Forecasting Financials Based on CMS’ Latest Proposals

August 19, 2016
Medicare Web

by Jugna Shah, MPH

CMS’ proposed changes to implement Section 603 of the Bipartisan Budget Act of 2015 and reshape payments for off-campus, provider-based departments (PBD) represent the most significant changes in the current year (CY) 2017 OPPS proposed rule.

The policy—mandated by Congress for CMS to find a way to implement what is often known as site-neutral payments —certainly had to be a priority for CMS staff while working on the proposed rule, and may have pushed off other initiatives in the works for 2017. Despite this, providers still need to take a close look at other aspects of this year’s proposed rule to accurately forecast the financial impact they may face in CY 2017 and beyond. 

Forecasting financials

In the early days of the OPPS, determining the financial impact was a decidedly simpler affair.  Providers could simply compare the current year’s payment for a CPT/HCPCS code to the proposed future rate.  Essentially, line-item level comparisons were sufficient for your top volume of services or the services that represented the top 20% of your billed charges. That is no longer the case, as CMS has moved over the years to increased packaging and packaging that essentially crosses date of service and applies at the claim level.

Back in the day, it was as simple as looking at the change in payment rate at the code level to determine the impact of CMS’ proposals. Then, we moved into looking at payment impact across line items for a given date of service as CMS introduced conditional packaging through status indicator Q to see if item/services would be paid separately or packaged. As policies continued to evolve, such as the introduction of comprehensive APCs (C-APC) and expanded lab packaging, we had to begin computing financial impact at the claim level.

This meant moving from a process that required few people and easily accessed data to requiring more people, more departments, and more information to make informed projections and decisions. These trends continue in the 2017 OPPS proposed rule, with proposals that will require inter-departmental staff coordination and a nuanced look.

Section 603

HIM and finance departments may also need to be involved as hospitals attempt to forecast the impact of the Section 603 provisions that would set payment rates for new PBDs at Medicare Physician Fee Schedule (MPFS) rates instead of the OPPS.

For example, grandfathered, or as CMS now calls them, “excepted” hospitals, would be paid at MPFS rates instead of OPPS for any expansion of services after November 2, 2015. CMS has identified clinical families at the APC level to define service expansions. Analyzing the impact of CMS’ proposals now is key in understanding what sort of financial impact your organization will face if CMS finalizes its proposals.  Alternatively, understanding impact now may help inform comments to CMS.

Additionally, just keep in mind that just because payments will be paid according to the MPFS and not the OPPS does not mean that your facility will be losing money. That may have been nearly always true five years ago, but as CMS continues to increase packaging, MPFS rates may actually be better for your facility since you’ll be getting paid separately for more items and services.

This certainly won’t be true across the board. It might not be applicable to the majority of facilities. But it’s still worth looking into for those who are worried about facing a massive revenue swing if CMS’ proposal is finalized.

Editor's note: Jugna Shah, MPH, president and founder of Nimitt Consulting, writes a bimonthly column for Briefings on APCs, commenting on the latest policies and regulations and analyzing their impact on providers. This is an excerpt from her article in September's issue.