On July 25, 2018 the Centers for Medicare & Medicaid Services (CMS) released the CY 2019 Outpatient Prospective Payment System (OPPS) Proposed Rule (2019 OPPS Proposed Rule) which revises the Medicare hospital OPPS and ambulatory surgical center payment systems for calendar year 2019. The 2019 OPPS Proposed Rule is scheduled to be published in the Federal Register on July 31, 2018, but can be found here. Of significance, CMS continues to focus on site-neutral payments for off-campus provider-based departments of hospitals (commonly referred to as HOPDs). In previous Client Alerts we have highlighted recent changes to payments for HOPDs as a result of Section 603 of the Bipartisan Budget Act of 2015, which excluded certain items and services provided by certain HOPDs (generally HOPDs not billing under the OPPS by November 2015) from payment under the OPPS. Our previous Client Alert setting forth CMS’ interpretation of Section 603 can be found here.

Site Neutral Payments for Clinic Visits in Excepted HOPDs 

In the 2019 OPPS Proposed Rule, CMS shifts its focus from the payment rates for non-excepted HOPDs and non-excepted items and services under Section 603, to the payment rates for excepted HOPDs and excepted items and services (generally those HOPDs billing under the OPPS prior to November 2015). For a more detailed explanation of the difference between excepted and non-excepted HOPDs, items and services, see our previous Client Alert linked above.

CMS proposes to cap the OPPS payment at the Physician Fee Schedule (PFS)-equivalent rate in order to control the volume of, what CMS calls, “unnecessary” services. Under this proposal, for the clinic visit service described as HCPCS code G0463 (Hospital outpatient clinic visit for assessment and management of a patient) provided in an excepted HOPD, CMS would apply the PFS payment rate that it determined for non-excepted items and services furnished by non-excepted HOPDs. According to CMS, the most frequently billed service with the “PO” modifier (excepted HOPDs) was described by HCPCS code G0463 – the total number of claim lines for this services was approximately 10.7 million as of May 2017. Under this proposal, an excepted HOPD would continue to bill HCPCS code G0463 with the “PO” modifier in CY 2019, but the payment rate for services described by HCPCS code G0463 when billed with modifier “PO” (excepted HOPD) would be equivalent to the payment rate for services described by HCPCS code G0463 when billed in a non-excepted HOPD with modifier “PN”.

CMS gives the following example: “in CY 2017, the OPPS payment rate for APC 5012, which is the APC to which outpatient clinic visit code was assigned, was $106.56. The CY 2017 PFS “facility” payment rate for a Level 3 visit, a service that commonly corresponds to the OPPS clinic visit, was $77.88 for a new patient and $51.68 for an established patient.” In contrast, the CY 2017 PFS nonfacility payment rates for a Level 3 visit was $109.46 for a new patient and $73.93 for an established patient. Thus, the total Medicare Part B payment rate for the hospital and professional service for a new patient when the service was furnished in an HOPD was $188.44 ($106.56 + $77.88) compared to $109.46 in the physician office setting, a difference of approximately $79. This change could significantly impact hospitals with excepted HOPDs providing clinic office visits.

Expansion of Items and Services in Excepted HOPDs 

Finally, with respect to excepted HOPDs, CMS also proposes to limit the clinical family of services from which an excepted HOPD may bill under the OPPS and receive OPPS reimbursement. Under the 2019 OPPS Proposed Rule, if an excepted HOPD furnishes services from any clinical family of services (defined in Table 32 of the 2019 OPPS Proposed Rule) from which it did not furnish an item or service during the baseline period from November 1, 2014 through November 1, 2015 (and subsequently bill under the OPPS for that item or service), items and services from these new clinical families of services would not be excepted items and services, and instead paid under the PFS as non-excepted items and services.

CMS proposes to define “new clinical families of services” as items or services (i) that are furnished and billed by an excepted HOPD; (ii) that are otherwise paid under the OPPS through one of the APCs included in Table 32 of the 2019 OPPS Proposed Rule; and (iii) that belong to a clinical family listed in Table 32 from which the excepted HOPD did not furnish an item or service during the baseline period from November 1, 2014 through November 1, 2015 (and subsequently bill for that service under the OPPS). However, for an excepted HOPD that furnishes a new item or service within a clinical family of services listed in Table 32 from which the excepted HOPD furnished a service during the baseline year, such new item or service would continue to be paid under the OPPS as it would not be considered a “service expansion”.

Additional Information 

We note that the 2019 OPPS Proposed Rule made additional revisions to payment policies that are not discussed in this Client Alert. If you have questions about the topics discussed in this Client Alert or other proposals in the 2019 OPPS Proposed Rule, please contact a member of Kutak Rock’s National Healthcare Practice.