On November 1, 2016, CMS released the Medicare Program's 2017 Hospital Outpatient Prospective Payment System ("OPPS") and Medicare Ambulatory Surgical Center ("ASC") final rule for Calendar Year ("CY") 2017. Published in the November 14, 2016 Federal Register, the highlights are provided below:
I. Medicare OPPS Payment Update
CMS is increasing the payment rates under OPPS by a factor of 1.65%. The total projected payments are roughly $773 million with the following payment provisions continuing in CY 2017:
- Application of a 2% payment reduction for hospitals failing to meet the outpatient quality reporting requirements.
- Application of a 7.1% adjustment to OPPS payments to Rural Sole Community Hospitals ("SCH's") and Essential Access Community Hospitals ("EACH's").
- Additional payments to cancer hospitals.
- Payment increase by 1.9% for ASCs that meet the quality reporting requirements.
II. Comprehensive APCs ("C-APC's")
CMS is adding 25 new C-APC's, for a total of 62, resulting in six new clinical families:
- Airway endoscopy (AENDO)
- Excision, biopsy, incision and drainage (EBIDX)
- Extraocular ophthalmic surgery (EXEYE)
- Nerve procedures (NERVE)
- Stem Cell Transplant (SCTXX)
- Wireless pulmonary artery pressure monitor (WPMXX)
Medicare is also implementing a revision to the complexity adjustment for certain add-on codes, or code combinations that represent a complex and costly form of the primary service. When a complexity adjustment occurs, payment is made to the next highest C-APC within the same clinical family. The cost and complexity determination is being modified, which expands the number of code combinations that qualify for a complexity adjustment.
III. Allogeneic Stem Cell Transplants
Medicare is introducing a new C-APC 5244, along with a dedicated cost center, for Allogeneic Stem Cell Transplants with a payment rate of $27,752. The new C-APC will allow the costs for services on the same OPPS claims to be packaged into rate setting for transplants utilizing Cost Center 77. In addition, Revenue Code 815 will now be used rather than 819 to identify hospital charges for stem cell acquisition related to allogeneic bone marrow/stem cell transplants. A new edit will also return to the provider any stem cell transplant claims submitted with CPT 38240 that do not include a separate line for Revenue Code 815 reporting donor acquisition services.
IV. Packaging Policy Revisions
Conditional packaging policy changes have been finalized and CMS is aligning the packaging logic for all conditional packaging status indicators. Currently, some conditional packaging occurs whenever a conditional packaged item or service is reported on the same claim as the primary service for a specific date of service. This type of conditional packaging has applied to items with Q1 and Q2 status indicators. In CY 2017, these items and services that are considered conditionally packaged under OPPS will be evaluated at the claims level rather than by date of service.
In addition, the outpatient laboratory Modifier "L1" which was used to identify unrelated lab charges on claims which should not be packaged with other outpatient services has been discontinued. According to comments from CMS, they believe most lab services are related to another service or diagnosis and in CY 2017, these lab services will be packaged into another service on a claim lessening the administrative burden for hospitals and CMS. The packaging exclusion will continue to be applied to molecular pathology and expanded to Advanced Diagnostic Laboratory Tests ("ADLT").
V. Payment Modifier for X-Rays
CMS is introducing a new Modifier "FX" in CY 2017 which will be required when submitting claims with x-rays taken using film, to include the x-ray component of a packaged service. Use of the Modifier will result in a 20% payment reduction.
VI. Inpatient Only Procedures
CMS is removing the following seven procedures from the inpatient only list:
- CPT 22585 - Arthrodesis anterior interbody each additional interspace;
- CPT 22840 - Posterior non-segmental instrumentation;
- CPT 22842 - Posterior segmental instrumentation 3-6 vertebral segments;
- CPT 22845 - Anterior instrumentation 2-3 vertebral segments;
- CPT 22858 - Total disc arthroplasty, anterior approach, including discectomy, second level cervical;
- CPT 31584 - Laryngoplasty w/ open reduction and fixation of fracture with tracheostomy;
- CPT 31587 - Laryngoplasty cricoid split without graft placement.
VII. Hospital Outpatient Quality Reporting Program
CMS is finalizing its proposal to publicly display data on the Hospital Compare website or other CMS website as soon as possible after data has been submitted in CY 2018. Hospitals will have 30 days to preview their data and CMS will change the CY 2019 timeframe for Extraordinary Circumstances Exemptions ("ECE") from 45 days to 90 days, from the date the ECE occurred. CMS is also finalizing the addition of seven new quality measures for the CY 2020 payment determination and subsequent years as follows:
- OP-35: Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy;
- OP-36: Hospital Visits after Hospital Outpatient Surgery;
- OP-37a: OAS CAHPS-About Facilities and Staff;
- OP-37b: OAS CAHPS-Communication About Procedure;
- OP-37c: OAS CAHPS-Preparation for Discharge and Recovery;
- OP-37d: OAS CAHPS-Overall Rating of Facility;
- OP-37e: OAS CAHPS-Recommendation of Facility.
VIII. ASC Quality Reporting Program
CMS is finalizing the addition of the following seven measures, to the ASCQR program measure set for the CY 2020 payment determination and subsequent years:
- ASC-13: Normothermia Outcome;
- ASC-14: Unplanned Anterior Vitrectomy;
- ASC-15a: OAS CAHPS-About Facilities and Staff;
- OP-15b: OAS CAHPS-Communication About Procedure;
- OP-15c: OAS CAHPS-Preparation for Discharge and Recovery;
- OP-15d: OAS CAHPS-Overall Rating of Facility;
- OP-15e: OAS CAHPS-Recommendation of Facility.
IX. Organ Transplant Thresholds
Medicare Conditions of Participation for Organ Transplant Programs contain an outcome requirement of 1-year survival for patient and graft. A number of thresholds must be met within these standards. One of the thresholds is based on the number of observed events (patient deaths or graft failures) divided by the number of expected events. The number of expected events is based on the risk adjusted national average. The threshold was established in CY 2007 at 1.5; and for CY 2017 CMS will restore the threshold, raising it to 1.85. Transplant Programs would not be out of compliance unless the number of observed events as compared to the number of expected events is greater than 1.85.
X. Organ Procurement Organizations ("OPO's")
CMS will change the current "eligible death" definition and aggregate donor yield metric in the OPO conditions for coverage, consistent with the Organ Procurement and Transplant Network ("OPTN") definition. CMS has also finalized revisions to documentation required, to be transported to the transplant organ center with the organ. While blood type and infection disease information will still be required, other information is now available electronically.
XI. Electronic Health Record ("HER") Incentive Program
In an effort to reduce the burden of reporting, CMS will eliminate the Clinical Decision Support ("CDS") and Computerized Provider Order Entry ("CPOE") objectives and measures, and lower the reporting thresholds for a subset of the remaining objectives and measures for the Modified Stage 2 and Modified Stage 3 thresholds.
CMS will also finalize a 90-day reporting period for both CY 2016 and CY 2017 including eligible professionals, eligible hospitals, and critical access hospitals ("CAH's") that have previously demonstrated meaningful use. The EHR reporting period will be any continuous 90-day period between January 1st and December 31st in CY 2016 and CY 2017.
CMS is finalizing proposals that eligible professionals, eligible hospitals, and CAH's that have not successfully demonstrated meaningful use in a prior year, will be required to attest to Modified Stage 2 objectives and measures. CMS will also make a one-time significant hardship exception from the CY 2018 payment adjustment for certain eligible professionals who are new participants in the EHR Incentive Program in CY 2017, and are transitioning to the Merit-Based Incentive Payment System in CY 2017.
XII. Off-Campus Outpatient Provider Based Departments ("PBD's")
CMS finalized significant changes relating to off-campus PBD's, and took a firm stance on implementing section 603 of the Bipartisan Budget Act excluding off-campus PBD's from being reimbursed under the OPPS. Per section 603, "Payments for applicable items and services furnished by an off-campus outpatient department...shall be made under the applicable payment system", for which CMS chose the Medicare Physician Fee Schedule ("MPFS"). Highlights of the changes are contained below.
1. Exceptions to the Bipartisan Budget Act Provision:
According to the final rule, a hospital department may continue to be reimbursed under the OPPS if the department is:
- An on-campus PBD;
- An off-campus PBD providing services and receiving reimbursement under the OPPS prior to the enactment of the Bipartisan Budget act on November 2, 2015;
- An off-campus PBD in mid-build at the time of the enactment of the Bipartisan Budget Act; or
- A dedicated emergency department.
2. Definition of an On-campus PBD:
PBD's that are located within the main hospital building, and departments located in buildings within 250 yards of the main campus or hospital remote location, will continue to be considered on-campus sites. Hospitals that comprise several sites at which both inpatient and outpatient care are furnished are required to designate one site as its "main" campus for purposes of the provider-based rules.
3. Definition of an Off-Campus PBD:
Off-campus departments of a hospital must meet certain requirements to be considered provider-based. The department must:
- Be located within a 35-mile radius of the campus of the main hospital;
- Have its financial operations fully integrated within those of the main provider;
- Have its clinical services integrated with those of the main hospital (for example, the professional staff at the off-campus PBD must have clinical privileges at the main hospital, the off-campus PBD medical records must be integrated into a unified retrieval system (or cross reference) of the main hospital), and patients treated at the off-campus PBD who require further care must have full access to all services of the main hospital;
- Be held out to the public as part of the main hospital.
4. Off-Campus PBDs in Mid-Build:
Enacted on December 13, 2016, the 21st Century Cures Act grants exception to the Bipartisan Budget Act provision in 2017 if a new off-campus PBD meets the mid-build requirement and the hospital submitted an attestation to the Secretary of Health and Human Services that the new off-campus PBD was a department of the provider prior to December 2, 2015. The mid-build requirement is defined by the 21st Century Cures Act as, "with respect to a department of a provider, that before November 2, 2015, the provider had a binding written agreement with an outside unrelated party for the actual construction of such department." If an attestation had not been submitted prior to that date, a new off-campus PBD may be granted excepted status beginning in 2018 if:
- The department meets the mid-build requirement;
- The Secretary of Health and Human Services receives from the provider an attestation, no later than 60 days from the enactment of the 21st Century Cures Act, that the department met the requirements of a department of the provider;
- The provider includes the department as part of the provider on the enrollment form in accordance with the Medicare enrollment process; and
- The CEO or COO of the provider submits a written certification that the department met the mid-build requirement to the Secretary of Health and Human Services no later than 60 days following the enactment of the 21st Century Cures Act or January 31, 2016.
5. Dedicated Emergency Departments:
Dedicated emergency departments will also be granted excepted status under the new regulations and will continue to be reimbursed under the OPPS. A dedicated emergency department is defined as any department or facility of the hospital, regardless of whether it is located on or off of the main campus, that meets at least one of the following requirements:
- It is licensed by the state in which it is located under applicable state law as an emergency room or emergency department;
- It is held out to the public (by name, posted signs, advertising, or other means) as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment; or
- During the calendar year immediately preceding the calendar year in which a determination under the OPPS is being made, based on a representative sample of patient visits that occurred during that calendar year, it provides at least one-third of all of its outpatient visits for the treatment of emergency medical conditions on an urgent basis without requiring a previously scheduled appointment.
6. Expansion and Relocation of Excepted PBDs:
In order to restrict the expansion of off-campus PBDs reimbursed under the OPPS, CMS set strict limitations on when an excepted department can relocate. Any on-campus PBD relocated to an off-campus location after January 1, 2017 will lose its excepted status. An off-campus PBD may relocate temporarily or permanently, without loss of their excepted status, for extraordinary circumstances outside of the hospital's control. These circumstances are listed as natural disasters, significant seismic building code requirements, or significant public health and public safety issues. The appropriate CMS Regional Office will evaluate all relocation requests on a case-by-case basis.
Hospitals may not purchase and expand into new units in a multi-office building, however, CMS will not limit the expansion of services provided within existing off-campus PBDs in 2017. CMS will monitor service line growth, and if appropriate, may propose to adopt a limitation on the expansion of service lines for future rulemaking.
7. Change of Ownership and Excepted Status:
If a Medicare-participating provider, in its entirety, is sold or merges with another hospital, provider-based status transfers to the new ownership as long as there is no material change of provider-based status. A provider-based approval letter is considered valid as long as the new owner accepts the prior hospital's provider agreement, however individual PBDs cannot be transferred and maintain their excepted status. If the provider agreement of the prior hospital is terminated, all off-campus PBDs of that hospital will lose their excepted status.
8. Reimbursement for Items and Services Provided in Non-Excepted PBDs:
Beginning January 1, 2017, non-excepted PBDs will be reimbursed under the MPFS at 50% of the OPPS payment that they would have received as an excepted PBD for the technical component of the item or service provided. Any services that are reimbursed under a payment system other than the OPPS, such as the Clinical Lab Fee Schedule, will continue to be reimbursed under that system. Non-excepted Partial Hospitalization Program items and services will be reimbursed at the Community Mental Health Center ("CMHC") rates. The department does not need to enroll as a CMHC in order to receive Medicare payments in 2017, but they do have the option to do so if they meet the requirements.
During 2017, hospitals will continue to utilize the institutional claim form to submit claims, and claims will continue to be processed through the Outpatient Code Editor ("OCE") and the OPPS Pricer to be paid under the MPFS. All items and services provided by these departments will need to be billed with modifier "PN" appended to the CPT or HCPCS code for the item or service on the claim form.
The wage index adjustment, OPPS packaging policies, and multiple procedure payment reduction ("MPPR") will apply to non-excepted PBD payments made under the MPFS. OPPS payment adjustments that will not be adopted under the MPFS include outlier payments, the rural sole community hospital adjustment, the cancer hospital adjustment, transitional outpatient payments, the hospital outpatient quality reporting adjustment, and the inpatient hospital deductible cap.
CMS is soliciting and encouraging open communication and feedback with stakeholders on the reimbursement policies enacted for 2017 for future rulemaking in 2018 and beyond.
SunStone specializes in assisting the healthcare industry with revenue integrity, reimbursement and regulatory solutions. For more information about the CY 2017 Final OPPS Rule, please contact Vonda Moon, Principal at firstname.lastname@example.org or Kristie Bailey, Senior Manager at email@example.com.