Hospital Outpatient Payment Proposal Maintains 340B Cuts, Addresses Price Transparency and Prior Authorization

July 30, 2019

On July 29, the Centers for Medicare & Medicaid Services (CMS) released its proposed rule for reimbursement under the Hospital Outpatient Prospective Payment System (HOPPS) in 2020. ASCO is still analyzing the proposal and will provide more information to members as soon as possible. Based on a preliminary analysis, key provisions in the proposed rule include:

Annual HOPPS Update

In accordance with Medicare law, CMS is proposing a 2.7% increase for hospital outpatient payment rates. This update is based on the projected hospital market basket increase of 3.2% minus a 0.5% adjustment for multi-factor productivity (MFP).

340B Reimbursement

For calendar year 2020, CMS is proposing continued cuts to the 340B drug pricing program. For 2019, the agency finalized a cut from Average Sales Price (ASP) plus 6 % to ASP minus 22.5% for certain separately payable drugs or biologics that are acquired through the 340B Program. The 2020 CMS proposal acknowledges ongoing litigation pertaining to this 340B cut and is soliciting comments on alternative payment options for CY 2020 and potential remedies for 2018 and 2019 payments in the event of an adverse ruling by the United States Court of Appeals.

Price Transparency

In accordance with the Administration’s June 24 executive order, “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” CMS is proposing “an expansion of hospital charge display requirements to include charges and information based on negotiated rates and for common shoppable items and services, in a manner that is consumer-friendly.” Specifically, all hospitals would need to ensure the availability of a machine-readable file containing a list of all standard charges for all items and services, and a consumer-friendly list of payer-specific negotiated charges for a limited set of shoppable services.

Hospital Supervision

CMS is proposing a change to 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). General supervision means that the procedure would be furnished under the physician's overall direction and control, but that the physician's presence is not required during the performance of the procedure.

Most hospitals are currently required to provide direct supervision for chemotherapy and radiation therapy services, though CAHs and rural hospitals with 100 beds or fewer have been exempted from enforcement of this requirement. CMS is proposing to set all services to general supervision for all hospitals and CAHs. Providers should be mindful of state laws regarding scope of practice, as they would not be impacted by this provision. This proposal would only impact hospitals and their outpatient departments. CMS is not proposing to change the supervision requirements for physician clinics and freestanding centers.

Prior Authorization

CMS is proposing a process through which providers submit a prior authorization request for provisional affirmation of coverage before a covered hospital Outpatient Department service is provided to a Medicare beneficiary and before the claim is submitted for processing. This change would apply to five categories of services: blepharoplasty; botulinum toxin injections; panniculectomy; rhinoplasty; and vein ablation. CMS proposes to implement this change on July 1, 2020. The agency may expand this process to other procedures that are showing growth in the outpatient setting in future rulemaking.

Stay tuned to ASCO in Action for the society’s comments on the proposal and updates on this and other cancer policy priorities.