Knowledge Base Article

As the holiday season approaches, most of us excitedly anticipate gifts and packages from our friends and relatives for Christmas. In fact, the anticipation is often more thrilling than the actual gift. For those of you who deal with Medicare outpatient services, you may have been, like me, anxiously anticipating the release of the 2017 OPPS Final Rule. The wait is over as CMS released the Final Rule on November 1st. As has been the trend for many years now, CMS continues to increase the packaging of outpatient services under OPPS into more bundled payments. CMS “packages payment for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility.” Our article today examines the new packaging rules for 2017 from the OPPS Final Rule.

Comprehensive APCs

A comprehensive APC (C-APC) results in one bundled payment for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. The C-APC payment policy was finalized in the 2014 OPPS Final Rule but implementation was delayed until January 2015. For 2017, CMS is adding 25 more C-APCs bringing the total number of C-APCs to 62. Since most of us think more in terms of HCPCS codes (includes CPT codes) rather than APCs, it is easier to understand the impact of this increase in C-APCs by looking at the numbers of HCPCS codes assigned to Status Indicator “J1” which denotes a comprehensive APC primary service.

• January 2015 – 219 HCPCS codes
• January 2016 – 872 HCPCS codes
• January 2017 – 2,737 HCPCS codes

In 2016, CMS added another type of comprehensive APC for a specific combination of services performed in combination with each other and named observation services as this type of C-APC. To accomplish the comprehensive payment for observation, visit codes (all ED visits, critical care, clinic visit, and direct referral to observation) were assigned a Status Indicator of “J2.” A comprehensive APC payment is made for the visit codes when all of the criteria for observation services are met – 8 or more hours of obs reported on the day of or day after the visit code, no services with an SI of “J1” on the claim, and no services with an SI of “T” on the day of or day after observation.

The adjunctive services whose payment is bundled with C-APCs includes just about everything –

• diagnostic procedures,
• lab tests,
• other diagnostic tests and treatments,
• visits and evaluations,
• therapeutic services such as injections and infusions,
• other non-primary surgical procedures and add-on procedures,
• prosthetics, orthotics and other durable medical equipment,
• outpatient department services similar to therapy services (PT, OT, SLP), and
• drugs, biologicals and radiopharmaceuticals.

Only a few services not covered or paid under OPPS are excluded from the C-APC policy. The following services are paid separately in addition to the C-APC payment – mammograms, ambulance services, brachytherapy seeds, pass-through drugs and devices, and preventive services. Self-administered drugs (SADs) that are not otherwise packaged as supplies are also excluded from the C-APC policy; hospitals may hold the patient financially responsible for SADs since Medicare does not cover them.

Medicare makes a complexity adjustment for certain comprehensive services. This means they may increase the payment rate of a C-APC to the next higher paying C-APC in the same clinical family in some incidences

• when more than one service with a “J1” status indicator is reported on the same claim or
• when certain add-on codes are reported with a “J1” service.

Medicare bases the decision to apply a complexity adjustment on frequency and cost thresholds. They modified their criteria for complexity adjustments this year which will result in more code combinations being eligible for the increased payment. Addendum J to the Final Rule includes a listing of the code combinations that will receive a complexity adjustment.

One 2017 C-APC of note is the new Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC. Per the FR, “The creation of a new C-APC for allogeneic HSCT and the assignment of status indicator “J1” to CPT code 38240 would allow for the costs for all covered OPD services, including donor acquisition services, included on the claim to be packaged into C-APC payment rate.” To appropriately capture costs, CMS is creating a new cost center and a new revenue code, 0815, for reporting all services required to acquire stem cells from a donor, such as National Marrow Donor Program fees, tissue typing, donor evaluation, collection procedures, and the preparation and processing of stem cells. CMS is also putting in place a claim edit that will require revenue code 0815 to be present on the claim if CPT code 38240 is reported.

Laboratory Packaging

Since 2014, Medicare has packaged most clinical diagnostic laboratory tests. They have only paid laboratory tests separately if:

• they are the only services provided to a beneficiary on a claim,
• they are “unrelated” laboratory tests (ordered by a different physician for a different diagnosis and reported with the L1 modifier),
• they are molecular pathology tests, or
• they are considered preventive services.

For 2017, CMS is eliminating the L1 modifier and will no longer pay separately for “unrelated” lab tests. Medicare will continue to pay separately when lab tests are the only services reported on a claim. In addition to the exclusion of molecular pathology tests from laboratory packaging, for 2017 Medicare will also exclude advance diagnostic laboratory tests (ADLTs) from lab packaging. The ADLTs will be assigned to status indicator “A” and paid under the Clinical Lab Fee Schedule (CLFS). ADLTs are defined as tests that provide an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result.

Per Claim Packaging

Most clinical laboratory tests are assigned to a Status Indicator of “Q4” and, as mentioned above, are sometimes packaged and sometimes eligible for separate payment. This is known as conditional packaging and there are two other status indicators that also indicate conditionally packaged services – “Q1” and “Q2” which prior to 2017 were packaged based on date of service. For 2017, these conditionally packaged status indicators will be packaged on a per claim basis, like lab tests with a “Q4” SI already are. “Q1” services will be packaged if they are reported on the same claim with services with status indicators of “S”, “T”, or “V.” “Q2” services will be packaged if they are on the same claim with services with an SI of “T.”

As you can see, Medicare is a generous gifter – there is not just one package for providers for the New Year, but a whole bunch of them. Unfortunately, you can’t just choose one; you have to take them all.