Overview:Anticipated payment updates for:
Additionally, look for the pace of migration from inpatient to outpatient to quicken as CMS proposes more deletions from the Inpatient Only List and additions to the Ambulatory Surgical Center procedure list. To move things along, ASCs may finally get their wish to move away from CPI-U based reimbursement. Telemedicine should get a boost from separately payable codes for Remote Patient Monitoring and the work portion of Emergency Room RVUs may get a review. ESRD treatment providers should see a status quo policy environment. CY 2019 rulemaking won't be all sunshine and roses. Expect continued pressure on Hospital Outpatient Department reimbursement under site-neutral policies. Given the political currents, also anticipate that drug pricing policy changes for Part B could emerge. |
The Trump Administration has published all the proposed rules related to FY 2019 payment areas. Next up are those provider types on a calendar year update cycle.
First to appear will likely be the CY 2019 updates for physicians, outpatient hospital departments and ambulatory surgical centers.
The OPPS rate is exceedingly hard to estimate due to the effect of the 340B reimbursement policy. Last year, CMS reduced reimbursement for Part B drugs that are acquired by non-profit hospitals from ASP +6 percent to ASP - 22.5 percent. The change was budget neutral and, as a result, the estimated $1.6 billion reduction in Medicare payments to non-profit hospitals related to the 340B program was redistributed to ALL hospital outpatient departments.
The $1.6 billion redistribution was just a rough guess, given the opaqueness of the 340B program. In CY 2018, CMS imposed a modifier for drug claims affected by 340B and as a result will generate more accurate data. If CMS has sufficient data to adjust the 3.19 percent increase from CY 2018, then the CY 2019 amount may rise or fall above that level, If they do not have additional data, we expect them to use a similar budget neutrality adjustment in CY 2019 that they used in CY 2018.
Policy - What to look for:
Changes to the Inpatient Only List. Last year, in removing Total Knee Arthroplasty (TKA) from the inpatient only list, CMS, invited comment on similar action for Total Hip Arthroplasty (THA) and Partial Hip Arthroplasty (PHA).
A procedure is assigned to the Inpatient Only List due to the invasive nature of the procedure; requirement for at least 24 hours of post-op care; or the presence of an underlying condition of a patient. CMS noted in the CY 2018 final rule that the geometric mean length of stay for the DRG assigned to THA and PHA was 4.6 days. In 2016, it was 2.7 days. They also noted there had been significant advances in minimally invasive techniques, improved perioperative anesthesia and alternative postoperative pain management.
CMS’s analysis of comments suggest that Ambulatory Surgical Centers, physicians and patients generally support the change while hospitals, some specialty societies and physicians opposed it.
We anticipate that CMS will propose removal of THA and PHA from the inpatient only list in the CY 2019 rule as part of the general policy viewpoint that it is physicians, not CMS, that should determine the care of a patient, including site of services.
Payments to New Hospital Outpatient Departments. On Jan. 1, 2017, new hospital outpatient departments that were constructed or acquired after Nov. 3, 2016 – with certain grandfathered exceptions – were paid for their services, exclusive of emergency care, at the OPPS rate less 50 percent. The change was part of a site neutral policy goal of Speaker Paul Ryan and designed to equalize payments between physicians’ offices and HOPDs.
The 50 percent haircut was, CMS admitted, just a guess when they implemented the change. Last year, having had time to acquire and analyze more data, CMS determined that physicians are paid about 25 percent of the HOPD rate for the most common outpatient visit. For that reason, for CY 2018, CMS proposed that new HOPDs be paid 25 percent of the OPPS rate.
The hospital industry went nuts, and CMS backed off to 40 percent but not without this parting shot:
“For CY 2019, and for future years, CMS intends to examine claims data in order to determine not only the appropriate [payment adjustment] but also determine whether additional adjustments to the methodology are appropriate especially with the goal of attaining site neutral payments to promote a level playing field under Medicare between physician office setting and off-campus [HOPDs] without regard to the kind of services furnished by particular off-campus [HOPD].”
For obvious reasons, we expect CMS to revisit the HOPD payments for newly acquired facilities in CY 2019.
Additions to the Ambulatory Surgical Center Covered Surgical Procedures List. In the CY 2018 proposed rule, CMS asked commenters if they thought TKA should be added to the ASC Covered Surgical Procedures list.
While commenters seemed to agree that performing TKA in an ASC was appropriate in some circumstances, CMS elected not to add it to the ASC Covered Surgical Procedures list in CY 2018.
As part of its ongoing policy to give physicians discretion regarding site of service, we expect CMS to propose the addition of TKA to the Covered Surgical Procedure list for CY 2019. If that is the case, ASCs will begin performing TKA in January 2019.
Revised Definition of Covered Surgical Procedure at an Ambulatory Surgical Center. In the CY 2018 rule, CMS asked for comment on changing the definition of Covered Surgical Procedure. Under current regulation, a Covered Surgical Procedure is one that is assigned or cross-walked to a Level I CPT code in the 10000 to 69999 range.
This definition excludes “surgery-like” procedures such as cardiac catherization, cardiac device programming services, electrophysiological services and certain radiation treatment services, for example.
In CY 2018 final rule, CMS suggested that they use the CPT code range as more of a guide than a requirement and sought comment on additional criteria they could consider in including surgery-like procedures for the Covered Surgical Procedures list.
According to CMS’s interpretation of the submitted comments, most people thought there were a number of procedures, including certain types of cardiac catherization that could be safely performed in an ASC.
We expect that CMS will make a formal proposal to change the definition of Covered Surgical Procedure that will permit ASCs to expand into the cardiac catherization and other similar procedures in CY 2019..
Ambulatory Surgical Center Payment Reform. Medicare updates ASC payments each year using CPI-U instead of a market basket adjustment. The industry has long sought a change that would update ASCs using the OPPS rate, something CMS is permitted to do under Medicare statute. In the CY 2018 rule, CMS asked stakeholders to consider changes to the ASC payment system.
Since there are some technical and logistical considerations, we expect CMS will continue to advance change in the CY 2019 rule, if not make a formal proposal. However, given that the cost structure for ASCs – they tend to spend more on drugs and supplies and less on labor than HOPDs – we are not certain CMS will adopt the OPPS system for ASCs.
There is no doubt that CMS seems to think that ASCs are underpaid by Medicare. They note that in 2008, ASCs were paid, on average, 65 percent of OPPS. In 2018, it is expected to be 56 percent. Given that data, and the CMS policy goal of providing more patient choice, we do not envision a circumstance where ASCs would be paid less than they are today as a result of payment reform.
Telehealth Services. While telehealth services are greatly restrained by Medicare statute, Remote Patient Monitoring is not. CMS considers RPM to be identical to a physician’s review and interpretation of data from an ECG, for example, after an in person visit.
There are two RPM codes – 99090 and 99091. The latter was unbundled in CY 2018 and is now separately billable to Medicare. The former, which is very broadly described, remains bundled and payable only as part of other physician services. In unbundling 99091, CMS indicated that it would be a short-term solution to facilitate payment of RPM services.
In the CY 2019 rule, we anticipate that CMS will propose separately payable RPM services using codes approved by the American Medical Association CPT Editorial Committee. These codes are focused on two things: Chronic Care Remote Physiologic Monitoring and Inter-professional Internet Consultation. The generic code 99090 would be deleted.
The two unknowns are the rate Medicare will pay for these services and the extent to which they expect utilization to change. The recently unbundled CPT code 99091 pays about $60. Because the PFS is budget neutral, utilization assumptions will affect the rest of the PFS schedule where payment would have to be reduced to offset the RPM costs.
The assignment of specific codes with accompanying reimbursement has implications for commercial payers who often follow CMS’s lead.
Mis-valued Emergency Room Codes. In the CY 2018 rule, CMS agreed with commenters that emergency room codes 99281 through 99385 were mis-valued. Specifically, the industry indicated that work RVUs have been undervalued given the increased acuity of the patient population and the heterogeneity of the care sites, such as freestanding ERs and off-campus emergency departments.
The American Medical Association’s RUC committee is reviewing the RVUs for these emergency room codes. Because their work is not particularly transparent, it is hard to know what, if anything, we can expect in the CY 2019 rule. Given the concerns expressed by CMS, we would expect that if CMS offers anything up for CY 2019, it will surprise to the upside.
But wait, there is more.
Not contemplated in the CY 2018 rules but included in the White House budget are some provisions that could emerge in CY 2019 rulemaking for physicians and outpatient services.
Part B Drug Inflation Limit. This proposal would limit the growth of the ASP portion of Part B drugs to CPI-U. Under this proposal, CMS would pay the lesser of the actual ASP + 6 percent or the inflation-adjusted ASP + 6 percent. The base for determining the growth of a drug’s price would be the initial ASP or the first quarter of CY 2017 for drugs that had an ASP before the regulation’s effective date.
Although this proposal is listed as legislative in nature in the budget, the courts have already affirmed CMS’s broad regulatory authority to establish payment. The hospital lawsuit against CMS over changes to 340B drug reimbursement was dismissed, largely for that reason. The ACLA’s lawsuit over PAMA will probably meet the same fate.
All that is to say that changes to ASP growth could probably be accomplished through regulation and may be considered as part of CY 2019 rulemaking.
Reduction in Wholesale Acquisition Cost-based Payments. Similarly, CMS probably has the authority to reduce reimbursement for single-source Part B drugs when ASP data are not available. Under the budget proposal, which is also classified as legislative, CMS would reduce the payment rate of drugs from 106 percent to 103 percent of Wholesale Acquisition Cost.
Get the popcorn. If one or both of these budget proposal are included in rulemaking the drug industry will fight back. Hard.
Also at the White House is the CY 2019 payment update for outpatient dialysis providers. There really isn’t much in the way of policy action for ESRD treatment until CMS issues a proposed rule on third-party payments. Otherwise, we expect that CMS will review the in-home training add-on payment to see if it is having the desired effect.
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Emily Evans
Managing Director
Health Policy
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