The Centers for Medicare & Medicaid Services (CMS) released the 2018 Proposed Rules for the Medicare Physician Fee Schedule (PFS) and Hospital Outpatient Prospective Payment System (OPPS) on July 13, 2017. The comment period runs until September 11, 2017, and final rules will be issued around November 1, 2017.
In this issue, we examine some of the proposals of most interest to the oncology community. For complete details on all proposals, access the PFS and OPPS proposed rules at www.regulations.gov.
MEDICARE PHYSICIAN FEE SCHEDULE (PFS) 2018 PROPOSED RULE 1
2018 PFS Conversion Factor
Under the proposed rule, physician payment rates will increase by 0.31% in 2018. The calendar year (CY) 2018 PFS conversion factor (CF) would be $35.9903, 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 -0.03%, and a misvalued code target recapture (required under the Achieving a Better Life Experience (ABLE) Act of 2014) amount of -0.19%. The target recapture amount of 0.19% equals the difference between the misvalued code target of 0.5% in 2018, and the net expenditure reductions of 0.31% achieved through the misvalued code changes.
2017 Conversion Factor
CY 2018 RVU Budget Neutrality Adjustment
CY 2018 Target Recapture Amount
CY 2018 Conversion Factor
Source: Medicare Physician Fee Schedule 2018 Proposed Rule
Table 40 of the proposed 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, 0% impact on rheumatology, and a 1% increase for radiation oncology and radiation therapy services. For those specialties that are expected to see a decrease in payments due to the proposals, CMS estimates the impact to diagnostic testing facilities will be the largest at -6%. However, keep in mind that within a specific specialty, the payment impact to an individual practice will vary depending on the services they provide.
Potentially Misvalued Codes 1, 2
The Affordable Care Act (ACA) statutorily mandates CMS to identify and re-value potentially misvalued physician fee schedule services. Under this annual process, referred to as the potentially misvalued code initiative, CMS revalues services to make sure that payment rates reflect the changing trends in the practice of medicine and current prices for inputs used in the practice expense (PE) calculations.
The ACA provides the following guidance as to identifying potentially misvalued services:
- Codes (and families of codes as appropriate) for which there has been the fastest growth;
- Codes (and families of codes as appropriate) that have experienced substantial changes in practice expenses;
- Codes for new technologies or services within an appropriate period (such as 3 years) after the relative values are initially established for such codes;
- Multiple codes that are frequently billed in conjunction with furnishing a single service;
- Codes with low relative values, particularly those that are often billed multiple times for a single treatment;
- Codes which have not been subject to review since the implementation of the Resource-based relative value scale (RBRVS); and
- Such other codes determined to be appropriate by the Secretary.
CMS reviews new, revised, and potentially misvalued codes by reviewing the current work relative value unit (RVU) (if one exists), the American Medical Association (AMA) Relative Value Scale Update Committee (RUC) recommended work RVU, as well as the intensity and time required to furnish all of the components of the service. CMS also takes into consideration information provided by other health care individuals, health care organizations, public commenters, and available literature and databases. In the 2018 proposed rule, CMS states that they are proposing values that generally reflect the expert recommendations from the AMA RUC without as many refinements as proposed in recent years.
Table 10 of the proposed rule includes the proposed work RVUs for new, revised and potentially misvalued codes. Of the drug administration codes identified as potentially misvalued, CMS is proposing no changes in the work RVUs for intravenous infusion, hydration, therapeutic, prophylactic, or diagnostic injections, and chemotherapy codes 96401, 96402, 96409 and 96411. However, they are proposing to increase the work RVU for CPT 96377 Application of on-body injector (includes cannula insertion) for timed subcutaneous injection from a work RVU of 0.00 in 2017 to 0.17 in 2018.
Bone Marrow Aspiration & Biopsy
CMS is proposing to accept the following RUC recommended work values:
- 1.20 RVUs for revised CPT code 38220 - Diagnostic bone marrow; aspiration(s),
- 1.28 RVUs for 38221 - Diagnostic bone marrow; biopsy (ies), and
- 1.44 RVUs for new CPT code 382X3* - Diagnostic bone marrow; biopsy (ies) and aspiration(s).
CMS also proposes to eliminate payment using HCPCS G0364 for CY 2018, as the changes to this set of CPT codes will now accurately describe the services currently reported by G0364.
* Codes that contain an 'X' are placeholder codes that will be replaced with the new code when the final CPT data files are published.
Medicare Part B currently covers certain services, such as office visits, furnished by a physician or practitioner, to an eligible beneficiary via a telecommunications system. In general, telehealth services must be provided through an interactive audio and video telecommunications system that allows real-time communication between the physician, or other authorized practitioner, at the distant site, and the beneficiary, at a telehealth originating site.
In response to numerous requests from stakeholders to expand access to telehealth services, CMS is proposing to add the following codes to the list of telehealth services:
- HCPCS code G0296 - Counseling visit to discuss need for lung cancer screening using low dose computed tomography (service is for eligibility determination and shared decision making).
- CPT code - 90785 Psychotherapy Interactive complexity (List separately in addition to the code for primary procedure).
- CPT codes 96160 and 96161- Administration of patient-focused health risk assessment instrument (e.g., health hazard appraisal) with scoring and documentation, per standardized instrument and administration of care-giver focused health risk assessment instrument (e.g., depression inventory) for the benefit of the patient, with scoring and documentation, per standardized instrument.
- HCPCS code G0506 - Comprehensive assessment of and care planning for patients requiring chronic care management services (list separately in addition to primary monthly care management service).
- CPT codes 90839 and 90840 - Psychotherapy for crisis; first 60 minutes and Psychotherapy for crisis; each additional 30 minutes (list separately in addition to code for primary procedure).
CMS is also soliciting comments on how they might further expand access to telehealth services within the current statutory authority and pay appropriately for services that take full advantage of communication technologies.
Evaluation and Management (E/M) Services Coding and Documentation
Currently, there are three key components to selecting the appropriate E/M visit level:
- History of Present Illness (HPI);
- Physical Examination (Exam); and
- Medical Decision Making (MDM).
CMS has heard from stakeholders that documentation related to E/M codes may be out of date and requirements may present additional administrative burden on physicians. CMS states they agree with stakeholders that the E/M documentation guidelines should be substantially revised.
CMS is seeking comments on specific changes they should undertake to update the guidelines, to reduce the associated burden, and to better align E/M coding and documentation with the current practice of medicine. Specifically, they are asking for comments on whether it would be appropriate to remove Medicare documentation requirements for the history and physical exam for E/M visits at all levels and instead focus on medical decision-making and time as the significant factors in distinguishing visit levels. They are also asking for comments on whether it should be left largely to the discretion of the individual practitioners as to what degree they should perform and document the history and exam.
In a July 25th letter to CMS, a medical oncologist/hematologist commented on the CMS proposal to revise the E/M codes to emphasize medical decision-making and time over the current "checklist" system. The commenter states that the current system encourages the performance and documentation of meaningless medical tasks, while at the same time undervaluing critical medical cognitive work. The commenter goes on to say that in oncology, "it is of far greater value to the patient's care to integrate the vast array of disparate data points into a comprehensive medical diagnostic and therapeutic formulation than it is to check off a few more review of systems or physical exam elements with the purpose of garnering a higher billing code than the cognitive integration can by itself provide." 3
Another commenter, whose primary clinical focus is geriatrics, went further, suggesting that existing E/M coding requirements be replaced in their entirety with time-based coding. The commenter suggested that aligning payment purely to the time a clinician spends with a patient is a simple and effective method for achieving patient centric care and that time-based coding would be less prone to abuse. 4
As E/M coding is an increasing focus of post-payment audits, providers and other stake-holders would be well-served by taking advantage of CMS' request for suggestions by presenting reasoned comments to CMS on this issue.
Part B Drugs - Biosimilars
Since January 1, 2016, biosimilar products that rely on a common reference product's biologics license application are grouped into the same payment calculation for determining a single average sales price (ASP) payment limit, and a single Healthcare Common Procedure Coding System (HCPCS) code is used for such biosimilar products.
CMS is soliciting comments on the effects of its payment policy on the biosimilar product marketplace since the regulations went into effect. CMS is particularly interested in obtaining new or updated material, such as market analyses or research articles that provide data and insight into the current economics of the biosimilar market place.
CMS states they are not proposing to change the existing payment policy in the proposed rule; rather they are soliciting comments for future consideration.
Medicare 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. Through PAMA, AUC is defined as, "criteria only developed or endorsed by national professional medical specialty societies or other provider-led entities, to assist ordering professionals and furnishing professionals in making the most appropriate treatment decision for a specific clinical condition for an individual. To the extent feasible, such criteria shall be evidence-based." 5
Under this program, providers would consult AUC clinical guidelines by entering patient clinical data into an electronic clinical decision support (CDS) tool to determine the appropriateness of the service for that patient.
CMS first introduced the AUC program in the 2016 PFS final rule, through which several program policies were established and CMS discussed the identification of priority clinical areas (PCAs). In the 2017 PFS final rule, CMS established the clinical decision support mechanism (CDSM) requirements, and the CDSM application process.
In the proposed 2018 rule, CMS is proposing that ordering professionals must consult specified applicable AUC through qualified CDSMs for applicable imaging services furnished in an applicable setting and ordered on or after January 1, 2019. At that time, ordering providers must consult a qualified CDSM during ordering. And the furnishing provider, will be responsible for reporting the following information on Medicare claims:
- Which qualified CDSM was consulted by the ordering physician (CMS would establish a series of HCPCS G-codes that would describe the specific CDSM that was used by the ordering professional as well as a specific G-code to identify circumstances where there was no AUC consultation through a qualified CDSM);
- Whether the service ordered would adhere to specified applicable AUC, would not adhere to specified applicable AUC, or whether specified applicable AUC were not applicable to the service ordered (reported through a series of modifiers established by CMS); and
- The national provider identifier (NPI) of the ordering professional (if different from the furnishing professional).
CMS is proposing to implement the initial list of priority clinical areas that were finalized in the CY 2017 Physician Fee Schedule Final Rule without expansion or modification for CY 2018. The priority clinical areas can be found on the CMS AUC Program website along with corresponding diagnosis codes.
Priority Clinical Areas
- Coronary artery disease (suspected or diagnosed)
- Suspected pulmonary embolism
- Headache (traumatic and nontraumatic)
- Hip pain
- Low back pain
- Shoulder pain (to include suspected rotator cuff injury)
- Cancer of the lung (primary or metastatic, suspected or diagnosed)
- Cervical or neck pain
The list of qualified CDSMs is posted on the CMS AUC Program website as well as those CDSMs with preliminary qualification:
Qualified Clinical Decision Support Mechanisms as of June 2017
- Applied Pathways CURION™ Platform
- Cranberry Peak ezCDS
- eviCore healthcare's Clinical Decision Support Mechanism
- National Decision Support Company CareSelect™
- National Imaging Associates RadMD
- Sage Health Management Solutions Inc. RadWise®
- Test Appropriate CDSM
Clinical Decision Support Mechanisms with Preliminary Qualification as of June 2017
- AIM Specialty Health ProviderPortal®
- Cerner CDS Mechanism
- Evinance Decision Support
- Flying Aces Speed of Care Decision Support
- LogicNets' Decision Engines
- MedCurrent OrderWise™
- Reliant Medical Group CDSM
- Siemens Healthineers Clinical Decision Support Mechanism
- Stanson Health's CDSM
CMS is seeking comment 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.
CMS Seeking Comments of Reducing Regulatory Burdens
On page 709 of the proposed physician rule, CMS states their commitment to transforming the health care delivery system, to focus on patient-centered care and to reduce unnecessary burdens for providers, patients and their families. The CMS request for information (RFI) invites the public to submit their ideas for "regulatory, sub-regulatory, policy, practice, and procedural changes" to increase quality of care, lower costs, improve program integrity and make the health care system more effective, simple and accessible. CMS says that while they will not respond to comments received in response to the RFI, they will actively consider all input as they develop future proposals or policy.
Quality Program Initiatives - Key Changes
First, in response to commenters, CMS is proposing to decrease the required number of Physician Quality Reporting System (PQRS) measures reported in 2016, for the 2018 payment adjustment, from nine measures to six measures. CMS says the reduction in required measures reported will limit the negative impact of potential 2018 payment adjustments for quality reporting.
Second, CMS is proposing changes to the related Value-based Payment Modifier (VM), which adjusts fee schedule payment based on the quality of care furnished as compared to cost efficiency.
Proposed VM Changes:
- The maximum penalties for the VM would be reduced from -4.0% to -2% for groups of 10 or more eligible providers, and from -2.0% to -1.0% for groups of 9 or fewer eligible providers and solo practitioners.
- All groups and solo practitioners who meet the criteria to avoid the 2018 PQRS penalty would be held harmless from downward payment adjustments under quality-tiering for the last year of the program.
- The maximum upward adjustment under quality-tiering would be aligned at 2 times the adjustment factor (+2.0x) for all groups and solo practitioners.
Due to the PQRS and VM proposed policies, CMS is also proposing not to report eligible providers VM quality-tiering, based on the 2016 data, on Physician Compare in 2018.
MACRA and the Quality Payment Program
The Medicare Access and CHIP Re-Authorization Act (MACRA) repealed the sustainable growth rate (SGR) formula and mandates the development of two new payment tracks under the Quality Payment Program (QPP), 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. The development of patient relationship categories and codes facilitate the attribution of patients to clinicians involved in their care and the frequency of that care.
In April and again in December 2016, CMS solicited comments on a draft list of patient relation categories. In response to the comments received, as well as consultation with stakeholders and experts, CMS is seeking comment on the following proposed patient relationship categories and HCPCS modifier. The voluntary use of these modifiers will begin on January 1, 2018.
Proposed Patient Relationship Categories and Modifies
Proposed HCPCS Modifier
Patient Relationship Categories
||Only as Ordered by Another Clinician
Physician Fee Schedule Payment Rates - Off-Campus Provider-Based Departments
In the 2017 Hospital Outpatient Prospective Payment System (OPPS) Final Rule, CMS implemented Section 603 of the Bipartisan Budget Act of 2015. This "site neutrality" provision addresses concerns that Medicare should not be paying different amounts for the same services based on the location or type of provider. Under Section 603, certain nonexcepted off-campus provider-based departments (PBDs) that began billing under the OPPS on or after Nov. 2, 2015, are no longer paid for most services under the OPPS.
Instead, these facilities began being paid under the Medicare Physician Fee Schedule (PFS) at a rate that is a percentage of the OPPS payment amount. CMS calls this adjustment the PFS Relativity Adjuster. In CY 2017, payments to non-excepted off-campus PBDs for nonexcepted items or services are paid at 50% of the OPPS rate.
In the PFS proposed rule for 2018, CMS is proposing to further reduce the current payment rates (paid under the PFS) for these services by half, from 50% of the OPPS rate in 2017 to 25% of the OPPS rate in 2018. CMS is seeking comments on the proposed PFS Relativity Adjuster of 25% and in particular is asking if a PFS Relativity Adjuster of 40% should be adopted instead.
Nevertheless, CMS makes clear their intention to more closely align payments in a site-neutral manner and their belief that the amendments made to the statute by section 603 of the Bipartisan Budget Act of 2015 intended to eliminate the Medicare payment incentive for hospitals to purchase physician offices, convert them to off-campus PBDs, and bill under the OPPS for items and services they furnish there.
Furthermore, in the CMS Fact Sheet on the Physician Fee Schedule Proposed Rule, CMS states their belief that this payment adjustment will encourage fairer competition between hospitals and physician practices by promoting greater payment alignment. 6
The beneficiary copayment for these nonexcepted items and services furnished by nonexcepted off-campus PBDs is limited to the cost-sharing rules under the PFS, (generally 20% of the fee schedule amount) regardless of what the cost-sharing obligation would be under the OPPS.
Hospital groups are not pleased with CMS' proposal to reduce off-campus PBDs payment for these services to 25% of the OPPS rate. In a July 13, 2017 press release, American Hospital Association (AHA) Executive Vice President Tom Nickels commented on the CMS proposal saying that the proposal, "appears to have a questionable policy basis and is yet another blow to access to care for patients, including many in vulnerable communities without other sources of health care." 7
Similarly, Dr. Bruce Siegel, President and CEO of America's Essential Hospitals, released a statement on July 13, 2017 stating that the reduction of the payment rate to 25% of the OPPS rate for nonexcepted off-campus PBDs will result in an unsustainable payment rate that will further reduce access for people in chronically underserved communities. 8
HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM (OPPS) 2018 PROPOSED RULE 9
On July 13, 2017, CMS released the Medicare Physician Fee Schedule (PFS) 2018 proposed rule, as well as the Hospital Outpatient Prospective Payment System (OPPS) 2018 proposed rule. Both of these rules if enacted as proposed would significantly impact services provided by hospital outpatient departments in 2018.
As discussed earlier in this newsletter, in the PFS proposed rule, CMS is proposing to further reduce nonexcepted services provided by certain nonexcepted off-campus provider-based departments (PBDs). And in the OPPS proposed rule, CMS is proposing to significantly reduce reimbursement for drugs purchased through the 340B discount program. The combination of these proposed cuts is causing concern amongst hospital groups and organizations.
Proposed Payment Rate Update
CMS is proposing an OPPS payment rate update of 1.75% in 2018. This positive update is based on a positive 2.9% market basket update, a negative 0.4% update for the proposed multifactor productivity (MFP) adjustment, and a negative 0.75% adjustment required by the Affordable Care Act (ACA).
In the proposed rule, CMS says that considering all policy changes under the outpatient prospective pay system, other than the 340B drug pay proposal, they estimate an overall 2% pay increase for hospitals in 2018.
340B Drug Discount Program 10, 11
The 340B Drug Discount Program, which was established by section 340B of the Public Health Service Act by the Veterans Health Care Act of 1992, is administered by the Health Resources and Services Administration (HRSA) within the department of Health and Human Services (HHS). 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. To achieve this goal, pharmaceutical manufacturers participating in Medicaid agree to provide outpatient drugs to 340B covered entities at significantly reduced prices.
The discounts provided are substantial. In their March 2016 MedPAC Report to Congress, MedPAC estimated that on average, 340B entities receive a minimum discount of 22.5% of the ASP for drugs paid under the OPPS. These discounted 340B drugs are reimbursed by Medicare at the same rate as the non-discounted drugs (generally ASP+6%), thereby generating a much higher profit for 340B entities.
There is concern that this discount program has lead to unintended consequences including higher utilization of drugs, and higher utilization of more expensive drugs, by 340B entities over those not participating in the 340B program. In fact, in a May 2015 MedPAC report, MedPAC included their findings that over a 5-year period from 2008-2012, "Medicare spending grew faster among hospitals that participated in the 340B program for all five years than among hospitals that did not participate in the 340B program at any time during the study period."
A subsequent Government Accountability Office (GAO) study found that "both in 2008 and 2012, per beneficiary Medicare Part B drug spending, including oncology drug spending, was substantially higher at 340B DSH hospitals than at non-340B hospitals." The GAO concluded their report with the suggestion that, "Congress should consider eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals."
In the 2018 OPPS proposed rule, CMS cites these reports and concerns and proposes to significantly decrease the reimbursement for drugs purchased through the 340B discount program, reducing reimbursement from Average Sales Price (ASP) plus 6% to ASP minus 22.5%. This proposed reduction in reimbursement would also lower the Medicare beneficiary's costs for these drugs.
In the 7-13-2017 CMS Fact Sheet, they state that they are seeking comments on implementing this proposal in a manner that will bring down out-of-pocket drug costs for Medicare patients and allows providers to best meet their patients' needs. 12
Several entities responded on the day the proposed rule was published. The AHA said the proposal to reduce reimbursement on 340B drugs is not based on sound policy and would threaten access to care for patients who benefit from the 340B program. The AHA urged CMS to abandon the proposal and instead to "take direct action to halt the unchecked, unsustainable increases in the cost of drugs." 13
A statement from America's Essential Hospitals, attributed to President and CEO Bruce Siegel, said the proposal to lower reimbursement on 340B drugs would threaten the affected hospitals ability to maintain critical services to patients and communities as the savings from the 340B Drug Pricing Program were needed to coordinate care and improve the health of low-income and other disadvantaged patients.
Packaging Threshold for Outpatient Drugs
The proposed rule would once increase the threshold for separate payment for outpatient drugs, to cost-per-day that exceeds $120 in 2018; this is up from $110 in 2017.
Packaging of Low-Cost Drug Administration Services
Under the OPPS, CMS generally packages payment of supportive, dependent, or adjunctive services into the payment of the primary services. In the 2014 final rule, CMS finalized a policy to unconditionally package procedures described by add-on codes. However, in response to stakeholder comments CMS did not finalize their proposal to package drug administration add-on codes.
In CY 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 is seeking stakeholder input on a payment methodology for drug administration add-on codes. Specifically, CMS is asking for public comments on: (1) whether CMS should conditionally or unconditionally package drug administration services add-on codes; (2) how CMS should consider or incorporate the varied clinical drug protocols that result in different infusion times into a drug administration service add-on code payment proposal; and (3) other recommendations on an encounter-based payment approach for drug administration services that are described by add-on codes when furnished in the hospital outpatient setting.
1 Federal Register Volume 82, Number 139, Friday, July 21, 2017 Proposed Rules. Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2018; Medicare Shared Savings Program Requirements; and Medicare Diabetes Prevention Program. https://www.gpo.gov/fdsys/pkg/FR-2017-07-21/pdf/2017-14639.pdf. Accessed August 1, 2017.