On July 25, 2018, CMS released its CY 2019 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment system proposed rule. The rule contains payment updates for hospital outpatient departments and ASCs as well as proposals related to pass-through payments and the 340B program. Three requests for information (RFIs), including two found in previously released proposed rules, are also in this rule.

Comments on the proposed rule are due to CMS by 5 pm on September 24, 2018.

CMS Predicts Payment Increase of 1.25 Percent for Hospital Outpatient Departments

Under the proposed rule, CMS proposes to increase payments to hospital outpatient departments by a 1.25 percent, to a total of $74.6 billion, or $4.9 billion higher than in 2018. This update takes into account the projected hospital market basket increase of 2.8 percent, a 0.8 percentage point decrease for multi-factor productivity (MFP), and a 0.75 percentage point decrease as required by statute. Hospitals which fail to meet quality reporting requirements will continue to have their reimbursement decreased by 2 percent.

CMS Proposes Lowering 340B Reimbursement to ASP-22.5% for Additional Off-Campus Sites, Adjusts Rate for Non-Pass Through Biosimilars under 340B

In last year’s OPPS rule, CMS finalized a change to reimbursement for drugs in the 340B drug discount program. This change in the CY 2018 rule reduced payment to average sales price (ASP) minus 22.5% instead of 106% of ASP. Nonexcepted off-campus PBDs of a hospital that are paid through the Physician Fee Schedule (PFS) were not subject to the new payment methodology s. Public comments noted that the different reimbursement amounts for excepted and nonexcepted departments could incentivize shifting drug administration services of 340B drugs to these nonexcepted facilities.

In the proposed rule for CY 2019, CMS notes their agreement with these comments and proposes to pay the adjustment amount of ASP minus 22.5 percent for drugs acquired under the 340B program when they are furnished in a nonexcepted off-campus PBD. Rural sole community hospitals, children’s hospitals and PPS-exempt cancer hospitals will be excepted from this payment adjustment.

Additionally, CMS is proposing to pay non-pass through biosimilars acquired through the 340B program at ASP minus 22.5% of the biosimilar’s ASP instead of the biosimilar’s ASP minus 22.5% of the reference product’s ASP.

Proposed Reimbursement for Drugs and Biologics without ASP Data Changed to WAC Plus 3 Percent

Aligning with recent proposals in the Physician Fee Schedule (PFS), CMS is proposing to pay for Part B drugs and biologicals products without pass-through status at wholesale acquisition cost (WAC) plus 3 percent instead of WAC plus 6 percent. WAC is used when average sales price (ASP) data is unavailable for a drug or biologic during its initial sales period. This proposal would be effective January 1, 2019 and would not apply to drugs acquired under the 340B program.

Packaging Threshold to be Increased to $125 for CY 2019

CMS is proposing a drug packaging threshold of $125 for CY 2019, an increase of $5 from the CY 2018 level. Items with a per day cost that is less than or equal to this threshold are packaged; items above this are separately payable at 106% of ASP or ASP minus 22.5% for 340B drugs.

Pass-Through Status Continuation Proposed for 49 Drugs

CMS is proposing that pass-through status will expire for 23 drugs and biologicals on December 31, 2018. Additionally, CMS is proposing to continue pass-through status for 45 drugs and biologicals. Four additional drugs and biologicals that already have had 3 years of pass-through will be extended by an additional two years as required by statute.

For 2019, CMS is proposing to continue paying ASP plus 6 percent for pass-through drugs and biologicals. The agency is also proposing to continue updating the payment rates on a quarterly basis.

CMS Receives 7 Applications for Device Pass-Through Payment; Does Not Believe Any Qualify

CMS allows for pass-through payment (as opposed to payment through APCs) for certain devices used in the outpatient setting that are sufficiently novel, costly, and effective. This year, CMS received seven applications for pass-through status, and expressed the following concerns:

• AquaBeam system for the resection and removal of prostate tissue in males suffering from lower urinary tract symptoms (LUTS) due to benign prostatic hyperplasia (BPH)
  • Insufficient evidence of clinical improvement
• BioBag larval debridement therapy in a contained dressing
  • Insufficient evidence of clinical improvement
• BlastX antimicrobial wound gel
  • Not an eligible device
• EpiCord skin substitute
  • Insufficient evidence of clinical improvement
• remedē system transvenous neurostimulator
  • Insufficient evidence of clinical improvement
• Restrata wound matrix
  • Insufficient evidence of clinical improvement
• SpaceOAR polyethylene glycol hydrogel spacer
  • Insufficient evidence of clinical improvement

CMS solicits comments on each of these concerns.

Device-Intensive Criteria Broadened in Order to Include More Codes

CMS began determining device-intensive status at the HCPCS code level in 2017. For 2019, CMS proposes to expand its definition of device-intensive procedures to include surgically-implanted single-use devices, whether or not they remain in the patient after the surgery. Additionally, they propose to lower the device offset threshold to 30 percent, from 40 percent, to allow more procedures to qualify as device-intensive. Until claims data are available, new HCPCS codes will be assigned a 31 percent device offset.

Three New C-APCs and New Methodology for Extremely Low-Volume New Technology APCs Proposed

For 2019 CMS is proposing three new comprehensive APCs (C-APC) that include primary, comprehensive services typically reported with other ancillary services:

• C-APC 5163 (Level 3 ENT Procedures);
• C-APC 5183 (Level 3 Vascular Procedures); and
• C-APC 5184 (Level 4 Vascular Procedures)

Also, in 2019, CMS is proposing a “Smoothing Mythology” for pricing extremely low-volume procedures which CMS defines as fewer than 100 claims a year under the hospital outpatient payment system.  Under this proposal, CMS will use up to 4 years of claims data to set a payment amount for both assigning the service to a New Technology APC but also for assigning the service to a regular APC once it is no longer included in the New Technology APC.

 CMS Proposes Applying PFS Rate for Clinic Visits to Outpatient Departments in Effort Towards Site Neutrality

CMS is proposing to cut payments for clinic visits at hospital outpatient departments (HOPDs). The proposal would apply a Physician Fee Schedule-equivalent payment rate for clinic visits provided at an off-campus provider-based department that is paid under OPPS.  This proposal expands site neutrality and brings payment for HOPDs to the lower reimbursement rate under PFS. With this change, CMS states that this proposal would reduce the OPPS payment rate for the clinic visit to $46 and the beneficiary copayment would be $9. The change unifies payments regardless of the location of care delivery. It works to prevent hospital consolidation and unnecessary increases in the volume of covered outpatient services.

CMS is including payment for new families of services provided at excepted off-campus provider-based departments of grandfathered clinics under the PFS at the reduced rate rather than OPPS. The proposed clinical families are airway endoscopy, blood product exchange, cardiac/pulmonary rehabilitation, diagnostic/screening test and related procedures, drug administration and clinical oncology, ear, nose and throat, general surgery and related procedures, gastrointestinal (GI), gynecology, major imaging, minor imaging, musculoskeletal surgery, nervous system procedures, ophthalmology, pathology, radiation oncology, urology, vascular/endovascular/cardiovascular, and visits and related services.

CMS Proposes Changes to Outpatient Quality Reporting Program Aiming to Streamline Hospital Quality Reporting, Enhance Provider Participation

In this rule, CMS proposes to remove one quality measure, OP-27: Influenza Vaccination Coverage Among Healthcare Personnel, from the Hospital Outpatient Quality Reporting (OQR) program beginning with the CY 2020 payment determination. Additionally, CMS proposes the removal of nine quality measures beginning with the CY 2021 payment determination. There are no new measures proposed. CMS proposes to extend the performance and reporting period for measure OP-32: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy measure from 1 to 3 years for the CY 2020 payment determination, which would increase the number of eligible cases by approximately 5% or 235 facilities.

Additionally, CMS proposes multiple changes to the measure removal factors. First, they propose updating the language in Factor 7 to exclude patient harm as a consideration. CMS clarifies that patient harm would warrant an immediate removal rather than consideration. Secondly, CMS proposes the addition of removal Factor 8, which covers measures whose costs outweigh the benefit of its continued use. This new factor is also proposed for inclusion across other hospital quality reporting programs. Two measures proposed for removal from the OQR are a result of the proposed addition of Factor 8. Thirdly, CMS proposes to codify these updated measure removal factors.

Next, CMS proposes to change the frequency of the Hospital OQR Program Specifications Manual release beginning with CY 2019. Rather than require its release every 6 months, the release would occur every 6 to 12 months. The manual maintains the technical specifications for the measures. Fewer releases per calendar year would reduce confusion on technical requirements for participants.

Lastly, CMS proposes to change the requirements for hospital participation in the OQR by removing the Notice of Participation (NOP) form. Moving forward, participants would only need to register on the QualityNet website, identify as a QualityNet security administrator, and submit data.

Changes Proposed for IQR HCAHPS Survey in Response to Opioid Over-prescription and Feedback from Stakeholders

In this rule, CMS is proposing changes to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure (NQF #0166) for the Hospital Inpatient Quality (IQR) Reporting program. CMS proposes to remove the three Communication about Pain questions from the survey beginning with the FY 2024 payment determination. These questions were added to the survey in the FY 2018 IPPS/LTCH PPS final rule in response to the growing opioid epidemic and were begin impacting payment determinations beginning in FY 2020.

Stakeholder feedback suggested that providers may be inclined to prescribe new or more opioids to patients to manage pain and score highly on the Communication about Pain questions. This would lead to the adverse intended effect. The proposed removal of these questions is in an effort to be cautious and prevent mis-prescribing or survey gaming for competitive advantage. Scoring for the remaining 29 survey questions will be unchanged.

CMS Proposes Changes to IPO List

CMS is proposing the following changes to the Inpatient Only (IPO) list for CY 2019:

• Removal of CPT code 31241 – nasal/sinus endoscopy, surgical; with ligation of sphenopalatine artery
• Removal of CPT code 01402- anesthesia for open or surgical arthroscopic procedures on knee joint; total knee arthroplasty
• Addition of HCPCS code C9606- percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary artery bypass graft
• CMS is seeking comments on potential removal of CPT code 0266T- implantation or replacement of carotid sinus baroreflex activation device.

 CMS Estimates Increase of $32 Million for ASCs in CY 2019

CMS is estimating an increase of $32 million under ASC payment system in CY 2019. The proposed MFP-adjusted payment update is 1.3 percent. CMS announced that they apply hospital market basket update to ASCs for an interim period of 5 years. CMS will apply 2.0 percent MFP- adjusted hospital market basket update factor to determine CY 2019 ASC payment amounts. CMS believes that the proposal will allow services that are often performed in the hospital outpatient setting to migrate to the ASC setting, increasing beneficiary choice and possible savings.

CMS will revise the definition of “surgery” for CY 2019 to account for “surgery-like” procedures that are assigned codes outside of the CPT surgical range (10000-69999), specifically adding some cardiovascular codes to the Covered Procedures List (CPL), but limited to those that do not require an overnight stay when performed in an Ambulatory Surgical Center (ASC).

CMS is also modifying criteria for device-intensive procedures to allow procedures with high-cost, single-use, and surgically inserted or implanted devices in the ASC setting. Device- intensive procedures currently have a device cost threshold of 40 percent of the total cost of procedure. CMS proposes to lower that threshold to 30 percent for CY 2019.

CMS Proposes Unpackaging Non-Opioid Pain Management Drugs in ASC Setting

In response to the opioid crisis, CMS is also proposing to unpackage and pay separately in CY 2019 for non-opioid pain management drugs that function as surgical supplies when used in ASCs. The proposed rule notes that this only currently applies to one drug. The change does not apply to hospital outpatient departments.

CMS Seeks Feedback on the Competitive Acquisition Program for Part B Drugs

As part of the Trump administration’s American Patients First drug pricing plan, officials have hinted at exploring the Competitive Acquisition Program (CAP) for Medicare Part B drugs. To that end, this rule contains a request for information (RFI) that solicits public comment for a program that would introduce competition while reducing Medicare expenditures and out of pocket spending. CMS is seeking feedback on a potential model design that builds upon the CAP. Comments could be related to scope, the providers and suppliers included or excluded in a model, the types of Medicare Part B drugs and biologicals included or exclude, and payment options.

RFIs On Price Transparency, Interoperability Also Included in Hospital Outpatient Rule

This proposed rule includes a request for information (RFI) identical to one included in other proposed payment rules, such as the Inpatient Prospective Payment System (IPPS) rule among others. The RFI seeks input on promoting interoperability and electronic healthcare information exchange. CMS is particularly interested in feedback on how to use CMS health and safety standards to further advance information exchange for safe and effective transitions of care.

CMS also repeats verbatim their request for information listed in the CY 2019 Physician Fee Schedule (PFS) proposed rule. This RFI continues initial efforts made in the FY2019 Hospital Inpatient and Long Term Care Hospitals Prospective Payment Systems proposed rule, where CMS proposed to “require hospitals to make available a list of their current standard charges via the Internet in a machine readable format and to update this information at least annually, or more often as appropriate,” effective January 1, 2019. CMS is interested in ways to improve patient transparency and share information in a consumer-friendly way.