The Centers for Medicare & Medicaid Services (CMS) has finalized Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rates and policies for calendar year 2019.  Notably, CMS adopted some – but not all – of its proposed policies intended to promote more “site-neutral payments” for different types of providers.

Hospital Outpatient Provisions

CMS adopted a 1.35% update to Medicare OPPS rates for 2019, with the update reduced by 2.0% for hospitals that fail to meet quality reporting requirements.  Payment changes for individual procedures vary.

In the final rule, CMS reiterated its concern that “current payment incentives, rather than patient acuity or medical necessity, are affecting site-of-service decision-making.”  To that end, CMS adopted several policies intended to promote site neutrality, particularly with regard to off-campus hospital provider-based departments (PBD) that are “excepted” under section 603 of the Bipartisan Budget Act of 2015.  Section 603 provides that effective January 1, 2017 certain off-campus PBDs are generally paid under the physician fee schedule (PFS), rather than the typically higher-paying OPPS, unless an exception applies.  For 2019, CMS finalized policies to:

  • Reduce payment for clinic visit services (G0463, Hospital outpatient clinic visit for assessment and management of a patient) to a PFS-equivalent rate when provided at an “excepted” PBD. CMS notes that the clinic visit is the most common service billed under the OPPS, and by removing the “payment differential that may influence site-of-service decisionmaking, we anticipate an associated decrease in the volume of clinic visits provided in the excepted off-campus PBD setting.”  In response to comments, CMS is phasing in the payment reduction over two years, with the rate for HCPCS G0463 reduced by 30% for CY 2019 and reduced by 60% in 2020.  In other words, these excepted PBDs will be paid approximately 70% of the OPPS rate for clinic visit services in CY 2019, which CMS expects will results in CY 2019 savings of about $380 million (including $80 million in savings to Medicare beneficiaries).
  • Apply to excepted PBDs a current policy that reduces OPPS payment for separately payable, nonpass-through drugs and biologicals (other than vaccines) purchased through the 340B drug discount program from average sales price (ASP) plus 6% to ASP minus 22.5% (with certain exceptions).

CMS did not adopt its proposal to revise payment when an excepted PBD expands into new lines of service, although CMS stated that it will monitor expansion of services in off-campus PBDs and, if appropriate, the agency may propose future rulemaking in this area.  More broadly, CMS repeats its interest in future rulemaking “to systematically control for unnecessary increases in the volume of other hospital outpatient department services,” while maintaining “beneficiary access to new innovations.”

Other policies adopted in the final rule include the following: 

  • CMS modified its device-intensive procedure criteria, including by lowering the device offset percentage threshold from 40% to 30% and extending device-intensive status to certain devices that do not remain in the patient’s body after the conclusion of the procedure.
  • CMS increased the 2019 threshold for separate payment for certain outpatient drugs if the drug’s cost-per-day exceeds $125, up from $120 in 2018. CMS also reduced the add-on for drug payment that is based on wholesale acquisition cost (WAC) from 6% to 3%.
  • CMS created three new comprehensive ambulatory payment classification (C-APCs), one for Level 3 ENT Procedures and two new C-APCs to describe Level 3 and 4 Vascular Procedures, raising the total number of C-APCs to 65. CMS also adopted its proposal to exclude from the C-APC packaging policy payment for procedures assigned to New Technology APCs.
  • CMS will maintain the high cost/low cost threshold policy for packaged skin substitutes for 2019, but the agency will consider alternative payment policies for the CY 2020 rulemaking.
  • The final rule updates Hospital Outpatient Quality Reporting Program requirements, including removal of quality measures as part of the Administration’s efforts to focus on patient-centered outcomes measures and reduce the paperwork and reporting burden on providers.

 ASC Provisions

 The final rule increases ASC rates by 2.1% for ASCs that meet ASC Quality Reporting (ASCQR) Program requirements.  In a significant change, CMS is basing its ASC update on the hospital market basket update – not the Consumer Price Index for All Urban Consumers (CPI-U).  CMS believes providing ASCs with the same update as hospital outpatient departments “could encourage the migration of services from the hospital setting to the ASC setting and increase the presence of ASCs in health care markets or geographic areas where previously there were none or few, thus promoting better beneficiary access to care.”  The final ASC update reflects a hospital market basket percentage increase of 2.9% minus a 0.8 percentage point MFP.  CMS estimates that using the CPI-U would have resulted in only a 1.8% update.  CMS will apply the hospital market basket update to ASC payment system rates for an interim period of 5 years while it assesses the impact of this policy.

CMS added 17 procedures to the list of ASC covered surgical procedures for 2019, but did not adopt its policy to provide ongoing review of procedures recently added to the ASC covered procedure list.  In addition, CMS updated ASCQR Program requirements; revised the criteria for ASC device-intensive procedures, and unpackaged the cost of non-opioid pain management drugs that function as surgical supplies, among other ASC policy changes.

Note:  CMS will accept comments on APC assignments and status indicators for new or replacement Level II HCPCS codes until December 3, 2018.