Knowledge Base Article

Over the past few weeks, articles in our Wednesday@One newsletter have addressed some of the new and revised policies from the 2020 Medicare Outpatient Prospective Payment System (OPPS) Final Rule. One such article last week discussed the continuation of two policies that the courts have already found to be outside of CMS’s authority – 1) the second year and further decrease in payment rates for outpatient clinic visits in excepted off-campus provider-based departments to the same rate (40% of OPPS rates) as paid for services in nonexcepted off-campus PBDs and 2) payment of separately payable drugs purchased through the 340B program at average sales price (ASP) minus 22.5%. This article will examine the changes in the level of supervision required for hospital outpatient therapeutic services and the new requirement for prior authorization for select cosmetic procedures. The change in supervision requirements is a relief for hospitals, especially critical access and small rural hospitals. Unfortunately, the prior authorizations are an added burden on hospitals, regardless of how CMS tries to couch it.

Level of Supervision of Outpatient Therapeutic Services in Hospitals and Critical Access Hospitals (CAHs)

Around 2010 and in subsequent years, CMS “clarified” in the OPPS final rules, that they expected direct supervision of therapeutic services in a hospital outpatient setting.  Direct supervision in a hospital was defined to mean that a physician was immediately available to direct or take over performance of the procedure. Due to the difficulties in meeting this requirement, CMS or Congress have continually had a nonenforcement rule for CAHs and small rural hospitals for this policy, the latest of which is expiring December 31, 2019. You can read more about the direct supervision requirements and where we currently stand in a prior Wednesday@One article.

In the 2020 OPPS Final Rule, CMS finalized their proposed policy to change the “generally applicable minimum required level of supervision for hospital outpatient therapeutic services from direct supervision to general supervision for services furnished by all hospitals and CAHs.” General supervision means that the procedure is furnished under the physician’s overall direction and control, but that the physician’s presence is not required during the performance of the procedure. CMS took this action to reduce the burden for outpatient hospital providers, to allow more flexibility to provide medical care, and to eliminate what has in effect been a two-tiered system of supervision levels between CAHs/small rural hospitals and all other hospitals. CMS feels comfortable changing the required level of supervision for hospital outpatient therapeutic services because:

• CMS is not aware of any supervision-related complaints from patients or of any data or information from providers indicating the quality of care for services furnished under general supervision was affected,
• There are Medicare Conditions of Participation (CoPs) and State and federal laws that require physician direction and supervision of hospital services to ensure the safety, health, and quality standards of outpatient therapeutic services,
• Hospitals and physicians can decide to furnish direct supervision for services when they believe a higher level of supervision is necessary to ensure the quality and safety of the procedure and to protect the patient from complications that might occur,
• CMS retains the ability to change the supervision level of an individual hospital outpatient therapeutic service or the default minimum level to a more intensive level of supervision, and
• CMS plans to monitor care furnished to Medicare beneficiaries to determine if there is any decline in the quality of therapeutic outpatient services provided as a result of this policy.

This policy becomes effective January 1, 2020 and will remain in place for future years unless modified by later notice and comment rulemaking.

Prior Authorization for Select Hospital Outpatient Services

As part of their responsibility to protect the Medicare Trust Funds, CMS routinely monitors the utilization of services. They have identified several surgical procedures with higher than expected volume increases that could be potentially noncovered by Medicare due to their cosmetic nature. In order to manage the growth of Medicare spending and control unnecessary increases in the volume of hospital outpatient department (OPD) services, CMS is implementing a policy for the prior authorization of certain procedures to “reduce the instances in which Medicare pays for these services when they are merely cosmetic and not medically necessary.”

• The affected procedures are blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty and vein ablation. A listing of the affected CPT codes can be found in the final rule. (See page 316 of the 2020 OPPS Final Rule pdf.)
• The requirement would begin for dates of service on or after July 1, 2020.
• Prior authorization is a process through which a request for provisional affirmation of coverage is submitted to Medicare or its contractors for review before the service is provided to the patient and before the claim is submitted.
• The PA request should include all documentation necessary to show that the service meets applicable Medicare coverage, coding and payment rules.
• Claims submitted for services that require a PA that have not received a provisional affirmation of coverage from Medicare would be denied unless the provider is exempt.
• Claims associated with the denied service, such as anesthesiology services, physician services, and/or facility services will also be denied.
• Upon submission of a PA request, CMS or its contractors would issue a decision (affirmative or non-affirmative) within 10 business days.
• Providers can request an expedited review if a delay could seriously jeopardize the patient’s life, health or ability to regain maximum function and a decision will be rendered within 2 business days. Documentation supporting the risk of serious jeopardy must be submitted with the request for an expedited PA.
• Exemption Process - CMS may elect to exempt providers from the PA process who achieve a PA affirmation threshold of at least 90% during a semiannual assessment. This exemption could be removed if the provider subsequently has a rate of non-payable claims greater than 10%.
• A non-affirmation PA decision is not appealable, but the provider will receive a detailed explanation as to why the request was non-affirmed and can resubmit an unlimited number of requests. Appeal rights exist once a claim is denied.
• There will be more sub-regulatory guidance before the requirement becomes effective, but the final rule indicates either the hospital or the physician may submit the PA request, though the hospital is ultimately responsible for ensuring this condition of payment is met.
• A unique tracking number (UTN) corresponding to the PA decision must be included on the OPD claim.

CMS argues this is not an additional burden on hospitals since no new documentation is required beyond what should already be present in the record and the hospital is just having to submit the records before the procedure instead of afterwards as they would have to do in the case of a Medicare medical review. Everyone knows it will be an additional burden, but the good news is that hospitals are used to PA requirements from most other payers, it causes the hospital to get the required documentation together before providing the service, and it likely will prevent some inappropriate payments for cosmetic procedures that do not meet Medicare’s medical necessity requirements.

So, a little relief for some, a little burden for others – is that a wash?