MEDICARE 2018 FINAL RULES
The first two days of November saw a flurry of activity from the Centers for Medicare & Medicaid Services (CMS) as they released three final rules.
On November 1, 2017, CMS issued the 2018 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule with comment period (CMS-1678-FC).
The CY 2018 Medicare Physician Fee Schedule Final Rule was placed on display at the Federal Register on November 2, 2017. This final rule updates payment policies, payment rates, and other provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after Jan. 1, 2018.
Also released on November 2, 2017, the Medicare Program; CY 2018 Updates to the Quality Payment Program; and Quality Payment Program: Extreme and Uncontrollable Circumstance Policy for the Transition Year Final Rule which provides program rules and guidance for Year 2 of the Quality Payment Program (QPP).
2018 Medicare Physician Fee Schedule Final Rule 1
2018 PFS Conversion Factor
The 2018 Physician Fee Schedule (PFS) Final Rule, estimates the 2018 PFS Conversion Factor (CF) will be $35.9996, which is up slightly from the 2017 CF of $35.8887. The proposed 2018 CF reflects the 0.5% update factor specified under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), a budget neutrality adjustment of -0.10%, and a misvalued code target recapture (required under the Achieving a Better Life Experience (ABLE) Act of 2014) amount of -0.09%.
|2017 Conversion Factor
|CY 2018 RVU Budget Neutrality Adjustment
|CY 2018 Target Recapture Amount
|CY 2018 Conversion Factor (estimated)
Source: Medicare Physician Fee Schedule 2018 Final Rule
Table 50 of the final rule, shows the estimated payment impact of the proposals on physician fee schedule services by specialty. CMS estimates that the physician rule will result in a 0% total impact for hematology/oncology, and a positive 1% impact on rheumatology, radiation oncology and radiation therapy services. The impact to diagnostic testing facilities is the largest negative impact at -4% (down from an estimated -6% in the 2018 proposed rule). As always, the specialty specific estimated impacts are just estimates as the payment impact to an individual practice will vary depending on the services they provide.
Payment Changes to Drug Administration Services
The Affordable Care Act (ACA) mandates that CMS identify and re-value potentially misvalued physician fee schedule services. For 2018, CMS reviewed certain drug administration codes identified as potentially misvalued. In the final rule, CMS finalized their proposal to accept the RUC recommended work and direct practice expense (PE) inputs for chemotherapy administration codes 96401, 96402, 96409, and 96411.
CMS also finalized their proposal to apply RVUs to CPT code 96377 Application of on-body injector (includes cannula insertion) for timed subcutaneous injection. This code, was assigned Medicare Status Indicator I (invalid code) when it was introduced in 2017. Effective for dates of service on and after January 1, 2018, CPT 96377 will be assigned Medicare Status Indicator A (active code).
Figure 1 illustrates the estimated drug administration code payment rate changes from 2017 to 2018 based on the potentially misvalued codes changes and other 2018 physician fee schedule changes. 2
||Hydration IV infusion initial
||Hydrate IV infusion add-on
||Ther/proph/diag IV infusion initial
||Ther/proph/diag IV infusion additional
||Tx/proph/dg additional sequential IV infusion
||Ther/diag concurrent infusion
||Ther/proph/diag inj sc/im
||Ther/proph/diag inj ia
||Ther/proph/diag inj IV push
||Tx/pro/dx inj new drug addon
||Applicaton on-body injector
||Chemo anti-neopl sq/im
||Chemo hormon antineopl sq/im
||Chemo intralesional up to 7
||Chemo intralesional over 7
||Chemo IV push sngl drug
||Chemo IV push addl drug
||Chemo iv infusion 1 hr
||Chemo IV infusion addl hr
||Chemo prolong infuse w/pump
||Chemo IV infus each addl seq
||Chemotx admn prtl cavity
||Chemotherapy into cns
||Refill/maint portable pump
||Refill/maint pump/resvr syst
||Irrig drug delivery device
Figure 1 Payment Rate Comparison 2017 to 2018
New/Revised CPT Codes for Bone Marrow Aspiration & Biopsy
For 2018, the American Medical Association (AMA) has developed a new code, CPT 38222 Diagnostic bone marrow biopsies and aspirations. In the 2018 final rule, CMS states they will adopt CPT 38222 in place of G0364 Bone marrow aspiration performed with bone marrow biopsy through the same incision on the same date of service.
Under the new rules, do not report 38221 in conjunction with 38220, when a diagnostic biopsy and aspiration are performed at the same session, use 38222.
Effective for dates of service on and after January 1, 2018 revised/new codes:
38220 Diagnostic bone marrow; aspiration(s)
38221 Diagnostic bone marrow; biopsy(ies)
38222 Diagnostic bone marrow; biopsy(ies) and aspiration(s) NEW
In the final rule, CMS estimates an unadjusted Medicare allowable of $174.24 for CPT 38222.
Evaluation and Management (E/M) Services Coding and Documentation
In the 2018 proposed rule, CMS elicited comments from stakeholders related to the administrative burden and relevancy of the current E/M coding and documentation requirements.
In particular, CMS requested comments on how to update medical decision making (MDM) guidelines in order to promote appropriate documentation for patient care that is proportionate to the level of patient complexity, while at the same time reducing burdensome documentation requirements and/or inappropriate upcoding.
CMS received and acknowledged many comments, and in the final rule CMS said they agree with stakeholders that the E/M documentation guidelines are potentially outdated and should be substantially revised. CMS expressed belief that revised guidelines could reduce clinical burden and improve documentation resulting in more effective clinical workflows and care coordination.
Finally, in response to the many commenters who urged CMS to include all stakeholders across all specialties in the process of a thoughtful examination of options, CMS acknowledged that a comprehensive reform of E/M documentation guidelines would require a multi-year, collaborative effort among stakeholders.
Part B Drugs - Biosimilars to Receive Separate Codes
Since January 1, 2016, biosimilar products that rely on a common reference product's biologics license application have been grouped into a single Healthcare Common Procedure Coding System (HCPCS) code and assigned a single average sales price (ASP) payment limit.
In the 2018 proposed rule, CMS solicited comments regarding their Medicare Part B biosimilar biological product payment policy citing the need to consider all options and the effect of payment policies on program sustainability for taxpayers, health care affordability and access for beneficiaries, and the investment made by the biosimilar industry.
CMS cited the many responses they received on this issue and announced their decision to take immediate action in order to support a more competitive marketplace and greater choice and value for beneficiaries. Effective January 1, 2018, newly approved biological products with a common reference product will no longer be grouped into the same billing code.
Required changes to the claims processing systems will take some time and CMS says that the changes are not expected to be completed by January 1, 2018, but they anticipate the changes will be done by mid-2018. CMS will issue further instructions through change requests/transmittals to contractors and the ASP website.
Delayed: Appropriate Use Criteria Program for Advanced Diagnostic Imaging
The Protecting Access to Medicare Act (PAMA) of 2014 establishes a new program under the statute for fee-for-service Medicare to promote the use of appropriate use criteria (AUC) for advanced diagnostic imaging services.
Under this program, providers would consult AUC clinical guidelines to determine the appropriateness of the service for that patient and to report that information on their claims.
The proposed effective date for AUC consultation and reporting requirements was January 1, 2019. In the 2018 proposed rule, CMS sought comments on whether the program should be delayed beyond the proposed start date of January 1, 2019 and whether the educational and operations testing period should be longer than one year.
In response to public comments received, CMS announced they are delaying the effective date for the AUC consultation and reporting requirements from January 1, 2019 to January 1, 2020. They also finalized a voluntary reporting period to run from July 2018 to December 2019 during which early adopters can begin reporting limited consultation information on Medicare claims.
PQRS AND VALUE MODIFER - TRANSITIONING TO MACRA QUALITY PAYMENT PROGRAM
Physician Quality Reporting System (PQRS)
CMS finalized their proposal to retroactively decrease the required number of PQRS measures reported in 2016, for the 2018 payment adjustment, from nine measures to six measures with no domain or cross-cutting measures required. According to CMS, this reduction in required measures will limit the negative impact of potential 2018 payment adjustments for quality reporting and better align with the Merit-based Incentive Payment System (MIPS) data submission requirements for the quality performance category.
2018 Value Modifier
As with the PQRS program, CMS finalized retroactive changes to the 2018 Value Modifier to better align incentives and to provide a smoother transition to the MIPS. CMS finalized the following changes to the policies for the 2018 Value Modifier:
- Reducing the automatic downward payment adjustment for not meeting the criteria to avoid the PQRS adjustment from negative four percent to negative two percent (-2.0 percent) for groups of ten or more clinicians; and from negative two percent to negative one percent (-1.0 percent) for physician and non-physician solo practitioners and groups of two to nine clinicians;
- Holding harmless all physician groups and solo practitioners who met the criteria to avoid the PQRS adjustment from downward payment adjustments for performance under quality-tiering for the last year of the program; and
- Aligning the maximum upward adjustment amount to 2 times the adjustment factor for all physician groups and solo practitioners.
- Given final policy changes for the Physician Quality Reporting System and the Value Modifier, CMS will not report 2018 Value Modifier data in the Physician Compare downloadable database as this would be the first and only year such data would have been reported. However, to promote transparency CMS will continue to make available the Value Modifier public use and research identifiable files.
2018 is the last year for the PQRS and Value Modifier and the new Quality Payment Program (QPP) started with the first MIPS reporting period beginning in 2017 and the first payment adjustment period in 2019.
MACRA Patient Relationship Codes
The Medicare Access and CHIP Re-Authorization Act (MACRA) of 2015 ended the Sustainable Growth Rate (SGR) formula and created the Quality Payment Program (QPP), which consists of the Merit-Based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APM).
MACRA also requires the development of care episode and patient condition groups, and classification codes for these groups to facilitate the attribution of patients and episodes to one or more clinicians. The intent of these modifiers is to measure resource use, and with the focus on care episodes, multiple clinicians can identify their role in the patient's care.
CMS solicited comments on proposed patient relationship categories and Level II HCPCS modifiers. In the final rule, CMS finalized the modifiers and patient relationship categories. They also finalized the policy of the voluntary use of the modifiers by clinicians associated with the patient relationship categories beginning on January 1, 2018. CMS stressed that during the period when reporting is voluntary, errors will not have payment consequences.
Patient Relationship HCPCS Modifiers and Categories
||Proposed HCPCS Modifier
||Patient Relationship Categories
||Only as Ordered by Another Clinician
Source: Table 27 2018 Medicare Physician Fee Schedule Final Rule
Payment Rates for Nonexcepted Off-Campus Provider-Based Hospital Departments
Section 603 of the Bipartisan Budget Act of 2015 requires that effective January 1, 2017, certain items/services furnished by certain off-campus hospital outpatient provider-based departments (PBDs) would no longer be paid under the Outpatient Prospective Payment System (OPPS). CMS finalized the PFS as the applicable payment system for these services effective January 1, 2017.
Since then, the payment rate to these facilities for certain items/services has been paid under the PFS at a rate that is a percentage of the OPPS payment amount, an adjustment that CMS calls the PFS Relativity Adjuster. In CY 2017, payments to non-excepted off-campus PBDs for non-excepted items or services are paid at 50% of the OPPS rate.
In the PFS proposed rule for 2018, CMS proposed to further reduce the current payment rates for these services by half, from 50% of the OPPS rate in 2017 to 25% of the OPPS rate in 2018, in order to ensure that hospitals are not paid more than others would be paid through the PFS nonfacility rate.
Addressing public comments on packaging rules under the OPPS and acknowledging that they are currently unable to fully calculate effects of the packaging, CMS finalized a PFS Relativity Adjuster of 40% in 2018 for these services.
HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM (OPPS) 2018 FINAL RULE 3
On November 1, 2017, CMS released the Hospital Outpatient Prospective Payment System (OPPS) 2018 final rule. In the press release announcing the release of the 2018 OPPS Final Rule, CMS begins with the announcement that they have finalized policies that lower out-of-pocket drug costs and increase access to high-quality care. The reference to lower out-of- pocket drug costs is tied to the surprising decision on the payment rate for 340B drugs as outlined below.
2018 Payment Rate Update
CMS is finalizing an OPPS payment rate update of 1.35% in 2018. This positive update is based on a positive 2.7% market basket update, a negative 0.6% adjustment for multi-factor productivity (MFP) and a negative 0.75% adjustment required by the Affordable Care Act (ACA). CMS estimates an overall impact of 1.4% payment increase for providers paid under the OPPS in 2018. Furthermore, CMS estimates that total OPPS payments (including beneficiary cost-sharing) to facilities will increase by approximately $690 million compared to calendar year (CY) 2017 payments.
340B Drug Reimbursement Rate Significantly Reduced 3, 4, 5
Established in 1992, the 340B Drug Discount Program is administered by the Health Resource and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services (HHS). The 340B program allows certain hospitals and other health providers to obtain substantially discounted prices on certain covered outpatient drugs. As originally intended and stated by HRSA, the goal of the 340B Program is to enable 340B covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.
340B entities are estimated to receive discounts from 20%-50% off the drug cost and these steeply discounted drugs are to be provided only to individuals who are patients of the covered entity. However, in the statute, the definition "a patient of the entity" lacks specificity leading to concerns that some covered entities are interpreting the term "patient of the entity" either too broadly or too narrowly.
Another concern has been the rapid growth of Medicare Part B drug spending in hospital outpatient departments (HOPDs) by hospitals that participate in the 340B program. Recent reports by the Medicare Payment Advisory Commission (Medpac), the Government Accountability Office (GAO), and the Office of Inspector General (OIG) found that the growth of Medicare Part B spending was substantially higher at 340B hospitals than at non-340B hospitals. All three agencies stress the value of the 340B program in helping "safety-net" hospitals provide care to low-income, uninsured and vulnerable populations. At the same time, Medpac, the GAO and the OIG have urged Congress to reduce financial incentives to provide more drugs or more expensive drugs by 340B entities.
Historically, Medicare has reimbursed discounted 340B drugs at the same rate as the non-discounted drugs (generally ASP+6%), thereby generating a much higher profit for 340B entities. In addition, Medicare beneficiaries are responsible for a cost-sharing liability of 20% of Medicare's payment rate for outpatient drugs, regardless of whether the drugs are given at a 340B hospital or not.
In their November 2015 report, Part B Payments for 340B-Purchased Drugs, the OIG outlined three alternative payment methodologies that could redistribute the financial benefits of the 340B program among 340B covered entities, Medicare, and Medicare beneficiaries. Each of the three scenarios, were they to be enacted, would reimburse 340B drugs at a lower payment rate, reserving some of the spread between drug costs and Part B payments for the 340B entity, while also reducing Medicare's expenditures for the drugs which in turn would result in cost-sharing savings for Medicare beneficiaries. 6
In response, in the 2018 OPPS proposed rule, CMS proposed to reduce reimbursement for 340B drugs from Average Sales Price (ASP) plus 6% to ASP minus 22.5%. CMS also requested comments on how best to implement this proposal so that out-of-pocket drug costs are reduced for Medicare patients while still allowing providers to meet their patients' needs.
CMS cited the OIG November 2015 Report (OEI-12-14-00030, page 9), which found that, for 35 drugs, the ''difference between the Part B amount and the 340B ceiling price was so large that, in a least one quarter of 2013, the beneficiary's coinsurance alone . . . was greater than the amount a covered entity spent to acquire the drug.''
Stakeholders wasted no time in responding to the proposal. The American Hospital Association (AHA) swiftly denounced the proposal as a threat to access to care for patients stating that the proposal was not being based on sound policy. Some commenters to the proposed rule asserted that CMS does not have the authority to calculate and adjust 340B-acquired drug rates as proposed.
There were also comments in favor of the proposal. In the 2018 OPPS Final Rule, CMS reports that several commenters, including organizations representing physician oncology practices, pharmaceutical research and manufacturing companies, a large network of community-based oncology practices, and several individual Medicare beneficiaries, supported the proposal.
Commenters in favor of the proposal to decrease reimbursement for 340B drugs stated their belief that the proposal would help address the growth of the program, reduce further physician practice consolidation with hospitals, and preserve patient access to community-based care.
Members of Congress also weighed in on the proposal outside of the proposed rule comment period, which ended on September 11, 2017. In a letter dated October 6, 2017, a bipartisan group of 57 Senators signed on to a letter asking CMS to protect the 340B program and to "carefully consider stakeholder concerns, and feedback and to act to ensure that reimbursement for 340B providers enables them to continue serving the most vulnerable."
And on September 27, 228 bipartisan members of Congress sent a letter to CMS Administrator Seema Verma urging CMS to withdraw the proposal to cut reimbursement rates for 340B drugs. The September 27 letter states, "We are deeply concerned that this misguided policy will directly limit the ability of hospitals to offer necessary services to vulnerable patients and their communities, especially low-income individuals and rural communities." 7, 8
In the end, CMS finalized their proposal to reduce payment rates for 340B drugs to ASP minus 22.5% effective January 1, 2018. However, in response to commenters, CMS is excluding rural sole community hospitals, children's hospitals, and PPS-exempt cancer hospitals from the alternative 340B drug payment methodology in 2018.
The final rule also establishes two modifiers to identify if a drug was purchased under the 340B program; for 2018 hospitals that are exempt from the 340B drug payment adjustment will report the informational modifier TB and will continue to be paid at ASP+6%, while non-exempted 340 entities are to report modifier JG which will trigger the discounted reimbursement rate. On December 13, 2018, CMS published a 6-page document of Frequently Asked Questions (FAQs) on billing 340B modifiers under the OPPS in CY 2018. For compete details on when and how to use the new mandatory modifiers TB and JG carefully review the CMS document.
CMS estimates that the reduction in reimbursement for 340B drugs will result in an estimated savings of $1.6 billion, which in accordance with budget neutrality, will be redistributed in an equal offsetting amount to all hospitals paid under the OPPS through increased payment rates for non-drug items and services for CY 2018.
The release of the 2018 OPPS Final Rule on November 1, was met within the hour by an announcement from the AHA that they were joining forces with the Association of American Medical Colleges and America's Essential Hospitals to pursue litigation to prevent the cuts to 340B reimbursement from going forward. 9
CMS Continues to Increase the Packaging Threshold for Outpatient Drugs
For CY 2018, CMS finalized their proposal to once again increase the packaging threshold for separate payment for outpatient drugs. For CY 2018, CMS will increase the packaging threshold to cost-per-day that exceeds $120; this is up from $110 in 2017.
Packaging of Low-Cost Drug Administration Services
Under the OPPS, CMS has been expanding the packaging of payments of supportive, dependent or adjunctive services into the payment of the primary service. In 2014, CMS finalized a policy to package procedures described by add-on codes. However, in response to stakeholder comments they did not include drug administration add-on codes. Then, in 2015, CMS conditionally packaged payment for ancillary services assigned to an ambulatory payment classification (APC) group with a geometric mean cost of $100 or less, but once again they excluded drug administration services.
In the 2018 proposed rule, CMS did not propose to package drug administration add-on codes, but sought public comments on whether these codes should conditionally or unconditionally be packaged in the hospital outpatient setting and whether doing so would create access to care issues or have other unintended consequences.
In the final 2018 OPPS rule, CMS thanked commenters and said they would take the comments received on packaging drug administration add-on codes into consideration in future rulemaking.
CMS did however determine to remove the packaging exception for certain drug administration codes and they have finalized their proposal to expand packaging policies to low-cost drug administration services for CY 2018. CMS stated their belief that conditional packaging of drug administration services will promote equitable payment between the physician office and the hospital outpatient department.
Therefore, effective for dates of service on or after January 1, 2018, payment for drug administration codes in Level 1 and Level 2 drug administration APCs (APC 5691 and APC 5692) will be packaged when reported with other separately payable services.
|APC 5691--Level 1 Drug Administration
||Tx/proph/dg addl seq iv inf
||Sc ther infusion reset pump
||Ther/proph/diag inj sc/im
||Chemo anti-neopl sq/im
||Chemo hormon antineopl sq/im
||Chemo intralesional up to 7
||Chemo iv push addl drug
||Chemo iv infusion addl hr
||Chemo iv infus each addl seq
Source: 2018 OPPS Final Rule
|APC 5692--Level 2 Drug Administration
||Hydrate iv infusion add-on
||Ther/proph/diag iv inf addon
||Sc ther infusion addl hr
||Tx/pro/dx inj new drug addon
||Application on-body injector
||Ther/prop/diag inj/inf proc
||Chemo ia infuse each addl hr
Source: 2018 OPPS Final Rule
CMS states that the steps they are taking to reduce cost-sharing for drugs and drug administration services furnished in the hospital setting may help encourage site-neutral care in that beneficiaries may receive the same drugs and drug administration services at the physician office setting without a significant difference in their financial liability between settings.
QUALITY PAYMENT PROGRAM FINAL RULE 2018 10
On November 2, 2017, CMS released the 2018 final rule to implement the second year of MACRA's Quality Payment Program (QPP).
In the final rule, CMS outlines their efforts to evaluate and streamline regulations with a goal to reduce unnecessary burden, increase efficiencies, and improve the beneficiary experience through the recently launched "Patients Over Paperwork" Initiative.
In the QPP final rule CMS identifies the following actions as part of this initiative:
- Excluding individual Merit-Based Incentive Payment System (MIPS) eligible clinicians or groups with less than or equal to $90,000 in Part B allowed charges or less than or equal to 200 Part B beneficiaries.
- Addressing extreme and uncontrollable circumstances, such as hurricanes and other natural disasters, for both the transition year and the 2018 MIPS performance period.
- Including virtual groups as another participation option for year 2.
- Making it easier for clinicians to qualify for incentive payments by participating in Advanced APMs that begin or end in the middle of a year.
Key Provisions in the QPP Final Rule For Year 2:
- The final rule raises the performance criteria to avoid MIPS payment adjustments from 3 points across the 3 MIPS categories in performance period 2017 (for payment year 2019) to 15 total points for the 2018 performance period (for payment year 2020).
- CMS will allow the use of 2014 Edition and/or 2015 Certified Electronic Health Record Technology (CEHRT).
- Clinicians may earn up to 5 bonus points on their final score for treatment of complex patients.
- Adding 5 bonus points to the final scores of small practices.
- The MIPS Cost Performance Score will be weighted to 10% of the total MIPS score.
- Part B drugs will be included in the cost measures, although Part D drugs will not.
- Clinicians must use only 1 submission mechanism for reporting per performance category.
- Category weights for payment year 2020 (performance year 2018): Quality 50%, Cost 10%, Improvement Activities 15% and Advancing Care Information 25%.
Watch for more details on the 2018 QPP Final Rule in our next newsletter, in the meantime, you can access the QPP Year 2 Fact Sheet here: https://www.cms.gov/Medicare/Quality-Payment-Program/resource-library/QPP-Year-2-Final-Rule-Fact-Sheet.pdf.