Knowledge Base Article

A few weeks ago, when CMS released the 2019 Outpatient Prospective Payment System (OPPS) Proposed Rule, we addressed some of the major proposed changes from that rule in Wednesday@One articles. Specifically, our August 1st newsletter included an article on the proposed changes to payments for off-campus provider-based departments and an article on the proposed changes to the inpatient only list. This week I will review some of the other more modest proposals from that rule.

Increased Payment Rate

CMS is proposing for CY 2019 an OPPS fee schedule increase factor of 1.25%.

• This increase factor is based on proposed hospital inpatient market basket percentage increase of 2.8% minus the proposed multifactor productivity (MFP) adjustment of 0.8%, and minus a 0.75% adjustment required by the Affordable Care Act.
• CMS estimates total payments to OPPS providers for CY 2019 would be approximately $74.6 billion, an increase of approximately $4.9 billion compared to estimated CY 2018 OPPS payments.
• The statutory 2.0% reduction in payments for hospitals failing to meet the hospital outpatient quality reporting requirements would continue for 2019.

Comprehensive APCs

As a reminder, the comprehensive APC (C-APC) payment policy packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level.

• Services identified by a status indicator (SI) of “J1” are designated as primary services.
• When a primary service is reported on a hospital outpatient claim, Medicare makes a single payment for the claim. Payment for all adjunctive and secondary items, services, and procedure is included in this single payment for the primary service.
• Services with “packaged” payment under C-APCs include diagnostic tests and procedures, visits, DME, therapy services provided during the perioperative period, and drugs, biologicals, and radiopharmaceuticals.
• Services excluded from the C-APC include mammography and ambulance services, brachytherapy seeds, pass-through drugs and devices, self-administered drugs, and certain preventive services.
• Medicare makes an increased payment for complexity adjustments when certain multiple “J1” codes or certain add-on codes are present on the claim.

For CY 2019, CMS is proposing to create three new C-APCs involving ears, nose, and throat (ENT) and vascular procedures: proposed C-APC 5163 (Level 3 ENT Procedures); proposed C-APC 5183 (Level 3 Vascular Procedures); and proposed C-APC 5184 (Level 4 Vascular Procedures).  This proposal would increase the total number of C-APCs to 65.

Also related to C-APCs, CMS is proposing to exclude payment for any procedure that is assigned to a New Technology APC from being packaged when included on a claim with a “J1” service assigned to a C-APC.

Device-Intensive Procedures

Currently, device-intensive procedures are those procedure that involve surgically inserted or implanted devices that remain in the patient’s body after surgery and for which the portion of the APC payment attributed to the device (device off-set amount) exceeds 40%. This means the following device-intensive policies apply to these procedures:

• There is a procedure/device edit that requires a device code to be reported on a claim with a device-intensive procedure. Any device code will satisfy the edit and CMS created HCPCS code C1889 to report devices furnished during a device-intensive procedure that are not described by a specific HCPCS code.
• OPPS payment for device-intensive procedures is decreased by the full or partial credit a provider receives for a replaced device, when a hospital furnishes a specified device without cost or with a full or partial credit. Hospitals report on the claim the amount of the credit in the amount portion for value code “FD” when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device.

For CY 2019, CMS is proposing to modify the device-intensive criteria to 1) allow procedures that involve single-use devices, regardless of whether or not they remain in the body after the conclusion of the procedure and 2) allow procedures with a device offset percentage of greater than 30 percent to qualify as device-intensive procedures. They are making these proposals because:

• They “no longer believe that whether a device remains in the patient’s body should affect its designation as a device-intensive procedure because such devices could, nonetheless, comprise a large cost of the applicable procedure”
• The lower 30% threshold “allow(s) a greater number of procedures to qualify as device-intensive.”
• “Allowing these additional procedures to qualify for device-intensive status will help ensure these procedures receive more appropriate payment in the ASC (ambulatory surgical center) setting, which will help encourage the provision of these services in the ASC setting.”
• “This proposed change would help to ensure that more procedures containing relatively high-cost devices are subject to the device edits, which leads to more correctly coded claims and greater accuracy in our claims data.”

The most interesting of the above reasons is CMS’s obvious hope that these policy changes would shift more of these procedures from the hospital setting to the lower-cost ASC setting. Addendum P to the proposed rule includes a full list of the proposed CY 2019 OPPS device-intensive procedures. All of the above noted device-intensive policies would apply to these procedures.

Separately Payable Drugs and Biologicals

For CY 2019, CMS is proposing to continue to pay for pass-through drugs and biologicals and separately payable non-pass-through drugs, biologicals, and therapeutic radiopharmaceuticals not purchased through the 340B drug program at ASP (average sales price) +6 percent. The proposed packaging threshold for CY 2019 is $125 a slight increase from the CY 2018 threshold of $120. This means payment for drugs with a per day cost less than or equal to $125 will be packaged and not paid separately.

They are proposing to continue to pay for separately payable Medicare Part B drugs (assigned status indicator “K”), other than vaccines (SI = “L” or “M”) and drugs on pass-through payment status (SI = “G”), acquired with a 340B discount at a rate of ASP minus 22.5 percent when billed by a hospital paid under the OPPS that is not excepted from the payment adjustment. Hospitals to which the payment reduction applies will continue to report modifier “JG” for applicable status “K” drugs. Rural sole community hospitals (SCHs), children’s hospitals, and PPS-exempt cancer hospitals are proposed to continue to be excepted from the 340B payment adjustment. These hospitals would continue to report informational modifier “TB” for 340B-acquired drugs, and continue to be paid ASP+6 percent.

One slight change is for drugs or biologicals for which ASP data is not available. For these drugs/biologicals CMS is proposing to pay WAC (wholesale acquisition cost) +3%, rather than WAC+6% whenever WAC-based pricing is used for a drug or biological. WAC minus 22.5% would continue to apply for drugs acquired under the 340B Program.

Those are some of the more interesting proposals for 2019, but as usual CMS has asked for input on a number of proposals, one related to skin substitutes. Currently CMS assigns skin substitutes to a low cost or high cost category based on either a product’s geometric mean unit cost (MUC) or the product’s per day cost (PDC) exceeding specified thresholds. Payment for skin substitutes is packaged, but application of high cost substitutes is reported with HCPCS codes 15271 through 15278, which receives a higher payment rate than application of low cost substitutes reported with HCPCS codes C5271 through C5278.

Significant fluctuations in the MUC or PDC thresholds from year to year may result in the reassignment of several skin substitutes from the high cost group to the low cost group which, under current payment rates, can be a difference of approximately $1,000 in the payment amount for the same procedure. One solution for CMS has been to maintain assignment of a product to the high cost group if it was in the high cost group the prior year, regardless of whether it exceeds or falls below the CY 2019 MUC or PDC threshold.

However, CMS continues to seek input on other ways to handle the payment of skin substitutes. They have identified four potential methodologies that have been raised and they encourage the public to review and provide comments on these. They “are especially interested in any specific feedback on policy concerns with any of the options presented as they relate to skin substitutes with differing per day or per episode costs and sizes and other factors that may differ among the dozens of skin substitutes currently on the market.” The four potential methodologies include:

• A lump-sum “episode-based” payment for a wound care episode,
• One payment category and set of procedure codes for all skin substitute products,
• Payment of current add-on codes or new additional procedure codes for larger size graft services, or
• A different threshold used to assign skin substitutes in the high-cost or low-cost group.

The discussion of these options can be found on page 37119 of the  OPPS 2019 Proposed Rule.

One last thing that hospitals need to know, even though this is not from the OPPS section of the proposed rule. CMS is proposing to add heart catherization and coronary angiography procedures described by CPT codes 93451-93462 to the list of ASC surgical procedures for 2019. This would allow Medicare patients having these procedures to elect to have them in an ASC instead of in a hospital setting.

For hospitals, some of these proposals may not be as modest as they first appear.