a practical assessment of cms’s changes to provider-based reimbursement

A Practical Assessment of CMS’s Changes to Provider-Based

Reimbursement

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Polsinelli Reimbursement Institute Webinar Series

Speakers

Colleen Faddick, Shareholder

(303) 583-8201

[email protected]

Kyle Vasquez, Shareholder

(312) 463-6338

[email protected]

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Agenda

Background – – BBA Section 603 and Proposed Rule

– Key Terminology

Final Rule – – Timing

– Exceptions to Section 603

– Identifying Off-Campus PBDs

– Payment for nonexcepted PBDs

– Recap

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SECTION 603 BACKGROUND

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Section 603 and the Proposed Rule

Section 603 of the BBA of 2015 – As of Jan. 1, 2017, no OPPS payment for items and

services furnished in off-campus provider-based hospital outpatient departments (“PBDs”); paid instead under the applicable Medicare payment system

CMS Proposed Rule/Narrow Interpretation – No relocation and limited expansion of services in

existing off-campus PBDs

– No facility fee payment in CY 2017 to off-campus PBDs not existing and billing OPPS on or before Nov. 2, 2015

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Key Terminology

Certain off-campus PBD items and services will be “excepted”

– “Excepted” = May continue to bill and receive payment under the OPPS

– “Nonexcepted” = Will not receive payment under the OPPS as of January 1, 2017

• Proposed and Final Rules define nonexcepted differently to the benefit of providers

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2017 OPPS PROVIDER-BASED FINAL RULE

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Section 603 Implementation Timeline

No changes to Proposed Rule timeline

Section 603 and implementing regulations take effect January 1, 2017

Despite commenters’ urging, CMS will not delay implementation

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Section 603 Exceptions – PBDs as of Nov. 2, 2015

Changes from Proposed Rule

In the Final Rule, CMS expanded the definition of excepted off-campus PBDs to include off-campus PBDs billed under the OPPS prior to November 2, 2015; and

PBDs furnishing outpatient items and services prior to November 2, 2015, even if the services were not billed under the OPPS until after November 2, 2015—if within timely filing limits

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Section 603 Exceptions – Dedicated EDs

No changes to Proposed Rule

All items and services (emergent or not) furnished in a dedicated emergency department (“DED”) are excepted

– On- and off-campus DEDs exempt

– Must qualify as DED under EMTALA by meeting one of three criteria:

• Licensed by state as an emergency department

• Held out to public as providing care for emergency medical conditions on an unscheduled, urgent basis

• During the prior calendar year, provided at least 1/3 of visits for treatment of emergency medical condition

– Exception includes both emergency and non-emergency services

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Section 603 Exceptions – FQHCs/CAHs/RHCs

CMS also confirmed that Section 603 does apply to provider-based FQHCs and FQHC look-alikes (but these are limited)

Section 603 does not apply to off-campus PBDs operated by the Indian Health Service or by a tribe or tribal organization

Section 603 does not apply to CAHs/RHCs

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Section 603 Exceptions – 250 Yards


On-campus locations are excepted, including PBDs within 250 yards of remote locations

Clarification - In measuring the 250 yards, the hospital may measure from any point on the physical facility that serves as the site of services of the remote location to any point on the PBD

CMS maintained Regional Office discretion to exceed 250 yards

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Section 603 Exceptions - Relocation

Minor changes to Proposed Rule Proposed Rule

– Freeze excepted off-campus PBDs as they existed on Nov. 2, 2015 (as listed on CMS 855-A) and prohibit relocation of excepted off-campus PBDs

– Potential exception for natural disasters and circumstances beyond the provider’s control

CMS declined commenters’ requests to permit relocation as long as overall number of PBDs unchanged or to use “substantially similar” test to determine if relocated location is actually new

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Section 603 Exceptions - Relocation

Final Rule – CMS finalized its proposal with modification to allow

excepted off-campus PBDs to relocate temporarily or permanently for extraordinary circumstances outside hospital’s control • Examples: natural disasters, significant seismic building code

requirements, or significant public health and public safety issues

• Address on identified in PECOS as of 11/1/15 critical

– Determinations regarding relocation requests will be made by Regional Offices on a case-by-case basis; subregulatory guidance TBD

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Section 603 Exceptions – Service Expansion

Significant changes to Proposed Rule

Proposed Rule

– No expansion of the services offered from excepted off-campus PBDs beyond those in the same “clinical families of services,” defined by HCPCS codes mapped to APCs (CMS identified 19 clinical families)

– Services beyond “clinical families of services” would be nonexcepted and billed under the MPFS, if at all

– No limit on volume of services furnished within clinical family billed prior to Nov. 2, 2015

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Section 603 Exceptions – Service Expansion

Final Rule

– CMS relented on its proposal

– No clinical family of service limitation

– Expansion must occur without impacting physical address/suite number

– But, CMS is about gaming the system using service expansion

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Section 603 Exceptions – CHOW


Excepted status for off-campus PBD transfers to new owners only if

– Ownership of main provider is also transferred and

– New owners accept existing provider agreement (i.e., agree to successor liability)

Where two hospitals are combined under one Medicare provider agreement and certification number, off-campus PBDs will lose excepted status if not enrolled as a PBD of the resulting combined hospital and billing under the OPPS for covered items and services prior to Nov. 2, 2015

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Section 603 Exceptions – CHOW

In finalizing its proposal, CMS reiterated that –

– Provider-based status is defined as the relationship between a facility and a main provider, and not an asset that can be transferred; and

– Assets/liabilities are transferred to the new owner only if the new owner accepts the existing provider agreement

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Section 603 – Identifying Off-Campus PBDs

New modifier but no new obligation to identify off-campus PBDs in enrollment forms

CMS will not require hospitals to modify their enrollment data to more specifically address off-campus PBD information – CMS will use existing program integrity protocols to monitor and

enforce new provider-based payment rules

– Hospitals are expected to maintain documentation to prove that an off-campus PBD was billing under the OPPS prior to November 2, 2015

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Section 603 – Identifying Off-Campus PBDs

CMS will use its new claim line modifier “PN” to identify and pay nonexcepted items and services furnished on or after January 1, 2017

The “PN” modifier is in addition to the existing mandatory “PO” modifier, which identifies off-campus PBDs

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Payment for Nonexcepted Items and Services

Significant changes to Proposed Rule

Proposed Rule – Section 603 requires nonexcepted items and services to be

paid under other applicable [non-OPPS] payment systems

– CMS proposed to delay implementation of such payment until CY 2018 and to pay physicians directly for nonexcepted items and services under the MPFS at the non-facility rate (which includes overhead)

– Or, hospitals could enroll locations furnishing nonexcepted items and services as another provider/supplier type

– Or, hospitals could forgo payment

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Payment for Nonexcepted Items and Services

Final Rule – CMS did not finalize its proposal – CMS agreed with commenters’ recommendations to

use past experience with routing institutional UB claims to an alternative (i.e., lower) fee schedule payment

– CMS acknowledged commenters’ fraud and abuse concerns where physicians or other practitioners would bill and receive payment based on the MPFS nonfacility rate for hospital services

– CMS issued an interim final rule to address billing and payment for hospital services beginning Jan. 1, 2017

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INTERIM FINAL RULE PAYMENT METHODOLOGY

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Interim Final Rule

Snapshot – MPFS is the applicable payment system for nonexcepted

items and services

– Hospitals will bill for nonexcepted items and services on an institutional claim form using the “PN” modifier, processed through OPPS Outpatient Code Editor

– New site-of-service specific MPFS rates for nonexcepted items and services based on TC of MPFS facility rate and OPPS claims processing logic

– CY 2017 Rate = 50% OPPS payment rate

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CY 2017 Payment Methodology

CMS compared OPPS payment rates to MPFS and ASC payment rates for the 22 codes most frequently billed from an off-campus PBD to Part B

CMS determined that MPFS rate is approximately 55% of OPPS rate, and ASC rate is approximately 45% of OPPS rate

CMS used 50% midpoint for scaling payments for nonexcepted items and services

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CMS acknowledged that 50% scaling may be too high or low (CMS suspects too high)

– 50% scaling is “transitional policy” and may change as more precise data becomes available

Beneficiary cost-sharing for nonexcepted items and services will be close to cost-sharing for items and services provided in free-standing facility

– i.e., 20% of the new rate, which is intended to be similar to the MPFS nonfacility rate

– Patients will still receive two bills and two copays

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Items and services currently paid based on other fee schedules or rates from other fee schedules will continue to be paid accordingly

– Examples: certain clinical laboratory tests, ambulance services, and separately payable drugs and biologicals

– See Table X.B.2 of Final Rule for all exceptions and adjustments

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The same HCPCS codes will be used, but CMS will address specific coding inconsistencies: – Outpatient E&M (G0463) - New MPFS payment rate of

50% OPPS using MPFS relativity adjuster, since MPFS has 5 E&M codes

– Radiation therapy and imaging guidance – New MPFS rate tied to TC of MPFS, with claims identified using HCPCS “G” codes with modifier “PN”

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CMS is establishing class-specific geographic practice cost indices (“GPCIs”) to be used exclusively to adjust the MPFS rates for nonexcepted items and services

– Similar to the geographic adjustments made under the OPPS based on the hospital wage index and will use actual wage index values

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Payment adjustments apply to hospitals paid under OPPS for nonexcepted items and services

Adjustments do not apply to: – Outlier payments, the rural sole community hospital adjustment, the

cancer hospital adjustment, transitional outpatient payments, the hospital outpatient quality reporting payment adjustment, the inpatient hospital deductible cap to cost-sharing liability for a single hospital outpatient services, or partial hospitalization program services

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CMS reiterated that Section 603 does not change the PBD status of nonexcepted off-campus PBDs: – Nonexcepted off-campus PBDs continue to use institutional

claim forms (with modifiers “PN” and “PO”)

– Costs of nonexcepted items and services continue to be included in reimbursable cost centers

– Nonexcepted off-campus PBDs continue to comply with PBD rules and outpatient supervision rules

Nonexcepted off-campus PBDs may still participate in the 340B program, but CMS deferred any final determinations to HRSA

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CMS anticipates using its CY 2017 payment methodology for CY 2018 (although with potentially different/lower rates)

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CY 2019 Payment …and Beyond

For CY 2019 and beyond, CMS intends to pay hospitals for nonexcepted items and services at a MPFS rate that would more directly equalize payment rates between nonexcepted off-campus PBDs and physician offices – Rather than scaling payments to 50% of OPPS rates, for most services

CMS would use a MPFS-based rate equal to the difference between the nonfacility and facility rates

– Where there is no separate MPFS payment when paid under the OPPS, the MPFS-based rate would equal the MPFS facility rate or the technical component rate under the MPFS

– For outpatient services not billable under the MPFS, CMS would consider the relative resources required and anticipates using a rate similar to that paid to ASCs

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CY 2019 Payment …and Beyond

CMS believes its proposal for CY 2019 and beyond would require hospitals to bill for nonexcepted items and services on professional or facility claim forms

CMS acknowledges the benefit of allowing hospitals to continue billing on an institutional claim form and is also considering whether to continue with a methodology similar to what it will use for CYs 2017 and 2018 based on a percentage of OPPS rates – CMS is concerned that if scaled payments are profitable for certain

items and services, hospitals may selectively acquire certain physician practices

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Interim Final Rule – Public Comments

CMS is seeking public comment on the Interim Final Rule (due Dec. 31, 2016), including –

• The proposed payment methodology and rates for CYs 2017 and 2018;

• Whether for CY 2019 and beyond, CMS should adopt its intended approach of using the difference between the MPFS nonfacility and facility rates, potentially requiring substantial changes, including the use of the professional claim form; and

• Whether for CY 2019 and beyond, CMS should continue with the methodology outlined for CYs 2017 and 2018, with the risk of inaccuracy in payment amounts and potential incentive for certain service lines to become nonexcepted off-campus PBDs

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FINAL RULE RECAP

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Final Rule Recap

On-campus departments, dedicated EDs and sites providing OPPS-billable services prior to 11/2/15 exempt from cuts

Nonexcepted items and services will be paid a lower facility fee (approx. 50% of the current OPPS facility fee)

May submit UB claims using a PN modifier

Sites remain reimbursable cost centers and 340B eligible

Campus measurement from any point on main/PB building

Limited relocation rights Ability to expand within

space Must comply with the PB

and supervision rules

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PENDING LEGISLATION

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Pending Legislation

H.R. 5273 “Helping Hospitals Improve Patient Care Act of 2016” - Section 201 “Mid-build exception” – Would restore hospital outpatient reimbursement

1/1/18 – Requires a binding written agreement with an outside

unrelated party for actual construction by 11/2/15 – Requires provider-based attestation by 12/31/16

(timing may vary), certification of binding agreement, and Medicare enrollment

House Approved; Stalled with Senate Fin. Comm.; Status unclear due to election

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QUESTIONS?

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real challenges. real answers. sm

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a practical assessment of cms’s changes to provider-based reimbursement

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