CMS Proposes Hospital Outpatient Prospective Payment Changes for 2017

On July 6, 2016, CMS released CMS-1656-P, which is the Calendar Year 2017 Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center (“ASC”) Payment System policy changes, quality provisions, and payment rates proposed rule (the “Proposed Rule”). The Proposed Rule sets forth, among other things, policies to implement Section 603 of the Bipartisan Budget Act of 2015 (the “Act”).  The Proposed Rule also addresses rate changes, packaged services policy refinements, device-intensive procedure policies, device pass-through applications, and inpatient only list procedures as well as aspects of the Pain Management dimension of the Hospital Consumer Assessment of Healthcare Providers and Systems (“HCAHPS”), the Medicare EHR Incentive Program, the Organ Procurement Organization Conditions for Coverage, the Hospital Outpatient Quality Reporting (“OQR”) Program, and the Ambulatory Surgical Center Quality Reporting (“ASCQR”) Program.  A summary of the Proposed Rule, with a particular focus on the policies implementing Section 603 of the Act, follows below.

Section 603 Implementing Policies

By way of background, Section 603 of the Act, which was enacted on November 2, 2015, included a statutory amendment that changed the reimbursement methodology for “new” off-campus hospital outpatient departments effective January 1, 2017. Pursuant to the Section 603, any off-campus hospital outpatient departments that were not providing outpatient services prior to November 2, 2015 will be eligible for reimbursement, as of January 1, 2017, under either the Ambulatory Surgical Center Prospective Payment System or the Medicare Physician Fee Schedule (“MPFS”).  Such off-campus hospital outpatient departments will be paid under OPPS until January 1, 2017.  Provider-based departments in existence prior to November 2, 2015 are “grandfathered” and can continue to receive reimbursement under OPPS after January 1, 2017.

As noted above, the Proposed Rule sets forth proposed policies to implement Section 603. Some of the key policies include the following:

  • The following off-campus provider-based departments will be permitted to bill for the following items and services under OPPS after January 1, 2017: (i) all items and services furnished in a dedicated emergency department; (ii) items and services that were furnished and billed by an off-campus provider-based departments prior to November 2, 2015; and (iii) items and services furnished in a hospital department within 250 yards of a remote location of the hospital (collectively, “Excepted Services”).
  • With respect to service expansions, additional items and services offered at a provider-based department beyond those within the clinical families of services furnished and billed prior to November 2, 2015 will not be Excepted Services. However, if an excepted off-campus provider-based department furnished and billed for any specific service within in a clinical family of services prior to November 2, 2015, such family of services would continue to be excepted and be eligible to receive payment under OPPS following January 1, 2017. The proposed clinical families and Ambulatory Payment Classifications (“APCs”) for purposes of implementing Section 603 consist of the following:
    • Advanced Imaging (APCs: 5523-25, 5571-73, 5593-4)
    • Airway Endoscopy (APCs: 5151-55)
    • Blood Product Exchange (APCs: 5241-44)
    • Cardiac/Pulmonary Rehabilitation (APCs: 5771, 5791)
    • Clinical Oncology (APCs: 5691-94)
    • Diagnostic tests (APCs: 5721-24, 5731-35, 5741-43)
    • Ear, Nose, Throat (ENT) (APCs: 5161-66)
    • General Surgery (APCs: 5051-55, 5061, 5071-73, 5091-94, 5361-62)
    • Gastrointestinal (GI) (APCs: 5301-03, 5311-13, 5331, 5341)
    • Gynecology (APCs: 5411-16)
    • Minor Imaging (APCs: 5521-22, 5591-2)
    • Musculoskeletal Surgery (APCs: 5111-16, 5101-02)
    • Nervous System Procedures (APCs: 5431-32, 5441-43, 5461-64, 5471)
    • Ophthalmology (APCs: 5481, 5491-95, 5501-04)
    • Pathology (APCs: 5671-74)
    • Radiation Oncology (APCs: 5611-13, 5621-27, 5661)
    • Urology (APCs: 5371-77)
    • Vascular/Endovascular/Cardiovascular(APCs: 5181-83, 5191-94, 5211-13, 5221-24, 5231-32)
    • Visits and Related Services (APCs: 5012, 5021-25, 5031-35, 5041, 5045, 5821-22, 5841)
  • Items and services must continue to be furnished and billed at the same physical addressincluding any suite number or unit designation in a multi-office building, at which the off-campus provider-based department provided such items and services prior to November 2, 2015 in order for the off-campus provider-based department to be considered excepted from the Section 603 requirements. If an excepted off-campus provider-based department changes location (including expanding into other units in a multi-office building), it will lose its excepted status. CMS is exploring whether to add exceptions to this proposal for extraordinary circumstances that are outside the control of a hospital.
  • If a hospital has a change of ownership and the new owners accept the existing Medicare provider agreement from the prior owner, the off-campus provider-based department may maintain its excepted status under the other rules outlined in the Proposed Rule. If the existing Medicare provider agreement is not accepted by the new owner, then the acquired hospital’s off-campus provider-based departments will lose their excepted status.
  • For calendar year 2017, the MPFS would be the applicable payment system for the majority of non-excepted items and services furnished in an off-campus provider-base department. Physicians furnishing such services would be paid based on the professional at the non-facility rate under the MPFS for services for which they are permitted to bill. CMS anticipates this payment model as being a one-year transitional policy while it explores operational changes that would allow an off-campus provider-based department to bill Medicare for its services under a Part B payment system other than OPPS beginning in 2018.
  • CMS is contemplating developing a new form through which hospitals will be required to separately identify all individual excepted off-campus provider-based departments, the date each excepted provider-based department began billing, and the clinical families of services (listed above) that were provided by the excepted off-campus provider-based department prior to November 2, 2015 and has requested comments regarding whether to require such a form and such information from hospitals.

Other Provisions of the Proposed Rule

In the Proposed Rule, CMS also proposed, among other things, the following:

  • Updating OPPS rates by 1.55 percent, which, after considering all other policy changes proposed under the OPPS, is estimated to result in a 1.6% payment increase for hospitals paid under OPPS in calendar year 2017.
  • Removing the pain management dimension of the HCAHPS survey for purposes of the Hospital Value-Based Purchasing (“VBP”) Program due to concerns that the relation of the pain management dimension questions in the Hospital VBP Program to Hospital VBP Program payment incentives creates pressure on hospital staff to prescribe more opioids to achieve higher scores on the pain management dimension.
  • With respect to EHR:
    • maintaining the EHR reporting period of 90 days for all eligible professionals, eligible hospitals, and critical access hospitals;
    • eliminating the Clinical Decision Support and Computerized Provider Order Entry objectives and measures for eligible hospitals and critical access hospitals attesting under the Medicare EHR Incentive Program and reducing the thresholds for a subset of the remaining objectives and measures in Modified Stage 2 for 2017 and Stage 3 for 2017 and 2018;
    • requiring certain eligible professionals, eligible hospitals, and critical access hospitals that have not successfully demonstrated meaningful use in a prior year to attest to Modified Stage 2 by October 1, 2017;
    • adding a significant hardship exception from the 2018 payment adjustment for certain eligible professions who intend to transition to the Merit-Based Incentive Payment System but who have not yet successfully demonstrated meaningful use; and
    • changing the policy for measure calculations for actions outside of the EHR reporting period.
  • Adding 25 new Comprehensive APCs (each a “C-APC”), including a bone marrow transplant C-APC and bone marrow transplant dedicated cost center.
  • Making certain packaging policy refinements, including, among others, basing service packaging on claim rather than date of service.
  • Implementing certain policies regarding device-intensive procedures and device pass-through applications.
  • Removing four spine procedures and two laryngoplasty procedures from the Medicare inpatient-only list.
  • Adding seven measures to the Hospital OQR Program, two of which are claims-based measures and five of which are Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems survey-based measures.
  • Adding seven measures to the ASCQR Program.
  • Restoring the CMS tolerance limit for patient and graft survival in the Medicare Conditions of Participation for Organ Transplant Programs to a threshold of 1.85, which is closer to the threshold set forth in the original 2007 rule.

The Proposed Rule will be published in the Federal Register on July 14, 2016 and is available here. Comments on all sections of the Proposed Rule must be submitted on or before September 6, 2016.

This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.