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In an advisory opinion released on October 13, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) approved a plan by a muti-specialty practice to pay its employed physicians bonuses related to outpatient procedures performed by those physicians at ambulatory surgical centers (ASCs) operated by the physician practice entity requesting the opinion (the Requestor).

According to the facts as presented by the Requestor, the practice employs a group of physicians across a range of specialties. The Requestor also operates two ASCs as corporate divisions of the practice’s legal entity and not as subsidiaries or affiliates. The Requestor plans to pay each employed physician who performs a procedure at either of the ASCs a quarterly bonus equal to 30% of the net profits generated by the facility fees that are directly attributed to that physician’s procedures performed at the ASCs during the preceding quarter.

Notably, there is no indication in the request that the bonus payments would be based solely on the professional component of services personally performed by the physicians; the measurement of profit per physician would be expected to include the technical component of the procedures.Continue Reading OIG Permits Multi-Specialty Practice to Pay Doctors Bonuses for Outpatient Procedures

On May 3, 2021, the Centers for Medicare & Medicaid Services (CMS) published an 81-page final rule to both extend and change the Comprehensive Care for Joint Replacement (CJR) model. We previously reported on the proposed rule here. The CJR model was initially implemented by way of notice-and-comment rulemaking in April 2016; the recent…

Includes proposed changes to the OPPS and ASC payment rates and Stark Law exemptions.

On August 4, 2020, CMS posted for inspection the Proposed Outpatient Prospective Payment System (“OPPS”) Rule for 2021.  The proposed rule is scheduled for publication in the Federal Register on Wednesday, August 12, 2020 and would revise the Medicare hospital OPPS…

The Medicare Payment Advisory Commission (MedPAC) released its 2021 Medicare provider rate update recommendations on March 13, 2020 – the same day President Trump declared a national emergency due to COVID-19.  MedPAC’s recommendations were based on an assessment of various Medicare “payment adequacy indicators” that are unlikely to reflect the state of the health…

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 proposed Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rates and policies for calendar year 2020.  In addition to making annual updates to the OPPS and ASC payment systems, CMS includes a controversial proposal to require all hospitals to disclose payer-specific pricing, including “consumer-friendly” information for hundreds of “shoppable” services.  CMS is accepting comments on the proposed rule through September 27, 2019.  The following are highlights of the proposed rule.

Hospital Outpatient Provisions

CMS proposes a 2.7% update to OPPS rates for 2020, with the update reduced by 2.0% for hospitals that fail to meet quality reporting requirements.  Payment changes for individual procedures vary.  CMS estimates total OPPS payments would increase by $6 billion in CY 2020 compared with 2019 under the rule.

Other OPPS policy proposals include the following, among many others:
Continue Reading CMS Proposes 2020 Medicare OPPS and ASC Update, Floats Plan for Hospital Disclosure of Payer-Specific Prices

The Medicare Payment Advisory Commission (MedPAC) has issued its annual report to Congress with recommendations for updates to Medicare fee-for-service rates for 2020.

With regard to hospital services, MedPAC recommends that Congress update Medicare inpatient and outpatient prospective payment system (PPS) rates by 2% in 2020.  MedPAC also proposes a new hospital value incentive program (HVIP) to replace Medicare’s current inpatient hospital quality programs.[1]  In short, the HVIP would include a small set of population-based outcome, patient experience, and value measures; score all hospitals based on the same prospectively-set performance targets; and account for social risk factors by distributing payment adjustments through peer grouping.  MedPAC believes the HVIP “will be simpler and will produce more equitable results compared with existing quality payment programs.”

MedPAC recommends no change to Medicare physician fee schedule rates in 2020, in accordance with the Medicare Access and CHIP Reauthorization Act of 2015.  MedPAC reiterates its criticism of current Merit-based Incentive Payment System measures, stating that they “are neither effective in assessing true clinician quality nor appropriate for Medicare’s value-based purchasing programs.”

MedPAC continues to call for implementation of a unified PPS for post-acute care (PAC) providers, including skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs).   Acknowledging that implementation of a unified PAC PPS “is on a longer timetable,” MedPAC recommends the following setting-specific interim payment updates for 2020:
Continue Reading MedPAC Recommends Medicare Payment Updates for 2020

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

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

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

The White House Office of Management and Budget (OMB) is reviewing several CMS rules that would finalize CY 2018 Medicare payment policies for various types of providers and suppliers. Specifically, OMB is reviewing final rules to update the hospital outpatient and ambulatory surgical center PPS; the Medicare physician fee schedule and physician Quality Payment Program;…

CMS has published 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) 2018. In addition to proposing rate updates for the two payment systems, CMS solicits comments on a wide range of topics, including, among others:  deep OPPS reimbursement cuts for drugs obtained through the 340B drug discount program; a new OPPS drug administration packaging proposal along with a broader query regarding the need for packaging policy reforms; a proposal to allow total knee replacement procedures to be performed on an outpatient basis; and potential changes to the way CMS calculates the ASC payment update.  CMS will accept comments on the proposed rule until September 11, 2017.

With regard to OPPS payments, CMS proposes a 1.75% update for 2018, reflecting a 2.9% market basket increase, which is partly offset by a 0.75 percentage point reduction and a 0.4% multi-factor productivity (MFP) reduction. CMS expects that overall OPPS payments would increase by 2% ($897 million) compared to 2017 levels (although this estimate does not include the effects its 340B drug proposal, discussed below).  The update for hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements is reduced by 2.0 percentage points.  Rate updates for individual procedures vary based on changes in ambulatory payment classification (APC) assignments and other proposed policies.

Other major provisions of the proposed rule include the following:  
Continue Reading CMS Proposes Medicare OPPS, ASC Update for CY 2018

CMS has published a notice correcting technical errors in its November 14, 2016 final rule with comment period updating the Medicare hospital outpatient prospective payment system (OPPS) and ambulatory surgical center payment systems for 2017.  Among many other things, CMS is correcting the OPPS weight scaler, which very slightly increases OPPS rates that are adjusted …

CMS has published its final rule with comment period updating the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rates and policies for CY 2017.  CMS will accept comments on a limited number of provisions until December 31, 2016.

Major provisions impacting outpatient hospital department services include the following: 
Continue Reading CMS Finalizes Medicare OPPS, ASC Rates and Policies for 2017

CMS has 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 CY 2017. CMS proposes a 1.55% OPPS update, reflecting a 2.8% market basket increase, which is partly offset by a -0.5% multifactor productivity (MFP) adjustment and an additional 0.75% reduction (both mandated by the Affordable Care Act). CMS expects that overall OPPS payments would increase by 1.6%, or $671 million, compared with 2016 levels, because of the proposed changes in the rule.  Hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements are subject to an additional reduction of 2.0 percentage points.  The actual update for individual procedures can vary dramatically, however, based on changes in ambulatory payment classification (APC) assignment and other policies in the proposed rule.  Other major provisions of the proposed rule include the following:  
Continue Reading CMS Proposes Update to Medicare OPPS, ASC Rates and Policies for 2017

The House Ways and Means Committee has approved an amended version of H.R. 5273, the “Helping Hospitals Improve Patient Care Act of 2016.”  While most of the provisions address Medicare payment policies pertaining to hospitals (including long term care hospitals (LTCHs) and hospital outpatient departments), certain other reimbursement policies, including Medicare Advantage and physician payment…

The House Energy and Commerce Committee is seeking input on Section 603 of the Bipartisan Budget Act of 2015, which established a site-neutral payment policy for newly-acquired, provider-based, off campus hospital outpatient departments (HOPD) after November 2, 2016.  In an open letter to the health care community, the Committee explains the origins of the policy, noting that it was enacted as a result of concerns that the Medicare hospital outpatient prospective payment system paid more for the same services provided at HOPDs than in other settings, such as an ambulatory surgery center, physician office, or community outpatient facility.   The letter discusses evidence the Committee considered in establishing this policy, but notes that the Committee has received significant feedback on this provision since enactment, with concerns raised about the provision’s potential impact on hospitals, beneficiaries, and providers.  The Committee has received a range of recommendations from the public, with stakeholders urging the Committee to:
Continue Reading House Energy & Commerce Committee Seeks Comments on Medicare Site-Neutral Payment Policies

On November 13, 2015, the Centers for Medicare & Medicaid Services (CMS) is publishing its final rule updating the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2016. CMS estimates that total federal expenditures under the OPPS will drop by $133 million in CY 2016 compared to CY 2015 due to the changes in the final rule, while overall ASC payments are expected to increase by approximately $128 million in 2016. The OPPS update for 2016 is -0.3%, driven in large part by CMS’s correction of a $1 billion error it made when estimating “packaged payment” for clinical laboratory tests under a policy implemented in 2014. Specifically, the -0.3% update reflects a 2.4% market basket increase, which is partially offset by a -0.5% multifactor productivity (MFP) reduction and an additional 0.2% reduction (both mandated by the Affordable Care Act), further reduced by a 2.0 percentage points to recoup the prior $1 billion overestimation of laboratory test packaging. Hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements are subject to an additional 2% reduction. The actual update for individual procedures can vary dramatically, however, based on reconfiguration of ambulatory payment classifications (APCs) and other policies in the rule. Other highlights of the final rule include the following:
Continue Reading CY 2016 Medicare OPPS Spending to Drop by 0.4% under Final OPPS Rule; ASC Payments Get Small Boost

This week CMS referred major final calendar year 2016 Medicare payment rules to the White House Office of Management and Budget (OMB) for regulatory clearance. Specifically, OMB is reviewing the final CMS rules to update the Medicare physician fee schedule, the hospital outpatient prospective payment system (PPS) and ambulatory surgical center payment update, the home…

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:Continue Reading CMS Issues Final Medicare OPPS, ASC Policies for 2014