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Category: OP PPS

OPPS Proposed Rule – CY 2019

CMS-1695-P drafted on 7/25/2018; Published in the Federal Register on 7/31/2018

On July 25, 2018, the Centers for Medicare & Medicaid Services (CMS) proposed changes to ensure that seniors can access the care they need at the site of care that they choose and to lower drug prices as outlined in the President’s Blueprint. The proposed policies in the CY 2019 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule would help lay the foundation for a patient-driven healthcare system.

To increase the sustainability of the Medicare program and improve quality of care for seniors, CMS is moving toward site neutral payments for clinic visits (which are essentially check-ups with a clinician). Clinic visits are the most common service billed under the OPPS. Currently, CMS often pays more for the same type of clinic visit in the hospital outpatient setting than in the physician office setting.  If finalized, this proposal is projected to save patients about $150 million in lower copayments for clinic visits provided at an off-campus hospital outpatient department. CMS is also proposing to close a potential loophole through which providers are billing patients more for visits in hospital outpatient departments when they create new service lines.

As part of active efforts to reduce the cost of prescription drugs, CMS is issuing a Request for Information to solicit public comment on how best to leverage the authority provided under the Competitive Acquisition Program (CAP) to get a better deal for beneficiaries as part of a CMS Innovation Center model. CMS believes a CAP-based model would allow the program to introduce competition to Medicare Part B, the part of Medicare that pays for medicines that patients receive in a doctor’s office.

In 2018, CMS implemented a payment policy to help beneficiaries save on coinsurance on drugs that were administered at hospital outpatient departments and that were acquired through the 340B program-a program that allows hospitals to buy certain outpatient drugs at a lower cost. Due to CMS’s policy change, Medicare beneficiaries are now benefiting from the discounts that 340B hospitals enjoy when they receive 340B-acquired drugs. In 2018 alone, beneficiaries have saved an estimated $320 million on out-of-pocket payments for these drugs. For 2019, CMS is expanding this policy by proposing to extend the 340B payment change to non-excepted off-campus departments of hospitals that are paid under the Physician Fee Schedule.

CMS is also seeking comment through a Request for Information asking whether providers and suppliers can and should be required to inform patients about charge and payment information for healthcare services and out-of-pocket costs, what data elements would be most useful to promote price shopping, and what other changes are needed to empower healthcare consumers.

Overall, the proposed rule is projected to result in an estimated decrease of $610M (or -0.1%) in payments to providers, ranging from 3.4% decreases for hospitals in the New England region up to 2.1% increases for non-teaching, non-DSH urban hospitals.

For more information regarding this Proposed Rule, see below:

Fact Sheet Link

Federal Register Link

Medicare OPPS Base Rates

CMS is proposing a base rate increase of 1.25% for hospitals that submit OQR quality data and 2.0% for ASCs that submit ASCQR quality data.

APC Changes

As expected, CMS is proposing weighting changes to APC weights for CY2019, along with new APC codes and new HCPCS codes. Below is a listing of the largest changes in weighting between CY2018 and CY2019 APCs:
Click here for a table of the full APC weighting comparison between CY2018 and CY2019.
Click here for a table of the new HCPCS codes effective 7/1/2018.
Other APC Changes
CMS has proposed to create three new comprehensive APCs (C-APCs) for ears, nose, and throat (ENT) and vascular procedures. CMS also proposes to remove two procedures from the inpatient-only list and add one procedure to the list.
Click here for a table of the changes to the inpatient-only procedures.

Changes to Quality Reporting

CMS is proposing several changes to the Outpatient Quality Reporting (OQR) in an effort to reduce burdens on hospitals, including the removal of 10 measures from the OQR (1 from CY2020 and 9 from CY2021). CMS also proposes to remove the three recently revised pain communication questions, starting with services on Jan. 1, 2022, to address concerns that providers might feel pressure to offer opioids in order to raise survey scores.
Click here for a table of the 10 OQR measures proposed to be removed.
Click here for a table of the 26 OQR measures required for CY 2020 and here for a table of the 15 ASCQR measures required for CY2020.

Off-Campus Payment Policy Changes

CMS remains concerned with the shift of services from freestanding physician offices to hospital provider-based departments (PBDs). As a result, they are proposing several significant changes that will negatively impact OPPS reimbursement for these facilities:
Expansion of PFS Rate for All Clinic Visits: CMS will extend the reduced Physician Fee Schedule (PFS) rate for clinic visits (HCPCS code G0463) to all off-campus PBDs, even those excepted under Section 603. (Note: The PFS payment rate is approximately 40% less than the OPPS rate.)CMS estimates that the impact of this change is expected to reduce reimbursement to hospitals by $760M.
Restricting “Clinical Families of Services”: CMS is also proposing to require that if an excepted off-campus PBD furnishes services from any clinical family of services from which it did not furnish and bill during the period from 11/1/2014 to 11/1/2015, such items and services would be paid at the reduced PFS rate applied to non-excepted off-campus PBDs. New items or services within a clinical family of service would continue to be paid under OPPS, as this would be considered a “service expansion.” For mid-build providers, CMS proposes a 1-year baseline period beginning on the first date the off-campus PBD furnished the service under OPPS.
Click here for a table of the clinical families of services.
New “ER” Modifier: Finally, CMS also plans to require a new “ER” modifier to identify services in off-campus ER departments. This is meant to address the MedPAC recommendation for CMS to assess the extent to which OPPS services are shifting to off-campus ER departments. (Critical access hospitals would be exempt from this reporting requirement.)

Changes to Drug Payment Policy 

In response to the President’s Commission on Combating Drug Addiction and the Opioid Crisis, CMS proposes to change the packaging policy for certain drugs. CMS is also proposing to change the payment for separately payable drugs for non-excepted off-campus PBDs to the same lower ASP minus 22.5% (or 77.5% of ASP) that excepted off-campus PBDs receive. Currently these non-excepted departments receive 106% of ASP for these drugs. SCHs, Children’s, and Cancer hospitals would be exempt.
Click here for a table of the drugs and biologicals with pass-through status expiring on 12/31/2018.

CMS Request for Information

CMS is seeking feedback as to how providers may safely and effectively transition EHR among other providers and thereby improve interoperability.

CMS is also interested in continuing the discussion as to how hospitals might improve access to charge information across providers in order to help patients understand their financial liability, including out-of-pocket costs.

Finally, CMS is soliciting comments on key designs for developing a potential model that would test private market strategies and introduce competition to improve quality of care for beneficiaries, while reducing both Medicare expenditures and beneficiaries’ out-of-pocket spending.  They are seeking feedback that would accelerate the move to a value-based healthcare system building upon the Competitive Acquisition Program (CAP) for Part B drugs.

For additional information, please contact Ron Knapp at

Other Recently Published Proposed Rules  

CY 2019 HHA PPS Proposed Rule [CMS-1689-P]
(FR Publish Date 7/12/2018)
  • Expected 2.1% increase in payments to HHAs in CY 2019
  • Rural add-on payment extended for CYs 2019 through 2022 with new methodology
  • Cost of remote patient monitoring will be allowable costs on the Medicare cost report
CY 2019 ESRD PPS and DMEPOS Proposed Rule [CMS-1691-P]
[FR Publish Date 7/19/2018)
  • Proposed ESRD
  • Updates to ESRD QIP measures and codifying several previously finalized requirements
  • Changes to the DMEPOS Competitive Bidding Program (CBP)
Physician Fee Schedule, Quality Programs, and Medicaid Interoperability Proposed Rule [CMS-1693-P]
(FR Publish Date 7/27/2018)
  • Updates to PFS RVUs, including an increase in the conversion factor of 0.13% to $36.0463
  • Elimination of payment distinction and documentation requirements E&M visit levels 2
    through 5
  • 50% multiple procedure payment adjustment when E&M visits and procedures with global periods are furnished together
  • Moving forward with Appropriate Use Criteria (AUC) using a Clinical Decision Support Mechanism (CDSM)
    >Effective 1/1/2020, physicians and other practitioners who order advance diagnostic
    imaging must consult with AUC and report the consultation information on the claims.
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Final Rule – Hospital OP PPS Changes – CY 2017

From: Federal Register CMS-1656-FC & IFC – Filed 11/1/16; Published 11/14/16

Excerpts from CMS Fact Sheet:

Today, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2017 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System policy changes, quality provisions, and payment rates final rule with comment period (CMS-1656-FC). CMS is finalizing a number of OPPS and ASC policies that will improve the quality of care Medicare patients receive.

Additionally, CMS issued an Interim Final Rule with comment period (IFC) to establish Medicare Physician Fee Schedule (MPFS) rates for certain items and services furnished by certain off-campus outpatient departments of a provider (hereinafter referenced as off-campus provider-based departments (PBDs)) to address changes required by Section 603 of the Bipartisan Budget Act of 2015.

CMS also addressed comments made by health care providers on the patient experience survey questions about pain management and is finalizing the removal of the Pain Management dimension of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey for purposes of the Hospital Value Based Purchasing Program.

This final rule with comment period is one of several rules for CY 2017 that reflect a broader Administration-wide strategy to create a health care system that results in better care, smarter spending, and healthier people.


Site Neutral Payments Provision (“Section 603”)

CMS is implementing Section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74) in the final rule with comment period and is establishing interim final payment rates under the Medicare Physician Fee Schedule (MPFS) in an IFC described in more detail below. As required by the statute, the final rule with comment period provides that certain items and services furnished by certain off-campus PBDs shall not be considered covered outpatient department services for purposes of OPPS payment and shall instead be paid “under the applicable payment system” beginning January 1, 2017. CMS is finalizing several policies relating to which off-campus PBDs and which items and services are “excepted” from application of the payment changes under this provision and thus will continue to be paid under the OPPS.

Excepted Items and Services – CMS is finalizing its proposals that certain off-campus PBDs would be permitted to continue to bill for excepted items and services under the OPPS. Excepted items and services are items and services furnished after January 1, 2017:

  • By a dedicated emergency department;
  • By an off-campus PBD that was billing for covered OPD services furnished prior to November 2, 2015, (i.e., the date of enactment of Section 603 of the Bipartisan Budget Act of 2015) that has not impermissibly relocated or changed ownership; or
  • In a PBD that is “on the campus,” or within 250 yards, of the hospital or a remote location of the hospital.

Service Expansions, Relocations, and Changes of Ownership

  • Service Expansion in an Excepted Off-Campus PBD –CMS proposed to limit the items and services that an excepted off-campus PBD could continue to bill under the OPPS beginning January 1, 2017, to those items and services within a clinical family that were furnished and billed as of November 2, 2015. Under the proposal, additional items and services beyond those within the clinical families of services furnished and billed prior to that date would not be excepted items and services paid under the OPPS. However, in response to public comments on administrative burden and complexity and potential beneficiary access issues, CMS is not finalizing this proposal. CMS will monitor expansion of clinical service lines by off-campus PBDs and continue to consider whether a potential limitation on service line expansion should be adopted in the future.
  • Relocation of Excepted Off-Campus PBDs – CMS is finalizing its proposal that items and services must continue to be furnished and billed at the same physical address of the off-campus PBD as was used as of November 2, 2015, in order for the off-campus PBD to be considered excepted from Section 603 requirements. The final relocation policy includes a notable change from the proposal to allow excepted off-campus PBDs to relocate temporarily or permanently without loss of excepted status due to extraordinary circumstances outside of the hospital’s control, such as natural disasters. Exceptions for extraordinary circumstances will be evaluated and determined by the applicable CMS Regional Office and are expected to be rare and unusual.
  • Changes of Ownership of Excepted Off-Campus PBDs – CMS is finalizing its proposal to allow an off-campus PBD to maintain its excepted status under the other rules outlined in this regulation if the hospital has a change of ownership and the new owners accept the existing Medicare provider agreement from the prior owner.

Applicable Payment System – For CY 2017, CMS is finalizing the MPFS to be the “applicable payment system” for non-excepted items and services furnished in a nonexcepted off-campus PBD. In light of public comment on the proposals regarding hospital billing and payment, CMS is issuing an IFC to establish new interim final MPFS rates so that hospitals may be paid for these nonexcepted items and services in CY 2017.

CMS-1656-IFC— Establishment of Payment Rates under the MPFS for Nonexcepted Items and Services Furnished by an Off-Campus Provider-Based Department of a Hospital

In conjunction with issuing the CY 2017 OPPS and ASC final rule with comment period, CMS also issued an IFC. The changes implemented through this IFC are intended to provide a billing mechanism for hospitals to report and receive payment under the MPFS for nonexcepted items and services furnished by off-campus PBDs to Medicare beneficiaries in CY 2017. Physicians furnishing such services will continue to be paid on the professional claim and will be paid at the facility rate under the MPFS consistent with current payment policies for physicians practicing in an institutional setting.

Under this IFC, CMS is establishing interim final site-specific rates under the MPFS for the technical component of all nonexcepted items and services. Hospitals will be paid under the MPFS at these newly established MPFS rates for nonexcepted items and services, which will be billed on the institutional claim and must be billed with a new claim line modifier “PN” to indicate that an item or service is a nonexcepted item or service. For CY 2017, the payment rate for these services will generally be 50 percent of the OPPS rate (there are some exceptions that are spelled out in the IFC, including that payment for separately payable drugs will not be reduced). Packaging, and certain other OPPS policies, will continue to apply to such services. We are seeking public comments on the new payment mechanisms and rates detailed in the IFC and, based on these comments, will make adjustments as necessary to the payment mechanisms and rates through rulemaking that could be effective in CY 2017.


OPPS Payment Update

For CY 2017, CMS is updating OPPS rates by 1.65 percent. The change is based on the projected hospital market basket increase of 2.7 percent minus both a 0.3 percentage point adjustment for multi-factor productivity (MFP) and a 0.75 percentage point adjustment required by law. After considering all other policy changes finalized under the OPPS, including estimated spending for pass-through payments, CMS estimates a 1.7 percent payment increase (before taking into account changes in volume and case mix) for hospitals paid under the OPPS in CY 2017.

Read more…

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AHA Faults CMS’s ‘short-sighted’ Policies on New Off-Campus PBDs

From: AHA News – 7/7/16
The AHA Wednesday expressed “extreme dismay” with the provisions for new off-campus hospital outpatient departments contained in the Centers for Medicare & Medicaid Services’ (CMS) outpatient prospective payment system (PPS) proposed rule for 2017.
“It appears that CMS is aiming to freeze the progress of hospital-based health care in its tracks,” AHA Executive Vice President Tom Nickels said of the regulations for new off-campus provider-based departments, or PBDs, contained in the agency’s July 6 proposed rule.
The rule proposes to implement the site-neutral provisions of Section 603 of the 2015 Bipartisan Budget Act. With the exception of dedicated emergency department services, the section requires services furnished in off-campus PBDs that began billing under outpatient PPS on or after Nov. 2, 2015 to no longer be paid under that outpatient payment system.
Instead these services would be paid under other applicable Part B payment systems beginning Jan. 1, 2017. CMS proposes that, in 2017, the physician fee schedule would be the applicable payment system for the site-neutral rates for the majority of services furnished in a new off-campus PBDs.
CMS would pay physicians furnishing services in these departments at the higher “nonfacility” PFS rate. There would be no payment made directly to the hospital by Medicare. Existing off-campus PBDs that expand their services to include those in new clinical families would receive the site-neutral rate for those services.
In addition, any existing off-campus PBD that relocates after Nov. 2 would lose its excepted status and be subject to site-neutral payments. An existing off-campus PBD that undergoes a change of ownership would only maintain its excepted status if the new owner accepts the existing Medicare provider agreement from the prior owner.
“We are extremely dismayed by the short-sighted policies” in the proposed rule, Nickels said. He said the AHA will submit detailed comments to the agency urging it to revise “these misguided policies so that hospitals can continue to provide the highest quality health care to their communities.”
PPS update. In the rule, CMS proposed to update outpatient PPS rates by 1.55% in 2017 compared to 2016.
Meaningful use. As urged by the AHA, CMS proposes to offer greater flexibility in the meaningful use of electronic health records under the Medicare program by shortening the reporting period for 2016 from a full year to 90 days for all hospitals and physicians. CMS also proposes, beginning in 2017, to remove two measures for eligible hospitals and critical access hospitals – computerized provider order entry and clinical decision support – and reduce the requirements for patients to view, download and transmit their information from 5% to at least one patient.
Stage 3 of meaningful use would still be required by all hospitals in 2018. However, the thresholds for most measures would be reduced to the level required in Modified Stage 2.
Quality reporting. For the CY 2020 outpatient quality reporting program, CMS proposes seven new measures – hospital admissions and ED visits for outpatient chemotherapy patients, hospital visits following outpatient surgery, and five measures derived from a new Outpatient and Ambulatory Surgical Center Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey.
The OAS CAHPS is a 37-item survey intended to assess the experience of care for patients that have received surgeries and other procedures in HOPDs and ASCs. CMS would require OAS CAHPS data to be collected and submitted quarterly starting with visits on Jan. 1, 2018. CMS proposes the same measures from the OAS CAHPS for the CY 2020 ASC Quality Reporting Program.
Comments on the proposed rule are due Sept. 6.
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