2019 HOPPS Proposed Rule Summary

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By Bill Finerfrock and Nathan Baugh

The proposed rule for the 2019 Hospital Outpatient Prospective Payment System (OPPS) was released by CMS on July 25. The full rule can be found here, but we would like to highlight two aspects of particular interest to the AHRA community: 1) Updates to the Site Neutral Payment Policy; and 2) Cost Center Calculation Updates for MRI and CT. 

Site Neutral Payment Policy 

PFS Relativity Adjuster Maintained 

CMS is retaining their 2018 policy and keeping the so-called “PFS relativity adjuster” for off-campus Hospital Outpatient Departments (HOPD) at 40% of OPPS charges.

When Congress originally designed the site neutral payment policy, they mandated that all new off-campus HOPDs receive payment under the Physician Fee Schedule (PFS), not the OPPS. However, because off-campus HOPDs are owned by hospitals and thus unable to bill the PFS, CMS was forced to create a workaround. As such, CMS designed the PFS relatively adjuster to bring OPPS payments roughly in line with PFS payments for the same services. This solution is a very crude way to approximate the two payment systems because on a per CPT-code basis, 40% of the OPPS is often well below or still well above the PFS rate.

Proposal to Expand Site Neutral Payment Policy via Clinical Families

Most off-campus HOPDs are not affected by this because they are considered grandfathered-in, or “excepted” and can still receive 100% of the OPPS reimbursement. It is only, new “non-excepted” off-campus HOPDs that are subjected to this policy.

However, CMS is now proposing to expand site neutral payment policy to some of these “excepted” off-campus HOPDs if they expand to “new clinical families of services.” For example, if an off-campus HOPD never provided any urology services, but expanded into that space this year, those urology services would be subject to the PFS relativity adjuster.

CMS is proposing this because they are concerned that the industry might get around the site-neutral laws by expanding the number and types of services offered in excepted off-campus HOPDs and therefore subvert the intent of Congress. CMS proposed a similar policy in the 2017 OPPS proposed rule, but decided not to finalize it.

Clinical Families APCs
Airway Endoscopy 5151–5155
Blood Product Exchange 5241–5244
Cardiac/Pulmonary Rehabilitation 5771; 5791
Diagnostic/Screening Test and Related Procedures 5721–5724; 5731–5735; 5741–5743
Drug Administration and Clinical Oncology 5691–5694
Ear, Nose, Throat (ENT) 5161–5166
General Surgery and Related Procedures 5051–5055; 5061; 5071–5073; 5091–5094; 5361–5362
Gastrointestinal (GI) 5301–5303; 5311–5313; 5331; 5341
Gynecology 5411–5416
Major Imaging 5523–5525; 5571–5573; 5593–5594
Minor Imaging  5521–5522; 5591–5592
Musculoskeletal Surgery 5111–5116; 5101–5102
Nervous System Procedures 5431–5432; 5441–5443; 5461–5464; 5471
Ophthalmology 5481, 5491–5495; 5501–5504
Pathology 5671–5674
Radiation Oncology 5611–5613; 5621–5627; 5661
Urology 5371–5377
Vascular/Endovascular/Cardiovascular 5181–5184; 5191–5194; 5200; 5211–5213;  5221–5224; 5231–5232
Visits and Related Services 5012; 5021–5025; 5031–5035; 5041; 5045; 5821–5823


Applying Site Neutral Payments for All HOPDs on Clinic Visits (G0463) 

CMS is also proposing to apply the PFS relativity adjuster for all clinic visits billed with G0463 regardless of the HOPD’s “excepted” or “non-excepted” status. CMS believes that there has been an unnecessary increase in the volume of clinic visits in HOPDs due to the payment incentives that currently exist to provide clinic visits in HOPDs rather than freestanding offices billing under the PFS.

This is a notable change to current policy because this applies to all HOPDs regardless of their excepted or non-excepted status. Furthermore, if this proposal becomes final, they could use this same logic to apply site neutral cuts to other HCPCS codes that see similar increases in volume.

We expect that this proposal will face significant opposition from those HOPDs that will see their office visit reimbursements dramatically reduced. There is an argument to be made that CMS is overstepping the law and/or Congressional intent by applying site neutral cuts to grandfathered “excepted” sites.


MRI and CT Cost Centers 

In 2014, CMS created distinct Cost-to-Charge Ratios (CCRs) for implantable devices, MRIs, CT scans, and cardiac catheterization. However, CMS recognized that many hospitals use an imprecise “square feet” allocation methodology to calculate costs of large equipment such as CT scanners or MRI machines.

If CMS includes those “square feet” allocations to calculate the relative payment weights for imaging APCs, the imaging APCs would face significant reimbursement reductions. As such, CMS agreed to remove data from any facility still using the “square feet” allocation methodology to calculate MRI and CT CCRs.

While this policy was scheduled to sunset in 2019, (meaning CMS would estimate imaging APC payment weights using cost data from all providers regardless of allocation methodology) CMS is instead proposing to extend this policy one last time for calendar year 2019. CMS notes that they do not anticipate extending this in calendar year 2020 because providers will have had 6 years to transition from a “square feet” cost allocation method to another cost allocation method.

As you can see in the chart below, with the exception of APC 5521, this policy results in higher reimbursement for most imaging categories.

Percentage Change in estimated cost for CT and MRI APCs when excluding claims from providers using “Square Feet” as the cost allocation method 


APC Descriptor


Percentage Change
5521 Level 1 Imaging without Contrast -3.6%
5522 Level 2 Imaging without Contrast 5.5%
5523 Level 3 Imaging without Contrast 4.3%
5524 Level 4 Imaging without Contrast 4.7%
5571 Level 1 Imaging with Contrast 7.7%
5572 Level 2 Imaging with Contrast 8.4%
5573 Level 3 Imaging with Contrast 2.8%
8005 CT and CTA without Contrast Composite 13.9%
8006 CT and CTA with Contrast Composite 11.4%
8007 MRI and MRA without Contrast Composite 6.6%
8008 MRI and MRA with Contrast Composite 7.4%


Bill Finerfrock is the president and owner of Capitol Associates, a government relations/consulting firm based in Washington, DC, who has partnered with AHRA on their regulatory affairs issues. Nathan Baugh is an associate with CAI. They can be contacted at bf@capitolassociates.com and baughn@capitolassociates.com.

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