Photo of Gail L. Daubert

The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would extend and modify the Comprehensive Care for Joint Replacement (CJR) Model, under which CMS makes a “bundled” payment to participant hospitals for an “episode of care” for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge (with certain exceptions).  Notably, CMS has proposed incorporating outpatient hip and knee replacements into the episode of care definition, now that these procedures are no longer on the CMS “inpatient only” list.  CMS also requests comments on a potential future bundled payment model focusing on LEJR procedures performed in ambulatory surgical centers (ASCs).  CMS will accept comments on until April 24, 2020.

Highlights of the proposed rule include the following:

  • Extension of CJR Model. The CJR Model began April 1, 2016 and currently is scheduled to run through December 31, 2020.  CMS has proposed extending the model for an additional three years, through December 31, 2023 for participant hospitals physically located in the 34 mandatory metropolitan statistical areas (MSAs), excluding rural or low-volume hospitals in those MSAs.  CMS anticipates that approximately 350 participants would participate in the CJR model during the proposed three-year extension, compared with about 470 providers as of October 2019.
  • Outpatient Joint Replacements. The proposed rule would expand the definition of a CJR “episode” to include outpatient total knee arthroplasty (TKA) and total hip arthroplasty (THA), in light of previously-adopted CMS policies that allow total knee and total hip replacements to be treated in the outpatient setting.  This change would apply to episodes initiated by an “anchor procedure” furnished on or after October 4, 2020 (because the 90-day episode would end on or after January 1, 2021, the first day of proposed new plan year 6).  CMS proposes to group all outpatient TKA procedures into MS-DRG 470 (LEJR without complications and/or comorbidities) without hip fracture historical episodes for purposes of calculating a single, site-neutral target price.  Outpatient THA cases would be grouped into either MS-DRG 470 with hip fracture or MS-DRG 470 without hip fracture depending on hip fracture status.
  • Target Price Calculation. CMS has proposed changing the basis for the target price from three years of claims data to the most recent one year of claims data.  The proposed rule also would discontinue the use of the regional and hospital anchor weighting steps in the target price calculation methodology, and it would end the annual updates to the target prices.  Furthermore, CMS proposes to incorporate additional risk adjustment to the target pricing and modify the high episode spending cap calculation methodology.

The proposed rule also would, among other things:
Continue Reading CMS Plans to Add Outpatient Hip/Knee Replacements to CJR Model, Seeks Comments on ASC Joint Procedure Bundled Payment Model

The Centers for Medicare & Medicaid Services (CMS) has finalized Medicare hospital outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) payment system rates and policies for 2020.  The final rule provided a 2.6% update to both OPPS and ASC rates for 2020 for facilities meeting quality reporting requirements (compared to an anticipated 2.7%

The Centers for Medicare & Medicaid Services (CMS) has published its final Medicare physician fee schedule (PFS) rule for calendar year (CY) 2020.  In addition to updating rates for physician services, the final rule revises numerous other Medicare Part B policies.  Highlights of the final rule include the following: 

  • The final 2020 conversion factor is

The Centers for Medicare & Medicaid Services (CMS) has finalized Medicare acute inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) rates and policies for fiscal year (FY) 2020, which begins October 1, 2019.  Key provisions of the final rule are outlined below.

IPPS Payment Update

CMS projects total Medicare IPPS spending in FY 2020 will increase by about $3.8 billion under the final rule taking into account operating, capital, new technology, and low volume hospital payments.  The IPPS market basket update is 3.0%, which is reduced by a 0.4 percentage point productivity adjustment and a +0.5 percentage point statutory adjustment.  The final FY 2020 standardized amount is $6,263.74 for hospitals that submit quality data and are meaningful electronic health record (EHR) users, with reduced payment to hospitals that do not report quality data and/or are not meaningful EHR users.  Specific hospital payments can be impacted by other factors, including penalties for excess readmissions under the Hospital Readmissions Reduction Program, poor performance under the Hospital-Acquired Condition Reduction Program, and adjustments under the Hospital Value-Based Purchasing Program.

Promoting Access to Innovative Devices and Antimicrobial Products

CMS adopted several policies intended to improve beneficiary access to innovative medical technologies in the IPPS setting for FY 2020.

  • CMS adopted an alternative IPPS new technology add-on payment (NTAP) pathway for certain “transformative” medical devices beginning in FY 2021.  Specifically, if a new medical device is part of the Food and Drug Administration’s (FDA) Breakthrough Devices Program and receives FDA marketing authorization, the device would be considered new for NTAP purposes and it would not need to demonstrate substantial clinical improvement (SCI).  In other words, the device would only need to meet the NTAP cost criterion
  • In response to comments, CMS extended the alternative NTAP pathway to antimicrobial products designated by the FDA as a Qualified Infectious Disease Product (QIDP), but not to technologies approved under an FDA expedited program for drugs.
  • CMS adopted its proposed increase in NTAP payments for discharges beginning on or after October 1, 2019.  Specifically, CMS is increasing the NTAP payment to the lesser of:  (1) 65% (up from 50%) of the costs of the new medical service or technology; or (2) 65% (rather than 50%) of the amount by which the costs of the case exceed the standard DRG payment.  In the case of a QIDP, the NTAP amount rises to 75%.
  • CMS clarified the SCI criterion for evaluating NTAP applications and provided examples of information sources and outcomes that may be used to demonstrate SCI.  CMS will continue to consider comments received on the proposed rule’s solicitation of input on longer-term changes to related CMS policies.

Note that CMS also has proposed similar proposals to promote innovative medical technologies as part of the pending calendar year 2020 Medicare hospital outpatient PPS proposed rule.
Continue Reading CMS Issues Final FY 2020 Medicare IPPS/LTCH Update, Including New Medical Device Technology Policies

On June 24, 2019, President Trump signed an executive order (EO) intended to improve health care price and quality transparency, boost tax-preferred health savings accounts, and protect patients from surprise medical bills.  This is not the first time the Trump Administration has tacked health price disclosure.  For instance, new hospital price transparency rules went into

Agency Promises More Frequent Drug/Device HCPCS Code Update Opportunities, Bars MACs from Adopting New Blanket Noncoverage Policies without Evidence Review  

On May 2, 2019, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma outlined new improvements to the HCPCS coding and local coverage decision processes that are intended to “ensure safe and effective treatments

The Centers for Medicare & Medicaid Services (CMS) has released its proposed rule to update the Medicare acute inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2020.  Notably, the proposed rule includes a number of provisions that aim to “unleash medical innovation” by

The Centers for Medicare & Medicaid Services (CMS) has finalized a major restructuring of the Medicare Shared Savings Program, dubbed “Pathways to Success.”  According to CMS, the program changes “are designed to increase savings for the Trust Funds and mitigate losses, reduce gaming opportunities, and promote regulatory flexibility and free-market principles.”  Most notably, CMS is accelerating the schedule for accountable care organizations (ACOs) to transition to two-sided risk models, under which the ACO is accountable for repaying shared losses in addition to qualifying for shared savings bonus payments.

By way of background, the Shared Savings Program is intended to encourage physicians, hospitals, and certain other types of providers and suppliers to form ACOs to provide cost-effective, coordinated care to Medicare beneficiaries.  The ACO agrees to be accountable for the quality and cost of the assigned Medicare fee-for-service beneficiary population.  The program has different “tracks” with varying frameworks for sharing savings or liability for losses depending on how spending compares to a benchmark.

Under the final rule, a participating ACO must select one of the following two tracks:
Continue Reading CMS Restructures Medicare Shared Savings Program to Encourage Transition to Performance-based Risk

Responding to longstanding industry criticisms, the Centers for Medicare & Medicaid Services (CMS) has announced a number of changes to the Healthcare Common Procedure Coding System (HCPCS) coding process for 2019.  Most of the new policies are intended to increase transparency regarding CMS HCPCS coding decisions.  The one substantive change of note is that CMS

The Centers for Medicare & Medicaid Services (CMS) has issued its final Medicare physician fee schedule (PFS) rule for calendar year (CY) 2019.  In addition to updating rates for physician services, the rule adopts changes to numerous other Medicare Part B policies.  Highlights of the final rule include the following:

  • The final 2019 conversion factor (CF) is $36.0391, up slightly from the 2018 CF of $35.9996.  This rate is based on a statutory update of 0.25%, offset by a -0.14% relative value unit (RVU) budget neutrality adjustment.
  • The rule reduces from 6% to 3% the “add-on” payment for new, separately-payable Part B drugs and biologicals that are paid based on wholesale acquisition cost when average sales price during first quarter of sales is unavailable.
  • The rule makes a number of changes to the Appropriate Use Criteria (AUC) program, which requires that physicians who order outpatient advanced diagnostic imaging (ADI) services (diagnostic magnetic resonance imaging, computed tomography, and positron emission tomography/nuclear medicine) for a Medicare beneficiary consult with AUC developed by provider-led organizations approved by CMS via a qualified clinical decision support mechanism (CDSM).  Specifically, the final rule:
    • Extends the requirements to independent diagnostic testing facilities (joining physician offices, hospital outpatient departments, and ambulatory surgical centers).
    • Clarifies that AUC consultation information must be reported on all applicable technical component and professional component claims (i.e., not just reported on claims by furnishing facilities).
    • Provides that when delegated by the ordering professional, clinical staff under the direction of the ordering professional may perform the AUC consultation with a qualified CDSM (a modification to the proposed rule, which would have specified that AUC consultations may be performed by auxiliary personnel under the direction of the ordering professional and incident to the ordering professional’s services).
    • Uses established coding methods (e.g., G-codes and modifiers) to report required information.
    • Revises the significant hardship exception criteria to include (1) insufficient internet access; (2) electronic health record or CDSM vendor issues; (3) extreme and uncontrollable circumstances; and (4) self-attestation of hardship status for ordering professionals.

For information regarding the AUC implementation schedule, see our previous post.
Continue Reading CMS Publishes Final CY 2019 Medicare Physician Fee Schedule Rates and Policies

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: 
Continue Reading CMS Finalizes Medicare OPPS, ASC Rates and Policies for 2019

In an effort to “modernize the Medicare program and bring the latest technologies and innovations to Medicare beneficiaries,” CMS has announced revisions to the local coverage determination (LCD) process.  Specifically, under authority provided in the 21st Century Cures Act and taking into account stakeholder feedback, CMS has issued Program Integrity Manual (PIM) changes intended

The Centers for Medicare & Medicaid Services (CMS) has announced that 1,299 entities have signed agreements to participate in the Administration’s new Bundled Payments for Care Improvement (BPCI) Advanced episode payment model, which runs from October 1, 2018 through December 31, 2023.  According to CMS, BPCI Advanced participants include 1,547 Medicare providers and suppliers (832

The Centers for Medicare & Medicaid Services (CMS) has released its final rule updating the Medicare inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2019.  The following are highlights of the lengthy rule, which is scheduled to be published August 17, 2018.

IPPS Payments to

The Centers for Medicare & Medicaid Services (CMS) has issued its proposed Medicare physician fee schedule (PFS) rule for calendar year (CY) 2019.  In addition to updating rates for physician services, the sweeping rule proposes changes to numerous other Medicare Part B policies.  Highlights of the proposed rule include the following:

  • CMS proposes a

The Trump Administration has rolled out its first CMS Innovation Center Medicare bundled payment initiative, the Bundled Payments for Care Improvement Advanced (BPCI Advanced). Under the new voluntary model, CMS will test whether bundled payments for 29 inpatient and 3 outpatient clinical episodes will lead to reduced Medicare expenditures while improving quality of care for Medicare beneficiaries. CMS anticipates that the performance period of the BPCI Advanced model will begin on October 1, 2018 and run through December 31, 2023.

BPCI Advanced builds on the ongoing Bundled Payments for Care Improvement (BPCI) initiative, which was launched in 2013 and runs through September 30, 2018. As in the BPCI model, BPCI Advanced seeks to incentivize providers to coordinate care to furnish services more efficiently while maintaining quality. Specifically, participants may either realize a gain or loss depending both on (1) how successfully they manage total Medicare fee-for-service costs of care (with limited exceptions) throughout each 90-day episode of care and (2) performance on specified quality measures.

There are key differences between the original BPCI and BPCI Advanced models, including the following (among others):
Continue Reading Trump Administration Unveils Its First Bundled Payment Initiative — BPCI Advanced

The Centers for Medicare & Medicaid Services (CMS) has officially cancelled a planned program to require certain hospitals to participate in Medicare episode payment models (EPMs) for acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment procedures furnished in designated areas of the country, along with a Cardiac Rehabilitation (CR) Incentive Payment Model. These programs, which were slated to launch on January 1, 2018, were summarized in previous posts. In a press release, CMS states that not pursuing these models gives it “greater flexibility to design and test innovations that will improve quality and care coordination across the in-patient and post-acute care spectrum.”

In the same rulemaking, CMS also dramatically scaled back the ongoing Comprehensive Care for Joint Replacement (CJR) model. By way of background, this program provides a “bundled” payment to participant hospitals for an “episode of care” for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge (with certain exceptions).  The bundled payment is paid retrospectively through a reconciliation process; providers receive regular fee-for-service payments in the interim. The CJR model began April 1, 2016 and runs through 2020.

Most notably, the new rule gives certain hospitals participating in the CJR model a one-time option to choose whether to continue their participation in the model, effective February 1, 2018. This voluntary election option applies to hospitals in 33 of the 67 Metropolitan Statistical Areas (MSAs) selected in the original CJR final rule, along with low volume hospitals and rural hospitals in the remaining 34 mandatory participation MSAs.  CMS is designating a one-time participation opt-in period from January 1 – 31, 2018 during which eligible hospitals may opt to continue to participate in CJR.  Note, however, that CMS will automatically terminate CJR participation for hospitals in the designated 33 MSAs, along with low volume and rural hospitals, as of February 1, 2018, unless the hospital elects to continue participation in the CJR model.  CMS expects the number of hospitals required to participate in CJR to fall from approximately 700 to about 370, and an additional 60 to 80 hospitals to make a voluntary election to continue participation.  A list of all current CJR participant hospitals and their status (mandatory or voluntary) is available on the CJR webpage, as is the Voluntary Participation Election Letter Template.

CMS also adopted a number of refinements to CJR model policies, including the following:
Continue Reading CMS Scraps Cardiac/Hip Fracture Episode Payment Model, Downsizes CJR Program

Delays AUC Requirement until 2020, Cuts Off-Campus Hospital Department Payments

The Centers for Medicare & Medicaid Services (CMS) has published its final Medicare physician fee schedule (PFS) rule for CY 2018. In addition to updating rates for 2018, the rule includes important policy changes, including an additional delay in implementation of appropriate use criteria (AUC) for advanced diagnostic imaging services and another reimbursement cut for off-campus hospital outpatient departments (although not as deep as proposed).  Highlights of the final rule include the following:
Continue Reading CMS Finalizes Medicare Physician Fee Schedule Update for 2018

CMS has published a final rule updating Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2018. In addition to rate updates, notable policy changes in the rule include a deep ($1.6 billion) OPPS reimbursement cut for drugs obtained through the 340B drug discount program, expanded OPPS drug administration packaging, and removal of total knee replacement procedures from the “inpatient only” list.

With regard to OPPS payments, the final rule provides a 1.35% update for 2018, reflecting a 2.7% market basket increase that is partly offset by both a 0.75 percentage point reduction and a 0.6% multi-factor productivity (MFP) reduction. The update for hospitals that fail to meet quality reporting requirements is reduced by 2.0% points.  Payment changes for individual procedures and ambulatory payment classifications (APCs) vary.  Under the new 340B discount drug policy CMS will reduce OPPS payment for separately payable, nonpass-through drugs and biologicals (other than vaccines) purchased through the 340B drug discount program from ASP plus 6% to ASP minus 22.5% (rural sole community hospitals, children’s hospitals, and certain cancer hospitals are excluded from this policy). CMS is redistributing the $1.6 billion in savings from this change by increasing by 3.2% conversion factor for non-drug items and services for 2018.  CMS may revisit how the 340B drug savings should be applied in the future.  Note that various hospitals and hospital associations have filed a lawsuit seeking to block this policy.

Other major provisions of the final rule include the following:  
Continue Reading CMS Finalizes Medicare OPPS, ASC Rates and Policies for CY 2018

CMS has posted preliminary Medicare clinical laboratory fee schedule rates for 2018 – the first year rates will be based on private payer data under the Protecting Access to Medicare Act of 2014 (PAMA). CMS estimates that 2018 Medicare Part B payments will be reduced by about $670 million for calendar year 2018. In fact,