Rule Would Delay Appropriate Use Criteria Requirement until 2019, Cut Rates for Off-Campus Hospital Departments

The Centers for Medicare & Medicaid Services (CMS) has published its proposed rule to update the Medicare physician fee schedule (PFS) for calendar year (CY) 2018. The proposed rule addresses numerous Medicare policies, including:  implementation of appropriate use criteria (AUC) for advanced diagnostic imaging services; a deep reduction in reimbursement for off-campus hospital outpatient departments; and consideration of potentially misvalued codes, among many others.  Highlights of the proposed rule include the following: 

  • Under the proposed rule, the 2018 MPFS conversion factor (CF) would be $35.9903, up slightly from the 2017 CF of $35.8887. This update reflects a 0.5% update factor specified under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is partially offset by a -0.03% relative value unit (RVU) budget neutrality adjustment and a -0.19% “target recapture amount” (since savings from proposed revisions to the RVUs of misvalued codes would not meet a statutory-0.5% target).
  • CMS proposes to revise a policy adopted in the final 2017 Medicare Hospital Outpatient Prospective Payment System (OPPS) rule to implement Section 603 of the Bipartisan Budget Act of 2015, which establishes a site-neutral payment policy for certain newly-acquired, provider-based, off-campus hospital outpatient departments (which CMS calls “off-campus provider-based departments” or “off-campus PBDs”). Effective for services provided on or after January 1, 2017, off-campus PBDs are paid under the PFS in most cases, rather than the generally higher-paying OPPS (with certain exceptions). In the 2017 rule, CMS established new PFS site-of-service payment rates to pay non-excepted off-campus PBDs for the technical component of non-excepted services; these rates generally are based on OPPS payments scaled downward by 50% (called the PFS Relativity Adjuster). For CY 2018, CMS is proposing to reduce the Relativity Adjuster by 50%; that is, the technical component rates for these services would be reduced from 50% of the OPPS rate to 25% of the OPPS rate. CMS invites comments on whether a different PFS Relatively Adjuster would be appropriate.

  • CMS discusses its review of potentially misvalued codes and proposes RVU changes that would achieve 0.31% in net expenditure reductions. CMS also solicits recommendations for additional screens it could use to identify potentially misvalued services. Additionally, CMS proposes updates to malpractice RVUs and solicits comments regarding supplemental data sources for use in future updates.
  • CMS proposes to continue implementation of a Protecting Access to Medicare Act of 2014 (PAMA) requirement that physicians who order advance diagnostic imaging services consult with AUC via a clinical decision support mechanism (CDSM). While PAMA mandates that CMS fully implement the AUC program by January 1, 2017, CMS previously announced that it will not meet this deadline. In the 2018 proposed rule, CMS proposes to begin the Medicare AUC program in 2019, which would be an “educational and operations testing year.” Ordering professionals would be required to consult specified applicable AUC using a qualified CDSM when ordering applicable imaging services and furnishing professionals would be required to report consultation information on the Medicare claim effective January 1, 2019. However, CMS would pay claims for advanced diagnostic imaging services in 2019 regardless of whether the claims report the AUC consultation. The agency plans to roll out a voluntary reporting period to begin in July of next year in order to begin early testing of the program, but it is not until January 1, 2019 that consultation of AUC via a CDSM will be required. CMS also proposes to establish G-codes and modifiers to be used in reporting. Concurrent with release of the rule, CMS posted a list of the CDSMs approved to date.
  • The proposed rule would establish a new payment modifier that would be used implement a Consolidated Appropriations Act of 2016 provision that encourages the transition from traditional X-ray imaging to digital radiography by reducing the PFS payment for the technical component of X-rays taken using computed radiography technology beginning in 2018. The statutory reduction equals 7% during 2018 through 2022, with a 10% reduction applicable beginning in 2023.
  • With regard to Part B drugs, CMS proposes to implement average sales price-based reimbursement for drugs furnished through an item of durable medical equipment, in conformance with the 21st Century Cures Act. Furthermore, CMS solicits comments regarding the effect of a CMS policy adopted in the final 2016 PFS rule that modified payment for biosimilar biological products.
  • The proposed rule includes numerous other policy provisions, including:
    • modifications to Medicare Shared Savings Program beneficiary assignment rules;
    • a solicitation of comments on data collection and reporting periods under new Clinical Laboratory Fee Schedule reimbursement policy;
    • revisions to telehealth policies;
    • a request for comments on potential separate payment for remote patient monitoring codes;
    • a comment solicitation on evaluation and management visit code documentation requirements;
    • coding and payment changes to support care management and behavioral health services;
    • implementation of the Medicare Diabetes Prevention Program expanded model; and
    • revisions to the Medicare Electronic Health Record (EHR) Incentive Program, the Physician Quality Reporting System (PQRS), and the Value-Based Payment Modifier (VM) to better align with reporting requirements under the MACRA Quality Payment Program.
  • In addition, CMS again includes a “Request for Information on CMS Flexibilities and Efficiencies” to gain public input on administrative changes that could reduce burdens on providers, improve quality of care, and reduce costs.

CMS will accept comments on the rule until September 11, 2017.