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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

CMS Releases OPPS Final Rule with Comment

November 4, 2016—The Centers for Medicare and Medicaid Services (CMS) Nov. 1 released the Calendar Year (CY) 2017 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule with comment, which updates payment policies and rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers beginning Jan. 1, 2017. 

CMS finalized most of the provisions in the proposed rule, including the implementation of Section 603 of the Bipartisan Budget Act of 2015 (P.L. 114-74) that certain items and services furnished by certain off-campus provider-based departments (PBDs) shall not be considered covered outpatient department services for purposes of OPPS payment.  The most significant change from the proposed rule is that, as discussed below, beginning Jan. 1, 2017, hospitals will receive a payment for services in PBDs that are no longer able to bill under the OPPS. This portion of the rule was published as an interim final rule with comment period.

In response to commenters’ concerns that the implementation of Section 603 will negatively impact the 340B Drug Pricing Program, CMS states that under the finalized policy, services provided at nonexcepted off-campus PBDs will continue to be reported on the hospital cost report.  CMS states that it will issue subregulatory guidance in the event that final payment policy necessitates a change for hospital cost reporting.   CMS defers to the Health Resources and Services Administration (HRSA) for questions on when drugs qualify for discounts under the 340B program.

CMS also finalized proposals to change how the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey is scored under the hospital Value Based Purchasing (VBP) program. Beginning fiscal year (FY) 2018, performance on the HCAHPS survey’s pain management dimension — which consists of three questions — will not count for payment purposes under the VBP program. Provider performance on the pain management questions will continue to be publicly reported. The AAMC previously endorsed legislation that would delink the pain management questions from VBP payments [see Washington Highlights, April 29].

Implementation of Section 603

For CY 2017, CMS states that the Medicare Physician Fee Schedule (MPFS) will be the “applicable payment system” for nonexcepted items and services furnished in a nonexcepted off-campus PBD.  Under this interim final rule, CMS is establishing interim final site-specific rates under the MPFS for the technical component of all nonexcepted items and services. Hospitals will be paid under the MPFS at these newly established MPFS rates for nonexcepted items and services, which will be billed on the institutional claim and must be billed with a new claim line modifier “PN” to indicate that an item or service is a nonexcepted item or service. For CY 2017, the payment rate for these services will generally be 50 percent of the OPPS rate. CMS is requesting comments to establish new interim final MPFS rates so that hospitals may be paid for these nonexcepted items and services in CY 2017.

Off-campus PBDs that will continue to be permitted to bill for excepted items and services under the OPPS furnished after Jan. 1, 2017, include:  (1) a dedicated emergency department; (2) an off-campus PBD that was billing for covered OPD services furnished prior to Nov. 2, 2015, (i.e., the date of enactment of Section 603 of the Bipartisan Budget Act of 2015) that has not impermissibly relocated or changed ownership; or (3) a PBD that is “on the campus,” or within 250-yards, of the hospital or a remote location of the hospital.

Off-campus PBDs that relocate and/or change ownership will be considered nonexcepted off-campus PBDs and will no longer be able to bill under the OPPS beginning Jan. 1, 2017.  CMS has chosen not to finalize the proposal to limit service expansion of clinical services lines after Nov. 2, 2015, not be reimbursed under the OPPS in response to stakeholder comments on administrative burden and complexity and beneficiary access issues.  CMS will continue to monitor whether a limitation on service line expansion should be adopted in the future.

Relocation:  CMS is finalizing its proposal that items and services must continue to be furnished and billed at the same physical address of the off-campus PBD as was used as of Nov. 2, 2015, in order for the off-campus PBD to be considered excepted from Section 603 requirements. The final relocation policy proposal allows for excepted off-campus PBDs to relocate temporarily or permanently without loss of excepted status due to extraordinary circumstances outside of the hospital’s control, such as natural disasters. Exceptions for extraordinary circumstances will be evaluated and determined by the applicable CMS Regional Office and are expected to be rare and unusual.

Changes of Ownership:  CMS is finalizing its proposal to allow an off-campus PBD to maintain its excepted status under the other rules outlined in this regulation if the hospital has a change of ownership and the new owners accept the existing Medicare provider agreement from the prior owner.

Other OPPS Provisions:

  • Updates OPPS payments by 1.65 percent for CY 2017. For CY 2017, the CPI-U update is projected to be 2.2 percent.  The MFP adjustment is projected to be 0.3 percent, resulting in an MFP-adjusted CPI-U update factor of 1.9 percent.  
  • Creates 25 additional C-APCs, resulting in a total of 62 C-APCs, primarily major surgery APCs within the various existing C-APC clinical families. Establishes three new clinical families to accommodate new C-APCs including nerve procedures, excision, biopsy, incision and drainage procedures, as well as airway endoscopy procedures.
  • Aligns packaging logic for all conditional packaging status indicators so that packing occurs at the claim level (instead of date of service). Expands molecular pathology lab test exception to include certain advanced diagnostic lab tests (ADLTs). Discontinues the use of the ‘L1” modifier.
  • Includes seven new measures to the Hospital Outpatient Quality Reporting (OQR) program beginning CY 2020 payment determination: two claims-based measures assessing emergency department visits and inpatient admissions following chemotherapy and outpatient surgery and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey-based measures. 
  • Restores the patient and graft survival tolerance threshold to 1.85.
  • Changes the definition of “eligible death” and the aggregate donor yield metric in the Organ Procurement Organizations Conditions for Coverage to align the definition and yield metric criteria with those set forth by the Organ Procurement and Transplantation Network (OPTN) and Scientific Registry of Transplant Recipients (SRTR).
  • Finalizes a 90-day EHR reporting period in 2016 and 2017 for all returning eligible professionals, eligible hospitals and CAHs that have previously demonstrated meaningful use in the Medicare and Medicaid EHR Incentive Programs.
  • Finalizes proposals that EPs, eligible hospitals, and CAHs that have not successfully demonstrated meaningful use in a prior year will be required to attest to Modified Stage 2 objectives and measures. Returning EPs, eligible hospitals, and CAHs will report to different systems in 2017 and therefore are not affected by this policy.

Contact:

Mary Mullaney
Director, Hospital Payment Policies
Telephone: 202-909-2084
Email: mmullaney@aamc.org

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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org