A Guide to Regulation and Legislation Secondary Image Volume Seventeen

CLA’s regulatory advisor summarizes the proposed changes, which will work to address what CMS perceives as unnecessary growth in the hospital outpatient setting.

Navigating health reform

CMS Releases 2019 Final Rule for OPPS and ASC Payment System

  • Jennifer Boese
  • 11/19/2018

On November 2, 2018, the Centers for Medicare and Medicaid Services (CMS) released the final 2019 Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rule, which includes policies impacting off-campus provider-based hospital outpatient departments and certain 340B sites, among others.

Overall, CMS continues to make regulatory changes that are designed to better equalize payments across settings. In this case, those settings are the hospital outpatient department, the physician office, and the Ambulatory Surgical Center (ASC). The finalized changes will:

  • Reduce payments to certain off-campus provider-based outpatient departments (PBDs) for clinic visits
  • Apply current 340B drug reimbursement policy to additional off-campus PBDs
  • Shift from the consumer price index to the hospital market basket for determining ASC rates
  • Add a dozen new procedures payable when provided in ASCs

This Regulatory Advisor includes a high level overview of key provisions in the final rule (CMS-1695-FC). CLA’s Health Care Innovation and Insight team is actively monitoring and analyzing trends and policies, like those in the 2019 OPPS/ASC final rule, to help your health care organization position itself successfully for the future.

Key payment updates
  • CMS provides a 2.9 percent market basket increase to the OPPS; however, with several required statutory decreases, the final payment update in 2019 will be 1.35 percent.
  • The OPPS labor-related share is set at 60 percent of the national OPPS payment and will use the fiscal year Inpatient Prospective Payment System post-reclassified wage index, inclusive of any adjustments, as the wage index for the OPPS.
  • CMS finalized that it will continue the current policy of a 7.1 percent payment adjustment for rural Sole Community Hospitals (SCHs) for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to costs. Further, the agency will maintain this adjustment rate (7.1 percent) into the future (i.e., until any data that would support a change to this payment adjustment becomes evident).
  • CMS finalized multiple OPPS Ambulatory Payment Classifications (APCs):
    • The treatment of nine new level II Health Care Common Procedure Coding System (HCPCS) codes that were effective April 1, 2018.
    • 12 new laboratory CPT Multianalyte Assays with Algorithmic Analyses (MAAA) codes (M codes) and Proprietary Laboratory Analyses (PLA) codes (U codes) that were effective April 1, 2018.
    • The treatment of 14 new HCPCS codes that were effective July 1, 2018
  • CMS finalized that services assigned to New Technology APCs would be those with fewer than 100 claims annually and based on up to four years of data.
  • CMS finalized its criteria for device-intensive procedures to better capture costs, and makes several changes to its current policy, including allowing procedures that involve surgically inserted or implanted, single-use devices that meet the device offset percentage threshold to qualify as device-intensive procedures, regardless of whether the device remains in the patient’s body after the conclusion of the procedure. It also reduces the device offset percentage threshold from 40 percent to 30 percent.
  • With respect to transitional pass-through payments for certain drugs and biologicals, CMS finalized that 23 will lose their pass-through payment status on December 31, 2018, and 49 will continue with their pass-through payment status.
  • In the case of a drug or biological during an initial sales period in which data on the prices for sales for the drug or biological are not sufficiently available from the manufacturer, CMS will pay wholesale acquisition cost (WAC) +3 percent (as opposed to +6 percent).
  • CMS finalized changes to the inpatient-only (IP-only) list, including removing several additional codes from the IP-only list that were suggested by commenters.
    • Removed: 31241 (nasal/sinus endoscopy, surgical; with ligation of sphenopalatine artery)
    • Removed: 01402 (anesthesia for open or surgical arthroscopic procedures on knee joint; total knee arthroplasty)
    • Removed: 0266T (implantation or replacement of carotid sinus baroreflex activation device; total system [includes generator placement, unilateral or bilateral lead placement, intra-operative interrogation, programming, and repositioning, when performed]).
    • Removed: 00670 (anesthesia for extensive spine and spinal cord procedures [e.g., spinal instrumentation or vascular procedures])
    • Added: C9606 (percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary artery bypass graft, any combination of drug-eluting intracoronary stent, atherectomy and angioplasty, including aspiration thrombectomy when performed, single vessel).
Site neutral payments for hospital off-campus provider-based departments

CMS finalized its policy to extend a site-neutral payment policy to off-campus PBDs for HCPCS code G0463 (clinic visit). In other words, the PFS rate of 40 percent of the OPPS rate will now apply to G0463 provided at an off-campus PBD. (CMS refers to this 40 percent rate as the PFS relativity adjuster.) This policy will not be done in a budget-neutral manner, meaning the savings will not be redistributed within the OPPS. In response to comments, CMS will phase this policy in over two years. In CY 2019, the payment reduction will be transitioned by applying 50 percent of the total reduction in payment that would apply if these departments were paid the site-specific PFS rate for the clinic visit service. So in CY 2019, payment will be reduced to 70 percent of the previous OPPS rate, and reduced fully to 40 percent of the OPPS rate in CY 2020.

CLA perspective
CMS will continue its current payment policy on non-grandfathered off-campus PBDs for 2019, and extends that to all off-campus PBDs for clinic visits (G0463). It would not be surprising if this results in a lawsuit from hospital groups.

CMS implemented a new modifier related to Emergency Departments (ER items and services furnished by a provider-based off-campus emergency department) through the sub-regulatory HCPCS modifier process, beginning January 1, 2019. This modifier is required for every line for outpatient hospital services furnished in an off-campus provider-based emergency department. The modifier would be reported on the UB–04 form (CMS Form 1450) for hospital outpatient services. Critical access hospitals (CAHs) would not be required to report this modifier.

CMS chose not to finalize its proposed policy on limiting service expansions at grandfathered off-campus PBDs. This policy would have limited a grandfathered off-campus PBD from furnishing any items or services from a “clinical family of services,” which it did not furnish and bill for during a baseline period (November 1, 2014, through November 1, 2015). If new, these services would no longer be grandfathered. As such, they would no longer qualify for payment under the OPPS, but would instead come under the PFS and be subject to the 40 percent relativity adjuster. Even though it did not finalize this policy, CMS indicates it has the authority to do so and will continue to monitor these PBDs and service growth.

CLA perspective
While CMS did not finalize this policy, it is the second time CMS has proposed a limitation on service expansions for grandfathered off-campus PBDs. The agency’s comments and concerns remain consistent, and hospitals would be wise to keep these concerns in mind moving forward. It would not be surprising if these policies were resurrected again in the future, especially if a more efficient method of categorizing services in PBDs or limiting service growth is developed by the agency. The agency will also watch growth in services in ERs via the new required modifier and may very well seek to limit that growth (if need be) in the future. Overall, these policy moves are in line with the agency’s desire to move towards more site-neutral payments.

340B payments changes
  • CMS finalized that for CY 2019 and subsequent years, it will apply the 2018 final OPPS payment policy for separately payable drugs and biologicals under the 340B program to those furnished by non-grandfathered off-campus PBDs. That payment is Average Sales Price (ASP) minus 22.5 percent. CMS indicates this is to address the incentive to move 340B drugs to non-grandfathered off-campus PBDs, since those are not billed under the OPPS and therefore are not currently subject to the 340B payment reduction. CMS continues to exempt rural SCH, children’s, and PPS-exempt cancer hospitals. (CAHs are not impacted.) 

The current 340B payment policy under the OPPS is the subject of an ongoing lawsuit by several impacted 340B covered entities and the American Hospital Association, among others. The initial lawsuit was dismissed (not ripe), but has been refiled since the cuts are now in effect (ripe).

  • CMS will apply this payment policy to nonpass-through drugs purchased under the 340B programs (ASP minus 22.5 percent) and will continue to exempt for 2019 CAHs, rural SCH, children’s hospitals, and PPS-exempt cancer hospitals. All entities will continue to use claim modifiers “JG” or “TB” as required.
  • CMS finalized its policy to pay nonpass-through biosimilars acquired under the 340B Program at the biosimilar’s ASP minus 22.5 percent of the biosimilar’s ASP, instead of the biosimilar’s ASP minus 22.5 percent of the reference product’s ASP.
  • CMS further clarifies that its current policy, as finalized in the 2018 final OPPS rule, applies to drugs priced either using the Wholesale Acquisition Cost (WAC) or Average Wholesale Price (AWP). It has been CMS’s policy to subject 340B drugs to these other pricing methodologies. Therefore, the 340B payment adjustment for WAC-priced drugs is WAC minus 22.5 percent, and AWP-priced drugs have a payment rate of 69.46 percent of AWP when the 340B payment adjustment is applied.
Hospital outpatient quality reporting program

In continuing with its meaningful measures initiative across the agency, CMS originally proposed removing 10 measures from the outpatient quality reporting (OQR) for CY 2020 and CY 2021 payment determinations and proposes no new measures. However, in response to comments, it chose to remove only eight measures. (CMS retained OP 29, OP 31.) The removed measures are:

For CY 2020 payment determination:

  • OP-27: Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431)

For CY 2021 payment determination:

  • OP-5: Median Time to ECG (NQF #0289)
  • OP-9: Mammography Follow-up Rates (no NQF number)
  • OP-11: Thorax Computed Tomography (CT) — Use of Contrast Material (NQF #0513)
  • OP-12: The Ability for Providers with HIT (Health Information Technology) to Receive Laboratory Data Electronically Directly into Their Qualified/Certified Electronic Health Records (EHR) System as Discrete Searchable Data (NQF endorsement removed)
  • OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus CT (no NQF number)
  • OP-17: Tracking Clinical Results Between Visits (NQF endorsement removed)
  • OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps — Avoidance of Inappropriate Use (NQF #0659)
ASC changes
  • CMS finalized a shift in how it updates ASC rates, moving from the consumer price index-urban (CPI-U) to the hospital market basket, which is used to update OPPS rates. CMS will test this for a five year time period (2019-2023). For 2019, the final ASC update is 2.1 percent for 2019.
  • CMS finalized changes to the definition of “surgery” to be provided to Medicare beneficiaries in an ASC for CY 2019 to account for “surgery-like” procedures that are assigned codes outside the CPT surgical range (10000-69999). CMS further explains that these newly-eligible “surgery-like” procedures are procedures that are described by Category I CPT codes that are not in the surgical range but, like procedures described by Level II HCPCS codes or by Category III CPT codes under our current policy, directly crosswalk or are clinically similar to procedures in the Category I CPT surgical range. These Category I CPT codes would be limited to those that CMS has determined do not pose a significant safety risk, would not be expected to require an overnight stay when performed in an ASC, and are separately paid under the OPPS.

    For 2019, CMS finalized that it will add 12 cardiac catheterization procedures to the list of covered surgical procedures in ASCs. In response to commenters’ suggestions of additional codes to add to the list, CMS agreed on five others: 93566, 93567, 93568, 93571, and 93572. In total, CMS added 17 codes related to cardiac catheterization procedures.

CLA perspective
This is the second time in this rule that commenters suggested additional codes and CMS obliged. The other time was removal of several additional codes from the Inpatient Only Procedures list. This reinforces that it is important to comment on proposed rules. It also shows that CMS, again, used these two changes to allow for more services to be done by ASCs.

  • For the ASC Quality Reporting Program, CMS finalized removal of one measure for CY 2020: ASC-8: Influenza Vaccination Coverage Among Health care Personnel (NQF #0431).
  • For CY 2021, CMS finalized removal of only one of its seven initially proposed measures:
    • ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps – Avoidance of Inappropriate Use (NQF #0659)
    • CMS chose to retain ASC-1, ASC-2, ASC-3, ASC-4, ASC-9, ASC-11.
Additional provision on HCAHPS

CMS includes a policy related to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) patient experience of care survey, which is referred to as the HCAHPS survey and is part of the Hospital Inpatient Quality Reporting program. CMS proposes to remove “Communication about Pain” questions from the survey, effective with January 2022 discharges for the FY 2024 payment determination. However, in response to stakeholder feedback, and to comply with the requirements of the SUPPORT for Patients and Communities Act, CMS finalized removing the Communication About Pain questions effective with October 2019 discharges for the FY 2021 payment determination and subsequent years. CMS also finalized that it will not publicly report this data.

How we can help

CLA’s health care team is a source of insight and information for these and other regulatory changes stemming from the federal government. We encourage you to reach out with questions, or to learn more about how this final rule will affect your organization.