On November 1, 2016, CMS issued its Calendar Year (CY) 2017 Outpatient Prospective Payment System (OPPS) final rule with comment period. CMS also issued an interim final rule with comment period that establishes Medicare Physician Fee Schedule (MPFS) rates for certain items and services furnished by certain hospital off-campus outpatient departments. Significant provisions of the final rule are highlighted below.
Site Neutral Payment Provisions under Section 603
Under the Bipartisan Budget Act of 2015, Section 603, beginning January 1, 2017, items and services furnished by “off-campus department[s] of a provider” generally will not be paid under the OPPS but instead will be paid under another “applicable payment system” (General Rule). In the final rule, CMS finalizes those items and services that will continue to be paid under the OPPS (Excepted Items and Services). For a more detailed discussion of Excepted Items and Services under Section 603 see our November 2 post.
Proposed OPPS Payment Update
For CY 2017, CMS updated OPPS rates by 1.65 percent that CMS estimates will result in 1.7 percent payment increase for hospitals.
Proposed Comprehensive Ambulatory Payment Classifications (C-APCs) for 2017
C-APCs provide an encounter level payments for a designated primary procedure, including all adjunctive and secondary services related to that procedure. For CY 2017, CMS proposed 25 additional C-APCs to add to the existing 37 C-APCs, including a C-PAC for Bone Marrow Transplants. CMS stated that it is establishing three new clinical families to accommodate new C-APCs including nerve procedures, excision, biopsy, incision and drainage procedures, as well as airway endoscopy procedures.
Changes to OPPS Packaging Policies
Under the OPPS, CMS “packages payments for multiple unrelated items into a single payment. For CY 2017, CMS is making three notable modifications to its packaging policies.
- Ending separate payments for “unrelated” laboratory tests. CMS will discontinue the unrelated laboratory test exception and related “L1” modifier. The unrelated laboratory test exception currently allows hospital to seek separate payment for “unrelated” laboratory tests. A laboratory test is unrelated if the laboratory test is listed on the same claim as other hospital outpatient services but ordered for a different diagnosis than the other outpatient hospital services and order by a different practitioner than the practitioner ordering the other hospital outpatient services.
- Expanding the molecular pathology test exception to include certain advanced diagnostic laboratory tests (ADLTs). All ADLTs meeting the requirements of § 1834(d)(5)(A) of the Social Security Act will be paid separately beginning in CY 2017.
- Changing conditional packaging status indicators Q1 and Q2. Similar to other conditional status indicators, conditional status indicators Q1 and Q2 will now have packaging occur at the claim level without regard to the date of service.
Device-Intensive Procedure Policies
CMS finalized two policies for device-intensive procedures:
- Modified the methodology for assigning device-intensive status at the HCPCS code level. All device procedures requiring implementation of a device will be assigned device-intensive status if the procedure has significant device costs (i.e. a device offset of greater than 40 percent) and subject to all policies applicable to device-intensive procedures.
- Creating a new payment policy for low volume device-intensive procedures. CMS established a payment rate for any device-intensive procedures “assigned to a clinical APC with less than 100 total claims for all procedures in the APC be calculated using the median cost.” For CY 2017 this new payment policy would only apply to CPT code 0308T in APC 5495.
Device Pass-Through Applications
Device pass-through payments are intended to enable access to certain new medical devices that represent a substantial clinical improvement relative to existing diagnostic or therapeutic services. For CY 2017, CMS stated that it did not approve any of the three applications evaluated for device pass-through status.
Inpatient Only List Removals
CMS will remove seven CPT codes from the inpatient only (IPO) list for CY 2017, because these codes are related to procedures previously removed from the IPO list. In addition to removing six CPT codes discussed in the proposed rule, CMS will also remove CPT code 22585 (Arthrodesis, anterior interbody). CMS also indicated that comments regarding the removal of CPT code 27447 (total knew arthroplasty) will be considered in future policy making.
Ambulatory Surgical Center (ASC) Payment Update
ASC payments are annually updated by the percentage increase in the Consumer Price Index for all urban consumers (CPI-U). For CY 2017, the CPI-U update is projected to be 2.2 percent. The multi-factor productivity (MFP) adjustment is projected to be 0.3 percent, resulting in an MFP-adjusted CPI-U update factor of 1.9 percent.
Quality and Performance Program Changes
- Partial Hospitalization Program (PHP) Rates for HOPDs and Community Mental Health Centers CMHCs. The PHPs are structured intensive outpatient programs consisting of a group of mental health services paid on a per diem basis under the OPPS, based on PHP per diem costs. For CY 2017, CMS changed the APC structure for PHPs to a single APC by provider type for providing three or more services per day. Further, for CY 2017, CMS implemented a CMHC outlier payment cap at eight percent of a provider’s CMHC total per diem payments in outlier payments. Also, in this final rule, CMS adopted payments for non-excepted hospital-based PHPs under the MPFS, paying the lower CMHC per diem rate for APC 5853, for providing 3 or more PHP services per day.
- Hospital Value-Based Purchasing (VBP) Program. In the CY 2017 final rule, CMS removed the pain management dimension of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey for purposes of the Hospital VBP Program, beginning with the FY 2018 program year. CMS stated this is to relieve any pressure on hospital staff to prescribe opioids. HCAHPS survey data on pain management will continue to be publicly reported under the Hospital Inpatient Quality Reporting (IQR) Program.
- Hospital Outpatient Quality Reporting (OQR) Program: Proposed Changes for CY 2018, 2019, and 2020 Payment Determinations and Subsequent Years. The Hospital OQR Program requires hospital outpatient facilities to meet administrative, data collection, and submission, validation, and reporting requirements, or receive a reduction of 2.0 percentage points in their annual payment update for failure to meet these requirements. CMS finalized the following updates in the CY 2017 final rule:
- For the CY 2020 payment determination and subsequent years, CMS added seven measures to the Hospital OQR Program: two claims-based measures, and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey-based measures.
- Beginning with the CY 2018 payment determination, CMS will publicly display data on the Hospital Compare website, or other CMS website, as soon as possible after measure data have been submitted to CMS. Hospitals will generally have approximately 30 days to preview their data; CMS will announce the timeframes for the preview period on a CMS website and/or on its applicable listservs.
- Beginning with the CY 2019 payment determination, Extraordinary Circumstances Extensions or Exemptions (ECE) policy request deadline will be changed from 45 days from the date that the extraordinary circumstance occurred to 90 days from the date that the extraordinary circumstance occurred.
Organ Transplant Enforcement
CMS makes the following notable changes in the context of organ transplant programs:
- Revisions to Medicare Conditions of Participation (CoPs) for Organ Transplant. CMS modifies one of the threshold measures for determining compliance with Medicare CoPs for organ transplant – specifically, the outcome requirement standard for one-year patient and graft survival. The old threshold, first adopted in 2007, was 1.5. CMS expands this threshold to 1.85. Therefore, a transplant program would not be out of compliance unless the number of observed events divided by the number of expected events exceeds 1.85.
- Modifications to Conditions for Coverage (CfCs) for Organ Procurement Organizations (OPOs). The Organ Procurement and Transplantation Network (OPTN) and Scientific Registry of Transplant Recipients (SRTR) collect data from OPOs for purposes of increasing organ donation and transplantation. CMS finalizes its proposal to reduce the paper documentation that must be submitted to the transplant center with the organ, limiting this documentation to only the most critical blood type and infectious disease information.
- System Improvement Agreements (SIAs) and Other Technical Changes. With respect to SIAs, CMS finalizes its proposal to clarify that a signed SIA with a transplant program remains in full force and effect even if a subsequent SRTR report indicates that the transplant program has restored compliance with Medicare CoPs. However, CMS has authority in its sole discretion to shorten the timeframe or allow modification to any portion of the SIA in such a case. CMS also extends the timeframe for organ transplant programs to notify CMS of their intent to request mitigating factors approval from 10 days to 14 calendar days.
Electronic Health Record (EHR) Incentive Program Changes
CMS finalizes the following modifications in the context of the Medicare and Medicaid EHR Incentive Programs:
- 90-Day EHR Reporting Period for 2016 and 2017. CMS finalizes its 90-day EHR reporting period for 2016 and 2017 (i.e., any continuous 90-day period between January 1 and December 31 in 2016 and 2017) for all returning eligible professionals (EPs), eligible hospitals and critical access hospitals (CAHs) that previously participated in the Medicare and Medicaid EHR Incentive Programs.
- New Participants in 2017 and Hardship Exemptions. For EPs, eligible hospitals and CAHs that were unable to demonstrate meaningful use in a prior year, CMS finalizes that these EPs, eligible hospitals and CAHs will be required to attest only to Modified Stage 2 objectives and measures. For certain EPs that are new participants in 2017 and also intend to transition to the Merit-based Incentive Payment System (MIPS) in 2017, CMS will permit these EPs to apply for a significant hardship exemption from the 2018 payment adjustment through a formal CMS application process.
- Removing Certain Objectives and Measures. CMS finalizes its proposal to eliminate the Clinical Decision Support (CDS) and Computerized Provider Order Entry (CPOE) objectives and measures for purposes of satisfying Modified Stage 2 and Stage 3 objectives for 2017 and subsequent payment years.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program Updates
Lastly, CMS finalizes changes to the following data collection and reporting standards that ambulatory surgical centers (ASCs) must meet to avoid annual payment reductions:
- New Measures Beginning CY 2020. ASCs must report on the following seven new measures beginning with the CY 2020 payment year: ASC-13 (Normothermia Outcome), ASC-14 (Unplanned Anterior Vitrectomy), and ASC-15(a through e) (which includes five measures involving patient satisfaction, experience and access to care). The CMS final rule does not impose any changes to the 12 measures (11 of which are required) for the CY 2018 and CY 2019 payment years.
- Access to Information Beginning CY 2018. CMS will make publicly available on either the Hospital Compare website or other CMS website data submitted to CMS concerning participation in the ASCQR Program. Participants will have 30 days to preview their data on a CMS website. Additionally, beginning with the CY 2019 payment year, CMS will impose a May 15 submission deadline for all data electronically submitted to CMS. CMS also extends the deadline for requesting an Extraordinary Circumstances Extension or Exemption (ECE) from 45 days to 90 days from the date of the occurrence.
The final rule will be pushed in the Federal Register on November 14. A pre-publication copy of the final rule is available here. CMS’s fact sheet on the final rule is available here. Public comments on the final rule and interim final rule must be submitted by 5 p.m. EST on December 31, 2016.