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CMS policy changes impact hospital outpatient services

CMS recently released its proposed rule for the 2020 Hospital Outpatient Prospective Payment System (OPPS). Among many changes, CMS proposed three key payment policy updates impacting hospital outpatient departments: lowering the supervision standard for hospital outpatient therapeutic services from direct supervision to general supervision; requiring prior authorizations for certain hospital outpatient department services; and reducing payments for clinic visits at off-campus provider-based departments (PBD).
The proposed changes also include the first-ever set of proposed rules implementing the Affordable Care Act’s mandate related to price transparency, which requires hospitals to publish their standard charges. The proposed rule also addresses pending litigation involving Medicare payment cuts for drugs purchased under the 340B program, including possible retroactive payment adjustments and the possibility of reducing the cuts prospectively.
Hall Render encourages hospital providers to submit comments on the OPPS proposed rule to ensure adequate and appropriate payment to hospitals and that the industry’s concerns for addressing price transparency initiatives are appropriately considered.

General supervision standard for outpatient therapeutic services in hospitals and CAHs
CMS policy requires direct supervision for hospital outpatient therapeutic services furnished in hospitals and PBDs. In the CY 2010 OPPS final rule, CMS clarified that this standard applies to critical access hospitals as well as hospitals paid under OPPS. CAHs and small rural hospitals raised concerns they would be unable meet the direct supervision standard due to recruiting and staffing challenges. In response to these concerns, CMS instructed Medicare administrative contractors not to enforce the direct supervision requirement for hospital outpatient therapeutic services rendered in CAHs in 2010.

Due to continued concerns, CMS extended this notice of non-enforcement as an interim measure for CY 2011 and expanded it to apply to small rural hospitals having 100 or fewer beds. Since that time, either CMS or Congress has continuously extended non-enforcement of the direct supervision standard, which remains in effect through Dec. 31. Extension of the enforcement instruction and legislative actions have created a two-tiered system of physician supervision requirements for hospital outpatient therapeutic services in the Medicare program.

For CY 2020, CMS proposed to end the two-tiered system by uniformly requiring general supervision for all outpatient therapeutic services provided by hospitals and CAHs. “General supervision” means the procedure is furnished under the physician’s overall direction and control, but the physician’s presence is not required during the performance of the procedure.

Although CMS lowered the supervision standard for hospital outpatient therapeutic services, it will retain the ability to change the supervision level through notice and comment rulemaking if individual hospital outpatient therapeutic services are more stringent than general supervision. Additionally, CMS seeks public comment on whether specific services, such as chemotherapy or radiation therapy, should be excepted from this proposal.

Prior authorization for hospital outpatient department services
CMS has identified a significant increase in certain outpatient therapeutic services that may be cosmetic surgical procedures not covered by Medicare, but these services may be combined with or masquerading as covered therapeutic services. These categories include blepharoplasty, botulinum toxin injections,  panniculectomy, rhinoplasty, and vein ablation.

CMS is proposing a new authorization process for these outpatient service categories with specific CPT codes. Specifically, CMS proposed that as a condition of Medicare payment, a provider must submit a prior authorization request for a hospital outpatient department. If the request meets the applicable Medicare coverage, coding, and payment rules, CMS or its contractor would issue a provisional affirmation to the requesting provider. If a provider receives a non-affirmation decision, the provider may resubmit a prior authorization request with any additional relevant documentation. Additionally, an expedited review process would be available when a delay could seriously jeopardize the beneficiary’s life, health, or ability to regain maximum function.

Claims submitted for services that require prior authorization that have not received a provisional affirmation of coverage from CMS or its contractors would be denied, unless the provider is exempt from the prior authorization process. CMS may elect to exempt a provider upon demonstration of compliance with Medicare coverage, coding, and payment rules. If the cost of the prior authorization program exceeds the savings it generates, CMS reserves the right to suspend prior authorization requirements.

Reduction in payments for clinic visits at off-campus provider-based hospital departments
In the CY 2019 OPPS final rule, CMS finalized its proposal to reduce payment for evaluation and management services at all off-campus PBDs with the payment impact to be phased in over a two-year period. CMS noted that clinic visits are the most common services billed under OPPS and are also furnished in the physician office setting. Accordingly, CMS targeted this service in an attempt to control the volume of these services under OPPS. On-campus PBDs and dedicated emergency departments are excluded from these payment cuts since they do not use the PO modifier.
CY 2020 will be the second year of the two-year transition of this policy, and in CY 2020, these departments will be paid the site-specific Medicare physician fee schedule rate for the clinic visit service. Under the payment policy reduction, if a hospital bills for an evaluation management service at an excepted off-campus PBD, it would be paid at 40 percent of the OPPS rate in 2020 (a 60 percent payment reduction).

It is also important to note that there are several pending legal challenges to this policy of reducing payments for evaluation management services being applied at PBDs excepted from the payment cuts.

Proposed requirements for hospitals to list standard charges
In the FFY 2019 final inpatient PPS rule, CMS reminded hospitals of their obligation to make available a list of their standard charges and provided subregulatory guidelines. This guidance was very general and left a lot to provider interpretation. Now, CMS has proposed specific regulations for implementing this price transparency initiative. The rule proposes requirements for “consumer friendly display” of “payer-specific negotiated charges for selected shoppable services.” Watch for additional bulletins addressing this aspect of the proposed rule.

Practical takeaways
If CMS’ proposals are adopted in the final rule, which will be issued in November, then beginning Jan. 1, the following principles will apply:
  • Outpatient therapeutic services at all hospitals and CAHs would require general supervision to match the policy previously applied at CAHs and small rural hospitals. If adopted, hospitals will need to assess patient care needs when assessing the level of supervision that it will require.
  • CMS may require more stringent supervision – either direct or personal – on a service-specific basis.
  • CMS would establish a prior authorization process for at least the following services: blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation.
  • CMS will continue to phase in payment reductions for evaluation and management clinic visits at excepted off-campus PBDs. In 2020, such services will be paid at 40 percent of the OPPS rate. Hospitals should analyze the impact of this reduction in payments.
  • Hospitals need to review the price transparency proposals and provide comments on this significant development.
Stakeholders are strongly encouraged to submit comments to CMS. Comments are due by 4 p.m. CDT Sept. 27.

More information about Hall Render’s reimbursement and payment practices services can be found here.
NRHA commissioned the above piece from Hall Render, a trusted NRHA partner, for publication within the Association’s Rural Health Voices blog

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