Knowledge Base Category -

A few weeks ago, when CMS released the 2019 Outpatient Prospective Payment System (OPPS) Proposed Rule, we addressed some of the major proposed changes from that rule in Wednesday@One articles. Specifically, our August 1st newsletter included an article on the proposed changes to payments for off-campus provider-based departments and an article on the proposed changes to the inpatient only list. This week I will review some of the other more modest proposals from that rule.

Increased Payment Rate

CMS is proposing for CY 2019 an OPPS fee schedule increase factor of 1.25%.

• This increase factor is based on proposed hospital inpatient market basket percentage increase of 2.8% minus the proposed multifactor productivity (MFP) adjustment of 0.8%, and minus a 0.75% adjustment required by the Affordable Care Act.
• CMS estimates total payments to OPPS providers for CY 2019 would be approximately $74.6 billion, an increase of approximately $4.9 billion compared to estimated CY 2018 OPPS payments.
• The statutory 2.0% reduction in payments for hospitals failing to meet the hospital outpatient quality reporting requirements would continue for 2019.

Comprehensive APCs

As a reminder, the comprehensive APC (C-APC) payment policy packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level.

• Services identified by a status indicator (SI) of “J1” are designated as primary services.
• When a primary service is reported on a hospital outpatient claim, Medicare makes a single payment for the claim. Payment for all adjunctive and secondary items, services, and procedure is included in this single payment for the primary service.
• Services with “packaged” payment under C-APCs include diagnostic tests and procedures, visits, DME, therapy services provided during the perioperative period, and drugs, biologicals, and radiopharmaceuticals.
• Services excluded from the C-APC include mammography and ambulance services, brachytherapy seeds, pass-through drugs and devices, self-administered drugs, and certain preventive services.
• Medicare makes an increased payment for complexity adjustments when certain multiple “J1” codes or certain add-on codes are present on the claim.

For CY 2019, CMS is proposing to create three new C-APCs involving ears, nose, and throat (ENT) and vascular procedures: proposed C-APC 5163 (Level 3 ENT Procedures); proposed C-APC 5183 (Level 3 Vascular Procedures); and proposed C-APC 5184 (Level 4 Vascular Procedures).  This proposal would increase the total number of C-APCs to 65.

Also related to C-APCs, CMS is proposing to exclude payment for any procedure that is assigned to a New Technology APC from being packaged when included on a claim with a “J1” service assigned to a C-APC.

Device-Intensive Procedures

Currently, device-intensive procedures are those procedure that involve surgically inserted or implanted devices that remain in the patient’s body after surgery and for which the portion of the APC payment attributed to the device (device off-set amount) exceeds 40%. This means the following device-intensive policies apply to these procedures:

• There is a procedure/device edit that requires a device code to be reported on a claim with a device-intensive procedure. Any device code will satisfy the edit and CMS created HCPCS code C1889 to report devices furnished during a device-intensive procedure that are not described by a specific HCPCS code.
• OPPS payment for device-intensive procedures is decreased by the full or partial credit a provider receives for a replaced device, when a hospital furnishes a specified device without cost or with a full or partial credit. Hospitals report on the claim the amount of the credit in the amount portion for value code “FD” when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device.

For CY 2019, CMS is proposing to modify the device-intensive criteria to 1) allow procedures that involve single-use devices, regardless of whether or not they remain in the body after the conclusion of the procedure and 2) allow procedures with a device offset percentage of greater than 30 percent to qualify as device-intensive procedures. They are making these proposals because:

• They “no longer believe that whether a device remains in the patient’s body should affect its designation as a device-intensive procedure because such devices could, nonetheless, comprise a large cost of the applicable procedure”
• The lower 30% threshold “allow(s) a greater number of procedures to qualify as device-intensive.”
• “Allowing these additional procedures to qualify for device-intensive status will help ensure these procedures receive more appropriate payment in the ASC (ambulatory surgical center) setting, which will help encourage the provision of these services in the ASC setting.”
• “This proposed change would help to ensure that more procedures containing relatively high-cost devices are subject to the device edits, which leads to more correctly coded claims and greater accuracy in our claims data.”

The most interesting of the above reasons is CMS’s obvious hope that these policy changes would shift more of these procedures from the hospital setting to the lower-cost ASC setting. Addendum P to the proposed rule includes a full list of the proposed CY 2019 OPPS device-intensive procedures. All of the above noted device-intensive policies would apply to these procedures.

Separately Payable Drugs and Biologicals

For CY 2019, CMS is proposing to continue to pay for pass-through drugs and biologicals and separately payable non-pass-through drugs, biologicals, and therapeutic radiopharmaceuticals not purchased through the 340B drug program at ASP (average sales price) +6 percent. The proposed packaging threshold for CY 2019 is $125 a slight increase from the CY 2018 threshold of $120. This means payment for drugs with a per day cost less than or equal to $125 will be packaged and not paid separately.

They are proposing to continue to pay for separately payable Medicare Part B drugs (assigned status indicator “K”), other than vaccines (SI = “L” or “M”) and drugs on pass-through payment status (SI = “G”), acquired with a 340B discount at a rate of ASP minus 22.5 percent when billed by a hospital paid under the OPPS that is not excepted from the payment adjustment. Hospitals to which the payment reduction applies will continue to report modifier “JG” for applicable status “K” drugs. Rural sole community hospitals (SCHs), children’s hospitals, and PPS-exempt cancer hospitals are proposed to continue to be excepted from the 340B payment adjustment. These hospitals would continue to report informational modifier “TB” for 340B-acquired drugs, and continue to be paid ASP+6 percent.

One slight change is for drugs or biologicals for which ASP data is not available. For these drugs/biologicals CMS is proposing to pay WAC (wholesale acquisition cost) +3%, rather than WAC+6% whenever WAC-based pricing is used for a drug or biological. WAC minus 22.5% would continue to apply for drugs acquired under the 340B Program.

Those are some of the more interesting proposals for 2019, but as usual CMS has asked for input on a number of proposals, one related to skin substitutes. Currently CMS assigns skin substitutes to a low cost or high cost category based on either a product’s geometric mean unit cost (MUC) or the product’s per day cost (PDC) exceeding specified thresholds. Payment for skin substitutes is packaged, but application of high cost substitutes is reported with HCPCS codes 15271 through 15278, which receives a higher payment rate than application of low cost substitutes reported with HCPCS codes C5271 through C5278.

Significant fluctuations in the MUC or PDC thresholds from year to year may result in the reassignment of several skin substitutes from the high cost group to the low cost group which, under current payment rates, can be a difference of approximately $1,000 in the payment amount for the same procedure. One solution for CMS has been to maintain assignment of a product to the high cost group if it was in the high cost group the prior year, regardless of whether it exceeds or falls below the CY 2019 MUC or PDC threshold.

However, CMS continues to seek input on other ways to handle the payment of skin substitutes. They have identified four potential methodologies that have been raised and they encourage the public to review and provide comments on these. They “are especially interested in any specific feedback on policy concerns with any of the options presented as they relate to skin substitutes with differing per day or per episode costs and sizes and other factors that may differ among the dozens of skin substitutes currently on the market.” The four potential methodologies include:

• A lump-sum “episode-based” payment for a wound care episode,
• One payment category and set of procedure codes for all skin substitute products,
• Payment of current add-on codes or new additional procedure codes for larger size graft services, or
• A different threshold used to assign skin substitutes in the high-cost or low-cost group.

The discussion of these options can be found on page 37119 of the  OPPS 2019 Proposed Rule.

One last thing that hospitals need to know, even though this is not from the OPPS section of the proposed rule. CMS is proposing to add heart catherization and coronary angiography procedures described by CPT codes 93451-93462 to the list of ASC surgical procedures for 2019. This would allow Medicare patients having these procedures to elect to have them in an ASC instead of in a hospital setting.

For hospitals, some of these proposals may not be as modest as they first appear.

We all know the benefits of a healthy diet and exercise. You can hardly go a day without seeing or hearing information on how eating right and exercising will lead to a longer, healthier, and happier life. Unfortunately, not all of us are proactive when it comes to our health. We wait until an episode or condition has occurred before changing our ways. Better late than never, so it is lucky for many that Medicare covers cardiac and pulmonary rehabilitation. For the providers that furnish these services, it is also wise to be proactive to ensure you meet the Medicare requirements of coverage and billing. Better late than never is not a wise option for providers since your facility could lose valuable reimbursement if you fail to follow the Medicare rules.

In May 2018, the Office of Inspector General added review of outpatient cardiac and pulmonary rehabilitation services to their Work Plan. The OIG notice reminds providers, “For these services to be covered, however, they must be medically necessary and comply with certain documentation requirements. Previous OIG work identified outpatient cardiac and pulmonary rehabilitation service claims that did not comply with Federal requirements.” In addition to prior OIG reviews, some Medicare Administrative Contractors (MACs) have also reviewed cardiac and pulmonary rehab services. The MAC reviews found significant error rates for these services.

If your facility provides one or both of these services, what should you do to ensure you comply with Federal requirements? The obvious first step is being familiar with Medicare’s requirements. The  Medicare Benefits Policy manual, chapter 15 discusses the coverage of pulmonary rehab in section 231 and cardiac rehab in section 232. Chapter 32 of the Medicare Claims Processing Manual provides instructions on these programs in section 140.

If you do provide these services, it is likely you know the covered conditions and required components of each. So, in this article, let’s focus on the areas that are most prone to be deficient.

Pulmonary rehab is covered for patients with moderate to very severe chronic obstructive pulmonary disease (COPD) (defined as GOLD classification II, III, and IV), when referred by the physician treating the chronic respiratory disease. Cardiac rehab is covered for patients with

• Acute myocardial infarction within the preceding 12 months;
• Coronary artery bypass surgery;
• Current stable angina pectoris;
• Heart valve repair or replacement;
• Percutaneous transluminal coronary angioplasty (PTCA) or coronary stenting;
• Heart or heart-lung transplant.
• Stable, chronic heart failure defined as patients with left ventricular ejection fraction of 35% or less and New York Heart Association (NYHA) class II to IV symptoms despite being on optimal heart failure therapy for at least 6 weeks.

In the case of a medical review, the patient’s diagnosis should be stated as part of the treatment plan but in addition, your record must substantiate the covered diagnosis with documentation from physicians’ office notes, hospital records, findings of diagnostic testing, and/or operative notes. Also verify timeframes (AMI within the last 12 months, optimal heart failure therapy for at least 6 weeks for CHF) and the inclusion of specific measures when required (GOLD class II, III, or IV; VEF of 35% of less; NYHA class II – IV symptoms) are addressed with supporting documentation.

Denials of pulmonary and cardiac rehab from prior MAC reviews were often cited as due to lack of all the required components. Both pulmonary and cardiac rehab require the following components.

• Physician-prescribed exercise,
• Education or training (for cardiac risk factor modification in the case of cardiac rehab)
• Psychosocial assessment
• Outcomes assessment
• Individualized treatment plan

It is unknown how strict a particular Medicare reviewer will be, so best practice is to address each of these elements with the following strategy – 1) what does the patient need, 2) what is the plan for addressing that need, 3) what was done for the patient based on the plan, 4) how did the patient respond and 5) modifications based on patient failure to progress. Years ago, CGS published an article that described the requirements for cardiac rehab. That article is no longer available, but MMP provided details from that publication in a prior Wednesday@One article that you might find helpful.

Cardiac and pulmonary rehabilitation program sessions are limited to a maximum of two (2) 1-hour sessions per day for up to 36 sessions, with the option for an additional 36 sessions if medically necessary. MMP sees Medicare denials of cardiac and pulmonary rehab services with Claim Adjustment Reason Code (CARC) 119 - Benefit maximum for this time period or occurrence has been reached. This could occur when:

• Cardiac/pulmonary rehab services exceed two (2) units for a single day of service
• Cardiac/pulmonary rehab services exceed 36 sessions without a –KX modifier included on the claim line
• Cardiac/pulmonary rehab services exceed 72 sessions

Medicare will assign liability for these services to the provider unless an Advance Beneficiary Notice (ABN) was obtained.

If a patient requires medically necessary cardiac/pulmonary rehab services beyond 36 sessions (up to a maximum of 72 sessions), a –KX modifier should be appended to the claim line. The –KX modifier indicates the services provided meet the medical necessity requirements of the applicable medical policy/regulation and there is supporting the rehab services beyond 36 sessions. For example, a patient may be benefiting from rehab but may not meet exit criteria after the initial 36 sessions. This is an example when use of the –KX modifier would be appropriate.

Also, be sure your documentation specifies the amount of time the patient is participating in cardiac or pulmonary rehab. In order to report one session of cardiac/pulmonary rehabilitation services in a day, the duration of treatment must be at least 31 minutes. Two sessions may only be reported in the same day if the duration of treatment is at least 91 minutes. If several shorter periods of cardiac/pulmonary rehabilitation services are furnished on a given day, the minutes of service during those periods must be added together for reporting in 1-hour session increments.

Now is a good time to look at your own cardiac or pulmonary rehab records to verify they meet all the Federal requirements before the OIG, a MAC, or another Medicare reviewer comes calling for those records. Be proactive before it is too late.

When we think of copycat products, we often picture the nefarious character flipping open his overcoat to reveal a row of “Rolex” watches available at bargain basement prices - in other words, counterfeit products of a lesser quality and illegally bearing a trademark name. But in the world of biological drugs, legitimate but costly copycat products offer physicians and patients other options for treatment. With appropriate payment policies, the United States biosimilar product marketplace can continue to grow resulting in cost savings and those additional treatment options. In the 2018 Medicare Physician Fee Schedule Final Rule (MPFS), CMS changed the payment policy for biosimilars to separately code and determine payment for each biological biosimilar product under Medicare Part B.

The original policy addressing biosimilars was from the 2016 MPFS rule. At that time CMS decided to base the payment amount for a biosimilar biological product on the average sales price (ASP) of all biosimilars for one reference product and to assign one payment code (HCPCS code) to all biosimilars for the same reference product. “In general, this means that products that rely on a common reference product’s biologics license application (that is, FDA’s previous finding of safety, purity, and potency for the common reference product) are grouped into the same payment calculation for determining a single ASP payment limit and that a single HCPCS code is used for such biosimilar products. The regulation went into effect on January 1, 2016.” Biosimilars sharing the same HCPCS code, but produced by different manufacturers, were distinguished by HCPCS modifiers.

There were varying opinions about Medicare’s payment policy for biosimilars from the beginning – some stakeholders supporting the use of one HCPCS code and others opposing it. In the 2018 MPFS FR, CMS notes, “The biosimilar product marketplace has continued to grow, and four biosimilar biological products that are paid under Part B have been licensed, including one product approved in 2017 that is sharing a HCPCS code with another previously licensed biosimilar biological product. Based on the number of biosimilar biological products that are reported to be nearing approval and the approvals made over the past 2 years, CMS anticipates that several more biosimilar biological products will be licensed for use in the United States during the next year and that during the following years, the marketplace will continue to grow steadily, provided that the approved products are marketed without delay. …CMS is aware of concerns that current Medicare policy may discourage development of new biosimilars and other innovation in this area potentially resulting in higher costs over time due to a lack of competition in the market place.”

As usual for CMS rules, the topic was discussed in great detail in the 2018 MPFS Final Rule (starting on page 53182). Some of the more interesting points of the discussion include,

Facts about Biosimilars:

• Biosimilars are similar, but not identical, to their reference products, and due to these subtle differences, they may have different therapeutic and adverse effects on patients, requiring clinical distinctions between the products.
• None of the currently available biosimilars are approved as interchangeable. The current biosimilar approval process does not compare biosimilar biological products to each other, rather, only similarity to a reference product is established and the licensing of a biological product under the biosimilar pathway does not mean that the products are interchangeable.
• Biosimilar biological products may be approved for fewer indications than the reference product and the approved indications within a group of biosimilar biological products with the same reference product may vary.
• These products are likely to be expensive and may have different acquisition costs. The development costs for these products and their manufacturing facilities are estimated to be in the hundreds of millions of dollars.

Stakeholders’ Comments

• Grouping (biosimilars) for payment could lead to prescribing choices based on cost rather than clinical considerations.
• The current policy may impair access to biosimilars, could potentially limit the introduction of biosimilars to the US market, and would fail to maximize competition and savings.
• Grouping products for payment that do not have all the same indications could cause clinicians and patients to think the products are interchangeable or could lead to off-label use.
• Blended payment could be a significant financial risk to the provider because the products that would be the best choice for a patient may not be paid above acquisition cost.
• ‘‘Race to the bottom’’ pricing competition would result from shared codes and lead to prices that could not sustain educational efforts and other activities associated with marketing new and complex biological products, ultimately resulting in manufacturers leaving the United States marketplace.
• Determining a payment for each biosimilar product by using individual HCPCS codes would drive and reward innovators, producing the potential cost savings of at least 10–15 percent compared to the reference biologic ASP necessary for biosimilar products to compete with the reference biological.

Because of the above facts and concerns, CMS has “become increasingly concerned about the relationship between cost, prices and competition; specifically, many commenters’ continued unease regarding the effects of our payment policy on patient and provider choices, as well as the biosimilar marketplace. We have also considered how the payment policy could affect market entry of new biosimilar manufacturers. If payment amounts limit manufacturers’ willingness to invest in the development of new biosimilars, it could in the long term, decrease the number of biosimilar biological products that are available to prescribe and thus impair price competition. Given that the United States’ biosimilar biological product marketplace is still relatively new, we believe that it is important to maintain a payment policy innovation as well as reasonable pricing for consumers. We agree that it is important to consider and effect policy changes early, as this portion of the drug marketplace develops, in order to support a robust marketplace that provides choices for providers and patients while maximizing savings.”

Effective January 1, 2018, newly approved biosimilar biological products with a common reference product will no longer be grouped into the same HCPCS code. Each biosimilar will be assigned a unique HCPCS code and payment will be based on the ASP for that individual biosimilar. Biosimilar HCPCS codes in use prior to January 1, 2018 are being changed and replaced to be in compliance with the new payment policy.  This is described on the Medicare Biosimilar webpage and addressed in the April 2018 OPPS Update MLN Matters Article.  Effective April 1, 2018, the descriptor for HCPCS code Q5101 (filgrastim biosimilar) is being changed to “Injection, zarxio.”  HCPCS code Q5102 (infliximab biosimilar) is being replaced effective April 1, 2018 with HCPCS codes Q5103 (Injection, inflectra) and Q5104 (Injection, renflexis).  The new biosimilar payment policy also makes the use of modifiers that describe the manufacturer of a biosimilar product unnecessary. Therefore, modifiers ZA, ZB, and ZC will be discontinued for dates of service on or after April 1, 2018. However, please note that HCPCS code Q5102 and the requirement to use applicable biosimilar modifiers remain in effect for dates of service prior to April 1, 2018.  

If your job involves keeping up with Medicare regulations, you know that sometimes there is so much information it can be overwhelming. You may also notice the same information appearing again and again. That is not a bad thing – repetition promotes learning and if you missed it one place, chances are you will see it again.

The guidelines we follow for Medicare come from laws, rules and regulations, and the sub-regulatory guidance of instructions, policies, and procedures. What is the difference in a law versus Medicare manual instructions? Laws come from Congressional actions signed into law by the President. Then a government department, such as the Centers for Medicare and Medicaid Services (CMS) issues rules in The Federal Register which become codified in the Code of Federal Regulations (CFR) to implement, interpret, or prescribe law or policy. From Medicare final rules, CMS issues sub-regulatory guidelines, such as in the form of Medicare transmittals to communicate new or changed policies or procedures that will be incorporated into Medicare manuals. And even beyond that CMS and the individual Medicare Administrative Contractors (MACs) offer instructions and numerous educational opportunities. With all of this communication, it would be hard for a provider to ever claim they were not aware of the Medicare requirements.

Like Medicare, you will see topics repeated in our Wednesday@One newsletter articles. For example, we have already written several articles based on the Outpatient Prospective Payment System (OPPS) Final Rule (FR). This article summarizes the January 2018 OPPS Update transmittal which addresses the changes from the FR to be implemented in January plus other January updates. Therefore, you will see topics again that you have seen in recent articles, but remember, repetition promotes learning.

• There are no new device categories eligible for pass-through payment for January 2018,
• Two additional New Technology APCs (1907 and 1908) are created and existing New Technology APC payment rates adjusted (see table in the transmittal).
• Effective January 1, 2017, X-rays taken using film must be reported with modifier “FX.” This results in a payment reduction of 20%.
• Effective January 1, 2018, hospitals must report modifier “FY” for X-rays taken using computed radiography technology. Use of this modifier results in a 7% payment reduction from January 1, 2018, through December 31, 2022, and a 10% reduction beginning January 1, 2023 and after.
• Modifier “CP” used to identify adjunctive services on a claim related to a procedure assigned to a Comprehensive APC (generally for Stereotactic Radio Surgery (SRS)) was deleted after December 31, 2017. Medicare will continue to make separate payments for the 10 planning and preparation services adjunctive to the delivery of the SRS treatment when furnished within 30 days of the SRS treatment. See the transmittal for more details and a list of the 10 planning and prep codes.
• CMS removed 6 procedures from the inpatient-only list (IPO) for CY 2018 – CPT 43282, laparoscopic repair of para-esophageal hernia; CPTs 43772-43774, laparoscopic gastric restrictive procedures; CPT 55866, laparoscopic prostatectomy; and creating the most discussion CPT 27447, total knee arthroplasty. CPT 92941, percutaneous transluminal revascularization during an AMI is being added to the IPO.
• CMS revised the laboratory date of service policy so that the date of service for molecular pathology tests and Advanced Diagnostic Laboratory Tests (ADLTs) that are not packaged under OPPS, that are collected from a hospital outpatient during a hospital outpatient encounter and the test is performed following the patient’s discharge from the hospital outpatient department, is the date the testing is performed. This means for tests meeting these criteria the testing lab must bill Medicare directly and the hospital laboratory should not bill Medicare. There are currently no ADLTs. Molecular pathology codes not packaged under OPPS can be identified on the OPPS Addendum B with a status indicator of “A.”
• For 2018, separately payable drugs with an OPPS status indicator of “K” purchased through the 340B program will be paid at ASP-22.5%. Hospitals to which this rule applies must report modifier “JG” on the claim to trigger the appropriate payment. Excepted hospitals (rural sole community hospitals, children’s hospitals, and OPPS-exempt cancer hospitals) will continue to be paid at ASP+6%, but should report informational modifier “TB” to identify drugs purchased through the 340B program.
• Effective January 1, 2018, newly approved biosimilar biological products with a common reference product will no longer be grouped into the same billing code with other biosimilars. CMS will be issuing new codes, but until then, continue to use existing codes and modifiers.
• See the January 2018 OPPS update (page 14) for a list of the assignment of Skin Substitute product codes as low- or high-cost.
• Medicare will be making available during CY 2018 a public searchable Internet website comparing estimated payments as required by the 21st Century Cure Acts.

This is a summary of some of the topics covered in the January 2018 OPPS Update transmittal. I encourage providers billing Medicare to read the entire transmittal for complete information.  The transmittal also includes new and revised codes.

An addendum to this article can be found by clicking here.

Background

The MolDX program requires billing laboratories to register in the DEX Diagnostics Exchange and apply for and obtain a unique test identifier (a Z-code) for each molecular diagnostic test (MDT) or lab developed test (LDT) they perform. If the billing laboratory does not perform the test but instead sends it to an outside laboratory to be performed, it is still the billing laboratory that must submit the Z-code on its claim. In this case, the billing lab obtains the DEX Z-CodeTM for the molecular test(s) from the performing laboratory, either directly or through the DEX system. Only certain MAC jurisdictions participate in the MolDX program. Since Palmetto is a MAC that participates, Jurisdiction J providers must follow the rules of the MolDX program sometime after transition (effective date to be announced by Palmetto but no earlier than March 2018).

Because of the unique nature of the tests in the MolDX program, hospital laboratories often do not perform these tests, but send most or all of them to an outside reference laboratory to be performed. Currently, Medicare’s laboratory billing and date of service rules require hospitals to bill Medicare directly for tests performed by another laboratory on hospital inpatients or outpatients. The hospital lab has to then pay the testing lab “under arrangements” for performing the test. The only current exception to this requirement is the laboratory date of service 14-day rule, which only applies when the test is ordered at least 14 days after discharge along with other criteria. This can be a burden on hospitals because sometimes the Medicare reimbursement to the hospital is less than the reference lab’s charge for the test. The MolDX program adds the additional burden of having to obtain and submit the Z-code on the Medicare claim in order to be paid.

So how does the new lab DOS policy affect the MolDX program?

In the 2018 OPPS final rule, CMS finalized a new laboratory date of service rule for hospital outpatients for molecular pathology and advanced diagnostic laboratory tests (ADLTs).  These are MDTs and ADLTs that are not packaged under OPPS but are paid separately under the lab fee schedule with an OPPS Status Indicator of “A.”  Basically, beginning January 1, 2018, if these types of tests are collected from a hospital outpatient but the test is not performed until after the patient’s discharge, then under the new rule, the testing lab must bill Medicare directly. The hospital lab cannot bill Medicare for molecular pathology tests and ADLTs performed after discharge unless they actually perform the test.

Because of this new rule, hospital laboratories will not be billing for molecular diagnostic tests and ADLTs with an SI of “A” that they do not perform in their own laboratory if all the requirements of the new date of service rule are met. This means they will not have to obtain or report a unique test identifier (a Z-code) for these tests that are sent to outside laboratories. In this case, the new rule relieves both of the burdens mentioned above.

There are some tests within the MolDX program that do not meet the definition for separately payable MDTs or ADLTs. These tests are conditionally packaged under OPPS with a status indicator of “Q4.” Medicare packages payment for the “Q4” lab tests when reported on a claim with other outpatient services, but pays hospitals separately for these tests if only laboratory tests are billed on the claim. When billing for these tests, the hospital will need to include a Z-code on the claim even if the test was performed under arrangements by an outside laboratory.

There are numerous local coverage determinations (LCDs) for the MolDX tests in the MAC jurisdictions that participate in the MolDX program. Providers should be familiar with the covered indications for the tests they furnish, whether they perform the test themselves or send it to an outside lab for testing. These outside testing labs will not be happy to be denied their Medicare reimbursement for lack of medical necessity because your hospital did not follow the LCD requirements.

The new rule does not apply to tests performed on inpatients. For inpatient testing sent to outside laboratories, the hospital bills Medicare directly and the testing lab receives payment from the hospital.  The only exception would be for tests that meet the lab DOS 14-day rule. Hospitals submit an inpatient claim to Medicare and are paid a MS-DRG payment for inpatients so individual lab CPT/HCPCS codes are not reported on the claim.

Figuring It Out

1. Performing laboratory bills; hospital doesn’t need Z-code: All hospital laboratories will want to identify the molecular pathology and ADLTs with an SI of “A” that they send to an outside lab for testing. Providers can determine the Status Indicator of laboratory tests by referring to Addendum B of the final rule. If the testing meets the new date of service rules (which it should), the testing lab must bill Medicare directly for these tests. Per the OPPS final rule, “hospital laboratories cannot bill for these tests unless they perform them.” Since the hospital will not be billing for tests sent out for testing that meet the new lab date of service rule, the hospital will not need to obtain a Z-code for these tests.

2. Hospital bills for tests performed by another lab and reports Z-code: Hospitals also need to identify the MolDX tests they send to an outside lab for testing that have a status indicator of “Q4.” Providers can determine the Status Indicator of laboratory tests by referring to Addendum B of the final rule. The hospital will bill Medicare directly for these tests and will need to obtain a Z-code from either the performing lab directly or through the DEX system. The Z-code must be submitted on the claim when billing Medicare for these tests.

3. Hospital performs and bills for tests and reports Z-code; And finally, hospitals need to identify the MolDX tests they perform in the hospital lab. The hospital will need to apply for and obtain the DEX Z-CodeTM before performing these tests. The Z-code must be submitted on the claim when billing Medicare for these tests.

Hospital labs need to be aware of both the new date of service rule and the reporting requirements for MolDX tests, and how one rule affects the other.  Review and follow the steps above to determine which molecular pathology and ADLTs your hospital must bill and when Z-code reporting is required.

Resources:
MolDX website - https://www.palmettogba.com/moldx
OPPS Addendum B - https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html
Watch for Medicare Transmittals that give more information on the new Laboratory Date of Service rule.

Finally fall weather has arrived in the South. The days are not too hot or too cold, so it is the perfect season to spend some time outdoors. Yesterday my dog and I went walking through the woods. Many of the paths had obstacles such as fallen trees or low hanging branches, so we would have to adjust and try a different route. This is also the time of year to get ready to adjust your paths with Medicare due to policy changes finalized in the 2018 Outpatient Prospective Payment System (OPPS) Final Rule that will become effective January 1, 2018.

Two of our Wednesday@One articles last week addressed finalized policies from the 2018 OPPS Final Rule – changes to the inpatient only list and payment reduction for separately payable drugs purchased through the 340B program.  This week we will examine some of the other significant policy changes from the 2018 OPPS final rule that will require some provider adjustments.

Drug Administration

Over the past several years, CMS has taken numerous actions to move the OPPS more toward an actual prospective payment system as the name indicates.  To this end, “the OPPS packages payments for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility.”  Specifically, over the past few years CMS has created and expanded comprehensive APCs which bundle payment for all adjunctive services into the payment for the primary service, packaged add-on codes, and conditionally packaged payment of ancillary services with a geometric mean cost of $100 or less.

Drug administration services have, up until this year, escaped the packaging concept as CMS examined various alternative payment policies for drug administration, including the associated drug administration add-on codes.  Finally, in 2018 CMS takes a baby step toward packaging of some drug administrative services.  They are conditionally packaging payment for some Level 1 and Level 2 drug administration services with a status indicator (SI) of “Q1” (see table below). Vaccine administration codes for preventive services (influenza, pneumococcal, and hepatitis B) and add-on drug administration codes, which still have an SI of “S,” are not packaged and will continue to be paid separately.  Vaccine admin codes 90471 and 90473, that are for administration of vaccines other than preventive services, are conditionally packaged. Since the Level 1 and 2 drug admin codes are conditionally packaged, they will be separately payable when not billed on the same claim as a HCPCS code with status indicator “S”, “T”, or “V”. The main impact from this drug admin packaging for hospitals will be for CPT code 96372 (therapeutic SQ/IM injection), and CPT codes 96401 and 96402 (chemotherapy SQ/IM injection codes).

As usual for packaged codes, CMS reminds hospitals that they are expected to report all HCPCS codes that describe the services provided, regardless of whether or not those services are separately paid or their payment is packaged. Although CMS did not package payment for add-on drug administration codes for 2018, they discussed the comments received and may propose more drug administration packaging in future years.

Lab Date of Service Policy

Probably the most difficult revised policy to explain and understand is the lab date of service policy. Laboratory date of service (DOS) rules start simple:

1. The DOS for clinical diagnostic laboratory services generally is the date the specimen is collected.
2. For archived lab specimens that are stored for more than 30 days before testing, the DOS is the date the specimen was obtained from storage.

Now this is where it starts getting complicated with what is known as the 14-day rule.

3. The DOS is the date the test was performed (instead of the date of collection) if the following conditions are met:
4. The test is ordered by the patient’s physician at least 14 days following the date of the patient’s discharge from the hospital;
5. The specimen was collected while the patient was undergoing a hospital surgical procedure;
6. It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted;
7. The results of the test do not guide treatment provided during the hospital stay; and
8. The test was reasonable and medically necessary for the treatment of an illness.
9. Another 14-day rule applies to chemotherapy sensitive tests performed on live tissue under the same conditions as described above with only slight variation to the first condition:
10. The decision regarding the specific chemotherapeutic agents to test is made at least 14 days after discharge;

Both of these 14-day rules apply to hospital inpatients and outpatients and the key point is that the test is ordered at least 14 days after discharge.  These DOS requirements determine whether the hospital bills Medicare for a clinical diagnostic laboratory test (CDLT) or whether the laboratory performing the test bills Medicare directly. When the 14-day rule applies, laboratory tests are not bundled into the hospital stay, but are instead paid separately under Medicare Part B to the testing laboratory.

Stakeholders expressed concerns about the current DOS policy because it requires hospitals to bill for tests they did not perform and that may have no relationship to or bearing on treatment received by the patient while in the hospital and it creates billing difficulties for the hospital. CMS agreed with these concerns and modified the date of service rule for hospital outpatients for molecular pathology tests and advanced diagnostic laboratory tests (ADLTs) that are not packaged under OPPS.  These types of lab test have a Status Indicator of “A” on Addendum B.

The new rule states that in the case of a molecular pathology test or an ADLT, the DOS of the test must be the date the test was performed only if—

• The test was performed following a hospital outpatient’s discharge from the hospital outpatient department;
• The specimen was collected from a hospital outpatient during an encounter (as both are defined in 42 CFR 410.2);
• It was medically appropriate to have collected the sample from the hospital outpatient during the hospital outpatient encounter;
• The results of the test do not guide treatment provided during the hospital outpatient encounter; and
• The test was reasonable and medically necessary for the treatment of an illness.

This new exception to the laboratory DOS policy does not apply to ADLT or molecular pathology tests when performed on a specimen collected from a hospital inpatient.

This new laboratory DOS policy will enable laboratories performing ADLTs and molecular pathology tests excluded from the OPPS packaging policy to bill Medicare directly for those tests, instead of requiring them to seek payment from the hospital outpatient department.  In fact, for molecular pathology tests and ADLTs meeting the above requirements, the DOS must be the date the test was performed and the test must be billed by the performing laboratory. Hospital laboratories cannot bill for these tests unless they perform them.

Supervision of OP Therapeutic Services

In the 2009 OPPS final rule, CMS clarified that direct supervision is required for hospital outpatient therapeutic services covered and paid by Medicare that are furnished in hospitals as well as in provider-based departments (PBDs) of hospitals.  They further clarified in the 2010 rule that this supervision requirement also applies to Critical Access Hospitals (CAHs).  Beginning in March 2010 and extending through December 31, 2016, CMS or Congress implemented and extended nonenforcement of this supervision requirement for CAHs and small rural hospitals having 100 or fewer beds.  Due to concerns that some small rural hospitals and CAHs have insufficient staff available to furnish direct supervision, CMS is reinstating the non-enforcement instruction for CYs 2018 and 2019.  This nonenforcement again applies to CAHs and small rural hospitals with 100 or fewer beds to give them more time to comply with the supervision requirements for outpatient therapeutic services and to submit specific services to be evaluated by the HOP Panel for a recommended change in the supervision level.

Other 2018 OPPS Updates

• Skin Substitutes – CMS will continue to assign skin substitutes as low cost or high cost based on their unit or per day cost. In addition, a skin substitute product that does not meet high cost criteria for CY 2018, but was assigned to the high cost group for CY 2017, will remain assigned to the high cost group for CY 2018 in order to maintain payment consistency.
• Comprehensive APCs – There are no new C-APCs for 2018.
• Brachytherapy – CMS decided not to finalize a proposed policy to establish an edit that requires a brachytherapy treatment code when a brachytherapy insertion code is billed. They are deleting Composite APC 8001 (LDR Prostate Brachytherapy Composite) and assigning HCPCS code 55875 to existing C-APC 5627 (Level 7 Radiation Therapy). 
• SRS Treatment – CMS is deleting modifier CP for services that are adjunctive to the primary stereotactic radiosurgery services (SRS) treatment described by HCPCS codes 77371 and 77372, but reported on a different claim. They will continue to make separate payment for the 10 planning and preparation codes adjunctive to the delivery of SRS treatments when furnished within one month of treatment.
• Bone Marrow Aspiration and Biopsy – CMS is deleting the add-on code G0364 and creating a new code (38222) to describe a diagnostic bone marrow with both aspiration and biopsy. The new code is assigned a status indicator of “J1” to the same APC as the codes for a bone marrow aspiration or a bone marrow biopsy performed separately.

This is not of course all of the policy changes from the 2018 OPPS final rule, but maybe the ones you should consider first and make process changes if necessary. The path to billing for Medicare services continually requires adjustments.

As a child I loved watching and playing along with game shows.  A lot of television viewers must also enjoy game shows as they continue to be popular with the ongoing creation of new shows and now even an entire channel dedicated to game shows. There are game shows where the contestants must answer difficult questions, game shows where people gamble on random choices, and game shows where the contestants try to guess answers given by others.  Though it is not an official “game show,” every year it is fun to guess which proposals from CMS’s proposed rules for inpatient and outpatient prospective payment systems will make the cut to become final Medicare requirements.  “Fun” may not be the word everyone would choose to describe this guessing game – some might consider it nerve racking.  There are some clues you can use to help with your guess: the tone of the discussion in the proposed rule and the resulting public conversations from interested parties. 

Based on public arguments concerning the 2018 Outpatient Prospective Payment System (OPPS) proposed payment reduction for drugs purchased through the 340B program, I truly thought CMS would back off, either altogether with no payment reduction or at least a lesser payment reduction.  There were numerous objections to the proposal from some influential entities – hospital associations, previous different and less severe proposals by the Medicare Payment Advisory Commission (MedPAC) and the Office of Inspector General (OIG), Hospital Outpatient Payment (HOP) Advisory Panel, and even members of Congress.  BUT – sound the buzzer – I was wrong.  CMS has indeed finalized their proposal to reduce payment for separately payable drugs purchased under the 340B program to ASP -22.5% as opposed to ASP +6% for drugs not purchased through the 340B program.

Background on the 340B Program

• The program allows participating hospitals and other health care providers to purchase certain “covered outpatient drugs” at discounted prices from drug manufacturers.
• It was established by section 340B of the Public Health Service Act by the Veterans Health Care Act of 1992 and is administered by the Health Resources and Services Administration (HRSA) within the Department of Health and Human Services (HHS).
• Health care providers eligible to participate in the 340B program if they meet certain criteria are:
• Federal health care grant recipients,
• Hospitals with a Medicare disproportionate share hospital (DSH) percentage > 11.75%,
• Critical Access Hospitals (CAHs),
• Children’s Hospitals with a DSH adjustment > 11.75%,
• Sole Community Hospitals (SCHs) with a DSH adjustment ≥0%
• Rural Referral Centers (RRCs) with a DSH adjustment ≥0%, and
• Freestanding Cancer Hospitals with a DSH adjustment > 11.75%.
• HRSA calculates the maximum (ceiling) price a participating drug manufacturer can charge a covered entity for each covered outpatient drug based on average manufacturer price (AMP) and a unit rebate amount (URA) that considers innovator vs. non-innovator drugs and the availability of generics.
• Deeper discounts (known as “subceiling prices”) are available on some covered outpatient drugs through HRSA’s Prime Vendor Program (PVP).
• The statutory intent of the 340B Program is to maximize scarce Federal resources as much as possible, reaching more eligible patients, and providing care that is more comprehensive.

CMS’s Reasons for the Payment Reductions

Payment Not Aligned with Costs

CMS’s goal is to make Medicare payment for separately payable drugs more aligned with the resources expended by hospitals to acquire such drugs. Various reports by government agencies estimated 340B hospitals receive a significant minimum discount for drugs paid under the OPPS with even deeper discounts if participating in the PVP program.

• MedPAC – discount of 22.5% of the ASP
• OIG – discount of 33.6% of the ASP
• GAO – discount of 20-50% of the ASP

Another MedPAC report estimated savings of $3.8 billion on outpatient drugs purchased through the 340B Program in 2013.  Also, participation in the program has grown steadily, from 583 participating hospitals in 2005, to 1,365 hospitals in 2010, and 2,140 hospitals in 2014.

There are limitations in estimating 340B drug costs due to the inability to identify which drugs were purchased through the 340B Program within Medicare claims data.  This is another concern CMS addresses in the final rule.

Drug Utilization/Spending

A MedPAC study also found that “Medicare spending grew faster among hospitals that participated in the 340B Program … than among hospitals that did not participate in the 340B Program …”.  The GAO found per beneficiary Medicare Part B drug spending, including oncology drug spending, was substantially higher at 340B DSH hospitals than at non-340B hospitals.  According to the GAO report, this indicates that, on average, beneficiaries at 340B DSH hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other non-340B hospitals in GAO’s analysis.

Beneficiary Costs

CMS is also concerned about the cost of co-pays for Medicare beneficiaries.  Medicare beneficiaries are liable for a 20% copayment of the OPPS payment rate, which is currently ASP+6% (regardless of the 340B purchase price for the drug).  In another unfavorable report, the OIG found 35 drugs where the “difference between the Part B [payment] amount and the 340B ceiling price was so large that, in at least one quarter of 2013, the beneficiary’s coinsurance alone… was greater than the amount a covered entity spent to acquire the drug.”

Public Comments

A number of commenters agreed with CMS’s proposal and reasons and also put forth a few other reasons for going forward with the payment reduction. Here are some of reasons given by commenters.

• Reverse the “perverse incentives” that have driven the closure and consolidation of the nation’s community cancer care system
• Only a small minority of 340B participating hospitals are using the program to benefit patients in need
• The increasing scope and magnitude of required 340B discounts are increasing drug prices to record-breaking levels as manufacturers factor these discounts into pricing decisions
• Future decreases in prices for supplemental insurance due to coinsurance savings from the 340B payment reduction if it is implemented
• Encourage site-neutral care as patients may receive the same services at a physician office setting without a significant difference in their financial liability between settings
• Address the incentive for hospitals to utilize these drugs solely for financial reasons

The major opposition to the payment reduction expressed by commenters was the lack of CMS’s statutory authority to impose such a large reduction in the payment rate for 340B drugs, and that payment cuts of this magnitude would greatly “undermine 340B hospitals’ ability to continue programs designed to improve access to services—the very goal of the 340B Program.”  If you are interested in the details of CMS’s response, you can read the display copy of the Final Rule beginning on page 562.  In summary, CMS stood their ground on most of the proposals although they did concede some additional exceptions and a change in the required modifier reporting. 

The Final Decision

For CY 2018, separately payable Part B drugs assigned status indicator (SI) “K” that are acquired through the 340B Program (including 340B PVP) will be paid at the ASP minus 22.5 percent when billed by a hospital paid under the OPPS that is not excepted from the payment adjustment.  Since separately payable Part B drugs with an SI of “K” were paid at ASP + 6% in 2017, the 340B drug payment reduction actually represents a total reduction of 28.5% from 2017 to 2018.  Also, since separately payable drugs not purchased through the 340B program will continue to be paid at ASP + 6% in 2018 the payment rate for these drugs posted in Addendum B of the 2018 OPPS Final Rule is ASP + 6%. Therefore, to calculate the reduced payment, you must first determine ASP by subtracting 6% and then the final reduced payment by subtracting the 22.5% to arrive at ASP – 22.5%, which is a reduction of 28.5% from the posted payment rate.

CMS believes an average discount to set payment rates for 340B-acquired separately payable drugs achieves the goals of (1) adjusting payments to better reflect resources expended to acquire such drugs, and (2) protecting the confidential nature of discounts applied to a specific drug. According to CMS, the estimated average minimum discount of 22.5% of the ASP calculated by MedPAC adequately represents the average minimum discount a 340B participating hospital receives for separately payable drugs.  In fact, they think it is likely the average discount is higher, potentially significantly higher, than the average minimum of 22.5%.  CMS wants to ensure that Medicare beneficiaries are not liable for a copayment rate that is tied to the current methodology of ASP+6% when the actual cost to the hospital to purchase the drug under the 340B Program is much lower than the ASP for the drug.

Exclusions and Exceptions

Exclusions from the 340B payment reduction are (1) drugs on pass-through payment status, which are required to be paid based on the ASP methodology (status indicator “G” – paid at ASP + 6%), and (2) vaccines, which are excluded from the 340B Program (status indicator L, paid at reasonable cost).  The following types of facilities are also excepted from the 340B payment discount:

• Critical Access Hospitals (CAHs),
• Rural Sole Community Hospitals (SCHs),
• Children’s Hospitals, and
• PPS-exempt Cancer Hospitals.

CMS decided not to make exceptions for the following:

• Biosimilar biological products will be paid the same as other separately payable drugs. Pass-through biosimilars will be paid ASP+6% and non-pass-through biosimilars will be paid at ASP-22.5%.  Currently there are only two biosimilars on the market, both with pass-through status for all of CY2018.  This means there are no biosimilars at this time that will be affected by the reduced payment for 340B drugs.
• Drugs provided in nonexcepted off-campus provider-based departments will be paid in accordance with section 1847A of the Act (generally, ASP+6 percent), consistent with Part B drug payment policy in the physician office although CMS may consider payment adjustments for these PBDs in 2019.
• Rural referral centers (RRCs) will be subject to the reduced payment if they participate in the 340B program.
• Blood clotting factors and radiopharmaceuticals that are not pass-through drugs will be paid ASP-22.5% if purchased through the 340B program.

Modifier Requirements

In response to comments, CMS is requiring a modifier for drugs acquired under the 340B Program instead of requiring its use on drugs that were not acquired under the 340B Program. In addition, they are establishing an informational modifier for use by certain providers who will be excepted from the 340B payment reduction.

• Effective January 1, 2018, Medicare will require hospitals subject to the 340B payment policy to report modifier “JG” on the same claim line as the drug HCPCS code to identify a 340B-acquired drug. These drugs will be paid at ASP-22.5%.
• Rural SCHs, children’s hospitals and PPS-exempt cancer hospitals excepted from the 340B payment adjustment will be required to report informational modifier “TB” for 340B-acquired drugs, and will continue to be paid ASP+6 percent.

These modifiers will facilitate the collection and tracking of 340B claims data whether they affect payment or not.

Budget Neutrality

CMS plans to implement the payment reduction for 340B drugs in a budget neutral manner.  “To maintain budget neutrality within the OPPS, the estimated $1.6 billion in reduced drug payments from adoption of this final alternative 340B drug payment methodology 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 furnished by all hospitals paid under the OPPS for CY 2018. Specifically, the redistributed dollars will increase the conversion factor across non-drug rates by 3.2% for CY 2018.”

Comment Solicitation

It is clear this is not the final word on this issue.  CMS states they may revisit the alternative 340B drug payment methodology in CY 2019 rulemaking and I am going to make another guess and say they definitely will. They are still seeking public comments on ways to more closely align the actual acquisition costs that hospitals incur rather than using an average minimum discounted rate while still keeping the ceiling price confidential as required by law.

I guessed wrong concerning the reduction in payment proposal for drugs acquired under the 340B program, but at least I didn’t have any money riding on it.  Unfortunately, hospitals do have money riding on it, maybe even a lot of money.

If you are interested in determining the potential impact the 340B payment reduction will have on your hospital, please contact Medical Management Plus, Inc. at 205-941-1105.  Utilizing the Medicare claims data from our sister company, RealTime Medicare Data (RTMD), we can compare your actual Medicare payments for drugs with an SI of “K” from a recent 12-month timeframe to the proposed 22.5% reduction from ASP.  As explained above this involves first subtracting 6% from the Addendum B payment rate of ASP + 6%, and then reducing the ASP by 22.5%, for a total of 28.5% below the posted payment rate. 

In a June 2016 Wednesday@One article about the new payment rates for laboratory tests, it was pointed out that Medicare wants competitive pricing for the services for which they pay. That is why the new lab payment rates are designed to be competitive with the rates of private insurers.

Background

The Protecting Access to Medicare Act of 2014 (PAMA) mandated a change to the way Medicare determines payment rates for laboratory tests under the Clinical Laboratory Fee Schedule. The purpose of this change was to make Medicare lab payments competitive with what private insurers are paid. A final rule was published in June 2016 implementing this requirement. To determine the basis for the revised payment rates, certain laboratories were required to submit private payor data to Medicare.  Below is some information that appeared in that previous Wednesday@One article concerning how the new payment rates were to be determined.

Payment Rates Determination

• Private payor rates for laboratory tests reported by the applicable laboratories will be the basis for the revised Medicare payment rates for most laboratory tests on the CLFS beginning in January 2018.
• The payment amount for a test on the CLFS furnished on or after January 1, 2018, will be equal to the weighted median of private payor rates determined for the test.
• The payment amount for a test cannot drop more than 10 percent as compared to the previous year’s payment amount for the first three years after implementation of the new payment system, and not more than 15 percent per year for the subsequent three years.
• Payment rates under the revised CLFS will be updated to reflect market rates paid by private payors every three years for most tests, and every year for ALDTs.

Preliminary CLFS Rates

On September 22, CMS published preliminary rates for the new private payor rate-based Clinical Lab Fee Schedule (CLFS) that will go into effect on January 1, 2018.  The data reported to CMS upon which the new CLFS rates are based captured over 96% of laboratory tests on the CLFS and represented over 96% of Medicare’s spending on tests in CY 2016.  CMS will be accepting comments on the preliminary determinations until October 23, 2017.  To see the preliminary rates, how to submit comments, and more information about the PAMA requirements see the CLFS PAMA Regulations webpage.

The table of preliminary payment rates with 10% phase-in reduction in 2018, 2019 and 2020 includes 1,360 laboratory HCPCS codes.  Of these,

• 879 codes have a 2018 payment reduction of 10% (the cap),
• 115 codes have a payment reduction < 10%,
• 134 codes have an increase in payment,
• 161 codes did not have a payment rate for 2017 but are assigned one for 2018,
• 71 codes are not assigned a 2018 payment rate due to payment and/or volume equal to 0 or they were new codes for 2017 or 2018.

Payment rates will continue to be adjusted until they reach the weighted median.  For 2018, 2019, and 2020, the maximum decrease per year will be a 10% reduction (reduction cap); after that, the reduction will be 15% for the next three years.  Regarding the reductions,

• 410 codes will reach the full payment change in 2018 (this includes the 115 codes with a reduction < 10%, the 134 codes with an increase in payment rates, and the 161 codes with a new rate for 2018),
• 61 codes will reach the full payment change in 2019,
• 102 codes will reach the full payment change in 2020,
• 716 codes will still require adjustment after 2020 to reach the full payment change.

Here are the proposed payments rates for some common laboratory tests.

For hospitals, the adjustments to payment rates will not have as significant an impact as they will for independent testing laboratories. This is because since 2014, the payment for most Medicare outpatient clinical laboratory tests billed by hospitals is packaged into the payment for other outpatient services.  This means lab tests performed in the emergency department, outpatient surgery, outpatient clinics or performed with other outpatient services are not separately paid. Separate payment for lab tests is only made to hospitals when the laboratory tests are the only outpatient services performed and billed on a claim. This includes testing on outpatients referred to the hospital lab by their physician and lab specimens sent to the hospital lab for testing.  Therefore, the impact on any particular hospital depends on the volume of outpatient hospital outreach lab testing.

Let’s look at the potential impact on hospitals.  Using data from our sister company, RealTime Medicare Data (RTMD), I determined the Medicare payments for a year for the common laboratory tests listed above from several hospitals with a significant amount of outpatient laboratory payments. These are actual payments so they represent laboratory testing that was separately paid by Medicare.  I averaged the payment data and estimated volumes based on 2017 pricing to allow comparison between these volumes and your facility’s volumes.  As you can see, even hospital laboratories with robust outreach business have limited loss of payments, with a total of around $166,000 annually for these 8 high-volume lab tests.  Of course, there are many more lab tests and payment reductions for most tests will continue over time, at least over a three period until a new evaluation of private payor payments is done.

Even though this is not a huge reimbursement loss for hospitals, in these days of already declining revenues and increasing costs, every penny counts.  And these are just more lost pennies.

The first weekend in September marked the return of college football for another season.  Football is a rough sport that requires a lot of padding to prevent and lessen injuries, so football pads are a good thing.  If you have ever done home projects that require working on your knees, you quickly realize the value of knee pads.  And for long-winded speakers, you hope your chair has a comfortable pad.  All of these are good “pads,” but some pads are not so welcome.  The extra padding of weight gain and aging is not so good – for example those extra “pads” around your eyes.  Peripheral artery disease, abbreviated PAD, is another pad that is bad.  The October 2017 update of the Outpatient Prospective Payment System addresses ways Medicare handles these examples of bad “pads.”

Supervised Exercise Therapy (SET) for Peripheral Artery Disease (PAD)

Under a new National Coverage Determination (NCD) effective May 25, 2017, Medicare will pay for supervised exercise therapy (SET) for beneficiaries with intermittent claudication for the treatment of symptomatic peripheral artery disease. The October OPPS update provides details of the requirements and CPT coding for this service.

The Medicare requirements for coverage of SET for PAD are:

• A therapeutic-exercise training program consisting of 30-60 minute sessions,
• Generally up to 36 sessions over 12 weeks,
• Referral from the physician responsible for PAD treatment,
• Contractor discretion for an additional 36 sessions over an extended period of time with a second referral,
• Performed in a hospital setting or physician’s office,
• Delivered by personnel trained in exercise therapy for PAD and who ensure benefits outweigh harms,
• Direct supervision by a physician or non-physician practitioner trained in both basic and advanced life support techniques,
• Patient has no absolute contraindications to exercise as determined by their primary physician, and
• A face-to-face visit with the physician responsible for PAD treatment to obtain:
• The referral for supervised exercise therapy, and
• Information regarding cardiovascular disease and PAD risk factor reduction, such as education, counseling, behavioral interventions, and outcome assessments.

Peripheral artery disease (PAD) rehabilitation is reported with CPT code 93668 for each session.  This service is paid under OPPS with a status indicator of “S” (separate APC payment, not discounted when multiple).

Upper Eyelid Blepharoplasty and Blepharoptosis Repair

CMS is revising their policy on blepharoplasty and blepharoptosis when performed together.  Before addressing the revision, let’s review the differences in these procedures and the prior policy.  Blepharoplasty is removing “pads” (excess fat or skin) around the eye. This is often a cosmetic procedure to improve appearance and cosmetic procedures are not covered by Medicare.  Medicare may cover blepharoplasty if there is medical need, such as an injury or the excess skin interferes with vision.  Ptosis repair tightens muscles around the eye to raise the height of a drooping eyelid.  Medicare’s prior policy, as clarified in the July 2016 OPPS Update, was that any removal of upper eyelid tissue (blepharoplasty) performed in conjunction with a ptosis repair of the same eye was considered a part of the blepharoptosis repair and could not be billed separately to Medicare or to the patient.

Effective October 1, 2017, CMS is revising this policy to allow either cosmetic or medically necessary blepharoplasty to be performed in conjunction with a medically necessary upper eyelid blepharoptosis surgery.  This means both procedures can be billed when performed together on the same eye – medically necessary procedures to Medicare and procedures performed for cosmetic reasons to the patient.  Patients should be made aware of their financial obligations for cosmetic procedures per Advance Beneficiary Notice (ABN) instructions.  If both the ptosis repair and the blepharoplasty are medically necessary and billed to Medicare, the payment for the blepharoplasty is bundled into the comprehensive APC payment for the blepharoptosis. In other words, when Medicare covers both procedures, there is no separate payment for the blepharoplasty.

The article also includes a list of practices related to blepharoplasty and blepharoptosis that are not appropriate for separate payment under Medicare, such as procedures performed on different dates.  Please refer to the October 2017 OPPS Update for the full list.  You can also find additional information on the original policy clarification in a prior article on this subject.

When billing Medicare for exercise therapy for PAD or blepharoplasty procedures, you need to grab your pad of paper and your favorite padded ink pen, sit in your most comfortable padded chair, and make notes on Medicare’s rules about “pads.”

There are times in life when your first attempt at something is just not good enough.  Throughout life, you may often be told to try again to get it right:

• As a teenager, you cleaned your room. Your mother took one look and said, “Not good enough – do it again.”
• You turned in a school term paper and the teacher promptly returns it with lots of red writing that points out errors, offers suggestions and says “try again.”
• Your boss tells you the proposal you submitted is not exactly what she wanted and requests you make modifications and try again.

Such constructive criticism may make you mad, embarrassed, or simply thankful for a second chance.  However you feel, you must get to work and try again.  It happens to everyone.

Case in point, it happened in February of this year to CMS, specifically to the Secretary of Health and Human Services.  The Court told the Secretary to try again in regards to the Educational Campaign for the Jimmo settlement. 

First a review of the Jimmo Settlement – in 2011, a class action suit was filed against the Secretary of HHS, Jimmo v. Sebelius, in which the plaintiffs alleged that Medicare contractors (MACs) were inappropriately applying an “Improvement Standard” in making claims determinations for Medicare coverage involving skilled care (e.g., the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) benefits).  In other words, MACs were denying claims for skilled care because there was no expectation the patient could improve. The argument was that Medicare should cover these services because the beneficiary did require a covered level of skilled care in order to prevent or slow further deterioration in his or her clinical condition. The Court agreed.  Medicare also agreed such services should be covered, but claimed that had always been their policy.  They denied ever having an “Improvement Standard” rule-of-thumb.  They further stated Medicare policy had long recognized skilled care may be required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function.

To promote better understanding and application of their existing policies concerning maintenance care, Medicare agreed to clarify that “when skilled services are required in order to provide care that is reasonable and necessary to prevent or slow further deterioration, coverage cannot be denied based on the absence of potential for improvement or restoration.”  To accomplish this, CMS agreed to:

• Revise the relevant program manuals used by Medicare contractors to reinforce the intent of the policy. Specifically, coverage of therapy “...does not turn on the presence or absence of a beneficiary’s potential for improvement from the therapy, but rather on the beneficiary’s need for skilled care.”
• Provide an educational campaign for contractors, adjudicators, and providers and suppliers. Education efforts would include written materials, such as Program Transmittals, MLN Matters articles, updated 1-800 MEDICARE script, and national conference calls to communicate the policy clarifications and answer questions.
• Establish accountability measures such as random reviews to determine trends and identify problems, and review of individual claims determinations that may not have been made in accordance with the principles set forth in the settlement agreement.

Medicare stressed that this was not an expansion of coverage, but clarification of existing policies. They also used the Jimmo settlement revisions to introduce additional guidance on documentation requirements.

“Care must be taken to assure that documentation justifies the necessity of the skilled services provided. Justification for treatment would include, for example, objective evidence or a clinically supportable statement of expectation that:

• In the case of rehabilitative therapy, the patient’s condition has the potential to improve or is improving in response to therapy; maximum improvement is yet to be attained; and, there is an expectation that the anticipated improvement is attainable in a reasonable and generally predictable period of time.
• In the case of maintenance therapy, the skills of a therapist are necessary to maintain, prevent, or slow further deterioration of the patient’s functional status, and the services cannot be safely and effectively carried out by the beneficiary personally, or with the assistance of non-therapists, including unskilled caregivers.”

CMS revised the manuals.  The revisions can be seen as red text in the attachments to Transmittal 179 (CR8458) updating chapters of the Medicare Benefit Policy manual regarding Inpatient Rehab facilities, Home Health services, Skilled Nursing Facilities, and Outpatient Rehabilitative Therapy services (physical therapy, occupational therapy and speech language pathology services).

They also provided some education, but alas, it was not good enough.  In a second suit brought in 2016 (Jimmo v. Burwell), the Court found that CMS (the Secretary) “failed to fulfill the letter and spirit of the Settlement Agreement with respect to at least one essential component of the Educational Campaign.…(S)ome of the information provided by the Secretary in the Educational Campaign was inaccurate, nonresponsive, and failed to reflect the maintenance coverage standard.”

In a February 2017 ruling, the Court mandated implementation of a Corrective Action Plan developed by the Secretary (which goes beyond the requirements of the Settlement agreement) with two required additions.  Here are some of the actions CMS is required to take by September 4, 2017:

• CMS will create a webpage on its website dedicated to the Jimmo The webpage will include:
• A message at the top of the webpage summarizing the clarifications to Medicare policy made pursuant to the settlement,
• A statement from CMS disavowing the application of the so-called "Improvement Standard" as improper under Medicare policy for the SNF, HH, and OPT benefits, while making clear that CMS has consistently denied the existence of such an "Improvement Standard."
• Access to public documents related to the settlement,
• Directions for providers and suppliers to the appropriate MAC for questions regarding individual claims,
• A set of Frequently Asked Questions (FAQs) regarding the policy clarification resulting from the Jimmo settlement,
• Messages notifying providers, adjudicators, contractors, and other stakeholder of the webpage and including the disavowal statement, and
• Letters to the MACs and Medicare Advantage Organizations (MAOs) directing them to conduct, within a specified timeframe, additional training on the Jimmo manual clarifications with training materials provided by CMS.

The first “additional requirement” of the Court agreement is a prescribed “Corrective Statement” adopted by the Court to be included on the Jimmo webpage, in the FAQs, and in the written materials and oral statements the Secretary has agreed to disseminate as part of her corrective action plan.  The second is that CMS shall hold a national call in which the Corrective Statement is orally disseminated.  To alleviate any confusion about the purpose of the call, the call notice must state, “This call will include corrective action mandated by the court overseeing the Jimmo settlement, clarifying the rejection of an improvement standard and explaining the maintenance coverage standard now included in the Medicare Beneficiary Policy Manual."

In plain language, what does this mean for therapy providers? 

1. It means they can provide therapy services to Medicare patients who do not have the potential to improve, but need skilled care to prevent further decline in function.
2. The term “skilled” is key; these services could not safely and effectively be provided by non-skilled personnel.
3. Documentation must support the need for skilled care and that the therapy is expected to prevent or slow further deterioration in the patient’s condition.
4. As with all therapy, the patient should benefit from the therapy as expected in established goals. If the goals are to slow further decline, documentation should support that the therapy is accomplishing that goal.
5. Therapy caps and the therapy threshold still apply to these services. Medically necessary services beyond the cap and threshold can still be provided, but may be reviewed by Medicare to ensure it was indeed medically necessary.

So bottom line for therapists – be reasonable with therapy duration and document thoroughly.

For inpatient hospital providers, this “maintenance therapy” standard could affect the need for care in post-acute care settings such as IRF, SNF, or HH care.

The new Jimmo Settlement webpage  was made live a couple of weeks ago and a notice was published in the August 24, 2017 MLN Connects publication both including the required “Corrective Statement.”  CMS appears to be off to a good start on their re-try.  Glad it wasn’t my term paper.