News Releases

Final OPPS Includes Expanded Site-Neutral Payments for HOPDs

Early this month, the Centers for Medicare and Medicaid Services (CMS) published its final rule on the 2019 hospital outpatient prospective payment system (OPPS), ending speculation over how they planned to move forward with site-neutral payments to hospital off-campus provider-based departments (HOPDs).

Under the final rule, CMS is moving ahead with the reduction in reimbursement to previously excepted HOPDs for a specific billing code – G0463 – to 40 percent of the hospital OPPS rate, or a 60 percent payment cut. This reduction will take place over two years, with a 30 percent cut in 2019 and an additional 30 percent cut in 2020.

G0463, which is used for routine office visits, makes up approximately one-third of all off-campus HOPD procedures each year. CMS expects the change will lead to a $380 million cut in 2019: $300 million less in Medicare payments and $80 million less in beneficiary payments.

While this cut applies only to off-campus HOPDs, it is being applied to both excepted HOPDs and non-excepted HOPDs. Previously, excepted off-campus HOPDs – those that were providing services as of Nov. 2, 2015 – were exempt from site-neutral payments, which began in 2017.

Hospitals with excepted off-campus HOPDs can find a morsel of good news in the final rule. In the proposed rule, CMS sought to implement the full site-neutral payment reduction – to 40 percent of the hospital OPPS rate – for expanded services at excepted HOPDs, meaning services that were added to the site after Nov. 2, 2015. However, this proposal was scrapped and did not appear in the final rule.

340B Drug Pricing Also Impacted

The final rule also included a provision impacting drug reimbursement. Non-excepted HOPDs participating in the 340B drug pricing program will receive a cut in their payments for 340B drugs. Previously, these facilities were reimbursed at average sales price (ASP) plus 6 percent. Beginning Jan. 1, 2019, the new reimbursement formula will be ASP minus 22.5 percent. Excepted facilities will still continue to receive ASP plus 6 percent. CMS estimates 115 non-excepted HOPDs will be impacted by this cut in 2019 with a payment reduction of $48.5 million.

New Tracking Modifier for Off-Campus EDs

Also worth noting is the addition of a new modifier to track off-campus hospital-owned emergency department claims in 2019. Beginning next year, such claims must include the ER modifier. This may very well be the precursor to future cuts. In June 2018, the Medicare Payment Advisory Commission (MedPAC) recommended reducing payments for some off-campus hospital-owned EDs. The implementation of a tracking modifier is how CMS laid the groundwork for the HOPD payment cuts. In 2016, the PD tracking modifier was implemented and in 2017 site-neutral payments were implemented.

Indications are that hospitals have not seen the last of CMS’s plans related to site-neutral payments and that more changes could lie ahead for the 340B program.

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