2020 Hospital Outpatient Payment Rule Maintains 340B Cuts, Updates Prior Authorization and Hospital Supervision Provisions

November 1, 2019

On November 1, the Centers for Medicare & Medicaid Services (CMS) released its final rule for reimbursement under the Hospital Outpatient Prospective Payment System (HOPPS) in 2020. ASCO is still analyzing the rule and will provide in-depth analysis for members as soon as possible. Based on a preliminary evaluation, key provisions in the proposed rule include:

Annual HOPPS Update

In accordance with Medicare law, CMS finalized a 2.6% increase for hospital outpatient reimbursement rates. This update is based on the projected hospital market basket increase of 3.0% minus a 0.4% adjustment for multi-factor productivity (MFP).

340B Reimbursement

For calendar year (CY) 2020, CMS will continue to reimburse drugs in the 340B Drug Pricing Program at Average Sales Price (ASP) minus 22.5%. In 2019, the agency finalized a cut from ASP plus 6% to ASP minus 22.5% for certain separately payable drugs or biologics that are acquired through 340B.

CMS also announced its plan to conduct a 340B hospital survey to collect drug acquisition cost data from CY 2018 and 2019. This is in response to ongoing litigation in the United States Court of Appeals pertaining to the 2019 cut to 340B. CMS intends to use the survey data to craft a remedy for implementing an adverse ruling by the court. In the event that the survey data is not used for that purpose, CMS intends to solicit additional public input in 2021 to inform the steps it could otherwise take to remedy CY 2018 and 2019 payments under 340B.

Hospital Supervision

The agency finalized its policy for CY 2020 and subsequent years 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 Critical Access Hospitals (CAHs). CMS notes that all of the policy safeguards that have been in place to ensure the safety, health, and quality of the outpatient therapeutic services that Medicare beneficiaries receive will remain in place. These safeguards include allowing providers and physicians to require a higher level of supervision to ensure that an outpatient procedure is performed without risking a patient’s safety or the quality of their care, outpatient hospital and CAH conditions of participation, and other state and federal laws and regulations.

Prior Authorization for Certain Outpatient Services

Additionally, CMS finalized its proposal to establish a process through which providers must submit a prior authorization request for a provisional affirmation of coverage before a covered outpatient service is provided to a patient and before the claim is submitted for processing. This change will apply to five categories of services including blepharoplasty; certain botulinum toxin injections; panniculectomy; rhinoplasty; and vein ablation. 

Effective July 1, 2020, the prior authorization process will require physicians or hospitals to submit prior authorization requests on behalf of the hospital outpatient department to the local Medicare Administrative Contractor (MAC). The MAC will then, within 10 business days (or in the case of an expedited request—two business days), return its decision. If the MAC does not provide a “provisional affirmation of coverage,” claims for the service and all related services will be denied.

Laboratory Date of Service

CMS declined to finalize two proposed changes to the laboratory date of service rule. The proposed changes would have 1) based billing jurisdiction on physician prediction of future use of test results, or 2) limited the date of service exception to Criterion A ADLTs. The agency concluded that these changes “could lead to a delay in test ordering and therefore, result in similar beneficiary access issues that prompted us to establish the laboratory DOS exception at § 414.510(b)(5).”

Instead, CMS is preserving the existing policy (subject to the limited change regarding blood banks), so that the date of service (DOS) will remain the date of test performance in CY 2020 for molecular pathology tests and Criterion A ADLTs performed on specimens collected from hospital outpatients.

CMS did finalize a third proposal that excludes molecular pathology tests performed by a “blood bank or center” from the date of service rule.

Price Transparency

While the proposed rule discussed changes to reflect the Administration’s June 24 executive order, “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” CMS did not finalize any provisions as part of this release. Price transparency will be addressed in a separate rule at a later date.

Stay tuned to ASCO in Action for updates on these and other cancer policy priorities.