2019 OPPS proposed rule: CMS continues push for site-neutral reimbursement and lower drug payments

CMS’ 2019 OPPS proposed rule continues the agency’s efforts to enforce site-neutral payments and reduce drug payments by introducing policies to reduce reimbursement for hospital outpatient clinic visits at off-campus, provider-based departments (PBD) and expanding last year’s payment reductions for drugs purchased under the 340B discount pricing program by nonexcepted PBDs.

The site-neutral payment policies will impact grandfathered PBDs that to date have not had to face any payment reductions for the services they provide. For CY 2019, CMS proposes that when reporting HCPCS code G0463 (hospital outpatient clinic visit for assessment and management of a patient), providers that append modifier -PO (excepted service provided at an off-campus, outpatient PBD of a hospital) will be paid at the same rate as those that append modifier -PN (nonexcepted service provided at an off-campus, outpatient PBD of a hospital).

“This proposal doesn’t come as a huge surprise given CMS’ E/M proposals released a few weeks ago, but what is surprising is that CMS does not address that physician offices and hospital outpatient departments, even off-campus ones, are structurally different in terms of infrastructure, typically serve different acuity patients, have payment rates developed under totally differently methodologies, and, most importantly, have different payment policies in place,” says Jugna Shah, MPH, president and founder of Nimitt Consulting Inc.

Specifically, the fundamental prospective payment system concept of packaging is utilized under the OPPS but not the Medicare Physician Fee Schedule (MPFS).

“The Medicare Payment Advisory Commission has always recognized this and has indicated that packaging must be taken into consideration when trying to compare rates between the OPPS and MPFS but the fact that CMS does not do this is deeply troubling,” says Shah. “These are all factors for why it makes perfect sense that the OPPS clinic visit payment rate is higher than the E/M rates under the MPFS.”

For 2019, the proposed unadjusted Medicare payment rate under the OPPS for a clinic visit would be approximately $116. The proposed unadjusted Medicare Physician Fee Schedule (MPFS) equivalent rate that clinics would instead be paid is approximately $46.

“It seems incomprehensible that CMS would expect a 60% reduction to cover the cost of the E/M service, plus all other services rendered that generate no separate payment such as labs, conditionally packaged ancillary services, and certain drugs, devices and drug administration services,” says Shah.

While this shift in payment might typically lead CMS to reallocate these savings to other OPPS services, the agency says in the proposed rule that it believes this method for controlling what it calls “unnecessary growth in the volume of clinic visits furnished by excepted off-campus PBDs” does not require reallocation in a budget neutral manner. Essentially, this means CMS is taking money saved from the change and pulling it out of the OPPS, says Shah.

“This proposal, if finalized, will result in significant financial impact and may lead to distortions to when and how other services, specifically conditionally packaged services, are provided,” says Shah. "Additionally, what CMS doesn’t discuss at all is that the physician is at the center of this. It is the physician who determines what services patients need and orders them. In many cases, the services ordered can only be provided in outpatient hospital departments, yet the hospitals providing these services will take a large payment cut despite providing access to the very care physicians ordered.”

To deal with future items and services CMS may deem represent unnecessary increases in outpatient department utilization, it is requesting comment in the proposed topic on questions such as:

• For what reasons might it ever be appropriate to pay a higher OPPS rate for services that can be performed in lower cost settings?
• How might Medicare define the terms “unnecessary” and “increase” for services (other than the clinic visit) that can be performed in multiple settings of care?
• Should prior authorization be considered as a method for controlling overutilization of services?

After introducing the policy in the 2017 OPPS proposed rule, but not finalizing it, CMS is again proposing to lower reimbursement at excepted PBDs for services provided in what it considers to be “new clinical families” by paying under the MPFS instead of the OPPS.

CMS proposes that, beginning in 2019, if an excepted PBD provides services from any clinical family as defined in the proposed rule that it did not provide and bill under the OPPS between November 1, 2014, and November 1, 2015, the service would be paid under the MPFS at 40% of the OPPS rate.

Excepted PBDs would be required to determine whether they provided services included in the APC ranges that make up each of the 19 clinical families. For example, the pathology clinical family includes APCs 5671-5674 (see Table 32 on p. 401 of the proposed rule for the full list).

CMS is seeking specific public comment on these proposals, including the lookback period for previously billed services, facilities to exclude from this policy, and the makeup of clinical families.

“This proposal is huge for providers and will require them to weigh in again about how this really ties their hands about the types of services they can provide to best meet the needs of their patient populations and the needs of the physicians who are ordering the services,” says Shah. “CMS says that many of its policies over the last year have been about modernizing Medicare, but this feels less like modernizing and more about limiting and constraining access and care delivery, which is not at all patient or provider friendly.”

340B payment reductions expanded

Despite a long-running legal threat initiated by the American Hospital Association and other hospital groups, CMS plans to expand its controversial policy of paying for drugs acquired through the 340B drug discount program at average sales price (ASP) 22.5% instead of the tradition ASP plus 6%.

In the 2019 OPPS proposed rule, CMS notes that nonexcepted PBDs are paid under the MPFS and not the OPPS, so they were not covered by the policy finalized last year affecting 340B hospitals. For 2019, CMS proposes to reimburse these facilities at ASP minus 22.5% for drugs acquired through the 340B program, though rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals would continue to be excepted.

For more information on the proposed rule, see the fact sheet and press release and continue to read Revenue Cycle Advisor for updates. Comments on the proposed rule are due by September 24. 

To learn more about the rule’s proposals and how they could affect your facility, attend HCPro’s annual OPPS proposed rule webinar on Tuesday, August 14, with Shah and Valerie A. Rinkle, MPA, lead regulatory specialist and an instructor for HCPro Medicare boot camps.