A new rule specifying how MACRA is implemented in 2018 will exclude more than 540,000 eligible clinicians.

Nov. 3—Off-campus provider-based departments that began operating after November 2015 will receive only 40 percent of the payment rates of older departments, according to a new rule.

The Centers for Medicare & Medicaid Services (CMS) on Nov. 2 issued a final rule for the Medicare Physician Fee Schedule (PFS) that implemented a requirement of the Bipartisan Budget Act of 2015 to limit Medicare payments for services at such sites. The payment rate relative to the Outpatient Prospective Payment System (OPPS) rate was reduced to 50 percent in 2017 and drops to 40 percent for 2018. The final 2018 rate nonetheless represents an improvement from the proposed rule issued several months ago, when it was set at 25 percent.

CMS officials said they increased the rate from the proposed rule over concerns that they “overstated relativity between the OPPS and the PFS.”

In the future, such facilities will be paid under the Part B payment system. Exempted are sites that offer dedicated emergency department services and those that meet the 21st Century Cures Act "mid-build" exception.

The cut raised concern among hospital advocates

"CMS finalized a number of policies, including one that will adversely impact patient access to care by reducing Medicare rates for services hospitals provide in 'new' off-campus hospital clinics," Tom Nickels, executive vice president of the American Hospital Association (AHA), said in a written statement. "We are particularly concerned about the impact on rural and vulnerable communities that do not have sufficient access. We also remain troubled that the agency's continued short-sighted policies on the relocation of existing off-campus provider-based clinics will prevent patients and communities from having access to the most up-to-date, high-quality services.”

America’s Essential Hospitals (AEH), which represents safety net hospitals, said those organizations have been trying to overcome practitioner shortages by extending primary and specialty care services to off-campus clinics in their communities.

“But today’s final rule puts expansion of services further out of reach for these communities and threatens access to care where access is needed most,” Bruce Siegel, MD, president and CEO of AEH, said in a written statement.

In a September report, Moody’s Investor Service concluded that revenue growth from outpatient services will rise faster than that from inpatient services as both commercial and government payers continue to shift volumes to lower-cost settings.

“Rated companies will capture some of those volumes in their outpatient departments or associated ambulatory surgery centers (ASCs),” Moody’s analysts wrote.

The outpatient payment cut comes as many hospitals and health systems are looking to expand in that direction.

“We’re trying to create more access, which means more ambulatory, which means more physician practices, more urgent care, more outpatient surgery, and as an integrated healthcare system we are trying to get much further beyond the acute care setting,” Nick Ragone, chief marketing and communications officer for Ascension, said in an interview after the rule was released. “We’re going to continue to look at that strategy; I’m sure it will be shaped in part by CMS rules and reimbursement, but directionally we’re going to continue to move in that direction.”

The health system is moving toward acquiring Chicago’s Presence Health, which includes 12 hospitals and numerous outpatient facilities, according to published reports.

Payment Specifics

CMS estimated the PFS will provide a 0.41 percent increase in 2018 Medicare physician payment rates—after application of a 0.5 percent increase as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), and a decrease tied to a misvalued code adjustment as stipulated in the Achieving a Better Life Experience Act of 2014.

The rule also finalized a CMS plan to pay for new telehealth services, including psychotherapy for crisis situations, health risk assessments, and care planning for chronic care management.

Delayed until Jan. 1, 2020, was an appropriate-use criteria program for advanced diagnostic imaging services.

Although the deadline has passed to submit data that factor into 2018 payment under the Physician Quality Reporting System (PQRS), CMS said it will retroactively lower the number of required measures from nine to six. The point of the reduced requirement is to better align PQRS with MACRA’s Merit-based Incentive Payment System (MIPS), which will begin affecting physicians’ Medicare pay in 2019.

The rule reduced the maximum pay cut in the 2018 Value Modifier program from 4 percent to 1 percent for individual clinicians and groups of under 10 clinicians and to 2 percent for groups of 10 or more clinicians. The rule noted that cuts will be limited to clinicians and groups that fail to report data


CMS also issued a separate final rule specifying the 2018 parameters for MACRA, which will be heading into its second year of implementation. The new payment model includes two tracks: MIPS and advanced alternative payment models (APMs).

The 2018 MACRA policy changes, which will affect physician Medicare payment in 2020, include an increase in the MIPS low-volume threshold to exclude more than 540,000 eligible clinicians from the program.

Surveys have found widely varying levels of physician preparation for MACRA, and the Medicare Payment Advisory Commission in October recommended scrapping the MIPS component, which is expected to include the vast majority of physicians in the early years of implementation. But some providers have reported good preparation.

“We’ve been preparing them for something like MIPS for a long time,” Howard Federoff, MD, PhD, CEO of UC Irvine Health System, said about his employed and affiliated physicians. “As I talk to a lot of providers and physicians, they now understand the expectation.”

UC Irvine has long been reporting quality measures. The biggest change from MACRA is that the reporting will now be tied to payment.

“The large majority of our physicians are ready,” Federoff said in an interview. “Are they happy? That’s a different issue because it requires an evolution of thinking, but I think for the most part they are ready.”

A new MIPS measurement option will allow hospital-based clinicians to use their hospital's Value-Based Purchasing results in the MIPS cost and quality categories. However, that option will not be available until 2019.

In 2018, clinicians can continue to report only 90 days of quality measures for the advancing care information (ACI) category. Physicians also can use the 2014 edition of certified electronic health records (EHRs) in that category.

“While we applaud CMS for providing much-needed relief from unrealistic and unfunded mandates for EHR capabilities for clinicians, we are disappointed the agency has yet to provide similar relief for hospitals,” Nickels said in a written statement.

In performance year 2019, MACRA will allow clinicians to qualify for the advanced APM track based on combined participation in alternative payment arrangements with Medicare and non-Medicare payers.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Friday, November 03, 2017