Select Page

Medicare’s 2020 OPPS/ASC Payment Proposal



The Centers for Medicare and Medicaid Services (CMS) released its proposed payment policy for the Medicare hospital outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) payment system for calendar year (CY) 2020 on July 29, 2019.

Keep in mind that the American Association of Orthopaedic Surgeons (AAOS) is currently digging through the proposed rule, and AAOS will provide an extensive analysis and comment letter in the near future.

Stakeholder comments are due on September 27, 2019, and you may want to consider making comments on some of these proposals.

Click here to reference the full rule.

Key Concepts
TOA encourages you to read through this summary. In addition, watch for AAOS’s extensive summary.

Some of the key concepts include (these are all proposals):

    • Add TKA to the ASC-payable list. CMS would like comments on what is appropriate for TKA in the ASC setting.
    • Remove THA from the inpatient-only (IPO) list. (This would not necessarily relate in a payable service for ASCs.)
    • Remove additional spine services from the IPO list. (Again, this does not necessarily mean that they would be ASC-payable services in 2020.)
    • Additional guidance related to hospital pricing disclosure. This proposal would have major implications for hospitals. Some of the “shoppable services” would include orthopaedic-related services.
    • Prior authorization for certain non-musculoskeletal services in an attempt to move these services away from the hospital setting. The idea of prior authorization for Medicare services is a controversial topic that Congress addressed (and backed away from) several years ago.
    • Continued payment update parity for ASCs. (Although a less favorable weight scalar of .8452 for ASCs is seen as a negative.)
    • Comments solicited for TracPatch and AUGMENT Bone Graft.

ASC-Payable List: Proposed Additions
CMS proposed to add eight codes to the ASC-payable list for 2020:

    • 27447 (Total knee arthroplasty)
    • 29867 (Allgrft implnt knee w/scope)
    • 92920 (Prq cardiac angioplast 1 art)
    • 92921 (Prq cardiac angio addl art)
    • 92928 (Prq card stent w/angio 1 vsl)
    • 92929 (Prq card stent w/angio addl)
    • C9600 (Perc drug-el cor stent sing)
    • C9601 (Perc drug-el cor stent bran)

For context, CMS asked for comments in the summer of 2017 regarding whether TKA and THA were ready for the ASC setting for Medicare patients. (CMS will typically remove a service from the inpatient-only list (IPO) in one year, and then Medicare will re-visit the issue and add that service to the ASC-payable list in a following year.)

CMS ultimately removed TKA from the IPO list at the end of 2017 for its final rule for the calendar year (CY) 2018 payment policy. Therefore, policy experts expected TKA to be added to the ASC-payable list in the near future, which is what CMS is proposing today.

CMS’s commentary on its decision in this proposal to add TKA to the ASC-payable list can be found on page 462.

CMS is asking for comments related to the proposal to add TKA to ASCs:

We believe that appropriate limits are necessary to ensure that Medicare Part B payment will only be made for TKA procedures performed in the ASC setting when that setting is clinically appropriate. Therefore, we are soliciting public comment on the appropriate approach to provide safeguards for Medicare beneficiaries who should not receive the TKA procedure in an ASC setting. Specifically, we are soliciting public comment on methods to ensure beneficiaries receive surgical procedures in the ASC setting only as clinically appropriate. For instance, CMS could issue a new modifier that indicates the physician believes that the beneficiary would not be expected to require active medical monitoring and care at midnight following a particular procedure furnished in the ASC setting. CMS could require that such a modifier be included on the claims line for a surgical procedure performed in an ASC. Alternatively, given the importance of post-operative care in making determinations about whether the ASC is an appropriate setting for a procedure, CMS could require that an ASC has a defined plan of care for each beneficiary following a surgical procedure. We could also establish certain requirements for ASCs that choose to perform certain surgical procedures on Medicare patients, such as requiring an ASC to have a certain amount of experience in performing a procedure before being eligible for payment for performing the procedure under Medicare. We are soliciting comment on these options, and other options, for ensuring that beneficiaries receive surgical procedures, including TKA, that do not pose a significant safety risk when performed in an ASC.

THA & More Spine Services: Inpatient-Only
CMS is proposing to remove total hip arthroplasty (THA) (27130) from the IPO list for 2020. In addition, CMS has proposed to remove the following spine codes from the inpatient-only list: 22633, 22634, 63265, 63266, 63267 and 63268. Discussion related to removing these spine codes from the IPO list can be found on page 413.

Extensive commentary related to CMS’s decision to propose the removal of THA from the IPO list can be found on page 372. You are encouraged to read CMS’s commentary on the proposal.

Keep in mind that being removed from the IPO list does not mean that Medicare will pay for that service in the ASC setting. Medicare must approve that service for payment in the ASC setting, and that is typically approved in a subsequent year (although it could be approved in the same year).

Medicare’s Geometric Mean Cost for TKA
TOA’s analysis will not dig into CMS’s commentary on APCs. However, CMS did highlight the geometric cost for TKA on page 194:

We note that this is the first year for which claims data are available for the total knee arthroplasty procedure described by CPT code 27447, which was removed from the inpatient only list in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59382 through 59385). Based on approximately 60,000 hospital outpatient claims reporting the procedure that are available for rate setting in this proposed rule, the geometric mean cost is approximately $12,472.05, which is similar to the geometric mean cost for APC 5115 (Level 5 Musculoskeletal Procedures) of $11,879.66, and within a range of the lowest geometric mean cost of the significant procedure costs of $9,969.37 and the highest geometric mean cost of the significant procedure costs of $12,894.18.

CMS goes on to comment on how the potential removal of THA from the IPO would provide new data on the cost:

We also are proposing to remove the procedure described by CPT code 27130 (Total hip arthroplasty) from the CY 2020 OPPS inpatient only list. Based on the estimated costs derived from in the available claims data, as well as the 50th percentile IPPS payment for TKA/THA procedures without major complications or comorbidities (MS-DRG 470) of approximately $11,900 for FY 2020 when the procedure is performed on an inpatient basis, we believe that it is appropriate to assign the procedure described by CPT code 27130 to the Level 5 Musculoskeletal Procedures APC series, which has a geometric mean cost of $11,879.66. Therefore, for CY 2020, we also are proposing to assign the procedure described by CPT code 27130 to APC 5115. We note that we will monitor the claims data reflecting these procedures as they become available. For a more detailed discussion of the procedures that are being proposed to be removed from the inpatient only (IPO) list for CY 2020 under the OPPS, we refer readers to section IX of this proposed rule.

CMS is proposing to assign the following APC values for musculoskeletal care:

Continued Parity for ASC and HOPD Updates
Last year, CMS finally applied the ASCs’ annual update to the same level as the hospital outpatient department annual update. In the past, the hospitals received the more generous market basket update, and the ASCs received the lower inflation-based update. As a result, the delta between ASC and HOPD payments grew every year. Medicare approved this for a five-year period (CY 2019 through CY 2023).

In this CY 2020 proposal, CMS is proposing to once again provide ASCs with the hospital market basket update. CMS stated: “This change will also help to promote site-neutrality between hospitals and ASCs and encourage the migration of services from the hospital setting to the lower cost ASC setting.”

Both ASCs and HOPDs will receive an initial payment update of 3.2 percent, which will then be decreased by 0.5 percent as a result of the Affordable Care Act’s productivity reduction provision. As a result, the payment update would equal 2.7 percent in 2020. (This is an average of all of the services; each service has a different value. In addition, sequestration has not been calculated.)

Problems for the ASC Weights
CMS is proposing to use .8452 percent as the weight scalar for ASCs, which would be a problem for ASCs. Discussion related to this proposal is on page 495.

Two Midnight Rule & IPO List Proposal
CMS is proposing a slight change to the two-midnight rule.

CMS provides background on the current rule (beginning on page 424):

As stated earlier in this section, the procedures on the IPO list of procedures under the OPPS are not subject to the 2-midnight benchmark for purposes of inpatient hospital payment. However, the 2-midnight benchmark is applicable once procedures have been removed from the IPO list.

CMS is making the following proposal:

As part of our continued effort to facilitate compliance with our payment policy for inpatient admissions, we are proposing to establish a 1-year exemption from certain medical review activities for procedures removed from the IPO list under the OPPS in CY 2020 and subsequent years. Specifically, we are proposing that procedures that have been removed from the IPO list would not be eligible for referral to RACs for noncompliance with the 2-midnight rule within the first calendar year of their removal from the IPO list. These procedures would not be considered by the BFCC-QIOs in determining whether a provider exhibits persistent noncompliance with the 2-midnight rule for purposes of referral to the RAC nor would these procedures be reviewed by RACs for “patient status.” During this 1-year period, BFCC-QIOs would have the opportunity to review such claims in order to provide education for practitioners and providers regarding compliance with the 2-midnight rule, but claims identified as noncompliant would not be denied with respect to the site-of-service under Medicare Part A. Again, information gathered by the BFCC-QIO when reviewing procedures that are newly removed from the IPO list could be used for educational purposes and would not result in a claim denial during the proposed 1-year exemption period.

We believe that a 1-year exemption from BFCC-QIO referral to RACs and RAC “patient status” review of the setting for procedures removed from the IPO list under the OPPS and performed in the inpatient setting would be an adequate amount of time to allow providers to gain experience with application of the 2-midnight rule to these procedures and the documentation necessary for Part A payment for those patients for which the admitting physician determines that the procedures should be furnished in an inpatient setting. Furthermore, we believe that this 1-year exemption from referrals to RACs, RAC patient status review, and claims denials would be sufficient to allow providers time to update their billing systems and gain experience with respect to newly removed procedures eligible to be paid under either the IPPS or the OPPS, while avoiding potential adverse site-of-service determinations.

Site Neutral Payments
TOA has provided extensive updates on the concept of site neutral payments since 2012. Therefore, we won’t provide an overview in this summary. However, CMS does provide an excellent summary on page 426.

Per CMS (page 18):

Method to Control Unnecessary Increases in the Volume of Clinic Visit
Services Furnished in Excepted Off-Campus Provider-Based Departments (PBDs): For CY 2020, we are completing the phase-in of the reduction in payment for the clinic visit services described by HCPCS code G0463 furnished in expected off-campus provider-based departments as a method to control unnecessary increases in the volume of this service.

Prior Authorization for “Unnecessary” Increases in Outpatient Volume
Per CMS:

Proposed Prior Authorization Process and Requirements for Certain Hospital Outpatient Department (OPD) Services: We are proposing a prior authorization process using the authority in section 1833(t)(2)(F) of the Act as a method for controlling unnecessary increases in the volume of the following five categories of services: (1) blepharoplasty, (2) botulinum toxin injections, (3) panniculectomy, (4) rhinoplasty, and (5) vein ablation.

The idea of prior authorization for Medicare services has been debated in Congress as an attempt to move certain surgeries to the ASC setting. Congress eventually backed away from the concept several years ago. It is important to watch this issue in the future for musculoskeletal services. CMS provided commentary on page 692.

Effect of Migration of Services to ASCs
CMS calculated the potential savings for Medicare beneficiaries that could result from the proposed policies. The commentary can be found on page 755:

We estimate that the proposed CY 2020 update to the ASC payment system would be generally positive (that is, result in lower cost-sharing) for beneficiaries with respect to the new procedures we are proposing to add to the ASC list of covered surgical procedures and for those we are proposing to designate as office-based for CY 2020. For example, using 2018 utilization data and proposed CY 2020 OPPS and ASC payment rates, we estimate that if 5 percent of coronary intervention procedures migrate from the hospital outpatient setting to the ASC setting as a result of this proposed policy, Medicare payments would be reduced by approximately $15 million in CY 2020 and total beneficiary copayments would decline by approximately $3 million in CY 2020. First, other than certain preventive services where coinsurance and the Part B deductible is waived to comply with sections 1833(a)(1) and (b) of the Act, the ASC coinsurance rate for all procedures is 20 percent. This contrasts with procedures performed in HOPDs under the OPPS, where the beneficiary is responsible for copayments that range from 20 percent to 40 percent of the procedure payment (other than for certain preventive services), although the majority of HOPD procedures have a 20-percent copayment.

Second, in almost all cases, the ASC payment rates under the ASC payment system are lower than payment rates for the same procedures under the OPPS. Therefore, the beneficiary coinsurance amount under the ASC payment system will almost always be less than the OPPS copayment amount for the same services. (The only exceptions would be if the ASC coinsurance amount exceeds the hospital inpatient deductible. The statute requires that copayment amounts under the OPPS not exceed the hospital inpatient deductible.) Beneficiary coinsurance for services migrating from physicians’ offices to ASCs may decrease or increase under the ASC payment system, depending on the particular service and the relative payment amounts under the MPFS compared to the ASC. While the ASC payment system bases most of its payment rates on hospital cost data used to set OPPS relative payment weights, services that are performed a majority of the time in a physician office are generally paid the lesser of the ASC amount according to the standard ASC rate-setting methodology or at the non-facility practice expense-based amount payable under the PFS. For those additional procedures that we are proposing to designate as office-based in CY 2020, the beneficiary coinsurance amount under the ASC payment system generally would be no greater than the beneficiary coinsurance under the PFS because the coinsurance under both payment systems generally is 20 percent (except for certain preventive services where the coinsurance is waived under both payment systems).

Payments for Non-Opioid Alternatives in the ASC Setting
CMS provided commentary on page 88 regarding its decision to pay for Exparel separately (as opposed to packaging) in ASCs in the CY 2019 final rule.

In this CY 2020 rule, CMS is asking for feedback on non-opioid alternatives:

Therefore, for CY 2020, we are proposing to continue our policy to pay separately at ASP+6 percent for the cost of non-opioid pain management drugs that function as surgical supplies in the performance of surgical procedures when they are furnished in the ASC setting and continue to package payment for non-opioid pain management drugs that function as surgical supplies in the performance of surgical procedures in the hospital outpatient department setting for CY 2020. However, we are inviting public comments on this proposal and asking the public to provide peer reviewed evidence, if any, to describe existing evidence-based non-opioid pain management therapies used in the outpatient and ASC setting. We are also inviting the public to provide detailed claims-based evidence to document how specific unfavorable utilization trends are due to the financial incentives of the payment systems rather than other factors.

Multiple stakeholders, largely manufacturers of devices and drugs, have requested separate payments for various non-opioid pain management treatments, such as continuous nerve blocks (including a disposable elastomeric pump that delivers non-opioid local anesthetic to a surgical site or nerve), cooled thermal radiofrequency ablation, and local anesthetics designed to reduce postoperative pain for cataract surgery and other procedures.

New Devices: TracPatch
CMS outlines several new medical devices for surgical payment in this proposed rule. CMS is asking for comments related to TracPatch.

Commentary regarding TracPatch begins on page 208:

According to the applicant, TracPatch is a wearable device which utilizes an accelerometer, temperature sensor and step counter to allow the surgeon and patient to monitor recovery and help ensure critical milestones are being met. The applicant states that TracPatch utilizes wearable monitoring technology and methods in an effort to enhance the rehabilitation experience for both patients and physicians. Accelerometers are utilized to recognize and record the results when patients perform standard physical therapy exercises, in addition to providing standard step count and high-acceleration events that may indicate a fall. A temperature sensor monitors the skin temperature near the joint.

TracPatch is described by the applicant as a 24/7 remote monitoring wearable device that captures a patient’s key daily activities: such as range of motion progress, exercise compliance, and ambulation.

CMS is also asking for comments on AUGMENT Bone Graft. Per CMS:

Wright Medical submitted an application for a new device category for transitional pass-through payment status for the AUGMENT® Bone Graft. The applicant describes AUGMENT® Bone Graft as a device/drug indicated for use as an alternative to autograft in arthrodesis of the ankle and/or hindfoot where the need for supplemental graft material is required.

ASC Quality Reporting Program
Per CMS:

Ambulatory Surgical Center Quality Reporting (ASCQR) Program: For the ASCQR Program, we are proposing to adopt one new measure, ASC-19: Facility-Level 7-Day Hospital Visits after General Surgery Procedures Performed at Ambulatory Surgical Centers, beginning with the CY 2024 payment determination and for subsequent years.

CMS provides commentary on page 538:

Therefore, in this proposed rule, we are proposing to adopt ASC-19: Facility-Level 7-Day Hospital Visits after General Surgery Procedures Performed at Ambulatory Surgical Centers (NQF #3357) (hereafter referred to as the proposed ASC-19 measure) into the ASCQR Program for the CY 2024 payment determination and subsequent years.

The proposed ASC-19 measure was developed in conjunction with two other measures adopted for the ASCQR Program beginning with the CY 2022 payment determination as finalized in the CY 2018 OPPS/ASC final rule with comment period: ASC-17: Hospital Visits After Orthopedic Ambulatory Surgical Center Procedures (82 FR 59455) and ASC-18: Hospital Visits After Urology Ambulatory Surgical Center Procedures (82 FR 59463). All three measures assess the same patient outcome for care provided in the ASC setting and use the same risk-adjustment methodology. These three measures differ in surgical procedures considered (orthopedic, urological, or general surgery), specific risk variables included, and reporting of the outcome, unplanned hospital visits. The proposed ASC-19 measure reports the outcome as a risk-standardized ratio because the diverse mix of procedures included in the proposed ASC-19 measure can have varying levels of risk of unplanned hospital visits; while the ASC-17 and ASC-18 measures report a risk-standardized rate that reflects clinically specific cohorts with fairly comparable mixes of procedures. We refer readers to section XV.B.3.d. of this proposed rule for a full discussion on the measure outcome calculation.

New HCPCS Codes: Request for Comments
CMS listed the new HCPCS codes (effective July 1, 2019) on page 148 and asked for comments in this proposal.  Several are related to orthopaedics:

Violations of the “2 Times Rule”
CMS is proposing to make 18 exceptions to the “2 times rules.” Commentary begins on page 166.

CMS highlighted the criteria that it used to determine these potential exceptions:

    • Resource homogeneity;
    • Clinical homogeneity;
    • Hospital outpatient setting utilization;
    • Frequency of service (volume); and
    • Opportunity for upcoding and code fragments.

The proposal includes the following exceptions:

Hospital Quality Measures
CMS provides commentary related to the Hospital OQR Measures on page 505. From a musculoskeletal standpoint, CMS highlights OP-8: MRI Lumbar Spine for Low Back Pain (NQF# 0514) for CY 2022 and subsequent years for payment determination.

CMS also provides commentary on the following four measures for CY 2022 for payment determination:

“Shoppable Services” and Hospital Transparency
The CY 2020 proposal would build on the Trump Administration’s push for hospital pricing transparency by requiring hospitals to disclose payer-specific negotiated rates with insurance companies in an easy format for patients to compare the prices.

Medicare’s proposed list of services can be found on age 627. Some of the highlights include:

    • New patient office or other outpatient (30 min.) – 99203
    • New patient office or other outpatient (45 min.) – 99204
    • New patient office or other outpatient (60 min.) – 99205
    • Patient office consult (typically 40 min.) – 99243
    • Patient office consult (typically 60 min.) – 99244
    • X-ray, lower back, minimum four views – 72110
    • MRI scan of lower spinal canal – 72148
    • CT scan, pelvis, with contrast – 72193
    • MRI scan of leg joint – 73721
    • CT scan of abdomen and pelvis with contrast – 74177
    • Spinal fusion except cervical without major comorbid conditions or complications – 216
    • Major joint replacement or reattachment of lower extremity – 470
    • Cervical spinal fusion – 473
    • Shaving of shoulder bone using an endoscope – 29826
    • Removal of one knee cartilage using an endoscope – 29881
    • Physical therapy, therapeutic exercise – 97110