Category: OP PPS

In This Edition:

• CY 2019 Medicare OPPS Final Rule
• Pricing Transparency Revisited
• Hospital Value Based Purchasing Data Published
• Hospital-Specific Rate Refresher

OPPS Final Rule – CY 2019
CMS-1695-FC drafted on 11/2/2018; Published in the Federal Register on 11/21/2018 and corrected notice issued on 11/30/2018

On November 2, 2018, the Centers for Medicare & Medicaid Services (CMS) finalized changes that remove unnecessary and inefficient payment differences between certain provider and supplier types so patients can have more affordable choices and options. The final rule with comment period updates and revises policies under the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System.

The polices in the calendar year (CY) 2019 OPPS and ASC Payment System final rule with comment period will further advance the agency’s priority of creating a patient-centered healthcare system by achieving greater price transparency, and significant burden reduction so that hospitals and ambulatory surgical centers can operate with better flexibility and patients have access to the tools they need to become active healthcare consumers.

Overall, the final rule is projected to result in an estimated increase of $360M (or 0.6%) in payments to providers, ranging from -1.6% decreases for rural hospitals in the New England region up to 1.6% increases for rural hospitals in the West South Central region.

For more information regarding this Final Rule, see below:

Fact Sheet Link

Federal Register Link

Medicare OPPS Base Rates
CMS is proposing a base rate increase of 1.35% for hospitals that submit OQR quality data and 2.1% for ASCs that submit ASCQR quality data.

APC Changes
As expected, CMS has finalized the 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 created three new comprehensive APCs (C-APCs) for ears, nose, and throat (ENT) and vascular procedures.  CMS will also remove four 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 finalizing several changes to the OQR reporting in an effort to reduce burdens on hospitals, including the removal of 8 measures from the OQR (1 from CY2020 and 7 from CY2021).  CMS will also remove the three recently revised pain communication questions, starting with services on Oct. 1, 2019, to address concerns that providers might feel pressure to offer opioids in order to raise survey scores.

Click here for a table of the 8 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 60% less than the OPPS rate.)  CMS will phase in this policy by paying 70% of the OPPS rate in 2019, then reducing payment to 40% of the OPPS rate in 2020 and future years.  CMS estimates that the impact of this change is expected to reduce reimbursement to hospitals by $380M in FY2019 and $760M in FY2020 and beyond.

Restricting “Clinical Families of Services” – Cancelled:  CMS decided not to finalize its requirement that excepted off-campus PBDs be limited from expanding services to 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 have been paid at the reduced PFS rate applied to non-excepted off-campus PBDs.  New items or services within a clinical family of service would have continued to be paid under OPPS, as this would be considered a “service expansion.”  Even though this policy was not finalized, CMS indicated that it has the authority to do so and will continue to monitor these PBDs and service growth.

New “ER” Modifier:  Finally, CMS will require a new “ER” modifier to identify services in off-campus ER departments.  The modifier would be reported on the UB-04 form and would be required on every line for outpatient services furnished in an off-campus provider-based emergency department.  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 has changed the packaging policy for certain drugs.  CMS will also change the payment for separately payable drugs for non-excepted off-campus PBDs to the same lower Average Sales Price (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.  Rural 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.

Other News

Pricing Transparency Revisited – Action Required by 1/1/2019
CMS is updating their guidelines regarding the requirements to comply with Section 2718(e) of the Public Health Service Act for hospitals to make public a list of the hospital’s standard charges. Previously issued guidelines required hospitals to 1) make public a list of standard charges (whether that be the chargemaster itself or in another form of the hospital’s choice), or 2) make known the hospital’s policies for allowing the public to view a list of those charges in response to an inquiry.

Effective January 1, 2019, CMS is revising their guidelines to remove the requirement to make known the hospital’s policies for allowing the public to view a list of those charges in response to an inquiry. Hospitals will now be required to make available a list of their standard charges via the internet in a machine-readable format and require that these lists be updated at least annually.

 In the proposed rule, CMS solicited comments on various questions to include defining standard charges, type of information beneficial to patients, informing patients of their out-of-pocket costs, and greater transparency around patient obligations. In the final rule, CMS did not respond directly to public comments but published a separate FAQ document, which can be accessed here.

Toyon’s Take:  Toyon recommends the following actions to comply with this change:

• List the charges at gross amounts (i.e., not adjusted for discounts to third-party payers, charity, self-pay, etc.)
• Calculate the average charge per case for each MS-DRG and include with the list of standard charges (Use FY 2011-2016 publicly available info as a guide at this link)
• For services subject to variable pricing (e.g., drugs, supplies, and implants subject to an internal mark-up policy that are variable to acquisition price), develop an average charge from the most recent period (e.g., quarter, year)
• Publish the list in a machine readable format (e.g., txt, csv, xlm, etc.). Note:  PDF is not considered an acceptable format.
• Update at least annually the publicly available chargemaster
• Include an advisory statement that the published charges are to be used as a guide and that actual charges incurred and patient obligation may differ
• The format is at the hospital’s discretion, and CMS did not specifically address the inclusion of hospital charge codes and CPT/HCPCS

For additional information, please contact Robert Howey at robert.howey@toyonassociates.com.

 Hospital Value-Based Purchasing Program Update for FFY 2019
On December 3, 2018, CMS released the final hospital value-based purchasing (VBP) incentive payment adjustment factors in Table 16B on its website for FFY 2019. The payment factors are effective for Medicare discharges on or after October 1, 2018, and are applied to the adjusted base operating MS-DRG payment. Each participating hospital’s payment rate is inclusive of a 2 percent contribution to the VBP payment pool ($1.9B) and adjustment factors greater than 1.0 represent those receiving payments above their contribution.

The payment factors are based on each hospital’s total performance score (TPS) measured on four equally weighted domains: Clinical Care (Mortality), Patient and Caregiver-Centered Experience, Patient Safety, and Efficiency/Cost Reduction. The breakeven TPS score for FFY 2019 was 35.15 (up from 34.60) and over 55 percent of hospitals will receive higher Medicare payments from the previous year. The highest performing hospital will receive a net increase in IPPS payments of 3.67 percent, and the lowest performing hospital will incur a net decrease in IPPS payments of 1.59 percent.

Click here for a table of estimated VBP payment impacts to each hospital.

For additional information, please contact Robert Howey at robert.howey@toyonassociates.com.

Hospital-Specific Rate Updates – A Refresher
When calculating a Sole Community or Medicare Dependent Hospital’s hospital-specific rate (HSR) each year, remember that any hospital-specific adjustment factor (e.g., IQR or EHR reduction factor) is only applicable for discharges occurring during that Federal Fiscal Year.  Those reduction factors are not cumulative in nature and should not be carried forward.

The HSR should be tabulated each year by adjusting the hospital’s most recent base period rate by the full, non-reduced cumulative update factors applicable to all hospitals for each fiscal year since the latest rebasing.  And then only for the current Federal Fiscal Year should any hospital-specific adjustment factors be applied to the hospital for that one year.

For additional information, please contact Ron Knapp at ron.knapp@toyonassociates.com.

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

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 ron.knapp@toyonassociates.com.

Other Recently Published Proposed Rules  

CY 2019 HHA PPS Proposed Rule [CMS-1689-P]

(FR Publish Date 7/12/2018)

Fact Sheet Link

Federal Register Link

• 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)

Fact Sheet Link

Federal Register Link

• 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)

Fact Sheet Link

Federal Register Link

• 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.