Health Reform WK-EDGE Approximate 2 percent increase in OPPS, ASC payments proposed for 2018; cuts to 340B drug discount payments
Thursday, July 27, 2017

Approximate 2 percent increase in OPPS, ASC payments proposed for 2018; cuts to 340B drug discount payments

By Kelly J. Rooney, J.D., M.P.H.

For calendar year (CY) 2018, CMS is proposing a number of payment rate and policy changes for outpatient hospitals and ambulatory surgical centers (ASCs) aimed at lowering costs, reducing reporting and monitoring burdens on providers, enhancing the patient-doctor relationship, and improving delivery of care, according to the CY 2018 Proposed rule and corresponding fact sheet. The proposed rule provides payment rate and quality reporting changes for CY 2018 for the Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System and changes to OPPS hospital payments under the 340B drug discount program (Proposed rule, 82 FR 33558, July 20, 2017).

Detailed in the CY 2018 Medicare Physician Fee Schedule Proposed rule, a 50 percent reduction in payment is proposed for off-campus provider-based departments, which per sec. 603 of the Bipartisan Budget Act of 2015 would no longer be paid under the OPPS starting in 2017 (see OPPS, ASC payment rates updated; off-campus PBD billing system established, November 2, 2016). According to American Hospital Association Executive Vice President Tom Nickels, "This proposal also appears to have a questionable policy basis and is yet another blow to access to care for patients, including many in vulnerable communities without other sources of health care."

Payment rate updates. CMS estimates that hospitals paid under the OPPS will see payments of $70 billion in 2018, up $5.7 billion from 2017, with the proposed 2.0 percent payment increase overall. This stems from a proposed payment update of 1.75 percent—based on a 2.9 percent projected market basket increase minus 0.4 percentage adjustment for multi-factor productivity (MFP) and 0.75 percent as required under sec. 3401 of the Affordable Care Act (ACA) (P.L. 111-148). ASC payments, which are updated annually by the percentage increase in the Consumer Price Index for all urban customers (CPI-U) minus a multi-factor productivity (MFP) adjustment, is projected to be 1.9 percent (estimated 2.3 percent CPI-U update minus 0.4 percent MFP adjustment).

Other payment changes. CMS is proposing to continue the 7.1 percent adjustment for certain sole community hospitals (SCHs), including essential access community hospitals (EACHs), for all services paid under OPPS, with some exception. CMS also is proposing to continue the additional payments made to cancer hospitals so the hospital’s payment-to-cost ratio (PCR) after additional payments is equal to weighted average PCR for other OPPS hospitals (which is reduced by 1.0 percentage point under the 21st Century Cures Act (P.L. 114-255 Sec. 16002(b)). The additional payments would need to result in a PCR equal to 0.89 for each cancer hospital.

340B payments. CMS is proposing to pay separately payable, non pass-through drugs (except vaccines) purchased at a discount under the 340B drug pricing program at the average sales price (ASP) minus 22.5 percent rather than the ASP plus 6 percent currently paid. (The 22.5 percent figure was the average minimum discount received by eligible hospitals for drugs under the program, as determined by the Medicare Payment Advisory Commission (MedPAC).) Other drugs would still receive ASP plus 6 percent payment. CMS notes this would better reflect the resources and acquisition costs incurred by hospitals and would allow the Medicare program and beneficiaries to share in the savings hospitals seen under the 340B program.

Quality reporting programs. The Hospital Outpatient Quality Reporting (OQR) Program requires hospital outpatient facilities to submit data on quality measures and collect certain data or they will see a 2.0 percent reduction of payment for failing to meet the requirements. In an effort to reduce the burden on providers, CMS is proposing to remove six measures under the CY 2018 rule and is seeking public comment on the future of another measure; to delay the mandatory implementation of the Consumer Assessment of Healthcare Providers and Systems Outpatient and Ambulatory Surgery Survey (OAS CAHPS) for 2018 (although hospitals may voluntarily administer this survey for 2018); and is clarifying procedures for validation of chart-abstracted measures.

Similarly, ASCs will see their payment reduced by 2.0 percentage points if they fail to meet the reporting and data collection requirements of the Ambulatory Surgical Center Quality Reporting (ASCQR) Program. CMS is proposing to add three measures, remove three measures, and to delay the mandatory implementation of the OAS CAHPS, and requests comments on two other measures.

Other proposed changes and feedback. A number of other proposed changes are contained within the Proposed rule, including:

  • To continue the moratorium (for CYs 2018 and 2019) on enforcement of the direct physician supervision requirements for hospital outpatient therapeutic services furnished in hospitals, CAHs, and in provider based departments of hospitals.
  • To conditionally package payment for low-cost drug administrative services.
  • To remove total knee arthroplasty from the list of procedure that are only paid under the Hospital Inpatient Prospective Payment System (IPPS), or the inpatient-only (IPO) list. (list of procedures that are only paid under IPPS. (This was supported by the Advisory Panel on Hospital Outpatient Payment).
  • To add three procedures to ASC covered procedures list (CPL).
  • Device pass-through applications are being evaluated for five devices.
  • Instead of being assigned into high or low cost groups, that skin substitutes (products used to promote wound healing) be assigned a geometric mean unit cost (MUC) or per day cost (PDC) that exceeds either the MUC threshold or the PDC threshold to the high cost group.
  • Maintain the 2017 methodology regarding partial hospitalization program (PHP) rate setting where a unified rate structure with a single PHP payment rate for each provider type for days with three or more services per day are performed.
  • No extensive changes to the already existing methodology for comprehensive APCs (C-APCs) and no new C-APCs are proposed.
  • Based on the Consolidated Appropriations Act, 2016 (P.L. 114-113), amending Soc. Sec. Act sec. 1833(t)(16) which provides for a phased-in reduction of payments for imaging services using computed radiography technology, a new modifier is established that would be reported to claims to identify such services.

CMS also is requesting feedback from stakeholders on a number of different policies, for example:

  • About existing packaging policies under OPPS, specifically "common clinical scenarios" for which payment would be most appropriately packaged under OPPS.
  • Whether partial and total hip arthroplasty should be removed from the IPO list.
  • Whether total knee arthroplasty, partial hip arthroplasty, and total hip arthroplasty should be added to the ASC-CPL.
  • Because stakeholders claim the current laboratory date of service (DOS) policy is an "unintentional operational burden" on hospital and laboratories that perform molecular pathology and certain advanced diagnostic laboratory tests (ADLTs), whether the tests are appropriately separable from the hospital stay and should have a DOS that is the date of performance rather than collection.
  • Ways to improve payment accuracy and data collection for ASCs.

Starting a conversation. In general, CMS would "like to start a national conversation about improving the healthcare delivery system" and how to make the health care more effective, simple, and accessible while maintaining program integrity and preventing fraud.

Companies: American Hospital Association

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