioning as supplies, etc.), CMS is proposing to package drugs with a per day cost less than or equal to $130. Separately payable outpatient drugs with a status indicator of “G” will be paid at ASP (average sales price) plus 6% with the exception of drugs purchased through the 340B program. Pass-through drugs (SI = ”K”) will also be paid at ASP+6%.

Since 2018, Medicare has paid for separately payable drugs purchased through the 340B program, excluding vaccines and pass-through drugs, and reported with modifier JG at CMS’s direction, at a rate of ASP minus 22.5%. That is 28.5% lower than the standard payment rate of ASP+6% for these drugs. In 2019, CMS expanded this payment reduction for 340B drugs to drugs furnished in a non-excepted off-campus PBD. CMS is proposing to continue this reduced payment of ASP-22.5% for 340B drugs, including when furnished in non-excepted off-campus PBDs, but there is a glitch.

This is where CMS does some dancing. CMS’s problem is that a judge has ruled they exceeded their statutory authority when setting the prices this low for 340B drugs. Pending the outcome of CMS’s appeal of this ruling, they may be forced to develop a solution to address what would then become “underpayments.” CMS is seeking comment on the proposed 2020 rates for 340B drugs and a remedy for the 2018/2019 payments. Some of the suggestions put forth by CMS in the Proposed Rule are a payment rate of ASP+3%, one calculated payment to each affected hospital to offset the underpayments, spreading the adjustments over multiple years, etc. while balancing budget neutrality and beneficiary cost-sharing. You can read the full discussion in the Proposed Rule and submit comments if you wish.

Level of Supervision of Outpatient Therapeutic Services in Hospitals and Critical Access Hospitals (CAHs)

I am not going to discuss the history of the supervision requirements because it is complicated, convoluted, and confusing. If you are interested in the details, you can read those in the Proposed Rule. Where we stand today is this: direct supervision is required for hospital outpatient therapeutic services, covered and paid by Medicare that are furnished in hospitals, including Critical Access Hospital (CAHs),  as well as in provider-based departments (PBDs) of hospitals. The definition of direct supervision has changed over time also, and the latest definition can be found in the Medicare Benefit Policy Manual, Chapter 6, Section 20.5.2. Some key parts of the current definition of direct supervision for hospital outpatient therapeutic services are:

  • The physician or nonphysician practitioner must be immediately available to furnish assistance and direction throughout the performance of the procedure.
  • The physician is not required to be present in the room where the procedure is performed or within any other physical boundary as long as he or she is immediately available.
  • Immediate availability requires the immediate physical presence of the supervisory physician or nonphysician practitioner.
  • A supervisory practitioner may furnish direct supervision from a physician office or other nonhospital space as long as he or she remains immediately available.
  • The supervisory responsibility is more than the capacity to respond to an emergency, and includes the ability to take over performance of a procedure or provide additional orders.

Since 2010, through various CMS instructions and legislative action, there has been nonenforcement of the direct supervision requirement for hospital outpatient therapeutic services in CAHs and small rural hospitals having 100 or fewer beds. The latest extension of this nonenforcement direction is set to expire on December 31, 2019.

In response to continued concerns about CAHs and small rural hospitals having difficulty meeting this standard, the lack of any quality concerns related to lack of direct supervision in these settings, and a two-tiered system of supervision levels, CMS is proposing to change the generally applicable minimum required level of supervision for hospital outpatient therapeutic services from direct supervision to general supervision for services furnished by all hospitals and CAHs. General supervision means that the

procedure is furnished under the physician's overall direction and control, but that the physician's presence is not required during the performance of the procedure. CMS retains the discretion to require a greater level of supervision for particular procedures if necessary and hospitals are free to provide more supervision than required when they think it is needed. The proposed rule specifically asks for public comments on whether specific types of services, such as chemotherapy administration or radiation therapy, should be excepted from this proposal.

The proposed general supervision will only apply to therapeutic services. The level of supervision required for diagnostic tests is published by CMS as a part of the Medicare Physician Fee Schedule Database.

Prior Authorization

As part of their responsibility to protect the Medicare Trust Funds, CMS routinely analyzes claims data, including assessment of the utilization volume of services. They found higher than expected volume increases for several services associated with cosmetic-type procedures which suggest an increase in unnecessary utilization. To address these concerns of unnecessary utilization, CMS is proposing “a process through which providers would submit a prior authorization (PA) request for a provisional affirmation of coverage before a covered OPD service is furnished to the beneficiary and before the claim is submitted for processing.”

The PA process would apply to blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation and would begin for dates of service on and after July 1, 2020. These services are most often considered cosmetic and, therefore, are only covered by Medicare in very rare circumstances. Specific details of the PA process can be found in the Proposed Rule, but include:

  • The prior authorization request must include all documentation necessary to show that the service meets applicable Medicare coverage, coding, and payment rules.
  • The request must be submitted before the service is furnished to the beneficiary and before the claim is submitted.
  • Claims submitted for services that require prior authorization that have not received a provisional affirmation of coverage from CMS or its contractors would be denied.
  • Claims associated with the denied service, such as anesthesiology services, physician services, and/or facility services would also be denied.
  • Even when a provisional affirmation has been received, a claim for services may be denied based on either technical requirements that can only be evaluated after the claim has been submitted for formal processing or information not available at the time the prior authorization request is received.
  • An expedited review process would be available when a delay could seriously jeopardize the beneficiary’s life, health, or ability to regain maximum function. Documentation supporting the serious jeopardy must be submitted with this request.
  • CMS or its contractor would have 10 business days for a routine PA decision and 2 business days for the expedited review.
  • PA decisions are not appealable, but providers receiving a PA denial can resubmit a prior authorization request with any applicable additional relevant documentation.
  • Services denied due to a denied PA request, or lack of a PA request, can be appealed.
  • Providers that achieve a PA provisional affirmation threshold of at least 90% during a semiannual assessment may be exempted from future PAs, but could lose their exemption if the rate of nonpayable claims submitted becomes higher than 10% during a biannual assessment.

The list of CPT/HCPCS codes proposed for the PA requirement is Table 38 in the Proposed Rule, which can be found on page 211 of the Proposed Rule pdf.

There are many other topics discussed in the Proposed Rule and CMS is accepting comments until 5 p.m. EST on September 27, 2019. See the Federal Registry website for details and an electronic way to submit comments. The final rule will likely come out in November of this year so being familiar with the proposed policy changes gives providers time to think about impacts and actions needed to address the potential changes – some that take a little, some that give a little.

Article by Debbie Rubio

Debbie Rubio, BS, MT (ASCP), is the Manager of Regulatory Affairs and Compliance at Medical Management Plus, Inc.  Debbie has over twenty-seven years of experience in healthcare including nine years as the Clinical Compliance Coordinator at a large multi-facility health system.  In her current position, Debbie monitors, interprets and communicates current and upcoming regulatory and compliance issues as they relate to specific entities concerning Medicare and other payers.  You may contact Debbie at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.


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