2019 OPPS final rule: CMS bringing site-neutral payment cuts for 340B drugs, clinic visits

In the 2019 OPPS final rule, released Friday, November 2, CMS implemented several site-neutral payment policies, though the agency did delay or shelve other proposals due to stakeholder feedback. 

Beginning January 1, 2019, CMS is expanding its controversial drug payment policy by reducing the reimbursement for separately payable 340B-acquired drugs provided in a nonexcepted, off-campus, provider-based department (PBD) to average sales price (ASP) minus 22.5% under the adjusted Medicare Physician Fee Schedule (MPFS) amount. These drugs are generally reimbursed at ASP plus 6% currently.

The American Hospital Association (AHA) and other hospital groups have been engaged in lawsuits against CMS for nearly a year after the agency implemented a similar payment reduction in the 2018 OPPS final rule for 340B drugs furnished in outpatient hospital departments.

“I’m not surprised CMS moved forward with this payment reduction given the agency warned us last year it would be reviewing this, and CMS’ overall premise is that if providers are purchasing drugs at a discount, they should be paid at a discount, regardless of the location or status of the PBD,” says Jugna Shah, MPH, president of Nimitt Consulting Inc.

“What’s likely giving providers heartburn is that CMS is picking and choosing which policies it applies under the OPPS vs. the policies being applied to non-excepted PBDs under the Site of Service Specific [SoSS] MPFS payment schedule,” she says. “In other words, if sites are paid at ‘MPFS-like rates,’ they should continue getting paid ASP plus 6% for drugs just like doctors in free-standing offices do. At a minimum, CMS should keep the savings estimated from this policy in the OPPS, but that’s not what CMS finalized.”

These nonexcepted PBDs will be required to append modifier -JG (drug or biological acquired with 340B drug pricing program discount) to the same claim line as the drug or biological HCPCS code to identify that it has been acquired under the 340B drug discount program, and they should also still apply modifier -PN (nonexcepted service provided at an off-campus, outpatient PBD of a hospital) to indicate that it was provided in a “new” nonexcepted location.

Rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals are not included in this policy and will continue to be required to report modifier -TB (drug or biological acquired with 340B drug pricing program discount, reported for informational purposes) along with 340B drugs. They will still be paid at ASP plus 6%.

CMS brings payment reductions to grandfathered PBDs

CMS has finalized a policy to reduce reimbursement for clinic visits in off-campus PBDs grandfathered under section 603 of the Bipartisan Budget Act of 2015, and previously protected from CMS’ PBD reimbursement reduction, claiming “unnecessary increases” in outpatient service volume.

However, the policy will be phased in over the course of two years with the first stage to be implemented in 2019. Beginning January 1, CMS will apply a 50% total reduction in payment that would apply to grandfathered off-campus PBDs as if these sites were paid the SoSS MPFS rate for services described by HCPCS code G0463 (hospital outpatient clinic visit for assessment and management of a patient). This would effectively pay providers 70% of the OPPS rate for 2019.

For 2020 and subsequent years, CMS will reimburse the grandfathered PBDs at the SoSS MPFS rate, which would equal 40% of the OPPS rate.

“It’s been a coin toss in my mind whether CMS would finalize this policy,” says Shah. “On one hand, it comes as no surprise the agency did not listen to the numerous technical reasons provided for why it would be completely inappropriate to move forward with the proposed payment reduction, given the agency has been considering policies regarding E/M payments and site neutrality for years.”

The AHA and other hospital groups are likely to bring forward another suit on this issue, but it may take years to see any resolution, not unlike what hospitals are facing with the 340B issue, she adds.

“It’s surprising that CMS is moving forward in a nonbudget-neutral manner with this payment reduction, as well as the 340B reduction described above, which means real dollars are coming out of the OPPS rather than there being a redistributive effect,” says Shah. 

In the meantime, CMS’ finalized policy means providers who append modifier -PO (excepted service provided at an off-campus, outpatient PBD of a hospital) will be paid a significantly lower rate for G0463 in 2019 than they have been paid previously, and over time they will be paid at the exact same rate as those that append modifier -PN.

However, CMS has determined that this policy should not be implemented in a budget neutral manner, meaning the savings will not be redistributed within the OPPS. The agency estimates this policy will lead to approximately $380 million in savings for 2019, with savings to beneficiaries accounting for approximately $80 million of that total.

CMS backs of expansion of services cuts

Another attempt by CMS to reduce reimbursement to grandfathered PBDs will not move forward in 2019, following a previous attempt at a similar policy in the 2017 OPPS proposed rule.

CMS proposed that, beginning in 2019, if an excepted PBD provides services from any of 19 newly created “clinical families” (as defined in the proposed rule) that it did not provide and bill under the OPPS between November 1, 2014, and November 1, 2015, the service would be paid under the MPFS at 40% of the OPPS rate. Excepted PBDs would be required to determine whether they provided services included in the APC ranges that make up each of the 19 clinical families. For example, the pathology clinical family included APCs 5671-5674.

CMS noted “operational challenges and administrative burden for both CMS and hospitals” in implementing this policy and that “the majority of commenters, including stakeholders and hospital systems and associations” opposed the proposal.

“Thankfully CMS listened to commenters on this front and did not move forward, at least for now, with any alternative methods despite MedPAC having suggested at least one,” says Shah.

This is a policy to watch, she says, since comment requests in the proposed rule on alternate methods for implementing a similar policy, as well as CMS’ multiple attempts at proposing reductions for new services at these facilities, makes it likely future rules will continue to tackle the subject.

Payment rates and further policy changes

CMS is increasing payment rates under the OPPS for outpatient hospital departments by 1.35%, estimating total 2019 payments of $74.1 billion, an increase of approximately $5.8 billion over estimated 2018 payments.

For more information on the 2019 OPPS final rule, see the press release and fact sheet and continue to read Revenue Cycle Advisor for updates.

To learn more about how to implement the final rule’s policies and what payment impact they could have at your facility, attend HCPro’s annual OPPS final rule webinar on Thursday, December 6, with Shah and Valerie A. Rinkle, MPA, lead regulatory specialist and an instructor for HCPro Medicare boot camps.