Medicare Payment and Reimbursement

CY 2019 OPPS/ASC Final Rule

November 27, 2018 1:25 pm

HFMA Executive Summary

On November 2, 2018, the Centers for Medicare & Medicaid Services (CMS) released a final rule updating payment rates under the hospital outpatient prospective payment system (OPPS) and the ambulatory surgical center (ASC) payment system for calendar year 2019 (CY 2019). Also included in the rule are updates and refinements to the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the Ambulatory Surgical Center Quality Reporting (ASCQR) Program. The rule was published in the November 21, 2018, issue of the
Federal Register. For more information on the final rule, 
download a detailed summary of the rule, or the
full text of the rule. 

OPPS Payment Updates
For CY 2019, CMS is adopting a conversion factor of $79.490 for hospitals receiving the full update for OQR, compared with $78.636 in CY 2018. The conversion factor update calculation is shown in a table on page 15 of the detailed summary. The update of 1.35% equals the market basket increase of 2.9%, minus the 0.8% multifactor productivity adjustment (MFP), and 0.75% outpatient department reduction required by the ACA. Hospitals that fail to meet the Hospital OQR program requirements will see a reduced conversion factor of $77.900. However, due to conflicting calculations, it is unclear how CMS determined this reduced conversion factor.

Outlier Threshold
For 2019, CMS provides that the outlier threshold would be met when a hospital’s cost of furnishing a service or procedure exceeds 1.75 times the ambulatory payment classification (APC) payment amount, and also exceeds the APC payment rate, plus a $4,825.00 fixed-dollar threshold (compared to $4,150 in 2018).

ASC Payment Updates
Instead of using the Consumer Price Index for All Urban Consumers (CPI-U) to measure the update factor for ASCs as it has done in the past, CMS finalizes its proposal to apply a hospital-market basket update to ASCs for an interim period of 5 years. CMS will use the hospital market basket update of 2.9%, minus the MFP adjustment of 0.8%. This yields an update of 2.1% ($46.551) for ASCs meeting quality reporting requirements. If the CPI-U had been used the update would have been 1.8%. 

  • CMS continues its policy of reducing the update by 2.0% for ASCs not meeting the quality reporting requirements, yielding an update of 0.1%, or $45.639. The calculation is shown in a table on page 73 of the detailed summary.

340B Drug Pricing Program
Effective January 1, 2019, CMS will pay, under the physician fee schedule (PFS), the adjusted payment amount of average sales price (ASP) -22.5% for separately payable drugs and biologicals acquired under the 340B Program when they are furnished by non-excepted off-campus provider-based departments (PBDs) of a hospital. These payments will differ from the ASP+6% payment for drugs and biologicals made in physicians’ offices and other nonhospital settings. For CY 2019, rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals are excepted from the 340B payment adjustment. These hospitals will continue to be paid ASP+6%.

Controlling Unnecessary Increases in the Volume of Outpatient Services
In order to control unnecessary increases in the volume of covered hospital outpatient department (HOPD) services, CMS will use its authority to pay for HCPCS code G0463 in all HOPDs at 70% of the full OPPS rate in 2019, and 40% of the full OPPS rate in 2020. The final payment amount will equal the site neutral PFS payment rate for services furnished at off-campus PBDs subject to section 603 of the Bipartisan Budget Act of 2015. CMS notes that this policy results in estimated 2019 savings of approximately $380 million, with approximately $300 million of the savings accruing to Medicare, and approximately $80 million saved by Medicare beneficiaries in the form of reduced copayments. The application of the reduction in payment for code G0463 will be phased-in over a two-year period. This payment rate change will not be implemented in a budget-neutral manner. 

Collecting Data on Services Provided in Off-Campus Emergency Departments
Effective January 1, 2019, CMS will implement a new HCPCS modifier (“ER”-Items and services furnished by a provider-based off-campus emergency department) to collect data to assess the extent to which OPPS services are shifting to off-campus provider-based emergency departments (EDs). The modifier must be reported with every claim line for outpatient hospital services furnished in off-campus provider-based EDs. Critical access hospitals will not have to report this modifier. CMS shares the concerns of the Medicare Payment Advisory Commission and other entities that higher payment rates for services furnished in these departments may be a significant factor in the growth of the number of these EDs. 

Hospital (OQR) Program
In the rule, CMS finalized changes to the factors it considers with respect to removing measures from the Hospital Outpatient Quality Reporting (OQR) Program, and removes 8 measures, one beginning with the 2020 payment determination, and the others beginning with 2021 payment. The total number of mandatory measures is reduced from 21 previously adopted for the 2020 and 2021 payment determinations to 20 measures for 2020, and 13 measures for 2021 payment. The final Hospital OQR Program measures for CY 2020 and 2021 payment determinations appear in a table in the final rule.

  • CMS finalized the changes to the factors it will use for determining whether to remove a measure from the ASCQR Program. The final eight factors are the same as those finalized for the OQR Program. Applying the finalized measure removal criteria, and considering the goals of the Meaningful Measures Initiative, CMS removes two measures from the ASCQR Program. Six other measures that were proposed for removal are instead retained in the final rule.

Additions to the List of ASC Covered Surgical Procedures
CMS finalized its proposal to add 12 cardiac catherization procedures to the list of ASC covered surgical procedures. In response to comments, CMS also added five procedures performed during cardiac catheterization procedures to this list (CPT codes 93566, 93567, 93568, 93571, and 93572). The 17 procedures that CMS adds to the list of ASC covered surgical procedures is shown in Table 60 of the final rule.

Overall Impact
CMS estimates that the total increase in expenditures under the OPPS for CY 2019, compared to CY 2018, will be approximately $440 million. Taking into account its estimated changes in enrollment, utilization, and case-mix for CY 2019, CMS estimates that the OPPS expenditures, including beneficiary cost-sharing, for CY 2019 will be approximately $74.1 billion; approximately $5.8 billion higher than estimated OPPS expenditures in CY 2018. 

Request for Information 
In the 2019 OPPS proposed rule, CMS included a Request for Information related to promoting interoperability and electronic health care information exchange. The agency received over 60 timely pieces of correspondence. However, CMS neither summarizes nor responds to these comments or indicates whether it will act on them at a future date.


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