CMS Issues Proposed CY 2015 Medicare OPPS/ASC Rule

On July 14, 2014, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule to update the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2015. The following are highlights of this major rulemaking:

  • OPPS rates would increase by 2.1% compared to 2014 levels, although rate changes for individual Ambulatory Payment Classifications (APCs) vary. This update reflects a 2.7% market basket increase, which is partially offset by a 0.4% multifactor productivity (MFP) adjustment and an additional 0.2% reduction, both of which were mandated by the Affordable Care Act (ACA). Hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements are subject to an additional reduction of 2.0%. The actual update for individual procedures can vary based on changes in relative weights and other policies in the proposed rule. Overall, CMS expects to make $800 million in additional payments for OPPS services furnished in CY 2015 under the rule.
  • CMS proposes expanding its packaging policy adopted in the 2014 final rule. Beginning in CY 2015, CMS proposes conditional packaging of all ancillary services when they are integral, ancillary, supportive, dependent, or adjunctive to a primary service (except for preventive, psychiatry, and drug administration services). The services proposed to be packaged under this policy are services assigned to APCs with a geometric mean cost of $100 or less. CMS proposes to make separate payment for these ancillary services when they are furnished by themselves. CMS expects to update and expand this policy in future years. CMS also proposes packaging all add-on codes, but it would allow certain combinations of primary service codes and especially costly add-on codes representing a more costly, complex variation of a procedure to trigger a complexity adjustment.
  • The proposed rule would implement, with revisions, a policy discussed in the final 2014 rule to replace existing device-dependent APCs in CY 2015. In short, CMS would make a single payment for all related or adjunctive hospital services provided to a patient in the furnishing of certain device dependent services, with certain exceptions. Under this policy, the comprehensive APC payment would include all outpatient services, including diagnostic procedures, laboratory tests and other diagnostic tests, and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; services and supplies used during the service; outpatient department services delivered by therapists as part of the comprehensive service; durable medical equipment (DME), as well as prosthetic and orthotic items and supplies when provided as part of the outpatient service; and any other outpatient components reported by HCPCS codes that are provided during the comprehensive service (except for certain services including mammography services, ambulance services, brachytherapy seeds, and pass-through drugs and devices). CMS proposes refining its 2014 policy to establish a total of 28 comprehensive-APCs for 2015 versus the 29 comprehensive APCs described in the 2014 final rule.
  • CMS proposes to continue to calculate which the OPPS relative payment weights using distinct cost-to-charge ratios for cardiac catheterization, CT scan, MRI, and implantable medical devices.
  • Under the proposed rule, the threshold for separate payment for outpatient drugs in 2015 would be a cost per day that exceeds $90, the same threshold as in 2014.
  • The proposed rule would revise OQR measures and modify OQR Program validation, review, and corrections provisions.
  • CMS proposes collecting data on services furnished in off-campus provider-based departments beginning in 2015. Hospitals and physicians would report a modifier for services furnished in an off-campus provider-based department on both hospital and physician claims. This information ultimately is intended to be used to improve the accuracy of Medicare physician fee schedule (MPFS) practice expense payments for services furnished in off-campus provider-based departments.
  • The proposed rule would revise the expansion exception process for physician-owned hospitals under the rural provider and hospital ownership exceptions to the physician self-referral law. Specifically, CMS proposes to permit physician-owned hospitals to use additional data sources to demonstrate eligibility for an expansion exception as a “high Medicaid facility.”
  • For CY 2015, CMS proposes an ASC prospective payment system update of 1.2%, reflecting a CPI-U update of 1.7%, offset by a 0.5% MFP adjustment. Payment updates for individual procedures vary. ASCs that do not meet quality reporting requirements are subject to a 2% payment reduction. CMS proposes adding 10 procedures to the ASC list of covered surgical procedures and refining the ASC quality program.
  • CMS proposes to require a physician certification only for long-stay cases (defined as 20 days or more) and outlier cases. An admission order would continue to be required for all admissions.
  • CMS proposes establishing a process to recover overpayments that result from the submission of erroneous payment data by a Medicare Advantage (MA) organization or Part D prescription drug plan sponsor if the plan fails to correct the data upon CMS request, with an appeals process for MA organizations and Part D sponsors.

CMS will accept comments on the proposed rule until September 2, 2014.

Next CMS Hospital Outpatient Payment Advisory Panel Meeting Set for August 25-26

CMS has announced that the Advisory Panel on Hospital Outpatient Payment (HOP Panel) will hold its summer meeting on August 25-26, 2014. The purpose of the Panel is to advise CMS on the clinical integrity of the Ambulatory Payment Classification (APC) groups and their associated weights under the Medicare hospital outpatient prospective payment system. The HOP Panel also advises CMS on hospital outpatient therapeutic services supervision issues. The deadline for presentations is July, 25, 2014, and the meeting registration deadline is August 1, 2014.

CMS Rejects OIG Call to Limit Medicare OPPS Rates for ASC-Approved Procedures to ASC Rates

In a recent report, the HHS Office of Inspector General (OIG) recommended that CMS limit Medicare hospital outpatient prospective payment system (OPPS) payments for procedures that can be safely performed in an ambulatory surgical center (ASC), given that ASC payments are typically lower than the corresponding OPPS payments. According to the OIG, Medicare would save as much as $15 billion for CYs 2012 through 2017 if CMS reduces OPPS rates to ASC payment levels for ASC-approved procedures performed on beneficiaries with low-risk or no-risk medical profiles (which the Agency for Healthcare Research and Quality estimates represents 68% of hospital patients 65 and older); beneficiaries would realize additional out-of-pocket savings. The OIG observes that its proposal would require legislative changes to current budget neutrality rules to prevent resulting savings from being redistributed in the form of higher payments for other procedures. Under the OIG proposal, outpatient departments would continue to receive the standard OPPS payment rate for ASC-approved procedures that must be provided in an outpatient department because of a beneficiary’s individual clinical needs.

CMS disagreed with the OIG’s recommendations, which are not binding on the agency. CMS noted that because most ASC rates are based on OPPS rates, the OIG’s recommendations may raise “circularity” concerns with the respect to the rate calculation process. Moreover, CMS observes that the OIG suggests no specific clinical criteria to distinguish patients that can be adequately treated in an ASC relative to the hospital outpatient setting, which would be needed to act on these recommendations. The OIG stands by its recommendations, however, and urges CMS to take the necessary steps to implement them.

The OIG prepared its report, “Medicare and Beneficiaries Could Save Billions If CMS Reduces Hospital Outpatient Department Payment Rates for Ambulatory Surgical Center-Approved Procedures to Ambulatory Surgical Center Payment Rates," in response to a congressional request.

CMS Seeking Comments on Supervision Levels for Select Hospital Outpatient Services

CMS has released its preliminary decisions on potential changes to outpatient supervision level requirements for a number of medical services in response to recommendations made last month by the Hospital Outpatient Payment (HOP) Panel. Notably, CMS proposes not to change the supervision level from direct to general for several codes describing injection and intravenous infusion of chemotherapy or other highly complex drugs or complex biological agents. While CMS is proposing to maintain the direct supervision standard for chemotherapy administration, the agency is raising the question of whether to distinguish the supervision level between initial and subsequent administrations of a given chemotherapeutic or biological agent. CMS will accept comments on the preliminary supervision level determinations until April 30, 2014, and final decisions will be effective on July 1, 2014.

MedPAC Issues 2014 Report to Congress on Medicare Payment Policy

The Medicare Payment Advisory Commission (MedPAC) has released its annual report to Congress on Medicare payment policy, including payment update recommendations for all the major Medicare fee-for-service payment (FFS) systems, limited recommendations related to the Medicare Advantage (MA) program, and a status report on the Medicare Part D program. The following are highlights of the recommendations for 2015 (many of which were recommended previously):

  • MedPAC recommends a 3.25% update to inpatient and outpatient hospital payment rates, concurrent with two changes that would institute site-neutral payments among settings. First, Congress should direct the HHS Secretary to reduce or eliminate differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications. Second, MedPAC recommends reducing payment for long-term care hospital (LTCH) services furnished to patients whose illness is not characterized as chronically critically ill (CCI) to the same rate that an acute care hospital would be paid for such care; savings from this provision would fund an outlier pool for acute care hospitals that treat costly CCI patients.
  • Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory updates that includes a higher update for primary care services than for specialty care services. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments from overpriced to underpriced services; and relative value unit reductions to achieve fee schedule savings.
  • Congress should eliminate the ambulatory surgical center (ASC) payment update for 2015, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
  • Congress should eliminate the skilled nursing facility (SNF) market basket update. Congress also should direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing with an initial reduction of 4% and subsequent reductions until Medicare’s payments better align with providers’ costs. Moreover, Congress should direct the Secretary to reduce payments to SNFs with relatively high risk-adjusted rates of rehospitalization during Medicare-covered stays.
  • MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, and establish a per episode copay for home health episodes not preceded by hospitalization or post-acute care use. In addition, Congress should direct the Secretary to reduce payments to home health agencies with relatively high risk-adjusted rates of hospital readmission.
  • Congress should eliminate the update to hospice rates for FY 2015 and adopt a series of previous MedPAC payment reform recommendations.
  • Congress should eliminate the 2015 updates for outpatient dialysis services and direct the Secretary to establish a quality measure that assesses poor outcomes related to anemia in the End-Stage Renal Disease Quality Incentive Program, revise the low-volume adjustment, and audit dialysis facilities’ cost reports.
  • Congress should eliminate the FY 2015 payment updates for inpatient rehabilitation facilities and LTCHs.
  • With regard to Medicare Advantage (MA), MedPAC recommends that Congress: (1) direct the Secretary to determine payments for employer-group MA plans in a manner more consistent with the determination of payments for comparable non-employer group plans; and (2) include the Medicare hospice benefit in the MA benefits package beginning 2016.

Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies.

Omnibus Government Spending Signed to Fund HHS, Other Departments

President Obama has signed into law the Consolidated Appropriations Act of 2014, which provides $1.012 trillion in discretionary funding for the operations of the federal government through September 30, 2014. In addition to setting overall funding levels for HHS agencies, the law specifies funding for numerous HHS policies and initiatives, such as additional funding for program integrity effort involving the 340B drug pricing program and research on the impact of health information technology on patient safety, and reduced funding for the IPAB and certain other ACA activities. The agreement also includes directives for HHS to improve fraud and abuse efforts, including using the latest technology to ensure only valid beneficiaries and valid providers receive benefits (although on the other hand, the agreement raises concerns that the Recovery Audit Contractor program includes incentives “to take overly aggressive actions”). In addition, the agreement highlights more Congressional interest in more narrow HHS policies, such as objections to the criteria CMS uses to package drug costs under the hospital outpatient prospective payment system, and concerns that rural patients maintain access to needed health services if CMS proceeds with a proposal to remove critical access hospital status from certain facilities.

CMS Issues Final Medicare OPPS, ASC Policies for 2014

On December 10, 2013, CMS published a final rule that updates Medicare payment and other policies under the hospital outpatient prospective payment system (OPPS) and the ambulatory surgical center (ASC) prospective payment system (PPS) for calendar year (CY) 2014. Key provisions of the final rule include the following:

  • CMS is increasing OPPS rates by 1.7% for 2014, which reflects a 2.5% hospital market basket increase, minus a 0.5% multifactor productivity (MFP) adjustment and an additional 0.3% reduction (both mandated by the Affordable Care Act, or ACA). The OPPS update is subject to other adjustments, including a 2% reduction for hospitals that do not meet quality reporting requirements.
  • CMS is adopting a revised version of its proposal to establish larger payment bundles to maximize hospitals’ incentives to provide care in an efficient manner. Specifically, CMS will package the following five new categories of supporting items and services into the procedural ambulatory payment classification (APC) payment: (1) drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; (2) drugs and biologicals that function as supplies or devices when used in a surgical procedure; (3) certain clinical diagnostic laboratory tests; (4) procedures described by add-on codes (except for add-on codes for drug administration services and, for CY 2014 only, add-on codes assigned to device-dependent APCs); and (5) device removal procedures. Note that in some cases separate payment is permitted if these services are reported alone on a claim. CMS is not finalizing its proposed policy to include two other categories of items in its expanded packaging policy: ancillary services with a CY 2013 status indicator of “X,” and diagnostic tests on the bypass list.
  • CMS has adopted its proposal to create 29 all-inclusive, “comprehensive APCs” to replace 39 existing device-dependent APCs, but CMS is delaying implementation until 2015. Under this policy, CMS will package into the comprehensive APCs all “adjunctive services” provided during the delivery of the comprehensive service, which results in a single prospective payment for all charges on the claim, excluding only charges for services that cannot be covered by Medicare Part B or that are not payable under the OPPS. Under this policy, the comprehensive APC payment will include all outpatient services, including: diagnostic procedures, laboratory tests and other diagnostic tests, and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; coded and uncoded services and supplies used during the service; outpatient department services delivered by therapists as part of the comprehensive service; durable medical equipment (DME), as well as prosthetic and orthotic items and supplies when provided as part of the outpatient service; and any other outpatient components reported by HCPCS codes that are provided during the comprehensive service (except for certain services including mammography services, ambulance services, brachytherapy seeds, and pass-through drugs and devices). Because CMS has delayed implementation until 2015, CMS will accept comments on this policy to be considered in next year’s rulemaking.
  • CMS has adopted its plan to collapse the current five levels of outpatient clinic visit codes into a single code for each unique type of outpatient hospital visit. CMS is not finalizing its proposal to replace the current five levels of codes for each type of emergency department visits, however; CMS will reassess this policy issue and consider revisions in a future rulemaking.
  • For 2014, CMS is calculating OPPS relative payment weights using distinct cost-to-charge ratios for cardiac catheterization, CT scan, and MRI, and implantable medical devices. To address commenters’ concerns about the impact of this change on rates for MRI and CT procedures, CMS has adopted a temporary policy that accommodates variations in hospital cost allocation methods, which has the effect of mitigating the rate reductions for these procedures compared to the proposed rule. CMS will allow four years for hospitals to transition to the cost allocation methods identified in the final rule.
  • CMS will continue a policy adopted last year setting OPPS payment for separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6% (which it calls the "statutory default" rate), without an adjustment for pharmacy overhead costs. The 2014 threshold for separate payment for outpatient drugs is a cost per day that exceeds $90, compared to $80 in 2013.
  •  With regard to ASC policy, the final rule increases ASC rates by 1.2% compared to 2013 levels. ASCs that do not meet quality reporting requirements are subject to a 2% payment reduction. As proposed, ancillary services that are packaged under the OPPS also will be packaged under the ASC payment system for CY 2014.
  • In addition, the final rule addresses, among many other things: refinements to the Hospital Outpatient Quality Reporting Program, the ASC Quality Reporting Program, and the Hospital Value-Based Purchasing Program; payment for partial hospitalization services; a requirement that individuals furnish “incident to” hospital or critical access hospital outpatient services in compliance with state law; and changes to Quality Improvement Organization eligibility and contracting rules.

Comments on limited provisions of the rule will be accepted until January 27, 2014.
 

Hospital Outpatient Payment (HOP) Advisory Panel Meeting - March 10-11, 2014

CMS has scheduled a meeting of the HOP Advisory Panel on March 10-11, 2014. Among other things, the panel will address: whether procedures within an APC group are similar both clinically and in terms of resource use; APC group weights; packaging of hospital outpatient prospective payment system services and costs; and the appropriate supervision level (general, direct, or personal) for individual hospital outpatient therapeutic services. Registration is required.

CMS Invites Nominees for Members of Advisory Panel on Hospital Outpatient Payment

The Centers for Medicare & Medicaid Services (CMS) is soliciting nominations for new members to the Advisory Panel on Hospital Outpatient Payment to fill five current vacancies. The Panel is charged with advising the HHS Secretary and the CMS Administrator on the clinical integrity of the Medicare hospital outpatient Ambulatory Payment Classification groups and their associated weights, along with supervision levels for hospital outpatient services. CMS will consider nominations received by December 31, 2013.

CMS Warns of Delay in Final CY 2014 Medicare Rules

As a result of the partial government shutdown, CMS is warning that it may delay until late November a series of major final rules setting a wide range of Medicare payment rates and policies for 2014. While CMS usually releases the final calendar year updates by November 1st each year, CMS is now saying that the 16-day government shutdown could push back the release date of the following rules to November 27th (or potentially later):

• CY 2014 Changes to the Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center (ASC) Payment System;
• Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2014;
• Medicare Program; End-Stage Renal Disease (ESRD) Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS); and
• CY 2014 Home Health Prospective Payment System Final Rule.

This timeline could leave providers, suppliers, and other health care entities only a few weeks to prepare for potentially sweeping changes before they go into effect on January 1, 2014 (although certain provisions have different effective dates). For instance, stakeholder are awaiting final disposition of CMS proposals to, among many other things: expand payment bundles under the HOPPS; cut physician fee schedule reimbursement for more than 200 codes if the Medicare physician office payment exceeds the HOPPS or ASC payment; systematically reexamine payment amounts under the Clinical Laboratory Fee Schedule; establish a centralized review process for Investigational Device Exemption (IDE) coverage decisions; reduce ESRD rates by 9.4%; and revise various DMEPOS payment policies.

CMS Issues Technical Corrections to CY 2014 Proposed OPPS/ASC Rule

CMS has published a notice correcting technical errors that appeared in the July 19, 2013 proposed rule updating the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the ambulatory surgical center payments for CY 2014. In addition to making revisions to specific ambulatory payment classifications, the technical corrections result in changes to the proposed OPPS relative payment weights and conversion factor (which generally have the impact of reducing payment rates). CMS is accepting comments on the technical corrections until September 16, 2013.  Updated payment files are posted here.  

CMS Issues Proposed OPPS, ASC Policies for 2014, Including Expanded OPPS Packaging Proposal

On July 19, 2013, CMS published a proposed rule that would update Medicare outpatient prospective payment system (OPPS) and ambulatory surgical centers (ASCs) policies and rates for CY 2014. Key provisions of the proposed rule include the following:

  • CMS proposes to update the OPPS market basket by 1.8% for 2014, which reflects a 2.5% hospital market basket increase, minus a 0.4% multifactor productivity (MFP) adjustment and an additional 0.3% reduction (both mandated by the ACA). The OPPS update is subject to other adjustments, including a 2% reduction for hospitals that do not meet quality reporting requirements.
  • CMS proposes larger payment bundles to maximize hospitals’ incentives to provide care in an efficient manner, including by encouraging hospitals “to effectively negotiate with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements.” Specifically, CMS proposes to package the following seven new categories of supporting items and services into the procedural ambulatory payment classification (APC) payment: (1) Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; (2) drugs and biologicals that function as supplies or devices when used in a surgical procedure; (3) certain clinical diagnostic laboratory tests; (4) procedures described by add-on codes; (5) ancillary services assigned status indicator “X”; (6) diagnostic tests on the bypass list; and (7) device removal procedures. Note that in some cases separate payment is permitted if these services are reported alone on a claim.
  • In a separate provision, CMS proposes to create 29 all-inclusive, “comprehensive APCs” to replace 29 existing device-dependent APCs and prospectively pay for device-dependent services associated with 136 HCPCS codes. CMS is proposing to package into the comprehensive APCs all “adjunctive services” provided during the delivery of the comprehensive service, including: diagnostic procedures, laboratory tests and other diagnostic tests, and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; uncoded services and supplies used during the service; outpatient department services delivered by therapists as part of the comprehensive service; durable medical equipment, prosthetic and orthotic items, and supplies when provided as part of the outpatient service; and any other components reported by HCPCS codes that are provided during the comprehensive service (except charges that cannot be covered by Medicare Part B or that are not payable under the OPPS).
  • CMS proposes to collapse the current five levels of outpatient visit codes into a single code for each unique type of outpatient hospital visit.
  • CMS proposes to continue a policy adopted last year setting OPPS payment for separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6% (which it refers to as the "statutory default" rate), without an adjustment for pharmacy overhead costs. The proposed 2014 threshold for separate payment for outpatient drugs would be a cost per day that exceeds $90, compared to $80 in 2013.
  • With regard to ASC policy, CMS is proposing to increase ASC payment rates by 0.9%, which is derived from a 1.4% inflation update reduced by a 0.5% MFP adjustment. ASCs that do not meet quality reporting requirements would be subject to a 2% payment reduction. CMS also proposes that ancillary or adjunctive services that would be packaged under the OPPS also would be packaged under the ASC payment system for CY 2014.
  • In addition, the proposed rule addresses, among many other things: refinements to the Hospital Outpatient Quality Reporting Program, the ASC Quality Reporting Program, and the Hospital Value-Based Purchasing Program; payment for partial hospitalization services; a requirement that individuals furnish “incident to” hospital or critical access hospital outpatient services in compliance with state law; and changes to Quality Improvement Organization eligibility and contracting rules

CMS will accept comments on the proposed rule until September 6, 2013.

CMS Proposes Updates to Medicare Physician Fee Schedule, Other Part B Policies for CY 2014

On July 19, 2013, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule updating Medicare physician fee schedule (PFS) rates and polices for calendar year (CY) 2014. CMS projects that PFS payments will be reduced by approximately 24.4% in 2014, largely due to the statutory Sustainable Growth Rate (SGR) update formula (although Congress is expected to eventually take action to block the automatic cuts, as it has in the past). The rule also includes a number of significant policy proposals, including the following highlights:

  • Under the proposed rule, CMS projects an estimated 2014 conversion factor of $25.7109, adjusted to $26.8199 to include a budget neutrality adjustment, compared to the 2013 conversion factor of $34.0230. As noted, Congress could override the SGR formula on either a temporary or permanent basis, but the timing and scope of any such action is uncertain. Reimbursement changes for individual procedures would vary based on numerous other policy proposals and updates.
  • Under its potentially misvalued code initiative, CMS is proposing to reduce PFS rates for more than 200 codes if Medicare physician office payment exceeds the payment in the outpatient hospital department or ambulatory surgical center (ASC) setting. CMS proposes limiting PFS payment in such cases to the total payment that Medicare would make to the practitioner and the facility when the service is furnished in a hospital outpatient department or ASC. Certain services would be exempt from this provision, including services without separate hospital outpatient prospective payment system (OPPS) payment rates and codes already subject to cuts pursuant to the Deficit Reduction Act imaging cap, among others). CMS estimates that this policy would have the biggest negative impact on allowed charges for independent laboratory PFS payments, radiation therapy center services, and pathology services. CMS also proposes to examine other specific codes as part of the agency’s ongoing review of misvalued codes.
  • CMS proposes to make payments for non-face-to-face complex chronic care management services for Medicare beneficiaries who have multiple (two or more) significant chronic conditions. This provision would be implemented in 2015 to provide sufficient time to develop and obtain public input on the standards necessary to demonstrate the capability to provide these services.
  • CMS proposes to modify the definition of eligible telehealth originating sites to include health professional shortage areas (HPSAs) located in rural census tracts of urban areas as determined by the Office of Rural Health Policy, which CMS expects to result in the inclusion of additional HPSAs as areas for telehealth originating sites. CMS also proposes adding transitional care management services to the list of eligible Medicare telehealth services.
  • CMS proposes to continue implementation of the physician value-based payment modifier (Value Modifier), which was mandated by the Affordable Care Act (ACA) to reward physicians for providing higher quality and more efficient care. The Value Modifier is being phased in from CY 2015 to CY 2017, with CY 2013 serving as the initial performance period for the CY 2015 Value Modifier. In the proposed 2014 rule, CMS calls for the value modifier to apply to groups of 10 or more eligible physicians in 2016 (compared to groups of 100 or more in 2015), and increases the amount of payment at risk from 1% to 2% in 2016. CMS also proposes to refine the methodologies used to calculate the value-based payment modifier to better identify both high and low performers for upward and downward payment adjustments.
  • CMS proposes to amend the “incident to” regulations to require that services and supplies be furnished in accordance with applicable state law, and that the individual performing “incident to” services meet any applicable requirements to provide the services, including state licensure requirements. CMS is proposing this policy to ensure that auxiliary personnel providing services to Medicare beneficiaries incident to the services of other practitioners do so in accordance with applicable state requirements, and to ensure that Medicare payments can be recovered when such services are not furnished in compliance with the state law.
  • CMS proposes a process to systematically reexamine payment amounts under the Clinical Laboratory Fee Schedule (CLFS) to determine if changes in technology for the delivery of that service (e.g., changes to the tools, machines, supplies, labor, instruments, skills, techniques, and devices by which laboratory tests are produced and used) warrant an adjustment to the payment amount. Beginning with the CY 2015 PFS proposed rule, CMS would identify the test code, discuss how it has been impacted by technological changes, and propose an associated payment adjustment. CMS would solicit comments, and any payment adjustment would be adopted in the final rule, beginning with the CY 2015 final rule. CMS would first examine the codes that have been on the CLFS the longest and then work forward, over multiple years, until all of the codes on the CLFS have been reviewed.
  • CMS proposes a centralized review process under which a single entity would be responsible for making Investigational Device Exemption (IDE) coverage decisions. The rule also would establish minimum standards for IDE studies and trials for which Medicare coverage of devices or routine items and services is provided (including pivotal study and superiority study design criteria).
  • CMS proposes to apply the outpatient therapy cap limitations and related policies to outpatient therapy services furnished in a critical access hospital beginning on January 1, 2014, in conformance with the American Taxpayers Relief Act (ATRA).
  • The sweeping rule also addresses, among many other things: updates to the geographic practice cost indices (GPCIs) and revisions to the weights assigned to each GPCI to increase the weight of work and reduce the weight of practice expense; revisions to the calculation of the Medicare Economic Index (MEI); revisions to the Physician Quality Reporting System (PQRS) and the Electronic Health Record (EHR) Incentive program; revisions to regulations regarding liability for overpayments to conform to ATRA provisions with regard to the timing of the triggering event for the ‘‘without fault’’ and ‘‘against equity and good conscience’’ presumptions; and updates to the ambulance fee schedule regulations to conform with statutory requirements.

The comment deadline is September 6, 2013.

CMS Releases Data on Medicare Outpatient Hospital Payments

CMS has posted estimated hospital-specific charges and average Medicare payments for 30 Ambulatory Payment Classification (APC) Groups paid under the Medicare Outpatient Prospective Payment System (OPPS) for calendar year 2011. National and state-level summaries are also available.

Advisory Panel on Hospital Outpatient Payment Meeting on August 26-27

CMS has announced that the second semi-annual meeting of the Advisory Panel on Hospital Outpatient Payment for 2013 will take place on August 26 and 27, 2013. The purpose of the panel is to advise CMS on the clinical integrity of the Ambulatory Payment Classification groups and their associated weights, and hospital outpatient therapeutic services supervision issues. The deadline for presentations and comments is Friday, July, 19, 2013.  Registration runs from July 8, 2013 through August 9, 2013 to attend in person (no registration is required for participants who plan to view the meeting via webcast).

MedPAC's March 2013 Report to Congress

MedPAC has released its annual report to Congress on Medicare Payment Policy, including payment update recommendations for all the major Medicare FFS payment systems and limited Medicare Advantage (MA) recommendations. The report also includes data on the status of the MA and Medicare Part D programs, including information about enrollment, plan options, and beneficiary cost-sharing. Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies. Major recommendations include the following (many of which were included in previous reports):

  • Congress should increase payment rates for inpatient and outpatient hospital prospective payment systems by 1%, and require the difference between the statutory update and the recommended 1% update be used to offset payment increases due to documentation and coding changes and to recover past overpayments.
  • Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory fee-schedule updates. This proposal, first offered in October 2011, would combine a freeze in payment levels for primary care and, for all other services, annual payment reductions followed by a freeze. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments to underpriced services, and changes to the structure of accountable care organization shared savings payments.
  • Congress should eliminate the ambulatory surgical center (ASC) payment update for 2014, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
  • Congress should eliminate the skilled nursing facility market basket update, and direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing payment as soon as practicable. 
  • MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, establish a per episode copay for home health episodes that are not preceded by hospitalization or post-acute care use, and expand program integrity efforts.
  • Congress should eliminate the update to hospice rates for FY 2014 and adopt a series of previous MedPAC recommendations addressing payment and program integrity reforms.
  • Congress should eliminate the 2014 updates for outpatient dialysis services, inpatient rehabilitation facilities, and long-term care hospitals.
  • With regard to Medicare Advantage, Congress should allow the authority for most MA chronic care special needs plans (SNPs) to expire (with certain exceptions) and allow MA plans to enhance benefit designs for individuals with specific chronic or disabling conditions. MedPAC also recommends that Congress permanently reauthorize dual-eligible special needs plans (D–SNPs) that assume clinical and financial responsibility for Medicare and Medicaid benefits (with certain changes) and allow the authority for all other D–SNPs to expire.

 

March Meeting of the Advisory Panel on Hospital Outpatient Payment (March 11, 2013)

CMS is hosting the next semi-annual meeting of the Advisory Panel on Hospital Outpatient Payment for 2013 on March 11, 2013. The purpose of the Panel is to advise the HHS Secretary and the CMS Administrator on the clinical integrity of ambulatory payment classification groups and their associated weights, and hospital outpatient therapeutic supervision issues. The deadline for presentations and comments is January 25, 2013, and the hardcopy of the presentation must be received by February 1, 2013. The meeting registration deadline is February 22, 2013.

 ** Note that due to an “unexpected low response to requests for presentations,” CMS has cancelled the previously-scheduled March 12 session, and the meeting will not be onsite at CMS headquarters; it will be conducted electronically via webcast, teleconference, and/or webinar.

CMS Final Decisions on Recommendations of the Hospital Outpatient Payment Panel on Supervision Levels for Select Services

CMS has released its Final Decisions on the August 2012 Recommendations of the Hospital Outpatient Payment Panel on Supervision Levels for Select Services. The document provides CMS’s final determinations regarding the appropriate supervision levels for 29 individual hospital outpatient therapeutic services, effective January 1, 2013. CMS has determined that 22 of the considered services may be furnished with a minimum of general supervision and the remaining 7 services will maintain their current designation as non-surgical extended duration therapeutic services.

CMS Finalizes OPPS, ASC Rates and Policies for 2013

On November 15, 2012, the Centers for Medicare & Medicaid Services (CMS) published its publishing its final rule with comment period updating Medicare payment and other policies for the hospital outpatient prospective payment system (OPPS) and ambulatory surgical centers (ASCs) for CY 2013. The rule also updates Medicare quality reporting program policies and various other Medicare policies. Key provisions of the final rule include the following:

  • The rule will increase 2013 OPPS rates by 1.8% compared to 2012 levels (although the impact on particular procedures will vary). This update reflects a hospital market basket increase of 2.6%, which is reduced under two Affordable Care Act (ACA) provisions – a 0.1 percentage point reduction and a 0.7% “multi-factor productivity” (MFP) adjustment/reduction. The OPPS update is subject to other adjustments, including a 2 percentage point reduction for hospitals that do not meet quality reporting requirements.
  • Effective for 2013, CMS will determine OPPS relative weights using the geometric mean costs of services within an Ambulatory Payment Classification, rather than median costs. CMS expects this change will have a limited payment impact on most providers, but believes it better encompasses variations in costs and aligns with the inpatient PPS methodology.
  • CMS will set OPPS payment for separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6% (which it refers to as the “statutory default” rate), compared to the current ASP plus 4%. Notably, CMS will not make an adjustment for pharmacy overhead costs in 2013 to reflect the redistribution of package costs, as it had for 2010 through 2012. The final 2013 threshold for separate payment for outpatient drugs is a cost per day that exceeds $80, compared to $75 in 2012. CMS also adopted a special payment adjustment policy to account for the costs of radioisotopes derived from non-highly enriched uranium sources.
  • With regard to ASC policy, CMS will increase ASC payment rates by 0.6%, which is derived from a 1.4% inflation update reduced by an MFP adjustment of -0.8%.
  • The final rule makes refinements to several Medicare quality programs, including the Hospital Outpatient Quality Reporting Program, the ASC Quality Reporting Program, and the Inpatient Rehabilitation Facility Quality Reporting Program.
  • CMS is clarifying the application of the supervision regulations to physical therapy, speech-language pathology, and occupational therapy services that are furnished in OPPS hospitals and critical access hospitals (CAHs). CMS also is extending nonenforcement of the requirement for direct supervision of outpatient therapeutic services furnished in CAHS and small rural hospitals with 100 or fewer beds for one final year through CY 2013 (CMS anticipates that this will be the final year of the extension).
  • CMS adopted changes to the regulations regarding payment for new technology intraocular lens (NTIOLs) to require more stringent labeling and clinical outcomes evidence to support NTIOL applications.
  • The final rule also addresses, among other things, payment for partial hospitalization services; revisions to the electronic reporting pilot for the Electronic Health Record Incentive Program; changes to regulations governing Quality Improvement Organizations (including the secure transmittal of electronic medical information, beneficiary complaint resolution, and notification processes); and a discussion of public comments related to potential changes to the Part A to Part B Rebilling Demonstration and hospital observation services policy.

CMS will accept comments on certain provisions, including payment classifications assigned to certain HCPCS codes and other specified provisions, until December 31, 2012.

CY 2013 Medicare Payment Rules at OMB

The Centers for Medicare & Medicaid Services (CMS) has sent several final Medicare calendar year 2013 payment rules to the White House Office of Management and Budget (OMB) for final regulatory clearance. Rules under review will establish final 2013 payment and other policies under the Medicare physician fee schedule, hospital outpatient prospective payment system,, home health prospective payment system (PPS), and end-stage renal disease PPS. Copies of the rules are not available at this point, but they are expected to go on display at the Federal Register in the coming days. 

Older Entries

October 16, 2012 — CMS Posts Outpatient Hospital Payment Information under "Value-Driven Health Care" Initiative

September 27, 2012 — CMS Invites Comments on Preliminary Supervision Level Decisions for Selected Hospital Outpatient Services

September 5, 2012 — CMS Seeks Nominees for MedCAC, HOP Panels

July 19, 2012 — CMS Issues Proposed OPPS, ASC Policies for 2013

June 27, 2012 — Medicare Proposed Payment Rules for 2013 Awaiting Clearance

June 8, 2012 — CMS Updates Supervision Levels for Selected HOPPS Services

May 29, 2012 — Hospital Outpatient Payment (HOP) Advisory Panel to Meet Aug. 27-29

May 10, 2012 — CMS Corrects 2012 OPPS Rule

April 23, 2012 — Extension of Hospital Wage Index Reclassifications and Special Exceptions

April 2, 2012 — MedPAC Issues March 2012 Medicare Recommendations

February 28, 2012 — President Obama Signs Payroll Tax Bill with Medicare/Medicaid Provisions

January 5, 2012 — New Law Provides Short-Term Medicare Physician Fee Schedule Fix and Extends Expiring Medicare Provisions for Two Months

January 4, 2012 — Corrections to MPFS, HOPPS/ASC Rules

December 28, 2011 — Advisory Panel on Hospital Outpatient Payment to Meet Feb. 27-29, 2012

December 13, 2011 — House Approves Tax/Jobs Bill with Medicare Provisions; Fate Uncertain

November 30, 2011 — CMS Renames APC Advisory Panel, Seeks Nominees

November 14, 2011 — CMS Finalizes CY 2012 OPPS/ASC Rates, Policy Changes

October 28, 2011 — Final CY 2012 Medicare Payment Rules in the Pipeline

July 18, 2011 — CMS Proposes CY 2012 OPPS/ASC Rates, Policy Changes

June 24, 2011 — CMS Schedules OPPS APC Panel Meeting for August 10 - 12, 2011

May 31, 2011 — Federal Agencies Outline Regulatory Review Plans

April 13, 2011 — CMS Seeks APC Panel Nominees

March 29, 2011 — 2011 HOPPS Rule Correction Notice

March 29, 2011 — MedPAC Report to Congress on 2012 Payment Recommendations

January 10, 2011 — MedPAC to Examine Medicare Provider Payment Adequacy (Jan. 13-14)

December 22, 2010 — APC Advisory Panel Meeting (Feb. 28-March 2, 2011)

December 6, 2010 — CMS Meeting on Developing New Imaging Efficiency Measures (Jan. 31, 2011)

December 6, 2010 — CMS Meeting on New Technology Add-On Payments (Feb. 2, 2011)

November 29, 2010 — MedPAC Meeting on Medicare Payment Adequacy (Dec. 2-3)

November 16, 2010 — CMS Issues Final CY 2011 HOPPS/ASC Rates

October 29, 2010 — Upcoming Medicare Hospital Outpatient, Physician Fee Schedule Final Rules

October 28, 2010 — OIG Report on Medicare Payment for OPPS Drugs

July 12, 2010 — CMS Proposes CY 2011 HOPPS/ASC Rates, Revises 2010 Rates

July 3, 2010 — OPPS Ambulatory Payment Classification Groups Advisory Panel Meeting (Aug. 23-24, 2010)

June 8, 2010 — CMS Transmittal on Physician Supervision Requirements

May 13, 2010 — Other PPACA Updates

March 31, 2010 — CMS Solicits Nominations for APC Advisory Panel

March 15, 2010 — MedPAC Issues 2011 Medicare Payment Recommendations

January 27, 2010 — MedPAC Votes on 2011 Medicare Provider Update Recommendations

January 13, 2010 — HOPPS/ASC Correction Notice

December 18, 2009 — APC Advisory Panel Meetings (Feb. 2010)

December 4, 2009 — CMS Meetings on Applications for IPPS/OPPS New Medical Service/Technology Payments (Feb. 10)

November 11, 2009 — Final CY 2010 Medicare HOPPS/ASC Rule Released

July 7, 2009 — HOPPS/ASC Proposed Rule

July 6, 2009 — APC Panel Meeting - August 5-7, 2009

May 27, 2009 — OPPS for TRICARE Program

May 8, 2009 — HOPPS Imaging Efficiency Measures

February 27, 2009 — MedPAC Report to Congress -- Medicare Payment/Transparency Provisions

February 11, 2009 — TRICARE Hospital Outpatient Services Rule Delayed

January 27, 2009 — OPPS, DSH Correction Notices

December 22, 2008 — APC Panel Nomination Solicitation

December 19, 2008 — APC Panel Meeting - Feb. 18-20, 2009

December 8, 2008 — TRICARE Hospital Outpatient Services Rule

November 4, 2008 — HOPPS/ASC Final Rule

October 30, 2008 — Listening Session on Hospital-Acquired Conditions

October 24, 2008 — Practicing Physicians Advisory Council Meeting

August 14, 2008 — HOPPS, Physician Fee Schedule Correction Notice

July 29, 2008 — HOPPS APC Panel Meeting

July 11, 2008 — OPPS/ASC Proposed Rule

July 8, 2008 — HOPPS APC Panel Meeting