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Fiscal Year 2023 Supplemental Improper Payment Data

On December 7, 2023, the Comprehensive Error Rate Testing (CERT) published the 2023 Medicare Fee-for-Service Supplemental Improper Payment Data ( https://www.cms.gov/data-research/monitoring-programs/improper-payment-measurement-programs/comprehensive-error-rate-testing-cert/cert-reports).

This report supplements the FY 2023 HHS Agency Final Report for Fiscal Year 2023, highlights common causes of improper payments, and includes tables allowing you to drill down into the review findings.

Estimated Improper Payment Rates

Calculation for the FY 2023 Medicare FFS improper payment rate included claims submitted during the 12-month period from July 1, 2021 through June 30, 2022. As compared to FY 2020 and 2021, the improper payment rate is trending up:

Improper Payment Rate

• FY 2020: 6.27%
• FY 2021: 6.26%
• FY 2022: 7.46%
• FY 2023: 7.38%

  Improper Payment Amount

• FY 2020: $25.74 billion
• FY 2021: $25.03 billion
• FY 2022: $31.46 billion
• FY 2023: $31.23 billion

   

  “It is important to note that the improper payment rate is not a “fraud rate,” but is a measurement of payments that did not meet Medicare requirements. Improper payments are attributed to one of five major error categories (no documentation, insufficient documentation, medical necessity, incorrect coding, or other).

  Unfortunately, “insufficient documentation” continues to be the main cause of improper payments. The CERT defines “insufficient documentation” as when the medical record documentation submitted is inadequate to support payment for the services billed. In other words, the CERT contractor reviewers could not conclude that the billed services were provided, were provided at the level billed, and/or were medically necessary. Claims are also placed into this category when a specific documentation element that is required as a condition of payment is missing, such as a physician signature on an order, or a form that is required to be completed in its entirety.

  While the CERT data reports on improper payments in various settings (i.e., skilled nursing facilities, hospital outpatient, hospice), this article focuses on Part A (Hospital IPPS) findings.

  “0 or 1 day” Length of Stay Claims

  A compare of improper payments rates for Part A hospital claims by length of stay (LOS) has been a part of this annual report since the October 1, 2013 implementation of the Two-Midnight Rule:

   

• 2014: “0 or 1 Day” stay claims highest improper payment rate to date at 37.18%,
• 2021: “0 or 1 Day” stay claims lowest improper payment rate to date at 16.8%.
• 2022: The “0 or 1 Day” claims rate increased to 20.1% with projected improper payments of $1.5 billion.
• 2023: The “0 or 1 Day” claims rate again increased to 21.7% with projected improper payments of $1.7 billion.

In addition, to the CERT’s focus on claims by length of stay, short stays (“0 of 1 Day” Stays) are also actively being reviewed by the OIG as part of their Work Plan (https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000538.asp) and Livanta, the National Medicare Claim Review Contractor (https://livantaqio.com/en/ClaimReview/index.html), who is actively requesting short stay claims across the nation on a monthly bases.  

In early 2023, Livanta published their year one review results. Of the 18,672 short stay claims reviewed, 2,663 (14%) of the claims were denied. You can read more about their review results in a related MMP article (https://www.mmplusinc.com/kb-articles/national-medicare-claims-review-contractor-year-one-review-results).

Top 20 Service Types with Highest Improper Payments: Part A Hospital IPPS

Table D4 of this report includes the top 20 DRG types with the highest improper payment rate. The table also details the percentage of error by each of the CERT’s major error categories.

Overall, 52.9% of the errors in the top 20 service types were due to error category medical necessity. This is an increase from 44.4% in FY 2022. A claim is placed in this category when the CERT contractor reviewer receives adequate documentation from the medical records submitted to make an informed decision that the services billed were not medically necessary based upon Medicare coverage and payment policies. The following three DRG types had the highest percent of errors attributed to medical necessity:

• DRG Pair 469 and 470: Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity,
• DRG Group 091, 092, and 093: Other Disorders of Nervous System, and
• DRG Group 518, 519, and 520: Back and Neck procedures Except Spinal Fusion.

Medicare Transmittals & MLN Articles

November 22, 2023: MLN MM13452: Medicare Physician Fee Schedule Final Rule Summary: CY 2024

This article highlights changes in the CY 2024 Physician Fee Schedule final rule. For example, starting in CY 2024, telehealth services provided to people in their homes will be paid at the non-facility PFS rate. https://www.cms.gov/files/document/mm13452-medicare-physician-fee-schedule-final-rule-summary-cy-2024.pdf

November 30, 2023: Change Request (CR) 13312: Indian Health Services (IHS) Rural Emergency Hospital (REH) Provider Enrollment

Beginning January 1, 2024, a tribal or IHS operated hospital that converts to an REH (IHS-REH) that provides hospital outpatient services to a Medicare beneficiary may be paid under the outpatient hospital All-Inclusive rate that is established and published annually by the IHS, rather than the rate for REH services. This CR updates Chapter 10 of the CMS Publication 100-08 (Medicare Program Integrity Manual) to include provider enrollment guidance regarding IHS-REHs. https://www.cms.gov/files/document/r12217pi.pdf

December 7, 2023: MLN MM13333: Medicare Program Integrity Manual: CY 2024 Home Health Prospective Payment System Updates

This article includes information about expanding the HHS 36-month rule, moving hospices into the high level of categorical risk-screening, and other updates to Chapter 10 of the Medicare Program Integrity Manual. https://www.cms.gov/files/document/mm13333-medicare-program-integrity-manual-cy-2024-home-health-prospective-payment-system-updates.pdf

December 7, 2023: MLN SE19007: Activation of Validation Edits for Providers with Multiple Service Locations – Revised

The December 7^th revision of this special edition MLN article adds information on how to verify and update service locations for Medicare enrollment and what claim modifier to use. https://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnmattersarticles/downloads/se19007.pdf

December 12, 2023: MLN MM13463: DMEPOS Fee Schedule: CY 2024 Update

Make sure your billing staff knows about CY 2024 fee schedule amounts for new and existing codes and payment policy changes. For example, the CY 2024 HH PPS final rule established a new benefit category for standard and custom fitted compression garments and additional lymphedema compression treatment items under Medicare Part B. https://www.cms.gov/files/document/mm13463-dmepos-fee-schedule-cy-2024-update.pdf

December 20, 2023: Change Request (CR) 13222: Enforcing Billing Requirements for Intensive Outpatient Program (IOP) Services with New Condition Code 92

Effective January 1, 2024, Section 4124 of the Consolidated Appropriations Act of 2023 establishes Medicare coverage and payment for IOP services for individuals with mental health needs when furnished by hospital outpatient departments, Critical Access Hospital outpatient departments, and Community Mental Health Centers. The original Transmittal 12125 has been rescinded and replaced by Transmittal 12423 (CR 13222) dated December 20, 2023. The purpose of this CR is to implement the new condition code 92 for IOP services and enforce billing requirements (https://www.cms.gov/files/document/r12423cp.pdf). Additional information about condition code 92 is available in a related MLN article 13496. https://www.cms.gov/files/document/mm13496-billing-requirements-intensive-outpatient-program-services-new-condition-code-92.pdf

December 21, 2023: MLN MM13481: Ambulatory Surgical Center Payment System: January 2024 Update

Make sure your billing staff knows about system updates for January, including new codes for covered devices for pass-through payments, biology-guided radiation therapy, dental services, surgical procedures, drugs and biologicals, and skin substitutes. https://www.cms.gov/files/document/mm13481-ambulatory-surgical-center-payment-system-january-2024-update.pdf

December 26, 2023: MLN SE19007: Activation of Validation Edits for Providers with Multiple Service Locations – REVISED

Question

A patient was admitted to the hospital with acute renal failure and has a history of a kidney transplant.  Is acute renal failure a complication of the kidney transplant?

Answer

Acute renal failure is affecting the function of the transplanted kidney, but it doesn’t mean that the transplant itself has failed.  Assign T86.19 (Other complication of kidney transplant) along with N17.9 (Acute renal failure) to correctly code this case.

• Pre-existing conditions or conditions that develop after an organ transplant are not coded as complications unless it affects the function of the transplanted organ.

References:

Coding Clinic for ICD-10-CM/PCS, Second Quarter 2019:  Page 7

AHA Coding Handbook

In a November 16^th Press Release HHS announced three new key resources to “build on the Administration’s work to advance health equity by acknowledging that peoples’ social and economic conditions play an important role in their health and wellbeing.”

White House Resource: U.S. Playbook to Address Social Determinants of Health (SDOH)

HHS defines SDOH as “the conditions in the environment where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.”

The White House’s vision is for every American to lead full and healthy lives within their community. “This Playbook lays out an initial set of structural actions federal agencies are undertaking to break down these silos and to support equitable health outcomes by improving the social circumstances of individuals and communities.” The playbook groups actions into the following three pillars:

• Pillar 1: Expanding Data Gathering and Sharing,
• Pillar 2: Support Flexible Funding to Address Social Needs,
• Pillar 3: Support Backbone Organization.

   

  HHS Resource: Medicaid and Children’s Health Insurance Program (CHIP) Health-Related Social Needs (HRSN) Framework

  In a related Press Release HHS notes “the Playbook highlights ongoing and new actions that federal agencies are taking to support health by improving the social circumstances of individuals…The second resource provides guidance “to structure programs that address housing and nutritional insecurity for enrollees in high need populations.”

   

  HHS Resource: HHS’s Call to Action to Address Health Related Social Needs

  The third document is meant to “encourage cross-sector partnerships among those working in health care, social services, public and environmental health, government, and health information technology to create a stronger, more integrated health and social care system through shared decision making and by leveraging community resources, to address unmet health related social needs.”

   

  Z-Codes: Identifying and Coding Social Determinates of Health

  Identifying and coding SDOH supports quality measurement, planning, and implementation of social needs, and identifying community population needs. This data can be used to advocate for updating and creating new policies. For example, effective October 1, 2023, the severity designation for three Z codes was changed to a CC (comorbidity or complication) for purposes of MS-DRG assignment:

• Z59.00: Homelessness, unspecified,
• Z59.01: Sheltered homelessness (due to economic difficulties, currently living in a shelter, motel, temporary or transitional living situation, scattered site housing, or not having a consistent place to sleep at night), and
• Z59.02: Unsheltered homelessness (residing in a place not meant for human habitation, such as cars, parks, sidewalks, or abandoned buildings (on the street)).

CMS noted in a FY 2024 IPPS Final Rule Fact Sheet that as SDOH codes are increasingly added to billed claims, they plan “to continue to analyze the effects of SDOH on severity of illness, complexity of services, and consumption of resources.” 

To help with understanding and coding Z Codes, CMS has published an infographic titled Improving the Collection of Social Determinants of Health (SDOH) Data with ICD-10-CM Z Codes. This document defines Z codes, explains the importance of collecting them and includes recent SDOH Z Code Categories and new codes effective October 1, 2023.

A related Journey Map walks you through five steps to using Z codes and how using these codes can enhance your quality improvement initiatives.

The OIG released its semiannual report to Congress on December 1^st. In a related fact sheet they indicated the report highlights over $3.44 billion in expected recoveries resulting from HHS-OIG audits and investigations conducted during fiscal year (FY) 2023.

This report “describes OIG’s work on significant problems, abuses, deficiencies, remedies, and investigative outcomes relating to the administration of HHS programs and operations during the reporting period. In this report, we present OIG expected recoveries, criminal and civil actions, and other statistics as a result of our work for the semiannual reporting period of April 1, 2023-September 30, 2023. We also provide data for accomplishments for fiscal year (FY) 2023 and highlight some of our work completed during this semiannual reporting period.”

For this article, we will focus on one report completed by the OIG that impacts inpatient claims in acute care hospitals. In September 2023, OIG released the report Medicare Improperly Paid Acute-Care Hospitals for Inpatient Claims Subject to the Post-Acute-Care Transfer Policy Over a 4-Year Period, but CMS’s System Edits Were Effective in Reducing Improper Payments by the End of the Period (A-09-23-03016), September 2023.

About the Post-Acute-Care Transfer Policy

Medicare makes the full Medicare Severity Diagnosis-Related Group (MS‑DRG) payment to an acute‑care hospital that discharges an inpatient to home or certain types of health care institutions but pays an acute-care hospital that transfers an enrollee to post-acute care a per diem rate for each day of the enrollee’s stay in the hospital.

Post-acute care settings that are subject to this policy includes transfers to:

• Inpatient rehabilitation facilities and units (Patient discharge status code 62 or planned acute care hospital inpatient readmission patient status code 90),
• Long-term care hospitals (Patient Status Code 63 or planned acute care hospital inpatient readmission Patient Status Code 91),
• Psychiatric hospitals and units (Patient discharge status code 65 or planned acute care hospital inpatient readmission patient status code 93),
• Cancer hospitals (Patient discharge status code 05 or planned acute care hospital inpatient readmission patient status code 85),
• Children’s hospitals (Patient discharge status code 05 or planned acute care hospital inpatient readmission patient status code 85),
• Skilled nursing facility (Patient discharge status code 03 or planned acute care hospital inpatient readmission patient status code 83),
• Hospice care at home (Patient status code 50) or Hospice Medical Facility (Certified) providing hospice level of care (Patient status code 51)
• Home under a written plan of care for the provision of home health (HH) services from a HH agency and those services occurs within 3 days after the date of discharge (Patient discharge status code 06 or planned acute care hospital inpatient readmission patient status code 86).

MS-DRGs Subject to the Post-Acute-Care Transfer Policy in the CMS FY 2024

• 764: The overall number of MS-DRGs for FY 2024
• 282: The number of MS-DRGs subject to this policy
• 148: The number of surgical MS-DRGs subject to this policy
• 134: The number of medical MS-DRGs subject to this policy

Specific regulations regarding the transfer policies can be found in Chapter 4 of the Medicare Claims Processing Manual, section 40.2.4.

Why OIG Did The Audit

OIG notes that compliance with the transfer policy has been an issue for a long time and this audit was conducted to evaluate whether Medicare properly paid acute-care hospital claims subject to the policy for claims with dates of service from January 1, 2019, through December 31, 2022.

About the Audit

• $198 million: The Medicare Part A payments covered in the audit.
• 12,133: the number of inpatient claims subject to the transfer policy.
• Claims included in the audit had a discharge status code to home or certain types of health care institutions on the claim.
• OIG used Medicare enrollee information to identify post-acute services settings that began on the same day as discharge for SNF claims, and within 3 days of inpatient discharge for home health claims.

What OIG Found

Medicare improperly paid $41.4 million to acute-care hospitals for inpatient claims subject to the post-acute-care transfer policy. This amount of money represents the difference between the amount of the full MS-DRG payments and the amount that would have been paid if the per diem rates had been applied.

These improper payments were made because CMS’s system edits were not effective in detecting inpatient claims subject to the transfer policy in October and November 2019 and from October 2020 through March 2022. However, after CMS fixed the edits in April 2022, improper payments significantly decreased through the end of the audit period.

October 30, 2023: MLN MM13390: ICD-10 & Other Coding Revisions to National Coverage Determinations: April 2024 Update (CR 1 of 2)

CMS advises providers to make sure your billing staff knows about newly available codes, recent coding changes, and NCD coding information.  https://www.cms.gov/files/document/mm13390-icd-10-other-coding-revisions-national-coverage-determinations-april-2024-update-cr-1-2.pdf

October 30, 2023: MLN MM13391: ICD-10 & Other Coding Revisions to National Coverage Determinations: April 2024 Update (CR 2 of 2)

CMS advises providers to make sure your billing staff knows about newly available codes, recent coding changes, and NCD coding information. https://www.cms.gov/files/document/mm13391-icd-10-other-coding-revisions-national-coverage-determinations-april-2024-update-cr-2-2.pdf

November 3, 2023: MLN MM13244: Separate Payment for Disposable Negative Pressure Wound Therapy Devices on Home Health Claims

Effective January 1, 2024, Medicare will make separate payment for HCPCS code A9272 on type of bill (TOB) 032x, instead of 034x. Also, Medicare Administrative Contractors (MACs) will apply deductible and coinsurance.

https://www.cms.gov/files/document/mm13244-separate-payment-disposable-negative-pressure-wound-therapy-devices-home-health-claims.pdf

November 6, 2023: MLN MM13055: Allowing Audiologists to Provide Certain Diagnostic Tests Without a Physician Order – Revised

Initially published June 1, 2023, this article was revised on November 6, 2023 to add two new CPT codes effective January 1, 2024, based on Change Request (CR) 13279.

Coverage Updates

October 30, 2023: MLN MM13017: Removal of a National Coverage Determination & Expansion of Coverage of Colorectal Cancer Screening – Revised

The initial release of this MLN article was February 2, 2023. Now in it’s third iteration, CMS has added clarifying information about the -KX modifier for screening colonoscopy claims in the context of a complete colorectal cancer screening. https://www.cms.gov/files/document/mm13017-removal-national-coverage-determination-expansion-coverage-colorectal-cancer-screening.pdf

November 20, 2023: MLN MM13429: Beta Amyloid Positron Emission Tomography in Dementia and Neurodegenerative Disease

On October 13, 2023 CMS published a Final Decision Memo announcing a final decision to remove this NCD and now permitting Medicare coverage determinations to be made by the MACs. Removing the NCD also removes the current limitation of one PET beta-amyloid scan per lifetime from the coverage requirements.

CMS notes in MLN article MM13429 that “your MAC will adjust any PET beta amyloid claims processed incorrectly that you bring to their attention, effective for claims with DOS on or after October 13, 2023. https://www.cms.gov/files/document/mm13429-beta-amyloid-positron-emission-tomography-dementia-and-neurodegenerative-disease.pdf

Compliance Education Updates

MLN Educational Tool: Medicare Payment Systems

CMS has updated this tool to include FY 2024 updates to the:

• Acute Care Hospital Inpatient Prospective Payment System,
• Hospice Payment System & Coverage,
• Inpatient Psychiatric Facility Prospective Payment System,
• Inpatient Rehabilitation Facility Prospective Payment System,
• Long-Term Care Hospital Prospective Payment System, and
• Skilled Nursing Facility Prospective Payment System.

Substantive changes to this tool are in dark red. https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/html/medicare-payment-systems.html

October 2023: MLN Booklet: Independent Diagnostic Testing Facility

CMS has updated this booklet to include more information on several topics, including supervising physicians, interpreting physicians, and technicians. https://www.cms.gov/files/document/mln909060-independent-diagnostic-testing-facility.pdf

New and Updated CMS National Training Program (NTP) Products

• Medicare & the Health Insurance Marketplace^®
• Medicare: Getting Started
• Medicare & Home Health Care

You can order CMS products in bulk by visiting our product ordering website.

Did You Know?

CMS announced in the CY 2024 Physician Fee Schedule (PFS) Final Rule, effective January 1, 2024 that they are pausing their efforts to implement the Appropriate Use Criteria (AUC) Program for reevaluation and rescinding the AUC regulations at 42 CFR 414.94, reserving this section for future use.

Why It Matters?

On November 3, 2023, CMS posted the following notice on the AUC Program webpage:

“Effective January 1, 2024, providers and suppliers should no longer include AUC consultation information on Medicare FFS claims. Additionally, CMS will no longer qualify PLEs or CDSMs and will remove this information from the AUC website. The claims processing instructions and guidance for the educational and operations testing period will also be removed.”

What Can I Do?

Share this information with the appropriate stakeholders at your facility and consider this an early Thanksgiving blessing that CMS acknowledged the challenges to implementing the regulations at 42 CFR 414.94.

Did You Know?

On November 6, 2023, the Office of Inspector General (OIG) released General Compliance Program Guidance (GCPG).

Per the OIG’s announcement, “the GCPG is a reference guide for the health care compliance community and other health care stakeholders. The GCPG provides information about relevant Federal laws, compliance program infrastructure, OIG resources, and other items useful for understanding health care compliance. The GCPG is voluntary guidance that discusses general compliance risks and compliance programs. The GCPG is not binding on any individual or entity.”

You can download the complete guidance or  individual sections.

Why it Matters?

The OIG first published compliance program guidance documents (CPGs) in 1998. Historically, guidance has been published in the Federal Register. However, moving forward, updates or new guidance will no longer be published in the Federal Register.

GCPG

The GCPG guidance applies to all individuals and entities involved in the health care industry and addresses:

• Key Federal authorities for entities engaged in health care business.
• The seven elements of a compliance program,
• Adaptations for small and large entities, other compliance,
• Other compliance considerations, and
• OIG processes and resources.

Moving forward, the OIG anticipates updating the GCPG as changes in compliance practices or legal requirements may warrant.

ICPGs

Starting in 2024, the OIG will begin publishing industry specific CPGs (ICPGs) that “will be tailored to fraud and abuse risk areas for each industry subsector and will address compliance measures that the industry subsector participants can take to reduce these risks. ICPGs are intended to be updated periodically to address newly identified risk areas and compliance measures and to ensure timely and meaningful guidance from the OIG.”

Moving Forward

Ultimately, the goal of both guidance documents (GCPG and ICPGs) “has been, and will continue to be, to set forth voluntary compliance guidelines and tips and to identify some risk areas that OIG believes individuals and entities engaged in the health care industry should consider when developing and implementing a new compliance program or evaluating and updating an existing one.”

I encourage you to take the time to read this latest guidance, pay close attention to the information in the blue boxes and tips throughout this document. For example, in the “Auditing and Monitoring” section of this document an OIG tip reminds providers that “Medicare requires, as a condition of payment, that items and services be medically reasonable and necessary. Therefore, entities should ensure that any claims reviews and audits include a review of the medical necessity of the item or service by an appropriately credentialed clinician. Entities that do not include clinical review of medical necessity in their claims audits may fail to identify important compliance concerns relating to medical necessity.”

Finally, if you are not already signed up for the OIG newsletter, I encourage you to do so. You can sign up on the website by scrolling to the bottom of page and clicking “Subscribe to Our Newsletter.”  

CMS issued the CY 2024 OPPS/ASC Final Rule on November 2, 2023. You can read about changes to the Inpatient Only (IPO) Procedure List and ASC Coverage Procedure List (CPL) in a related article in this week’s newsletter. This article highlights additional topics that historically our clients have reached out to us to learn about.

OPPS Remedy for 340B-Acquired Drug Payment Policy

On July 7, 2023, CMS published a proposed rule, referred to as “remedy proposed rule” to address reduced payment amounts to 340B hospitals for CYs 2018 through 2022 and to comply with the statutory requirement to maintain budget neutrality. The “remedy proposed rule” proposed changes to the calculation of the OPPS conversion factor beginning in CY 2025.

The 340B final remedy was also issued on November 2^nd. In this final rule, CMS finalized their proposed methodology of estimating the reduction in drug payments to affected 340B covered entity hospitals in CY 2018 through September 27, 2022, and will make total lump sum payments in the amount of $9.004 billion.

CMS will be issuing instructions to the MACs to issue a one-time lump sum payment to the affected hospitals within 60 calendar days of the MAC’s receipt of the instructions.

Based on updated analyses, the final rule Addendum AAA was updated with new hospital-specific payment amounts and accounts for all payment activity that has happened since the proposed rule was issued. Updated claims data reflects that affected hospitals received approximately $10.6 billion less in 340B drug payments (including money that would have been paid by Medicare and money that would have come from the beneficiaries as copayments) than they would have for drugs provided in CY 2018 through September 27, 2022, had the 340B policy not been implemented.

“The amounts included in Addendum AAA are the amounts that hospitals will receive, except that payment amounts may be affected by MACs continuing to follow normal accounting processes for collecting repayment amounts stemming from provider-specific overpayment obligations, adjustments resulting from errors identified through the lump-sum technical correction process described below, as well as other unique situations such as provider bankruptcy or payment suspension, any of which may impact the provider’s net payment amount.”

Unfortunately, the lump sum payments do not include interest and CMS is following budget neutrality requirements to make these payments. This means that “beginning in CY 2026, we will reduce all payments for non-drug items and services to all OPPS providers, except new providers (hospitals with a CMS CCN effective date of January 2, 2018, or later), by 0.5 percent each year until the total estimated offset of $7.8 billion is reached. We currently estimate that the payment decrease will be completed after approximately 16 years. To implement this reduction and exception for new providers, we are finalizing the proposed regulation text changes at § 419.32(b)(1)(iv)(B) as proposed, except for changing the implementation date of the 0.5 percent reduction from CY 2025 to CY 2026.”

CMS notes in the 340B remedy final rule that “generally the impact of that annual 0.5 percent reduction to the OPPS conversion factor on individual providers, as well as categories of providers, will depend on the percentage of their OPPS payments that are conversion factor-based, and in most cases will be a decrease of slightly less than 0.5 percent of overall OPPS payments.”

Beneficiary Cost Sharing

CMS noted in the final rule that commenters overwhelmingly supported their proposed approach and rationale for accounting for beneficiary cost sharing. They finalized their “policy to account for beneficiary cost sharing as proposed. We will exercise our authority under section 1833(t)(2)(E) of the Act (42 U.S.C. 1395l(t)(2)(E)) to make adjustments “as necessary to ensure equitable payments,” to pay the full $9.0 billion difference, including $1.8 billion, an amount that is approximately equivalent to what affected 340B covered entity hospitals would have collected from beneficiaries for these 340B-acquired drugs if the 340B Payment Policy had not been in effect from CY 2018 through September 27, 2022, so that affected 340B covered entity hospitals are paid the approximate amount they would have been paid in full without application of the 340B Payment Policy.”

340B Modifiers “JG” and “TB”

The Inflation Reduction Act of 2022 expanded the provider types that must report one of these modifiers no later than January 1, 2024, to now include critical access hospitals, Maryland All-Payer or Total Cost of Care Model Hospitals, and Non-excepted off-campus provider-based departments (PBD).

In the CY 2023 OPPS/ASC final rule, CMS maintained the requirements that 340B hospitals report one of two modifiers, “JG” – Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes, or “TB” – Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes for select entities.

In the CY 2024 OPPS/ASC proposed rule, CMS notes they “now believe utilizing a single modifier will allow for greater simplicity, especially because both modifiers are used for the same purpose: to identify separately payable drugs and biologicals acquired under the 340B program.”

CMS is proposing that all 340B covered entity hospitals would report the “TB” modifier effective January 1, 2025, even if the hospital previously reported the “JG” modifier. The “JG” modifier will remain effective through December 31, 2024. Beginning January 1, 2025, the “JG” modifier would be deleted.

CMS notes hospitals currently using the “JG” modifier could choose to continue to use it in CY 2024 or choose to transition to the “TB” modifier during that year.