Fact Sheets

CMS Proposes Hospital Outpatient Prospective Payment Changes for 2017

CMS Proposes Hospital Outpatient Prospective Payment Changes for 2017

On July 6, 2016, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2017 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System policy changes, quality provisions, and payment rates proposed rule (CMS-1656-P). CMS is proposing a number of outpatient prospective payment policies that will improve the quality of care Medicare patients receive.

A key proposal in this year’s rule is to implement Section 603 of the Bipartisan Budget Act of 2015, which will affect how Medicare pays for certain items and services furnished by certain off-campus outpatient departments of a provider (hereinafter referenced as off-campus “provider-based departments” (PBDs)). In addition, CMS has listened to concerns raised by health care providers on the patient experience survey questions about pain management and is proposing to remove the Pain Management dimension of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey for purposes of the Hospital Value Based Purchasing Program. In addition to the payment provisions and quality reporting program changes for the OPPS/ASC proposed rule, CMS is also proposing: 

• Several changes to the objectives and measures of the Medicare EHR Incentive Program. These changes are only applicable for eligible hospitals and critical access hospitals (CAHs) attesting under the Medicare EHR Incentive Program and would not impact eligible hospitals and CAHs attesting under a state’s Medicaid EHR Incentive Program.
• To align the definition of “eligible death” and the aggregate donor yield metric in the Organ Procurement Organization (OPO) Conditions for Coverage (CfC) with those of the Organ Procurement and Transplantation Network (OPTN) and Scientific Registry of Transplant Recipients (SRTR), as well as revise the OPO CfC to reduce the amount of hard copy documentation that must be sent with the organ, as much of this information is now available to the transplant center electronically.  

The OPPS proposed rule is one of several rules for CY 2017 that reflect a broader Administration-wide strategy to create a health care system that results in better care, smarter spending, and healthier people.

SECTION 603 OF THE BIPARTISAN BUDGET ACT OF 2015

Site Neutral Payments Provision (“Section 603”)

We are proposing to implement Section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74). This provision requires that certain items and services furnished by certain off-campus PBDs shall not be considered covered outpatient department services for purposes of OPPS payment and shall instead be paid “under the applicable payment system” beginning January 1, 2017. We make several proposals relating to which off-campus PBDs and which items and services are “excepted” from application of payment changes under this provision.

Excepted Items and Services – We propose that certain off-campus PBDs would be permitted to continue to bill for excepted items and services under the OPPS.  Excepted items and services are:   

• All items and services furnished in a dedicated emergency department. 
• Items and services that were furnished and billed by an off-campus PBD prior to November 2, 2015.
• Items and services furnished in a hospital department within 250 yards of a remote location of the hospital.

Service Expansions, Relocations, and Changes of Ownership

• Service Expansion in an Excepted Off-Campus PBD – While excepted off-campus PBDs will be paid at OPPS rates for items and services furnished and billed as of November 2, 2015, CMS is proposing that additional items and services beyond those within the clinical families of services furnished and billed prior to that date will not be excepted services.
• Relocation of Excepted Off-Campus PBDs – CMS is proposing that items and services must continue to be furnished and billed at the same physical address of the off-campus PBD as of November 2, 2015, in order for the off-campus PBD to be considered excepted from Section 603 requirements.   CMS is proposing that an excepted off-campus PBD will lose its excepted status if it changes location.  CMS is requesting comment on whether there should be exceptions to this proposal for extraordinary circumstances that are outside the control of the hospital.
• Changes of Ownership of Excepted Off-Campus PBDs – CMS is proposing that if a hospital has a change of ownership and the new owners accept the existing Medicare provider agreement from the prior owner, the off-campus PBD may maintain its excepted status under the other rules outlined in this regulation. 

Applicable Payment System – For CY 2017, CMS proposes the Medicare Physician Fee Schedule (MPFS) to be the “applicable payment system” for the majority of non-excepted items and services furnished in an off-campus PBD.  Physicians furnishing such services would be paid based on the professional at the nonfacility rate under the MPFS for services which they are permitted to bill.  We intend that this payment proposal would be a one-year transitional policy while we continue to explore operational changes that would allow an off-campus PBD to bill Medicare for its services under a Part B payment system other than the OPPS beginning in 2018.  Provided it can meet all Federal and other requirements, a hospital would have the option of enrolling the non-excepted off-campus PBD as the provider/supplier it wishes to bill in order to meet the requirements of that payment system (such as an ASC or group practice). 

For CY 2018, we are soliciting comments on regulatory and operational changes that we could make to allow a non-excepted off-campus PBD to bill and be paid for its non-excepted items and services under an applicable payment system (other than the OPPS). We seek other comments in implementation of this provision as well.

OTHER OPPS PAYMENT PROVISIONS

Proposed OPPS Payment Update

CMS proposes to update OPPS rates by 1.55 percent.  The change is based on the projected hospital market basket increase of 2.8 percent minus both a 0.5 percentage point adjustment for multi-factor productivity (MFP) and a 0.75 percentage point adjustment required by law.  After considering all other policy changes proposed under the OPPS, including estimated spending for pass-through payments, CMS estimates a 1.6 percent payment increase for hospitals paid under the OPPS in CY 2017.

Proposed Comprehensive Ambulatory Payment Classifications (C-APCs) for 2017

A C-APC is an APC that provides for an encounter-level payment for a designated primary procedure(s) and generally, all adjunctive and secondary services provided in conjunction with the primary procedure.  There are currently 37 C-APCs, which mostly include procedures for the implantation of costly medical devices.  For CY 2017, CMS is proposing 25 new C-APCs, many of which are major surgery APCs within the various existing C-APC clinical families. We are also proposing three new clinical families to accommodate new C-APCs including nerve procedures, excision, biopsy, incision and drainage procedures, as well as airway endoscopy procedures.

• C-APC for Bone Marrow Transplants (BMT): In addition, CMS is proposing to develop a C-APC as well as a dedicated cost center for BMT. The creation of a new C-APC for BMT would allow all the costs for services on the same OPPS claim as a BMT to be packaged into the rate setting for the BMT. This would also allow for the payment for the BMT to be representative of payment for all services that are associated with the BMT procedure along with the BMT procedure itself.

Proposed Packaged Services Policy Refinements

CMS believes that a basic tenet of a prospective payment system is the packaging of all integral, ancillary, supportive, dependent, or adjunctive services into primary services.  Under current policy, many ancillary services are conditionally packaged.  For CY 2017, CMS is proposing three policy refinements with respect to packaging:

• Packaging Based on Claim instead of Based on Date of Service: We are proposing to align the packaging logic for all of the conditional packaging status indicators so that packaging would occur at the claim level (instead of based on the date of service) to promote consistency and ensure that items and services that are provided during a hospital stay that may span more than one day are packaged according to OPPS packaging policies.
• Expansion of Molecular Pathology Laboratory Test Exception to Include Certain Advanced Diagnostic Laboratory Tests (ADLTs): In CY 2014, we adopted a policy to exclude molecular pathology tests from our laboratory packaging policy. We believed that they may have a different pattern of clinical use than more conventional laboratory tests, which may make them less tied to a primary service in the hospital outpatient setting than the more common and routine laboratory tests that are packaged. We believe that this rationale also would apply to certain ADLTs. Therefore, we are proposing to expand this laboratory packaging exclusion to ADLTs that meet the criteria of section 1834A(d)(5)(A) of the Act. 
• Discontinuation of the ‘L1’ Modifier: In CY 2014, we created modifier L1 to allow for separate payment of laboratory tests for use when (1) laboratory tests were the only services on the claim, or (2) when the laboratory test or tests were “unrelated” to the other services on the claim, meaning that the laboratory test was ordered by a different physician for a different diagnosis than the other services on the claim. In CY 2016, we created status indicator Q4, which allows for automatic separate payment for laboratory tests when these are the only services on the claim without the use of the L1 modifier. For CY 2017, we are proposing to discontinue separate payment for “unrelated” laboratory tests, and, therefore, we are proposing to discontinue the L1 modifier.

Device-Intensive Procedure Policies

CMS is proposing the following two policies regarding device-intensive procedures:

• Methodology for Assignment of Device-Intensive Status: Currently, device-intensive procedures are those procedures assigned to a device-intensive APC, which are APCs with a device offset greater than 40 percent. The device offset amount for an APC is the portion of the APC payment amount that is associated with the cost of devices used in procedures assigned to the APC. The device portion of a device-intensive procedure’s payment is the same in both the hospital outpatient department and ASC setting. With the recent reorganization of the APCs to include a greater number of procedures, some APCs contain procedures that have high device costs but do not meet the 40 percent device-intensive threshold. Given this outcome, we believe that we should change the device-intensive calculation methodology and instead calculate the device offset amount at the HCPCS code level rather than at the APC level so that device-intensive status is assigned to all device-intensive procedures that exceed the 40 percent threshold.
• Proposed New Payment Policy for Low Volume Device-Intensive Procedures: We are proposing that the payment rate for any device-intensive procedure that is assigned to an APC with fewer than 100 total claims for all procedures in the APC be based on the median cost instead of the geometric mean cost. We believe that this approach will mitigate significant year-to-year payment rate fluctuations while preserving accurate claims-data-based payment rates for low volume device-intensive procedures.

Device Pass-Through Applications

Device pass-through payments are intended to enable access to certain new medical devices that represent a substantial clinical improvement relative to existing diagnostic or therapeutic services.  In response to stakeholder requests for greater transparency, in CY 2016, CMS adopted a policy to continue to accept and review device pass-through applications on a quarterly basis but to also include discussions of the preliminary pass-through applications in the next applicable OPPS proposed rule.  For CY 2017, CMS includes a discussion of three applications for which preliminary approval has not been granted based upon quarterly review.

Inpatient Only List

The Medicare inpatient-only (IPO) list includes procedures that are only paid under the IPPS. Each year, we use established criteria to review the IPO list and determine whether or not any procedures should be removed from the list. For CY 2017, we are proposing to remove six procedures from the IPO list. The procedures include four spine procedures as well as two laryngoplasty procedures. The CY 2017 OPPS/ASC proposed rule also includes a comment solicitation regarding whether total knee arthroplasty (TKA) should be removed from the IPO list in a subsequent year.

ASC Payment Update

ASC payments are annually updated by the percentage increase in the Consumer Price Index for all urban consumers (CPI-U).  The Medicare statute specifies a MFP adjustment to the ASC annual update.  For CY 2017, the CPI-U update is projected to be 1.7 percent.  The MFP adjustment is projected to be 0.5 percent, resulting in an MFP-adjusted CPI-U update factor of 1.2 percent. 

Partial Hospitalization Program (PHP) Rate Setting

The CY 2017 OPPS/ASC proposed rule proposes to update Medicare payment rates for PHP services furnished in hospital outpatient departments and Community Mental Health Centers (CMHCs). The PHPs are structured intensive outpatient programs consisting of a group of mental health services paid on a per diem basis under the OPPS, based on PHP per diem costs. 

Update to PHP Per Diem Costs

The CY 2017 OPPS/ASC proposed rule proposes to replace the existing two-tiered APC structure for PHPs with a single APC by provider type for providing three or more services per day.  These proposed changes would provide more predictable PHP per diems, particularly given the small number of CMHCs, and would generate more appropriate payments for these services by avoiding the cost inversions that hospital-based PHPs experienced in the CY 2016 OPPS/ASC final rule with comment period.

CMHC Provider-Level Outlier Cap Proposal

The CY 2017 OPPS/ASC proposed rule proposes to implement a CMHC outlier payment cap to be applied at the provider level.  Under this proposal, in any given year an individual CMHC would receive no more than 8 percent of its CMHC total per diem payments in outlier payments.  This proposed CMHC provider-level outlier cap is evidence of CMS’ continued efforts to ensure appropriate outlier payments.

QUALITY AND PERFORMANCE PROGRAM CHANGES

Hospital Value-Based Purchasing (VBP) Program 

The Hospital VBP Program, funded by a 2 percent reduction from participating hospitals’ base operating diagnosis-related group (DRG) payments each year, requires CMS to redistribute a portion of the Medicare payments to hospitals for inpatient services based on performance.  In this CY 2017 OPPS/ASC proposed rule, CMS is proposing to remove the Pain Management dimension of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey for purposes of the Hospital VBP Program, beginning with the FY 2018 program year.  Other Hospital VBP Program requirements will be set forth in an upcoming FY 2017 IPPS/LTCH PPS final rule to be issued on or around August 1, 2016.

CMS has received feedback that some stakeholders are concerned about the pain management dimension questions being used in the Hospital VBP Program, believing that the linkage of these particular questions to the Hospital VBP Program payment incentives creates pressure on hospital staff to prescribe more opioids in order to achieve higher scores on this dimension.  The pain management dimension questions do not specify any particular type of pain control method.  In addition, appropriate pain management includes communication with patients about pain-related issues, setting expectations about pain, shared decision-making, and proper prescription practices.  Although CMS is not aware of any scientific studies that support an association between scores on the pain management dimension questions and opioid prescribing practices, we are proposing to remove the pain management dimension of the HCAHPS survey for purposes of the Hospital VBP Program in an abundance of caution. We are also developing and field testing alternative questions related to provider communications and pain in order to remove any potential ambiguity in the HCAHPS survey.

While CMS is developing alternative pain management questions, HCAHPS survey data on all dimensions of care, including pain management, will continue to be publicly reported under the Hospital Inpatient Quality Reporting (IQR) Program in recognition that pain control is an important aspect to delivering quality care.  We believe this approach would appropriately balance concerns that clinicians could face financial pressure to prescribe opioids without compromising the only source of nationally comparable data on pain management and pain management disparities.

Hospital Outpatient Quality Reporting (OQR) Program: Proposed Changes for CY 2018, 2019, and 2020 Payment Determinations and Subsequent Years

The Hospital OQR Program is a pay for quality data reporting program for outpatient hospital services. The Hospital OQR Program requires hospital outpatient facilities to meet administrative, data collection, and submission, validation, and reporting requirements, or receive a reduction of 2.0 percentage points in their annual payment update for failure to meet these requirements.

In the CY 2017 OPPS/ASC Proposed Rule, CMS is proposing to add a total of seven measures to the Hospital OQR Program for the CY 2020 payment determination and subsequent years: Two claims-based measures, and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey-based measures. The seven measures are:

• OP-35: Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy, which assesses the care provided to cancer patients and encourages quality improvement efforts to reduce the number of unplanned inpatient admissions and emergency department (ED) visits among cancer patients receiving chemotherapy in a hospital outpatient setting.
• OP-36: Hospital Visits after Hospital Outpatient Surgery (NQF #2687), which assesses variations in patient outcomes following surgery at a hospital outpatient department (HOPD). 
• OP-37(a-e):  Five proposed measures that are collected using the Outpatient and Ambulatory Surgical Center Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey, a patient experience of care survey which assesses patients’ access to care, interactions with facility staff, and overall experience at the facility.

CMS is seeking public comment on a future electronic clinical quality measure concept for the Hospital OQR Program that addresses concerns associated with overlapping or concurrent prescribing of opioids or opioids and benzodiazepines. This measure concept is designed to reduce preventable deaths as well as reduce costs associated with the treatment of opioid-related ED use by encouraging providers to identify patients at high risk for overdose due to respiratory depression or other adverse drug events.

We note that CMS is not proposing any changes to the CY 2018 and CY 2019 Hospital OQR Program measure sets, which include 26 measures—25 required and one voluntary.

Additionally, beginning with the CY 2018 payment determination, CMS is proposing to publicly display data on the Hospital Compare Web site, or other CMS Web site, as soon as possible after measure data have been submitted to CMS.  In addition, the agency is proposing that hospitals will generally have approximately 30 days to preview their data.  CMS is also proposing to announce the timeframes for the preview period on a CMS Web site and/or on its applicable listservs.  Furthermore, beginning with the CY 2019 payment determination, CMS proposes to update the Extraordinary Circumstances Exemptions (ECE) policy by changing the ECE request deadline from 45 days from the date that the extraordinary circumstance occurred to 90 days from the date that the extraordinary circumstance occurred.

Organ Transplant Enforcement

The Medicare Conditions of Participation for Organ Transplant programs at 42 CFR sections 482.80 and 482.82 contain an outcome requirements standard for one-year patient and graft survival. A transplant program is out of compliance with this standard if all of the thresholds in the standard are crossed. One of the thresholds, the number of observed events divided by the number of expected events, is based on the program’s outcomes in relation to the risk-adjusted national average. Currently, that threshold, which was adopted in 2007, is 1.5. However, as national outcomes for organ transplants have improved over time, the margin for compliance and noncompliance has narrowed. So, we are proposing to restore the CMS tolerance limit for patient and graft survival closer to the level allowed under the original 2007 rule by changing this threshold to 1.85.  If the threshold is changed, this would mean that transplant programs would not be out of compliance unless the number of observed events (one-year patient deaths or graft failures) divided by the number of expected events exceeds 1.85.

Changes to the Conditions for Coverage for Organ Procurement Organizations (OPOs)

The Organ Procurement and Transplantation Network (OPTN) establishes the types and frequencies of the data to be submitted by the Organ Procurement Organizations (OPOs) to the Scientific Registry of Transplant Recipients (SRTR) through its policies. The OPTN/SRTR collect and analyze the data pursuant to the Health Resources Service Administration (HRSA) mission to increase organ donation and transplantation. Periodically, the OPTN revises its OPO data reporting policies based on methodologies and clinical practice improvements that enable them to draw more accurate conclusions about donor and organ suitability for transplantation.  We are proposing to change the definition of “eligible death” and the aggregate donor yield metric in the OPO Conditions for Coverage (CfCs) to align the definitions, criteria and outcome measures with those requirements set forth by the OPTN and SRTR.  CMS does not want OPOs to have to submit two sets of numbers, some to the SRTR and some to CMS.  We are also proposing to revise the OPO CfC that requires certain documentation to be transported to the transplant center together with an organ.  Blood type and infectious disease information, which are two of the most important pieces of information, will continue to be required in written format and sent along with the organ.  Other donor information is now available to the transplant center electronically.  This reduction in the amount of hard copy documentation that must be sent with the organ would allow OPOs better use of their time during the donation process.

Transplant Technical Correction and Other Proposed Revisions

We are also proposing several revisions to the special procedures for approval and re-approval of organ transplant centers. We are proposing to extend the time for organ transplant programs to notify CMS of their intent to request mitigating factors approval from 10 days to 14 calendar days; to clarify that the time period for submission of the mitigating factors information is calculated in calendar days; and to clarify CMS discretion regarding organ transplant Systems Improvement Agreements (SIAs).

Electronic Health Record (EHR) Incentive Program

90-Day EHR Reporting Period in 2016

In 2015, the EHR reporting period for all eligible professionals (EPs), eligible hospitals, and CAHs was any continuous 90-day period, which enabled health care providers to accommodate the changes to the program that were not finalized in rulemaking until the end of 2015.

We are proposing a 90-day EHR reporting period in 2016 for all EPs, eligible hospitals, and CAHs, as we believe it would continue to assist health care providers by increasing flexibility in the program. The EHR reporting period would be any continuous 90-day period between January 1, 2016 and December 31, 2016. 

Medicare EHR Incentive Program for Eligible Hospitals and CAHs

CMS is proposing to eliminate the Clinical Decision Support (CDS) and Computerized Provider Order Entry (CPOE) objectives and measures for eligible hospitals and CAHs attesting under the Medicare EHR Incentive Program and reduce the thresholds for a subset of the remaining objectives and measures in Modified Stage 2 for 2017 and Stage 3 for 2017 and 2018. These proposed changes would not apply to eligible hospitals and CAHs that attest under a state’s Medicaid EHR Incentive Program.

New Participants in 2017

After the publication of the 2015 EHR Incentive Programs Final Rule, CMS determined that, due to cost and time limitation concerns related specifically to 2015 Edition CEHRT updates in the  EHR Incentive Program Registration and Attestation System, it is not technically feasible for EPs, eligible hospitals, and CAHs that have not successfully demonstrated meaningful use in a prior year (new participants) to attest to the Stage 3 objectives and measures in 2017 in the EHR Incentive Program Registration and Attestation System. Therefore, we are proposing that EPs, eligible hospitals, and CAHs that have not successfully demonstrated meaningful use in a prior year would be required to attest to Modified Stage 2 by October 1, 2017. Returning EPs, eligible hospitals, and CAHs will report to different systems in 2017 and therefore would not be affected by this proposal.

Significant Hardship Exception for New Participants Transitioning to MIPS in 2017

We are proposing that certain EPs, who have not successfully demonstrated meaningful use in a prior year, intend to attest to meaningful use for an EHR reporting period in 2017, and intend to transition to MIPS and report on measures specified for the advancing care information performance category under the MIPS as proposed in 2017, can apply for a significant hardship exception from the 2018 payment adjustment as authorized under section 1848(a)(7)(B) of the Act.

Modifications to Measure Calculations for Actions Outside of the EHR Reporting Period

We are proposing to change the policy for measure calculations such that, for all meaningful use measures, unless otherwise specified, actions included in the numerator must occur within the EHR reporting period if that period is a full calendar year, or if it is less than a full calendar year, within the calendar year in which the EHR reporting period occurs. 

Ambulatory Surgical Center Quality Reporting (ASCQR) Program 

The ASCQR Program is a pay-for-reporting program that requires ambulatory surgical centers (ASCs) to meet administrative, data collection, and reporting requirements, or receive a reduction of 2.0 percentage points in their annual payment update for failure to meet the requirements.

In the CY 2017 OPPS/ASC proposed rule, CMS is proposing to add seven measures to the ASCQR program measure set for the CY 2020 payment determination and subsequent years.  The seven measures are:

• ASC-13: Normothermia Outcome, which assesses the percentage of patients having surgical procedures under general or neuraxial anesthesia of 60 minutes or more in duration who are normothermic within 15 minutes of arrival in the post-anesthesia care unit (PACU).
• ASC-14: Unplanned Anterior Vitrectomy, which assesses the percentage of cataract surgery patients who have an unplanned anterior vitrectomy (removal of the vitreous present in the anterior chamber of the eye).
• ASC-15(a-e): Five proposed measures that are collected using the Outpatient and Ambulatory Surgical Center Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey, a patient experience of care survey which assesses patients’ access to care, interactions with facility staff, and overall experience at the facility.

CMS is seeking public comment on a quality measure for future consideration in the ASCQR Program that addresses Toxic Anterior Segment Syndrome (TASS), a complication of anterior segment eye surgery.  This measure assesses the number of ophthalmic anterior segment surgery patients diagnosed with TASS within two days of surgery.

We note that CMS is not proposing any changes to the CY 2018 and CY 2019 ASCQR Program measure sets, which include 12 measures—11 required and one voluntary.

Additionally, beginning with the CY 2018 payment determination, CMS is proposing to publicly display data on the Hospital Compare Web site, or other CMS Web site, as soon as possible after measure data have been submitted to CMS.  In addition, the agency is proposing that hospitals will generally have approximately 30 days to preview their data.  CMS is also proposing to announce the timeframes for the preview period on a CMS Web site and/or on its applicable listservs.  CMS is further proposing, beginning with the CY 2019 payment determination, to update the Extraordinary Circumstances Exemptions (ECE) policy by extending the ECE request deadline from within 45 days of the date that the extraordinary circumstance occurred to within 90 days of the date that the extraordinary circumstance occurred.  CMS is also proposing to implement a May 15 submission deadline for all data submitted via a CMS Web-based tool in the ASCQR Program beginning with the CY 2019 payment determination.

CMS will accept comments on the proposed rule until September 6, 2016, and will respond to comments in a final rule. The proposed rule will appear in the July 14, 2016, Federal Register and can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection.

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