In the News: Nov 2–8

CMS Cuts Payment for 340B; Removes TKA from IP-Only List

CMS released the 2018 Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule for calendar year 2018. The following are 2 key changes that every health care leader should know:

340B Payment Cut: OPPS payment rates for drugs purchased through the 340B Program will be average sale price minus 22.5% (ASP –22.5%). This is effectively a 27% payment cut, and CMS estimates this will decrease aggregate payments for these drugs by $1.6 billion. For more information about the 340B Program and what Sg2 experts predicted for its future earlier this year, read the Sg2 Expert Insight: What We Know, What We Think and What We Fear About the 340B Program.

OP Reimbursement for TKA: CMS finalized the removal of total knee arthroplasty (TKA) from the IP-only list. They did not, however, add TKA to the ASC-covered surgical procedures list. Therefore, patients will remain in hospital-based settings, but the appropriate patient status may transition from IP to OP for a portion of patients undergoing TKA procedures. This change in patient status may result in an 18% payment reduction. The national payment rate under OPPS is $10,122 for APC 5115 (Level 5 Musculoskeletal Procedure) and $12,384 under IPPS for DRG 470 (W/O MCC).

CMS also finalized a 2-year prohibition of Recovery Audit Contractor (RAC) reviews of patient status for TKA procedures. This reprieve from RAC reviews is a crucial period to adjust to the change in reimbursement policy. Claims may eventually be reviewed and denied by a RAC following “persistent noncompliance” with IP discharges that do not satisfy the 2-midnight benchmark or have appropriate documentation demonstrating medical necessity for an IP admission. Check out the Sg2 FAQ: Preparing for Outpatient Joint Replacement to identify steps that orthopedic service line leaders should take to prepare for this site of care shift.

CMS Finalizes 60% Reduction for New Off-Campus HOPDs

CMS released the 2018 Medicare Physician Fee Schedule Final Rule that outlines Part B payment changes, along with updates to the Medicare Shared Savings Program and the Medicare Diabetes Prevention Program. Among these changes, CMS finalized a reduction (from 50% in CY 2017 to 60% in CY 2018) in Outpatient Prospective Payment System (OPPS) payment rates for off-campus hospital outpatient departments (HOPDs) that are affected by site-neutral payment provisions outlined under Section 603 of the Bipartisan Budget Act of 2015.

Since January 1, 2017, some HOPDs have been receiving lower facility rates for certain services. For a recap of site-neutral payment provisions from the Bipartisan Budget Act of 2015, see the Sg2 on-demand webinar: 2016 Health Care Policy Year in Review. The relevant section runs from minute 27:30 to 31:25 and covers slides 13 to 14.

CMS Finalizes Rules for MACRA in 2018

CMS released the 2018 Medicare Quality Payment Program (QPP) Final Rule that outlines the Year 2 reporting requirements, along with a corresponding interim final rule that alleviates the reporting burden on clinicians in areas affected by Hurricanes Irma, Harvey and Maria. Notably, the rule finalized the proposed expanded exemption criteria for low-volume clinicians (less than $90K in allowed Medicare Part B charges or 200 patients) and reintroduced the Cost category as 10% of a clinician’s Merit-based Incentive Payment System (MIPS) composite score.

As the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) continues to be rolled out, it’s important to consider both a short- and long-term reporting strategy. Will you stay in MIPS or prepare to transition into advanced alternative payment models? For more considerations, read the Sg2 Expert Insight: Strategy Teams Need a Seat at the MACRA Table.

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