Principal Healthcare Data and Policy Analyst 1/22/2020 and Advocacy... · PHP APC payment rate APC...

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Transcript of Principal Healthcare Data and Policy Analyst 1/22/2020 and Advocacy... · PHP APC payment rate APC...

Page 1: Principal Healthcare Data and Policy Analyst 1/22/2020 and Advocacy... · PHP APC payment rate APC Group Title Final CY 2019 Payment Rate Final CY 2020 Payment Rate % Change 5863

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Lauren Davis

Principal Healthcare Data and Policy Analyst

1/22/2020

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Rule Overview

• Conversion Factor Updates

• Wage Index

• Off-Campus Policies

• Price Transparency

• Miscellaneous Policies

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Conversion Factor and Wage Index

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Conversion Factor UpdatesFinal CY 2019 $79.490

+3.00% Marketbasket (MB) Update

-0.40 ppt ACA-Mandated Productivity MB Reduction

+2.60% Net MB Update

-0.09% Wage Index 5% Stop Loss Budget Neutrality Adjustment

-0.84%

Other Budget Neutrality Adjustments (Annual Wage Index,

Bottom Quartile Wage Index Increase Offset, Pass-through

Spending, Cancer Hospital)

+1.64% Adopted Rate Update

Final CY 2020 $80.793

• Adopted CY 2020 rate of $79.257 (-0.29%) for hospitals not meeting quality reporting

requirements

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Wage Index• OPPS uses post-reclass, post-rural floor Inpatient wage index

• Updated annually to reflect changes in labor market/CBSA

wages

– FFY 2016 Medicare Cost Reports / CY 2016 Occupational Mix Survey

• Year-to-Year changes in Wage Index are a combination of:

– Updated Wage Data

– Changes to Hospital Wage Area Reclassifications and Outmigration

Adjustments

• Labor-Related Share maintained at 60%

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Wage Index Disparities

• Concern over manipulation of rural floor

calculation to increase wage index of state

at the expense of other states

– For FFY 2020+, CMS will remove the wage

index data of urban hospitals that reclassify as

rural when calculating a state’s rural floor

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Wage Index Disparities

• Opportunity to Increase Employee Compensation

– Adopted proposal to increase wage index for hospitals in national bottom quartile of wage index (<0.8457)

• New wage index = halfway point between base wage index and 25th percentile value

– Eff. CY 2020, for at least 4 years, recalculated each year

– “Use it or lose it”

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Wage Index Disparities

• Budget Neutrality Offset

– CMS had proposed to apply a budget neutrality

offset to wage index values of hospitals in the top

national quartile of wage index (>1.0351)

– Instead adopted reduction to the conversion factor

• DataGen estimates an additional reduction of 0.16% to

the OPPS conversion factor (CMS rolled this into the

overall OPPS WI BN) (-$84 M)

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Wage Index Reduction Transition

• Transition Period for Wage Index Reductions

– A hospital’s CY 2020 wage index will be no less

than 95% of its final CY 2019 wage index

• “5% stop-loss adjustment”

• Budget neutrality reduction of 0.09% to the OPPS

conversion factor to account for this (-$48 M)

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APCs, Packaging, and Pass-Throughs

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Comprehensive APC (C-APC) Payment Policy• ‘All-inclusive’ payments for device dependent

procedures and device-related services– All other services are treated as supportive of the primary

device procedure

– CY 2019: New Technology APCs included on claim with “J1” indicator no longer packaged• CY 2020: New Technology APCs included on claim with “J2”

indicator no longer packaged

• Currently applicable to 2,977 (up from 2,919) distinct procedures in 67 C-APCs across 22 clinical families– Adoption of new C-APCs

• C-APC 5182: Level 2 Vascular Procedures

• C-APC 5461: Level 1 Neurostimulator and Related Procedures

• C-APC 5495: Level 5 Intraocular Procedures

Device

Procedure

Supporting

Procedures Paid

Separately

Non C-APC Policy

C-APC Policy

J1/J2

Device

Procedure

• Single Payment

triggered by

J1/J2

procedure

codes

• Price based on

US claims

history

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Current C-APCs and Clinical Families

November 12, 2019

Federal Register,

Table 5, pages 61,164

- 61,166

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Packaging Policies• CMS will continue to unpackage (and pay separately) the

cost of non-opiod pain management drugs that function as surgical supplies in the ASC setting.

• Packaging of Non-Pass-Through Drugs/ Biologicals/ Radiopharmaceuticals– CY 2020 packaging cost threshold of $130/day (from $125).

Non-pass-through drugs above this threshold will be paid separately using individual APCs.

– Baseline Payment Rate is Average Sales Price (ASP) + 6% or Wholesale Acquisition Cost (WAC) + 3% (for those not acquired under 340B)

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Drugs & Biologicals with Expiring Pass-Through

Status

• Six HCPCS codes will

be removed from the

list of drugs &

biologicals that

receive pass-through

status in CY 2020

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Drugs & Biologicals with Pass-Through Status

• 79 HCPCS codes

will remain on the

list of drugs &

biologicals that

receive pass-

through status

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Medical Devices with Pass-Through Status

• New medical devices that are part of the FDA

Breakthrough Device Program no longer need to

demonstrate the “substantial clinical

improvement” requirement to quality for pass-

through status.

• CMS has approved five new devices pass-

through payment applications for CY 2020.

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Other Changes

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Calculation of Cost-to-Charge Ratios

• CMS finalized a 2-year phased-in approach, to no longer remove claims from providers that use a “square footage” cost allocation method when calculating CCRs to estimate costs for several CT and MRI APCs– For CY 2020, CMS will calculate costs for CT and MRI APCs using

• 50% of the standard method (all claims with valid CT and MRI cost center CCRs, including those that use a “square feet” method); and

• 50% of the transition methodology (excluding providers that use a “square feet” method).

– Beginning with CY 2021, CMS will set the imaging APC payment rates at 100 percent of the payment rate using the standard method.

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340B Payment Reduction• OPPS payments to 340B facilities for non-pass through

drugs and biologicals (status indicator K) will continue to be reduced to ASP – 22.5% (non-ASP drugs are paid either at WAC – 22.5% or at 69.46% of AWP )– Children’s hospitals, PPS-exempt Cancer hospitals, and Rural

Sole-Community hospitals continue to be paid at ASP + 6%

– For drugs acquired through the 340B program, non-exempt hospitals must report separately payable drugs with modifier “JG”, while exempt hospitals use modifier “TB”

– Vaccines and drugs on pass-through payment status are excluded

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340B Payment Reduction• American Hospital Association et al. v Azar et al

– District court ruled that CMS exceeded its authority on 340B reductions

– CMS has appealed the decision, but is drafting (for a future CY 2021 proposal) an appropriate budget-neutral remedy for CYs 2018 – 2020

– CMS is also collecting survey data on drug acquisition cost for CYs 2018 and 2019 to potentially be used in setting Medicare payments for drugs acquired by 340B hospitals in the future, and for developing a remedy for prior year reductions if necessary

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Off-Campus Outpatient DepartmentsBackground:

– New off-campus provider-based departments (PBDs) have not been eligible for billing under the Medicare OPPS since January 1, 2017.

– Reimbursement for covered, non-excepted, outpatient services at locations affected by this policy receive a payment of 40% (60% reduction) of what would have been received under OPPS.

– In CY 2019+, excepted off-campus PBDs (prior to 11/2/15) saw this reduction expand to HCPCS code G0463 (Hospital Outpatient Clinic Visit) as it began its 2 year phase-in.

Exemptions:

– Dedicated emergency departments; and

– Excepted off-campus PBDs already billing Medicare OPPS before November 2, 2015 (for all services except HCPCS code G0463).

• For CY 2020, CMS will continue to phase in the payment reduction for HCPCS code G0463 for excepted off-campus PBDs from the existing 30% reduction, to the 60% endpoint.1-year 2020 impact (-$329 M)

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Off-Campus Outpatient Departments

Claims

modifier

2017 2018 2019 2020 10yr

Estimated

Impact

Non-Excepted

Sites (All

Services)(OPDs post

11/2/2015)

PN Paid at

50% of

OPPS

Paid at

40% of

OPPS

($10B)

Excepted Sites

(Clinic)(OPDs prior to

11/2/2015)

PO Paid at

70% of

OPPS*

Paid at

40% of

OPPS

($7B)

*CMS agreed to repayment for CY 2019 in December 2019 as mandated by the U.S. District Court

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Off-Campus Outpatient Departments

• The U.S. District Court ruled to vacate the adoption of the CY 2019 policy to pay a reduced rate for general clinical visits of excepted off-campus PBDs

• CMS rescinded site-neutral clinic cuts to “excepted” sites for CY 2019 and will reprocess CY 2019 claims paid at the reduced rate to repay hospitals

• CMS has not abandoned changes to the site-neutral clinic payment reduction (as finalized) in the CY 2020 final rule

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Partial Hospitalization (PHP) Services

• For Community Mental Health Centers (CMHCs), CMS will

continue outlier payments of 50% of the amount by which

the cost of a PHP service exceeds 3.4 times the CMHC

PHP APC payment rate

APC Group Title

Final

CY 2019

Payment Rate

Final

CY 2020

Payment Rate

% Change

5863

Hospital-Based PHPs—

Partial Hospitalization

(three+ services)

$220.86 $238.66 +8.1%

5853

CMHCs—Partial

Hospitalization (three+

services)

$120.58 $124.30 +3.1 %

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Other Changes to Outpatient Rates and Payments

• Continued payment adjustment of +7.1% for rural SCHs and EACHs

• Outlier fixed-dollar threshold increased to $5,075 (from $4,825). This will decrease the number of cases that qualify as outliers, and maintain outlier payments at 1% of total OPPS

– When the threshold is met, outlier payments will continue to be made at 50% of the amount by which hospital costs exceed 175% of the APC payment amount

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Inpatient-Only (IPO) List• CY 2020 IPO list removals:

– CPT code 27130— Arthroplasty, acetabular and proximal femoral prosthetic replacement (total hip arthroplasty) with or without autograft or allograft.

– CPT code 22633— Arthrodesis, combined posterior or posterolateral technique with posterior interbody technique including laminectomy and/or

discectomy sufficient to prepare interspace (other than for decompression), single interspace and segment; lumbar;

– CPT code 22634— Arthrodesis, combined posterior or posterolateral technique with posterior interbody technique including laminectomy and/or

discectomy sufficient to prepare interspace (other than for decompression), single interspace and segment; lumbar; each additional interspace and

segment;

– CPT code 63265— Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; cervical;

– CPT code 63266— Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; thoracic;

– CPT code 63267— Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; lumbar;

– CPT code 63268— Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; sacral.

– CPT code 00670— Anesthesia for extensive spine and spinal cord procedures (for example, spinal instrumentation or vascular procedures);

– CPT code 00802— Anesthesia for procedures on lower anterior abdominal wall; panniculectomy;

– CPT code 00865— Anesthesia for extraperitoneal procedures in lower abdomen, including urinary tract; radical prostatectomy (suprapubic, retropubic);

– CPT code 00944— Anesthesia for vaginal procedures (including biopsy of labia, vagina, cervix or endometrium); vaginal hysterectomy; and

– CPT code 01214— Anesthesia for open procedures involving hip joint; total hip arthroplasty.

• Adoption of a 2-year exemption from medical review activities related to noncompliance with the two-

midnight rule for procedures removed from the inpatient-only list for CY 2020 and forward.

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Prior Authorization• Adoption of a prior

authorization process to only pay for certain services when medically necessary, beginning July 1, 2020.

– Blepharoplasty, botulinum toxin injections, panniculectomy rhinoplasty, and vein ablation

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Outpatient Quality Reporting (OQR) Program

• Measure Removal for CY 2022+ Payment

Determinations:

– OP-33: External Beam Radiotherapy (NQF #1822)

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Price Transparency• Effective CY 2019, CMS requires hospitals to make a list of their

current standard charges available via the Internet, in a machine-

readable format, and updated at least annually.

• CMS does not believe that the current policy is

sufficient for consumers to make informed

decisions based on prices of health care

services, and the information needed is not

currently available. Therefore, CMS adopted

additional requirements in a supplement to

the final rule released on 11/15/2019.

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Price Transparency• Defined a “hospital”, for price transparency requirements, by its licensure, to ensure that the requirements

apply to all U.S. hospitals, including those not considered hospitals for purposes of Medicare participation.

– Does not apply to federally-owned or operated hospitals since these facilities do not serve the general public (except

for emergency services) and their payment rates are non-negotiable.

– Critical access hospitals, hospitals located in rural areas, or hospitals that treat special populations are subject to

the requirements.

• “Items and services” include all individual and packaged items and services that can be provided in the

inpatient or outpatient setting, including those furnished by a hospital-employed practitioner, for which a

hospital has established a standard charge.

• Types of standard charges to be made publicly available, separately by each hospital location:

– Gross charges: non-discounted charges for individual items or services as reflected on a hospital’s chargemaster;

– Payer-specific negotiated charges: charges that hospital negotiated for an item or service with a third party payer;

– Discounted cash price: price the hospital would charge individuals who pay cash (or cash equivalent) for items and

services; and

– De-identified minimum and maximum negotiated charges: the lowest and highest charges that a hospital has

negotiated for an item or service with third party payers, respectively.

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Price Transparency• Publicly display a list of “shoppable” services, created from the machine-readable file, that

includes payer-specific negotiated charges, de-identified minimum and maximum negotiated

charges, and discounted cash prices for a total of 300 shoppable services, with 70 of those

selected by CMS (CY 2020 Price Transparency Supplement to Final Rule, Table 3);

• File format requirements, requirements for the content, and a process to ensure data accessibility

and uniformity;

• Monitoring and assessment methods for hospital compliance, including CMS audits and

monetary penalties for noncompliance, with CMS providing a written warning prior to applying the

penalty, and having the opportunity to submit a corrective action plan (CAP) to CMS or comply with

the CAP requirements. Penalty capped at $300 per day, with a cost-of-living adjustment and will

be made public on the CMS website; and

• Appeals process for failure to meet the reporting requirements. The hospital must request a

hearing within 30 days of being notified for lack of compliance.

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Additional Policy Changes…• Removal of 5 HCPCS codes from the CY 2020 bypass list

• CAH and Small Rural: Requirement for general (from direct) supervision of hospital outpatient therapeutic services

• Revised definition of “expected donation rate” for Organ Procurement Organizations recertification with grace period for 2022 recertification cycle

• Exclusion of molecular pathology tests performed by a laboratory that is a blood bank/center from the laboratory date of service exception

• Available Teaching Slots (Applications due 1/30/2020)

– Provider 390290 closed; 556.81 IME, 574.82 DGME

– Provider 510039 closed; 22.93 IME, 22.93 DGME

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Analysis Walkthrough

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OPPS Final Rule Analysis

Components

that build up to

total OPPS

Payments

Policy Impact

Estimates

Final CY 2019 Final CY 2020 Percent Change

$79.490 $80.793 1.64%

0.9526 0.9691 1.73%

$77.23 $79.30 2.67%

0.910 0.885 -2.76%

$70.30 $70.19 -0.16%

$6,158,600 $6,148,500 -0.16%

Impact Analysis Percent Change

Estimated CY 2019 OPPS Payments

2.87%

-0.38%

-0.68%

0.75%

0.00%

0.25%

-0.15%

-0.09%

-2.72%

-0.16%

$6,148,500

The impact shown above does not include the impact of the 2.0% sequestration reduction to all lines of Medicare payment authorized by Congress

through FFY 2027. It is estimated that the impact of sequestration on CY 2020 OPPS PPS-specific payments would be: -$123,000.

Total Estimated Change CY 2019 to CY 2020 ($10,100)

Estimated CY 2020 OPPS Payments

$15,200

Marketbasket Update

Wage Index (Wage Data and Reclassification)

ACA-Mandated Marketbasket Reduction

$176,900

Other BN Adjustments ($41,900)

$46,000

($23,600)

Conversion Factor

Payment Calculation

Labor-Share 60%

Wage Index

$6,158,600

Adjusted Conversion Factor

Dollar Impact

87,600

Total Case Mix-Adjusted Conversion Factor

Medicare APC Count

Estimated Outpatient Payments

APC Factor/Updates

Wage Index (Other Changes)

> Increasing Bottom Quartile Wage Index Values

> Application of 5% Stop Loss Adjustment

> Rural Reclasses Removed from Rural Floor Wage Index Calc

APC Factor/Updates ($167,800)

$300

($9,500)

($5,400)

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Additional Changes

Estimate of Payment

Reduction Clinic Visits

at Off-Campus PBDs

Potential Impact of

Removal of THA

from Inpatient Only

List

Portion of CY 2018 OPPS

Revenue for Off-Campus

Estimated CY 2019 Payment

for Excepted Off-Campus

Estimated CY 2020 Payment

for Excepted Off-Campus

4.84% $208,500 $119,100

-1.5%

Est. FFY 2020 IPPS Revenue

(THA Procedures Only)

Est. CY 2020 OPPS Revenue

(THA Procedures Only)

Potential Impact on

Total Revenue

MS-DRG 469: Major Hip and Knee Joint Replacement or Reattachment of

Lower Extremity w MCC or Total Ankle Replacement$183,600 $151,800

Estimated Impact of Payment Change to Excepted Off-

Campus Provider-Based Departments (PBDs) at 40% of OPPS

Rate

Potential Impact if ALL Total Hip Arthroplasty (THA)

Procedures are Performed in an Outpatient Setting

Using CPT Code 27130

Estimated Impact/Change to Overall CY 2019 OPPS Revenue

($31,800)MS-DRG 470: Major Hip and Knee Joint Replacement or Reattachment of

Lower Extremity w/o MCC

($89,400)

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