Congress Approves Bills to Bar Restrictions on Pharmacies Sharing Certain Drug Pricing Information with Consumers

The House of Representatives approved two “gag clause” bills on September 25, 2018 that would prevent insurers from restricting pharmacies from informing consumers about lower cost, out-of-pocket prices for their prescriptions.  The bills were approved by the Senate earlier this month, and are now cleared for the President’s signature.

Specifically, S 2553, the Know the Lowest Price Act of 2018, would prohibit a Medicare Part D or Medicare Advantage prescription drug plan from restricting a pharmacy from informing (or penalize for informing) an enrollee of any differential between the negotiated price of, or copayment or coinsurance for, a drug or biological under the plan and a lower price that would be paid without using health insurance coverage.  S 2554, the Patient Right to Know Drug Prices Act, would extend a similar prohibition on sharing drug pricing information to group health plans and health insurance issuers offering group or individual health insurance coverage, along with entities that provide pharmacy benefits management services for such plans/issuers.  Furthermore, S 2554 would extend current requirements for generic and brand pharmaceutical companies to submit patent settlement agreements to the Federal Trade Commission and the Justice Department to extend to settlement agreements between manufacturers of biologics and biosimilar biological products.

President Trump has indicated his support for the legislation.

Healthcare Investors, Innovators Wanted for HHS Summit – Nominations Due October 3, 2018

HHS Deputy Secretary Hargan has announced the creation of the “Deputy Secretary’s Innovation and Investment Summit” (DSIIS), which will provide a forum “to discuss the innovation and investment landscape within the healthcare sector, emerging opportunities, and the government’s role in facilitating more investment and accelerated innovation.”  The DSIIS will involve quarterly meetings between healthcare innovation and investment professionals and HHS personnel focusing on “emerging innovation opportunities and whether government policies are accelerating or delaying these innovations.”  A more comprehensive “Industry Day” forum will follow the fourth session.

HHS is seeking nominations for DSIIS participants with experience, knowledge, and leadership related to innovation and investment in the healthcare sector.  Specific selection criteria include:  areas of educational focus; executive or other organizational leadership experience; and healthcare sector private equity, venture capital, and lending experience.  Nominations will be accepted until October 3, 2018.

CMS Proposes Regulatory Changes to Ease Burden on Medicare, Medicaid Providers

CMS has issued a proposed rule intended streamline the Medicare and Medicaid regulatory burden on numerous types of providers and suppliers.  CMS generally classifies the proposals as falling into the following categories:  (1) those that simplify and streamline processes, (2) those that reduce the frequency of activities and revise timelines, and (3) those that address obsolete, duplicative, or unnecessary requirements.  CMS estimates that its proposal would result in total annual savings of about $1.1 billion, with a one-time implementation cost of $64 million.

Major provisions of the proposed rule include the following:

  • Emergency Preparedness Requirements. CMS proposes to:  allow facilities to review their emergency programs every two years, rather than annually; reduce testing frequency for outpatient providers and suppliers and allow all providers to use innovative emergency preparedness testing methods; and eliminate certain documentation requirements.
  • Hospitals. The rule would allow multi-hospital systems to have unified and integrated Quality Assessment and Performance Improvement programs and infection control programs for all member hospitals.  CMS also proposes to allow hospitals to establish a medical staff policy describing the circumstances under which a pre-surgery/pre-procedure assessment for an outpatient could be utilized, instead of a comprehensive medical history and physical examination.  In addition, the rule would provide discretion regarding when an autopsy is indicated in certain instances.
  • Ambulatory Surgical Centers (ASCs). CMS proposes to remove the requirements that ASCs have a written transfer agreement with a hospital that meets certain Medicare requirements or ensure that all physicians performing surgery in the ASC have admitting privileges in a hospital meeting certain standards.  The rule also would remove the requirement that a physician or other qualified practitioner conduct a complete comprehensive medical history and physical (H&P) assessment on each patient not more than 30 days before the date of the scheduled surgery; instead, each ASC would be required to establish and implement a policy that identifies patients who require an H&P assessment prior to surgery.
  • CAH, RHC, and FQHCs. The proposed rule would reduce the frequency with which Critical Access Hospitals (CAHs), Rural Health Centers (RHCs) and Federally Qualified Health Centers (FQHCs) must perform reviews of certain policies and procedures.  It also would remove the conditions of participation requirement for CAHs to disclose the names of people with a financial interest in the CAH, in light of duplicative program integrity requirements.
  • Hospices. The proposed rule would remove federal qualification standards for hospice aides and defer to state licensure requirements; remove the requirement related to having on the hospice staff an individual with education and training in drug management; allow hospices to provide to the patient or patient representative, and family information regarding the use, storage, and disposal of controlled drugs (rather than requiring hospices to provide them with a copy of medication policies and procedures); and provide hospices and long term care (LTC) facilities with additional flexibility to negotiate the format and schedule for orienting LTC facility staff on certain hospice-specific information.
  • Other Provisions. Other proposed policies address, among other things:  home health agency requirements for providing patients with copies of clinical records and verbal notification of patient rights; frequency of comprehensive outpatient rehabilitation facility utilization reviews; requirements for portable x-ray orders and conditions for coverage for portable x-ray technologists; organ transplant program re-approval requirements; community mental health center client assessment requirements; and discharge planning in religious nonmedical health care institutions.

CMS will accept comments on the proposed rule through November 19, 2018.  CMS also invites comments on additional regulatory reforms for consideration in future rulemaking, consistent with CMS’s ‘‘Patients Over Paperwork’’ Initiative.”

CMS Releases Preliminary 2019 Medicare Clinical Lab Payment Determinations

CMS has posted the preliminary 2019 Medicare clinical laboratory fee schedule (CLFS) payment determinations for new and reconsidered clinical lab test codes.  For each code, CMS announces whether it intends to use crosswalking or gapfilling to establish the payment rate, along with the agency’s rationale for the decision.  CMS will accept public comments on these preliminary determinations through October 22, 2018.

House and Senate Hearings Focus on Health Costs and Policy Issues

Congressional panels continue to focus on federal health care policy topics, including cost, quality, and program integrity issues. Recent hearings have included the following:

  • The Senate Health, Education, Labor and Pensions (HELP) Committee held hearings entitled “Reducing Health Care Costs: Examining How Transparency Can Lower Spending and Empower Patients”; “Prioritizing Cures: Science and Stewardship at the National Institutes of Health”; and “Health Care in Rural America: Examining Experiences and Costs.”  The HELP Committee also has scheduled a September 27 hearing on “Reducing Health Care Costs: Improving Affordability through Innovation.”
  • House Energy and Commerce Committee hearings focused on “Examining Barriers to Expanding Innovative, Value-Based Care in Medicare” and nursing home quality of care and resident safety. On September 27, the Health Subcommittee will convene a hearing on “Better Data and Better Outcomes: Reducing Maternal Mortality in the US.”
  • The Senate Homeland Security Committee held a hearing on Medicaid fraud and overpayments.

CMS Schedules Provider Compliance Focus Group Meeting (Oct. 5)

CMS is hosting an October 5, 2018 “Provider Compliance Focus Group” meeting to address several Medicare fee-for-service compliance topics, including the Recovery Audit Contractor (RAC) and targeted probe and educate programs.  The intended audience for the meeting is physicians, non-physician practitioners, billing specialists, suppliers, and associations.  Registration is required; attendees can choose to participate by dial-in/Webex or in person.

CMS Announces 2019 Open Payments Reporting Thresholds

CMS has released the inflation-adjusted de minimis Open Payments/Physician Payments Sunshine Act reporting thresholds for 2019. Payments or other transfers of value of less than $10.79 do not need to be reported in 2019, unless total annual payments or other transfers of value to a covered recipient exceed $107.91.  These amounts are up slightly from the 2018 thresholds of $10.49 and $104.90, respectively.

OIG Invites Comments on Potential Changes to Federal Anti-kickback and Beneficiary Inducement Policies to Promote Value-Based Care

The Office of Inspector General (OIG) of the Department of Health Human Services (HHS) has issued a request for information (RFI) on ways to amend or add new safe harbors to the Anti-Kickback Statute and exceptions to the beneficiary inducement provisions of the Civil Monetary Penalty statute, in order to foster arrangements that promote care coordination and advance the delivery of value-based care.  The OIG will accept comments on the RFI until October 26, 2018.  A Reed Smith Client Alert discussing the scope of the RFI is available here.

CMS Proposes Medicare Shared Savings Program Redesign to “Put Real ‘Accountability’ in Accountable Care Organizations”

The Centers for Medicare & Medicaid Services (CMS) is proposing a “new direction” for the Medicare Shared Savings Program, with changes to Medicare accountable care organization (ACO) requirements designed to increase Medicare savings and reduce “gaming opportunities.”  In a press release announcing the “Pathways to Success” redesign, CMS Administrator Seema Verma asserts that “after six years of experience, the time has come to put real ‘accountability’ in Accountable Care Organizations.”  According to Administrator Verma, “most Medicare ACOs do not currently face any financial consequences when costs go up, and this has to change.”

To that end, CMS is proposing to accelerate the schedule for ACOs to transition to two-sided models, under which the ACO is accountable for repaying shared losses in addition to qualifying for shared savings bonus payments.  In short, under proposed restructured participation options, an ACO would select one of the two tracks:

  • The BASIC track, which would include an option for eligible ACOs to participate under a one-sided model for a maximum of two years, and incrementally phase-in risk (an approach referred to as a glide path). At the highest level of risk, this track would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program.
  • The ENHANCED track for ACOs that immediately take on the highest level of risk and potential reward; this qualifies as an APM.

Under the proposed rule, the Shared Savings Program agreement period would be extended to five-years (up from three currently).  To give ACOs more time to prepare for these changes, CMS proposes that the first participation period under the new requirements would begin July 1, 2019; that is, CMS would forgo a 2018 application cycle for a January 1, 2019 start date.  CMS proposes allowing ACOs with a participation agreement ending on December 31, 2018 to extend their current agreements by six months (and new ACOs could extend their initial agreement period to 5 years and 6 months).

CMS proposes numerous other changes to ACO program policies, including implementation of Bipartisan Budget Act of 2018 provisions that promote telehealth services and allow certain ACOs to provide incentive payments of up to $20 to assigned beneficiaries who receive qualifying primary care services.  Other provisions address:  the methodology for establishing adjusting, updating, and resetting benchmarks; repayment mechanism arrangement requirements; expanded availability of the skilled nursing facility 3-day rule waiver; evaluation of the eligibility of ACOs seeking to renew program participation; termination of ACO participation; quality measures; and adoption of Certified Electronic Health Record Technology (CEHRT) by ACO clinicians.  CMS also seeks comments on approaches to encourage Medicare ACOs to collaborate with the sponsors of stand-alone Part D prescription drug plans to improve the coordination of pharmacy care to reduce the risk of adverse events and improve medication adherence.

CMS estimates that the proposed rule would save $2.24 billion over 10 years and reduce the number of ACOs participating in the Shared Savings Program by approximately 109 by 2028.

CMS will accept comments on the proposed rule until October 16, 2018.

Medicare Hospital Inpatient and Long-Term Care Hospital Payment Policies Finalized for FY 2019

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 Rise by $4.8 BillionCMS expects total IPPS payments by $4.8 billion in FY 2019 compared to FY 2018.  The annual hospital update for FY 2019 is 1.35%, based on a 2.9% hospital market basket update that is reduced by a 0.8 percentage point productivity adjustment and an additional 0.75 percentage point statutory reduction.  CMS also is applying a 0.5 percentage point documentation and coding increase mandated by the Medicare Access and CHIP Reauthorization Act of 2015, for a 1.85% increase to operating payment rates.

Quality Measures and Related Payment Adjustments.  Updates to acute hospitals are subject to several quality-related adjustments.  For example, the maximum update of 1.35% applies to a hospital that submits quality data and is a meaningful electronic health record (EHR) user.  On the other hand, a hospital that does not submit quality data and is not a meaningful EHR user is subject to an update of -1.55%.  Other factors impacting payments include excess readmissions under the Hospital Readmissions Reduction Program, Hospital-Acquired Condition Reduction Program performance, and Hospital Value-Based Purchasing (VBP) Program adjustments.

CMS adopted numerous changes to hospital quality and value programs to reduce the burden on hospitals and to align with the Administration’s “Meaningful Measures” initiative.  For instance, CMS is remove 18 measures from CMS quality programs and “de-duplicating” 25 additional measures that are reported in multiple quality programs. In response to public comments, however, CMS is retaining six patient safety measures it had proposed to remove from the VBP Program.  CMS also is revising requirements under the Medicare and Medicaid Electronic EHR Incentive Programs, which CMS now calls “Promoting Interoperability Programs.”

Other IPPS PoliciesThe final rule also addresses, among many other things:  changes to MS-DRG classifications; new technology add-on payment applications; updates to Medicare uncompensated care payments; wage index updates; payments for certain hospitals paid on a reasonable cost basis; and revisions to documentation requirements for Medicare cost report submissions and physician certification and recertification of claims.

LTCH Policies.  Under the final rule, CMS expects LTCH PPS payments will increase by approximately 0.9% ($39 million) in FY 2019.  The standard federal rate for FY 2019 is $41,579.65 (compared to $41,415.11 in FY 2018).  This rate reflects a 1.35% annual update, an area wage level budget neutrality factor of 0.999713, and a one-time budget neutrality adjustment of 0.990884 in connection with elimination of the “25 Percent Rule” (discussed below).  The update for an LTCH that does not submit required LTCH Quality Reporting Program data is reduced by 2 percentage points, resulting in a standard federal rate of $40,759.12.  The final fixed-loss amount for high cost outlier cases paid under LTCH-PPS is $27,124, and the fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate is $25,769.

Elimination of the 25 Percent Rule.  As previously proposed, CMS is eliminating the current 25% threshold policy.  By way of background, under the 25% rule, an LTCH is allowed to admit up to 25% of its patients from a single general acute care hospital, beyond which there is a significant reimbursement reduction (with certain exceptions).  Full implementation has been subject to statutory and regulatory delays.  Under the final rule, CMS is eliminating the 25% threshold policy effective beginning in FY 2019 by removing the provisions of 42 C.F.R. § 412.538.  In light of the full implementation of the site neutral payment rate beginning in FY 2016, CMS determined that the concerns that led to the introduction of the 25-percent threshold policy (i.e. LTCHs acting like IPPS step-down units) have been ameliorated. CMS is applying a one-time adjustment to the LTCH PPS standard federal payment rate in FY 2019 to make this change budget neutral.

FY 2019 Medicare Inpatient Rehabilitation Facility Payments to Rise by $105 Million under Final Rule

The Centers for Medicare & Medicaid Services (CMS) expects Medicare payments to inpatient rehabilitation facilities (IRFs) to increase by 1.3% ($105 million) in fiscal year (FY) 2019 under the final IRF prospective payment system (PPS) rule.  For FY 2019, the IRF PPS update factor is 1.35%, based on an IRF market basket update of 2.9%, reduced by a 0.8 percentage point multifactor productivity adjustment and a statutory 0.75 percentage point reduction (the update for an IRF that does not submit required quality data is reduced by 2.0 percentage points).  The final FY 2019 standard payment conversion factor is $16,021, compared to $15,838 in FY 2018.  CMS estimates that aggregate payments will decrease by an additional 0.1% due an update to the outlier threshold, from $8,679 in FY 2018 to $9,402 for FY 2019.

CMS finalized several policies intended to reduce the administrative and regulatory burdens for IRFs.  Specifically, applicable to IRF discharges beginning on or after October 1, 2018, CMS is: allowing the post-admission physician evaluation to count as one of the required face-to-face physician visits; allowing the rehabilitation physician to lead the interdisciplinary meeting remotely without any additional documentation requirements; and removing the admission order documentation requirement.  Furthermore, for IRF discharges beginning on or after October 1, 2019, CMS is removing the Functional Independence Measure instrument and associated Function Modifiers from the IRF-Patient Assessment Instrument.  The final rule also updates IRF Quality Reporting Program policies and measures.

PDPM Activated:  CMS Finalizes FY 2019 SNF Rule Largely as Proposed

The Centers for Medicare & Medicaid Services (CMS) has finalized its annual update to Medicare skilled nursing facility (SNF) PPS rates and policies for fiscal year (FY) 2019, without significant changes to the rule as proposed.  Most notably, CMS adopted the Patient-Driven Payment Model (PDPM) case mix classification system.  The PDPM, which will replace the existing Resource Utilization Groups, Version IV (RUG–IV) model beginning in FY 2020 (effective October 1, 2019), focuses on a resident’s clinical condition and care needs, rather than the volume of care provided.  CMS characterizes PDPM as a value-based, unified post-acute care payment system that prioritizes the unique care needs of patients and reduces the administrative burden associated with the system.

With regard to the annual payment update, CMS (as proposed) increased rates by 2.4%, as mandated by the Bipartisan Budget Act of 2018; the annual market basket percentage is reduced by 2 percentage points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program (QRP).  Based on this update, CMS estimates an increase of $820 million in Medicare payments to SNFs in FY 2019.  CMS also finalized various updates to the SNF Value-Based Purchasing Program (VBP), which adjusts a SNF’s payments up or down based on its performance on a 30-day hospital readmissions measure.

As we noted in our post on the proposed rule, CMS expressed concerns that its proposed change in how therapy services would be used to classify residents under the PDPM could incentivize the use of group and concurrent therapy rather than individual therapy. CMS finalized its proposal to establish a combined 25% limit on concurrent therapy and group therapy for each discipline of therapy provided.  CMS reiterated its position that individual therapy permits the greatest degree of interaction between the resident and therapist, and should therefore represent, at a minimum, the majority of therapy provided to an SNF resident.  While CMS finalized the proposed cap, it left room for future changes and stated that it will monitor whether group and concurrent therapy are being over- or underutilized and will consider revising the policy and undertaking enforcement efforts as necessary. Continue Reading

Trump Administration Finalizes Rule Expanding Availability of Short-Term, Limited Duration Health Insurance

The Departments of Treasury, Labor, and Health and Human Services have issued a final rule that expands the availability of short-term, limited duration insurance policies that are exempt from Affordable Care Act (ACA) qualified health plan standards (e.g., the requirement to provide essential health benefits, prohibition on preexisting condition exclusions, lifetime and annual dollar limits, guaranteed availability and guaranteed renewability).  The final rule extends the maximum duration of such “short-term” coverage from less than three months to a maximum initial contract term of less than 12 months, and – in a change from the proposed rule — a maximum duration (including the initial contract term and renewals and extensions) of up to 36 months.  States may adopt a definition with a shorter maximum initial contract term and/or a shorter maximum duration of a policy.  The final rule also revises the requirements for consumer notices that must appear in the contract and any application materials provided in connection with enrollment in these short-term, limited-duration insurance policies.

Based on an updated analysis, the Administration estimates that 2019 enrollment in short-term, limited-duration insurance will increase by 600,000 (including 100,000 previously-uninsured consumers), while Exchange enrollment is expected to decrease by 200,000 and off-exchange plan enrollment is expected to decrease by 300,000.  By 2028, the Administration projects that enrollment in individual market plans will decrease by 1.3 million, while enrollment in short-term, limited-duration insurance will increase by 1.4 million, representing a 0.1 million increase in the total number of people with some type of coverage.  The Administration also discusses benefits and costs of the rule, including comments it received regarding the potential effects on premiums, the individual market risk pool, out-of-pocket spending, and access to care, among other impacts.

The final rule is effective October 2, 2018 and applies to insurance policies sold on or after October 2, 2018.

Medicare Hospice Payments to Increase by $340 Million under Final FY 2019 Rule

The Centers for Medicare & Medicaid Services (CMS) has finalized its FY 2019 update to Medicare hospice rates and policies.  As forecast in the May 8, 2018 proposed rule, CMS is increasing FY 2019 hospice rates by 1.8% ($340 million), based on a 2.9% inpatient hospital market basket update that is reduced by both a 0.8 percentage point multifactor productivity adjustment and a 0.3 percentage point statutory adjustment.  The annual update is reduced by 2 percentage points for hospices that fail to report required quality data.  The final FY 2019 hospice cap is $29,205.44, an increase of 1.8% over the 2018 level.

The final rule codifies a Bipartisan Budget Act of 2018 provision that expands the definition of attending physician to include physician assistants.  CMS also updates Hospice Quality Reporting Program (HQRP) procedural policies, changes how hospice quality results are displayed on Hospice Compare, and adds a new HQRP measure “removal factor” that considers whether the costs associated with a measure outweigh the benefit of its continued use, among other HQRP provisions.

CMS Educational Call on Proposed CY 2019 Physician Fee Schedule Rule (Aug. 22)

CMS is inviting stakeholders to participate an August 22, 2019 listening session on the CY 2019 proposed Medicare physician fee schedule rule.  The call will focus on three aspects of the proposed rule:

  • Streamlining Evaluation and Management (E/M) payment policies
  • Advancing virtual care
  • Changes to the Quality Payment Program intended to reduce clinician burden, focus on outcomes, and promote interoperability

During the call, CMS experts will answer “clarifying questions” regarding these provisions to help stakeholders develop their formal comments.

Medicare Inpatient Psychiatric Facility Rates for FY 2019 Finalized

CMS has published its final rule to update fiscal year (FY) 2019 rates and policies for Medicare inpatient psychiatric facility (IPF) services.  CMS estimates that the final rule will increase payments by a total of $50 million (1.1%) compared to FY 2018 levels.  The final rule provides for a 1.35% payment update for FY 2019, based on a 2.9% market basket update that is reduced by both a 0.8 percentage point productivity adjustment and a statutorily-mandated 0.75 percentage point reduction.  CMS estimates that payments will be further reduced by 0.24 percentage points as a result of an outlier fixed-dollar loss threshold adjustment.  Under the final rule, the IPF prospective payment system federal per diem base rate is increased from $771.35 to $782.78; the per diem base rate is $767.33 for providers who failed to report quality data.  The final rule also updates the IPF labor-related share, the IPF wage index, and quality measures and reporting requirements under the IPF Quality Reporting Program (IFPQR).  Note that while CMS proposed to remove eight IPFQR measures, as a result of public comments CMS is retaining three of the measures (pertaining to Physical Restraint Use, Seclusion Use, and Tobacco Use Treatment at Discharge).

CMS Hosts Forum for Opioid Prescribers to Address the Opioid Epidemic (Aug. 15)

On August 15, 2018, CMS is convening a Special Open Door Forum on “Sharing Federal Strategies to Address the Opioid Epidemic.”  The conference call, which will feature representatives from several Department of Health and Human Services agencies, is intended to educate opioid prescribers on federal resources and strategies for safe prescribing as well as other opioid-related topics.

Citing “Significant Potential for Fraud, Waste, and Abuse,” CMS Extends HHA/Ambulance Enrollment Moratoria in Selected States

The Centers for Medicare & Medicaid Services (CMS) has determined that it should extend for an additional six months its current moratoria on the Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) enrollment of new home health agencies (HHAs) and Part B nonemergency ground ambulance suppliers in selected states.  Under the latest notice, the moratoria on new HHAs and branch locations applies to Florida, Illinois, Michigan, and Texas, and the non-emergency ambulance enrollment moratorium applies to New Jersey and Pennsylvania (the previous ambulance supplier enrollment moratorium in Texas was lifted last year as a result of Hurricane Harvey), applicable beginning July 20, 2018.  In extending the moratoria, CMS states that the Office of Inspector General concurs that “a significant potential for fraud, waste, and abuse continues to exist regarding those provider and supplier types in these geographic areas.”  Furthermore, CMS believes that the moratoria are needed to enable the agency to “continue with administrative actions to combat fraud and abuse, such as payment suspensions and revocations of provider/supplier numbers.”  Since the initial moratoria were imposed in 2013, denied applications from more than 1204 HHAs and 26 ambulance companies in the affected geographic areas.


House Approves Permanent Medical Device Tax Repeal Bill

The House of Representatives has voted 283 – 132 to approve legislation (HR 184) that would permanently repeal the Affordable Care Act’s 2.3% excise tax on the sale of certain medical devices.  While a government funding bill approved by Congress in February 2018 blocked imposition of the tax in 2018 and 2019, permanent repeal has been a top priority of the medical technology industry.  It is uncertain, however, whether the Senate will take up the bill this year.

CMS Proposes CY 2019 Medicare OPPS, ASC Update, with Emphasis on Promoting Site-Neutrality

CMS has issued its proposed rule to update Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2019.  In addition to providing routine annual updates, the proposed rule includes several provisions intended to encourage “site-neutral payments” for different types of providers.  CMS also proposes a change to the basis for updating ASC rates that has long been sought by stakeholders.  CMS will accept comments on the proposed rule until September 24, 2018.

Hospital Outpatient Provisions

CMS proposes a 1.25% update to Medicare OPPS rates for 2019, reflecting an expected 2.8% market basket increase that is partly offset by both a statutory 0.75 percentage point reduction and a 0.8% 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 vary.

In the proposed rule, CMS emphasizes its interest in addressing payment differentials that the agency believes drives site-of-service decisions, especially between the physician’s office and hospital outpatient department settings, and increases costs to the Medicare program and beneficiaries.  In particular, CMS targets certain 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 for services provided on or after 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 proposes:

  • Paying a PFS equivalent rate for clinic visit services (G0463, Hospital outpatient clinic visit for assessment and management of a patient) when provided at an “excepted” PBD. CMS observes that clinic visits are the most common service billed under the OPPS, and this policy is expected to save approximately $760 million in FY 2019, including $150 million in reduced beneficiary copayments.
  • CMS proposes to apply to exempted 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).
  • Revising payment when an excepted PBD expands into new lines of service. Under the proposed rule, if an excepted off-campus PBD furnishes a service from one of 19 proposed clinical families of services that it did not furnish during a baseline period (November 1, 2014 through November 1, 2015), the service from the “new” family would be paid under the PFS rather than the OPPS.
  • CMS notes that it is “developing a method to systematically control for unnecessary increases in the volume of other hospital outpatient department services.” In the meantime, CMS requests comments on alternative approaches to controlling unnecessary volume increases, while “not impeding development or beneficiary access to new innovations.”

Other proposed provisions include the following:   Continue Reading