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Medicare Finalizes Hospital Outpatient Payment Rule for 2017

Kate Traynor

Kate Traynor News Writer
News Center

Medicare's payments for hospital outpatient services provided during 2017 are projected to be 1.7% higher than payments for services provided in 2016, the Centers for Medicare and Medicaid Services (CMS) announced on November 1.

The annual update to the hospital outpatient prospective payment system (OPPS) includes payment policies that have become routine, such as reimbursement rates of average sales price (ASP) plus 6% for separately payable drugs and biologicals and an updated furnishing fee for blood clotting factors.

CMS experimented with different ASP-based reimbursement models for several years before opting for the statutory default reimbursement rate of ASP plus 6%, which has been in place since 2013.

The furnishing fee for blood clotting factors has been paid since 2008 and is updated annually to reflect changes in the Consumer Price Index. This year's fee is $0.209 per unit, up from $0.202 per unit in 2016, and will be paid in addition to the standard reimbursement rate.

Also continuing is the system of statutorily required transitional pass-through payments for new, high-cost drugs and biological products. In all, 47 products will start the year with pass-through status and will be reimbursed at the ASP-plus-6% rate; if ASP data are not available, the reimbursement rate will be the wholesale acquisition cost plus 6%.

According to the final rule, products new to pass-through status in 2017 will retain that designation for three years, after which pass-through status will automatically expire. CMS plans to revise its pass-through list quarterly, rather than annually, to manage the automatic expirations.

Site Neutrality

Alongside the familiar is one major change that has caught the attention of hospitals—the implementation of site-neutral provisions that target differential payments for similar services provided by independent physicians and by physician practices owned by hospitals.

CMS in June proposed to end reimbursements under the OPPS for services provided in offsite provider-based outpatient departments that initiated OPPS billing on or after November 2, 2015. Under that proposal, physicians would be directly reimbursed for providing the services at the amount paid under the physician fee schedule. Hospitals would then need to work with their physicians to receive a portion of the payment from CMS.

The American Hospital Association and other stakeholders objected to that plan, and CMS modified it in the final rule. Instead, outpatient sites that are subject to this portion of the rule will generally be reimbursed at half the amount payable under the OPPS.

According to the final rule, offsite emergency departments and outpatient facilities that also provide inpatient care are exempt from the site-neutral payment changes. Also exempt are products and services with special payment provisions, such as drugs and biologicals subject to the ASP-plus-6% methodology.

But, with few exceptions, any outpatient practice that moves to a new physical address loses the ability to bill under the OPPS even if the move was initiated before November 2, 2015.

Before the rule was finalized, ASHP asked CMS whether implementation of the site-neutral provisions—which shift payment for certain new or expanded hospital outpatient departments to the physician fee schedule or the ambulatory surgical center fee schedule—would also result in loss of eligibility as a child site under the federal 340B Drug Pricing Program. Eligibility for the 340B program is affected by the reporting of costs incurred at facility locations specified in the Medicare cost report.

Jillanne Schulte, director of federal regulatory affairs for ASHP, said the language in the final rule suggests that cost reporting, and thus 340B eligibility, won't be affected by the site-neutral changes.

"We will continue to monitor the implementation of the changes to ensure that patient access to care is not adversely impacted," she said. CMS cautioned that the Health Resources and Services Administration, which oversees the 340B program, is ultimately responsible for eligibility determinations.

Pain Management

The final rule makes good on a CMS proposal to eliminate the three-question pain management dimension from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) patient satisfaction survey. The survey is a component of the Value-Based Purchasing Program, and HCAHPS scores affect hospitals' Medicare reimbursement.

The final rule states that the change addresses stakeholders' concerns that the inclusion of the three pain management questions in the survey could encourage the overprescribing of opioids as a way to boost HCAHPS scores.

But CMS noted that pain management remains an important part of patient care and will be addressed in a future revision of the HCAHPS pain management dimension.

Also under development is a new electronic clinical quality measure to capture data on patients who have active prescriptions for opioids or benzodiazepines and receive additional prescriptions for the medications during a healthcare encounter.

In an apparent response to ASHP's concerns, the final rule states that CMS will continue to engage with pharmacists and other stakeholders before finalizing the measure.

CMS encouraged stakeholders to actively engage in the quality measure development process and to regularly monitor the agency's website for opportunities to provide input.

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