Payment Trends

4 Key Ways the OPPS Final Rule Affects the Revenue Cycle

January 17, 2019 9:43 am

One change is a payment reductionfor clinic visits in certain off-campus provider departments.

Medicare’s 2019 Outpatient Prospective Payment System (OPPS) rule, finalized on Nov. 21, 2018, includes numerous changes that will impact the 3,800 hospitals that are paid under the Medicare OPPS system. Although key stakeholders are challenging some changes in the U.S. court system, health systems need to move forward in implementing the changes and measuring their financial impact. 

Four key issues in the 2019 final rule affect revenue cycle leaders. Keep in mind that the final rule is now in effect and a targeted, rapid assessment and implementation are necessary to mitigate risk.

Clinic Visit Payment Reduction for Excepted Off-Campus Provider Departments

Medicare is concerned with the continuing growth of outpatient services that are being provided in a “hospital setting.” This expenditure growth continues to trend upward with a 9.1 percent increase expected in 2019. In addition, there continues to be an upward trend in the volume and intensity of outpatient services to Medicare beneficiaries.

Medicare believes that the increase in payment for services being provided in a hospital setting is a major reason for the migration of services to the hospital setting. 

One particular area of focus by Medicare is the increased payment for outpatient “clinic” visits being provided in a hospital setting with HCPCS Code G0463 versus the same services in a physician office. To kick off its initiative to control outpatient expenditure growth, Medicare has decided in 2019 to target the clinic visit (G0463) payment made to excepted off-campus provider-based departments. 

For 2019, Medicare is reducing the payment for clinic visits in excepted off-campus campus provider departments to 70 percent of the OPPS clinic visit payment for G0463. The 2019 national payment rate for G0463 is $116. For excepted off-campus provider departments that reduction in payment to 70 percent of the OPPS payment rate results in a payment of $81 for these excepted departments. In the 2019 proposed rule, Medicare had proposed to pay these excepted clinic visits at the same rate as non-excepted off-campus provider departments, which are 40 percent of the OPPS rate resulting in a $46 payment. 

After the receipt of many comments opposing this proposal, Medicare decided to use a two-phase approach to the payment reduction. In 2019, the excepted off-campus provider payment for G0463 is $81 in 2019 and will be reduced to 40 percent of the OPPS payment rate in 2020 resulting in a $46 estimated payment.

Medicare projects that this initiative will save the Medicare program approximately $380 million in 2019 including $80 million in beneficiary savings. The impact of this 30 percent payment reduction on each hospital will be different based on the number of excepted off-campus provider clinic visits provided. 

To determine the impact on your institution, determine the number of clinic visits provided with HCPCS G0463 and the “PO” modifier to Medicare beneficiaries in excepted off-campus provider-based departments. This patient volume multiplied by the payment difference of $35 ($116 OPPS payment minus $81 reduced payment for excepted off-campus clinics).  For example, if a hospital has 10,000 clinics visited billed to Medicare with HCPCS G0463 and modifier “PO,” the 2019 estimated impact will be a payment reduction of $350,000.

340B Drug Payment Reductions for Non-Excepted Off-Campus Provider Departments

In the proposed and final 2019 OPPS rule, Medicare indicated concern that higher payment for 340B drugs assigned Status Indicator K (Status Indicator K=separately payable drug) in non-excepted, off-campus provider departments provides hospitals a financial incentive to have these drugs administered in this setting. 

To eliminate the possible financial incentive, Medicare in 2019 has implemented the ASP minus 22.5 percent payment reduction for Status Indicator K drugs in both the excepted and non-excepted off-campus provider departments. This will now require the appending of the JG modifier to 340B drugs for non-excepted provider departments.

A recent federal judge ruled against a 2018 cut in 340B payment, but the 2019 rule implementation is still in question. 

Although minimal operational changes (i.e., appending the JG modifier) are required as a result of this regulatory change, health systems should still determine the financial impact of this change in 340B payment on their institution. To assess the financial impact, the health system should identify which non-excepted off-campus provider departments are administering 340B drugs with Status Indicator K. This identification process should include input from finance, revenue cycle, and pharmacy in determining the potential financial impact. After the identification of the applicable drugs is completed, the ASP minus 22.5 percent payment reduction should be quantified. It is also important to note that 2018 payment for these Status Indicator K drugs is ASP plus 6 percent.

Modifier for Off-Campus Provider Based Emergency Departments

Medicare has expressed concern with the growth, since 2010, of emergency services paid under OPPS. Medicare’s main concern has been that patients are possibly being shifted to higher-acuity and high-cost emergency department (ED) services due to the higher OPPS payment rates in off-campus provider-based EDs. These off-campus EDs are currently exempt from regulations related to excepted and non-excepted off-campus provider-based departments.

To assess the impact of this shift of services to off-campus provider-based EDs, Medicare is requiring that services provided in these off-campus EDs have an “ER” modifier appended to the CPT Codes on the UB-04 claim. Note that critical access hospitals are exempt from this reporting requirement.

In the past, Medicare has used this type of data collection methodology as the precursor to payment cuts in areas such as off-campus provider-based departments. So, it is important to recognize that payment reductions similar to the payment reductions for other off-campus provider department may be next on the “agenda” for Medicare.

Device Intensive Charge Master Integrity

For device-intensive procedures, hospitals are required to report a device HCPCS on claims in addition to the surgical procedure CPT Code. In 2018, a device intensive procedure was defined as procedures that meet these three criteria:

  • Procedures with a device-offset percentage greater than 40 percent
  • Procedures must involve implantable devices that would be reported if device insertion procedures were performed
  • Required devices must be surgically inserted or implanted devices that remain in the patient’s body after conclusion of the procedure (at least temporarily)

For 2019, Medicare has revised the criteria to:

  • Procedures with a device-offset percentage greater than 30 percent
  • Procedures must involve an implanted device with an assigned CPT or HCPCS Code
  • Required devices (including single-use devices) must be surgically inserted or implanted

The 2019 device-intensive procedure criteria changes mean many more procedures in 2019 now qualify as device intensive because of the lowering of the cost threshold to 30 percent. The list of device-intensive procedures is detailed in Addendum P of the Final OPPS Rule and includes an additional 140 procedure CPT Codes.

In addition, the 2019 device definition change now states that devices no longer must remain in the patient’s body at the completion of the procedure. This definition of a device is not consistent with the definitions used for implants by Medicare and other third-party payers. 

The implant definitions used by Medicare and other third-party payers include the requirement that the implant remain in the patient’s body after the surgery. This means that hospitals should be careful to not automatically assign Revenue Code 278 to all devices that meet the device intensive criteria without ensuring Revenue Code 278 is appropriate. 

This means that hospitals will need to review their chargemaster to ensure that devices that are used with device intensive procedures have HCPCS Codes (“C” codes) on the devices and the correct Revenue Code assigned either 272 or 278 as appropriate. Dependent on current hospital policy for assigning HCPCS Codes for devices, there may be devices without a HCPCS assigned on the chargemaster.

Hospitals should also review a sample of Medicare outpatient claims for each of the device-dependent CPT Codes added in 2019 to determine if there is a device with an HCPCS Code (C code) on the claim. If there is no HCPCS Code for a device on a claim with a device-intensive surgical procedure CPT Code, Medicare has an edit that will stop the claim from being paid. As a preventive measure, hospitals should ensure that there are edits built in the claims scrubber to ensure there is a device with a HCPCS Code (C code) on the claim prior to submission to Medicare. 

For device-dependent procedures that do not have a device HCPCS Code on the claim, HCPCS Code C1889 “Implantable/insertable device for device intensive procedure, not otherwise classified” should be used for billing of the claim to ensure that the Medicare outpatient claim is paid.

Mike Kovar is an independent revenue integrity consultant, an author and speaker on revenue integrity issues, and a member of HFMA’s Maryland Chapter.


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