This week’s note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.
Last week we discussed CMS’ movement from a largely fee-for-service outpatient hospital reimbursement methodology to a more prospectively determined outpatient prospective payment system (OPPS) payment methodology. Looking at the proposed calendar year (CY) 2014 OPPS/Ambulatory Surgery Center (ASC) rule, we spent most of our time focusing on CMS’ proposal to create comprehensive ambulatory payment classifications (APCs) for the 29 most costly device-dependent primary services. Under this proposal, CMS would make a single prospective payment based on the cost of all individually reported codes that represent the provision of one of these primary services and all adjunctive services provided to support the delivery of that primary service. This would result in a significant reduction in the number of individual separate payments for OPPS covered items and services.
We also noted CMS’ recommendation to significantly expand the number and type of OPPS covered items and services subject to “packaging.” When a covered item or service that is payable under the OPPS is packaged, the payment for that item or service is included in the payment for the related primary service of which it is an integral, supporting part. In the remainder of this week’s note, we will focus on the specific details of CMS’ proposed expansion of packaging for CY 2014. This expansion would also significantly reduce the number of individual separate payments for OPPS covered items and services.
Historical perspective on packaging
Since August 2000, the OPPS has been the primary payment methodology for most hospital outpatient services covered under Medicare Part B and certain inpatient hospital services that are not covered under Part A but are covered under Part B. Under the OPPS, as originally implemented, most covered services were separately payable based upon the HCPCS code that identified those services and the APC to which that HCPCS code was assigned.
From the beginning, certain dependent services that Medicare considered to be covered and payable under the OPPS were not separately payable. These items and services were referred to as “packaged.” As noted above, the payment for a packaged item or service is included in, or “packaged into,” the payment for the related primary service of which it is an integral part.
Initially, packaged items and services tended to be relatively low cost and were usually furnished in support of some other more significant independent service. Items and services that have been traditionally packaged include anesthesia, use of the operating/treatment/procedure room, drugs, devices, and observation. Effective January 1, 2008, CMS vastly expanded the number of packaged items and services to include many that are fairly expensive and that might be used independently, at least in some circumstances. The expanded list of packaged items and services includes diagnostic radiopharmaceuticals, contrast agents, guidance services, image processing services, intraoperative services, and imaging supervision and interpretation services.
Proposed CY 2014 packaging expansion
In the proposed CY 2014 OPPS/ASC rule, CMS has recommended packaging the following additional items and services:
- Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure
- Drugs and biologicals that function as supplies or devices when used in a surgical procedure
- Clinical diagnostic laboratory tests
- Procedures described by add-on codes
- Ancillary services (currently identified with status indicator ‘‘X’’)
- Diagnostic tests on the bypass list
- Device removal procedures
Let us look at each of these categories in more detail.
Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure
In its rationale for expanding packaging to include these items and services, CMS noted that it currently unconditionally packages the following six categories of drugs, biologicals, and radiopharmaceuticals (unless temporary pass-through status applies):
- Those with per day costs at or below the packaging threshold (for CY 2014, the proposed packaging threshold is $90 per day based on historical claims data from CY 2012)
- Diagnostic radiopharmaceuticals
- Contrast agents
- Anesthesia drugs
- Drugs used as supplies according to § 419.2(b)(4)
- Implantable biologicals
CMS noted that the same rationale that justifies packaging diagnostic radiopharmaceuticals and contrast agents that function as supplies when used in specific diagnostic tests or procedures should logically be expanded to package all drugs, biologicals, and radiopharmaceuticals that function as supplies in such circumstances. Thus, CMS proposes to unconditionally package all drugs, biologicals, and radiopharmaceuticals that function as a supply when used in a diagnostic test or procedure, except when the drug, biological, or radiopharmaceutical has pass-through status. For purposes of this proposed expansion, a diagnostic test or procedure is defined as any kind of test or procedure performed (i) to aid in the diagnosis, detection, monitoring, or evaluation of a disease or condition; or (ii) to determine which treatment option is optimal.
CMS mentioned two specific drugs that would be included in this expanded packaging category in addition to currently packaged diagnostic radiopharmaceuticals and contrast agents: stress agents and hexaminolevulinate hydrochloride (Cysview®). Stress agents are composed of a class of drugs that are used in certain diagnostic tests (primarily myocardial perfusion imaging) to evaluate certain aspects of cardiac function. Stress agents include those drugs currently identified by HCPCS codes J0152, J1245, J1250, and J2785. Cysview® (HCPCS code C9275) is an optical imaging agent indicated for use in the cystoscopic detection of non-muscle invasive papillary cancer of the bladder among patients suspected or known to have lesion(s) on the basis of a prior cystoscopy.
The drugs, biologicals, and radiopharmaceuticals within this packaging category that are identified by specific HCPCS codes are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with a status indicator of “N.”
Drugs and biologicals that function as supplies or devices when used in a surgical procedure
Since the implementation of the OPPS, CMS has packaged virtually all medical devices (except for those subject to temporary pass-through status), medical and surgical supplies, and surgical dressings. For purposes of these packaging rules, supplies constitute a large category of items that are typically either for single patient use or have a shorter life span than equipment. Supplies include not only minor, inexpensive, or commodity-type items, but also a wide range of products used in the hospital outpatient setting, including certain implantable devices and biologicals. CMS has long considered these implantable devices and biologicals to be integral to the surgical implantation procedures using them, and, except for devices and biologicals subject to temporary pass-through status, CMS has packaged payment for them into the payment for the related surgical procedure of which they are an integral part.
As with the prior expansion category, CMS has moved from the specific to the general, proposing to unconditionally package all drugs and biologicals that function as supplies or devices when used in a surgical procedure.
In its discussion, CMS identified one specific class of drugs or biologicals that would fall within this category: skin substitutes. The term ‘‘skin substitutes’’ refers to a category of products that are most commonly used in outpatient settings for the treatment of diabetic foot ulcers and venous leg ulcers. These products do not actually function like human skin and are not a substitute for a skin graft. Instead, these products are various types of wound dressings that stimulate the host to regenerate lost tissue and replace the wound with functional skin. Skin substitutes are subject to regulation by the FDA as medical devices, human tissue, or cellular products and are applied to wounds during surgical procedures described by CPT codes 15271 through 15278. Some of these products have dual uses and can be used either as skin substitutes or implantable biologicals, depending on whether they are applied externally or internally.
The drugs and biologicals within this packaging category that are identified by specific HCPCS codes are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with a status indicator of “N.”
Clinical diagnostic laboratory tests
Up to this point, clinical diagnostic laboratory tests have been paid under the clinical laboratory fee schedule (CLFS), rather than the OPPS. However, the secretary of HHS has broad discretion to determine which covered items and services are to be paid under the OPPS. In the interest of moving toward a more prospective OPPS, and after a careful review of how, why, and when laboratory tests are performed in the outpatient hospital setting, CMS has determined that the vast majority of such tests are integral, ancillary, supportive, dependent, or adjunctive to the primary services provided and should be packaged.
Therefore, except for molecular pathology tests, CMS is proposing to package laboratory tests when they are integral, ancillary, supportive, dependent, or adjunctive to a primary service or services provided in the hospital outpatient setting. This would be the case when they are provided on the same date of service as the primary service and are ordered by the same practitioner who ordered the primary service.
CMS would consider a laboratory test to be unrelated to a primary service and, thus, not part of this packaging policy, when the laboratory test is the only service provided on that date of service or when the laboratory test is provided on the same date of service but is ordered for a different purpose by a different practitioner from the one who ordered the primary service. The laboratory tests not included in this packaging proposal would continue to be paid separately at CLFS rates when billed on a 14X bill type. As noted above, CMS also proposed that molecular pathology tests described by CPT codes 81200 through 81383, 81400 through 81408, and 81479 should be exceptions from this packaging policy.
The HCPCS codes for the laboratory tests subject to this packaging category are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with a status indicator of “N.”
Procedures described by add-on codes
Add-on codes describe procedures that are always performed in addition to a primary procedure. The example that CMS discussed is the procedure described by CPT code 11001 (debridement of extensive eczematous or infected skin; each additional 10% of the body surface, or part thereof), which is used for additional debridement beyond that described by the primary procedure code. Currently, add-on codes typically receive separate payment based on APC assignment and are assigned status indicator ‘‘T.’’
Because add-on codes represent an extension or continuation of a primary procedure, CMS argues that they are typically supportive, dependent, or adjunctive to that primary procedure and, consequently, their payment should be packaged into the payment for the primary procedure. Therefore, CMS is proposing to unconditionally package all procedures described by add-on codes in the OPPS.
The specific HCPCS codes for the add-on codes subject to this packaging category are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with a status indicator of “N.”
Ancillary services (status indicator ‘‘X’’)
Under the OPPS, CMS currently pays separately for certain ancillary services that are assigned to status indicator ‘‘X,’’ defined as ‘‘ancillary services.’’ In most instances, these services, which include a number of minor diagnostic tests (e.g., x-rays, pathology laboratory tests) are actually performed ancillary to a primary service. However, in certain circumstances they may be performed independently.
Consistent with their desire to develop a more prospective OPPS and the packaging principles discussed above, CMS believes that these ancillary services, which are assigned status indicator ‘‘X,’’ should be packaged when they are performed with another primary service, but should continue to be separately paid when performed independently. Therefore, CMS is proposing to conditionally package all ancillary services (except for preventive services) that were previously assigned a status indicator of ‘‘X’’ and to assign to these services status indicator ‘‘Q1’’ instead (packaged when provided with a service assigned a status indicator of ‘‘S,’’ ‘‘T,’’ or ‘‘V’’). Status indicator ‘‘X’’ would be discontinued. For preventive services previously assigned to status indicator ‘‘X,’’ CMS is proposing to change their status indicator to ‘‘S’’ and to continue to pay for them separately.
The specific HCPCS codes for those ancillary services previously assigned a status indicator of “X” and subject to this expanded packaging category are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with a status indicator of “Q1.”
Diagnostic tests on the bypass list
For a number of years, CMS has created a bypass list of separately paid services. The list is used to convert claims with multiple separately payable procedures, which are generally not used for rate-setting purposes, into claims with a single separately paid procedure that can be used for rate setting. Services on the bypass list have limited associated packaged costs so they can be bypassed when assigning packaged costs on a claim to a separately paid procedure on that same claim.
CMS noted that in the past and under the current proposal, they have packaged or recommended packaging a number of adjunctive diagnostic tests into the primary procedures of which they are an integral part. CMS argues that the diagnostic tests on the bypass list share many characteristics with these other conditionally or unconditionally packaged or proposed packaged categories of items and services. Examples include a barium swallow test (CPT code 74220) and a visual field examination (CPT code 92081). In many instances, these tests are integral, ancillary, supportive, dependent, or adjunctive to a primary service. However, in certain circumstances they may be performed independently.
Therefore, CMS is proposing to conditionally package these procedures (except for preventive services) when performed adjunctively and to continue to pay for them separately when performed independently. CMS is proposing the assignment of status indicator “Q1” for these codes. Some of the diagnostic tests on the bypass list are currently assigned to status indicator ‘‘X’’ and would be conditionally packaged under the proposed policy to conditionally package ancillary services currently assigned status indicator ‘‘X.’’ Thus, the only diagnostic codes on the bypass list affected by this proposal are currently assigned to status indicator ‘‘S.’’ Preventive services will continue to be paid separately.
The specific HCPCS codes for services on the bypass list that are subject to this expanded packaging category are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with status indicator “Q1.”
Device removal procedures
Implantable devices frequently require removal or replacement due to a variety of factors such as wear, failure, recall, infection, etc. Since the beginning of the OPPS, most implantable devices (except for those subject to pass-through status) have been packaged as supplies, implantable prosthetics, or implantable DME into their associated procedures. Device removal is sometimes reported with a code that describes both removal and repair/replacement, or with a code that only describes removal. Although device removal procedures are frequently performed with procedures to repair or replace devices, device removal may occur without repair or replacement if the clinical indication for the device that was removed no longer exists.
When a separately coded device removal procedure is performed with a separately coded device repair or replacement procedure, CMS argues that the device removal procedure actually represents an integral part of an overall primary procedure that is removal plus repair or replacement of the device. Consistent with their desire to develop a more prospective OPPS and the packaging principles discussed above, CMS is proposing to conditionally package device removal codes when they are billed with other surgical procedures involving repair or replacement and to assign to these services a status indicator of ‘‘Q2’’ (packaged when provided with a service assigned a status indicator of ‘‘T’’).
The specific HCPCS codes for removal services that are subject to this expanded packaging category are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with status indicator “Q2.”
Clarification regarding packaging of medical and surgical supplies
CMS provided one additional clarification regarding the packaging of medical and surgical supplies under the OPPS. Although such items are generally unconditionally packaged, prosthetic supplies are sometimes paid separately. Prosthetic devices are paid according to the DMEPOS fee schedule if paid separately. In a recent review, CMS discovered many supplies that should be paid under the OPPS as packaged items and services, but that are currently assigned to status indicator ‘‘A’’ and are being paid separately, according to the DMEPOS fee schedule.
For CY 2014, CMS is proposing to revise the status indicator for all supplies described by Level II HCPCS A-codes (except for prosthetic supplies) from status indicator ‘‘A’’ to ‘‘N,’’ so that these supplies are unconditionally packaged under the OPPS, as required by applicable regulations. The specific HCPCS codes for the supplies that are subject to this change are included in both Addendum B and Addendum P to the proposed CY 2014 OPPS/ASC rule, with status indicator “N.”
Correctly reporting packaged items and services and their related charges
Even though there is no separate payment for covered packaged items and services, hospitals are strongly encouraged to report them on the same claim as the more significant services of which they are an integral part, whether required by CMS to do so or not. They should be reported as separate line items, along with their related charges. This is to ensure that these charges are appropriately allocated so the payments for the separately payable services of which they are an integral part are calibrated to cover the cost of the related packaged items and services. With the increase in the number of packaged items and services, including very high cost drugs, biologicals, and devices, it has become even more important for hospitals to accurately and completely identify and report their respective costs.
In last week’s , Kimberly Hoy, JD, wrote about the newly published OPPS proposed rule. CMS is proposing sweeping changes that have the potential to rock the world of the prospective payment system hospitals. CMS may not have wanted the critical access hospitals (CAHs) to feel left out so they have included two major proposals that may also shake up the CAHs’ world, but in reality may have been expected.
- Non-enforcement instruction for the supervision of outpatient therapeutic services: In 2010, CMS announced that it would not enforce supervision requirements for CAHs because their flexible staff requirements under their licensure would prevent compliance with the regulations. Then in CY 2011, CMS expanded the non-enforcement to include small rural hospitals having 100 or fewer beds. However, in the CY 2013 OPPS final rule, CMS implied that the non-enforcement period would soon be coming to an end. Holding true to its word, CMS is proposing the expiration of this moratorium because it has provided hospitals with adequate opportunity to meet the required supervision levels for all hospital outpatient therapeutic services. CMS believes it has also given enough time for facilities to become familiar with the new independent review process established by the Hospital Outpatient Payment Panel who evaluates requests for revisions to levels of supervision – those services that may be furnished under general or personal supervision rather than direct or services to be designated as a nonsurgical extended duration therapeutic service.
- Implement therapy caps, exceptions process and manual medical review: The American Taxpayer Relief Act of 2012 implemented therapy caps and manual medical review for most outpatient therapy providers. CAHs were excluded from applying the caps to their services; however, the therapy services furnished by a CAH in 2013 are counted toward the therapy caps for services provided by other providers. In a Rural Health Open Door Forum call earlier this year, CMS hinted that CAHs would be included in the therapy caps in 2014 and it has now elaborated on this in the Medicare Physician Fee Schedule (MPFS) proposed rule. At this time, there would not be a change in the reimbursement under reasonable cost for the services provided by a CAH. This proposal would level the playing field for all outpatient therapy providers by implementing the caps and reviews for all outpatient therapy services, regardless of the site of service.
CAHs should review both of the proposed rules and submit comments to CMS about how the coming changes may impact their bottom line and ability to provide services to their rural communities. CAHs should also review the rules for other proposals that may have limited impact on their operations, such as conditions of payment for “incident to” outpatient services and EHR incentive payments to Method II CAHs.
How does your facility determine which services are directly related to the admission and fall into the three-day payment window?
On January 4th, CMS updated the three-day payment window section of the inpatient chapter of the Claims Processing Manual creating new logistical problems carrying significant compliance risks- let our experts review the new guidance and offer operational solutions and options to meet these challenges efficiently.
Following this 90-minute audio conference you will be able to:
- Explain the changes CMS made to the three-day payment window
- Evaluate operational solutions to incorporate the changes to the three-day payment window for observation, self-administered drugs, and non-covered inpatient admission
- Determine whether your facility should rebill services affected by CMS’ new guidance
Learn more about this webcast, which features Kimberly Anderwood Hoy, JD, CPC and Valerie A. Rinkle, MPA, by clicking here.
Editor’s note: Judith Kares, JD, CPC, regulatory specialist for HCPro, Inc., is the author of this week’s note from the instructor.
CMS issues recurring update notification highlighting important CY2013 OPPS changes
On Friday, CMS released its annual recurring update notification reflecting the claims processing-related changes implemented in the CY 2013 OPPS final rule. Hospitals and CAHs are encouraged to review the transmittal more thoroughly to assure that they are prepared to implement these changes for services provided on and after January 1, 2013.
Hospitals and CAHs are also encouraged to be on the lookout for a similar transmittal (which has not yet been released) designed to reflect benefit-related changes included in the CY 2013 OPPS final rule. CMS also noted that the January 2013 integrated outpatient code editor (I/OCE) and OPPS pricer will reflect the healthcare common procedure coding system (HCPCS), ambulatory payment classification (APC), HCPCS modifier, and revenue code additions, changes, and deletions identified in this transmittal.
CMS identified the following key changes for CY 2013:
- Changes to device, radiolabeled product and procedure edits for January 2013. The most current list of device edits can be found at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/ .Failure to pass these edits will result in the claim being returned to the provider.
- Intracoronary stent placement procedure codes. The deletion of two CPT codes (92980 and 92981) that describe the placement of non-drug-eluting intracoronary stents and two existing HCPCS G-codes that describe the placement of drug-eluting intracoronary stents, along with the creation of nine new HCPCS C-codes in order to maintain the existing OPPS policy of differentiating payment for intracoronary stent placement procedures involving non-drug‑eluting and drug-eluting stents for CY 2013.
- Outpatient payment for composite APC 8000. Modification of the intracardiac catheter ablation codes that may qualify a cardiac electrophysiologic evaluation and ablation service for composite payment under composite APC 8000 for services provided on and after 1/1/13. CMS’ action follows the AMA CPT editorial panel’s deletion of CPT codes 93651 and 93652 (intracardiac catheter ablation codes), effective 1/1/2013 and creation of new CPT codes 93653, 93654, and 93656, effective 1/1/2013.
- New ‘sometimes therapy’ services that may be paid as non-therapy services for hospital outpatients, Effective January 1, 2013 the addition of two HCPCS codes (G0456 and G0457) to the list of PT/SLP/OT “sometimes therapy” services that may be paid under certain circumstances to a facility under the OPPS. The limited set of sometimes therapy services are paid under the OPPS when they are not furnished as therapy, that is, when they are not furnished under a certified therapy plan of care.
- Coding changes for partial hospitalization psychiatric (PHP) services. Following the AMA’s CPT editorial panel deletion of 28 psychiatric CPT codes, including those related to PHP services, and replacing them with 12 new CPT codes (effective for services provided on and after 1/1/13), CMS’ implementation of corresponding changes to the PHP code set that is used for billing and documenting PHP services.
- Certain changes to drugs, biologicals, and radiopharmaceuticals:
- Effective for services provided on and after 1/1/13, the creation of several new HCPCS codes to identify those drugs, etc. for which no specific code had previously been created. The new codes are set out in Table 1 of Attachment A to the transmittal;
- Effective for services provided on and after 1/1/13, changes to the HCPCS/CPT or long descriptor, or both, of certain drugs, etc. These changes are set out in Table 2 of Attachment A to the transmittal. Hospitals are once again admonished to pay close attention to accurate billing for units of service consistent with the dosages contained in the long descriptors of the active CY 2013 HCPCS and CPT codes;
- For CY 2013, payment for nonpass-through drugs, biologicals and therapeutic radiopharmaceuticals is made at a single rate of ASP + 6%, which provides payment for both the acquisition and pharmacy overhead costs associated with the drug, biological or therapeutic radiopharmaceutical. In CY 2013, a single payment of ASP + 6% will also be made (providing payment for both associated acquisition and pharmacy overhead costs for these pass-through drugs, biologicals and radiopharmaceuticals);
- Any changes in the payment rates effective for services provided on and after 1/1/13, based on sales price submissions from the third quarter of CY 2012, will be incorporated into the January 2013 release of the OPPS Pricer.
- CY 2013 OPPS payment adjustment for certain cancer hospitals. CMS’ updating of the “target payment to cost ratio (PCR)” for CY 2013, for purposes of the cancer hospital payment adjustment, to 0.91 for outpatient services furnished on or after January 1, 2013 through December 31, 2013. Under the Affordable Care Act (ACA), beginning in CY 2012, CMS is to provide additional payments to each of the 11 cancer hospitals so that each cancer hospital’s final payment to cost ratio (PCR) for services provided in a given calendar year is equal to the weighted average PCR (which CMS refers to as the “target PCR”) for other hospitals paid under the OPPS.
- Changes to OPPS pricer logic:
- Rural sole community hospitals (SCHs) and essential access community hospitals (EACHs) will continue to receive a 7.1% payment increase for most services (excluding drugs, biologicals, items and services paid at charges reduced to cost, and items paid under the pass-through payment policy) in CY 2013;
- New OPPS payment rates and copayment amounts will be effective January 1, 2013. All copayment amounts will be limited to a maximum of 40% of the APC payment rate. Copayment amounts for each individual service cannot exceed the CY 2013 inpatient deductible;
- For hospital outlier payments under OPPS, there will be no change in the multiple threshold of 1.75, which will continue to apply for 2013;
- In addition, for hospital outlier payments under the OPPS, there will be no change in the fixed-dollar threshold of $2,025, which will continue to apply for CY 2013. The estimated cost of a service must be greater than the APC payment amount plus $2,025 in order to qualify for outlier payments;
- For outliers for community mental health centers (bill type 76x), there will be no change in the multiple threshold of 3.4, which will continue to apply for 2013;
- Effective January 1, 2013, 3 devices are eligible for pass-through payment (pass-through payment generally equals charges reduced to cost, sometimes subject to an offset amount) in the OPPS Pricer logic. Category C1830 (Powered bone marrow biopsy needle), has an offset amount of $0, because CMS is not able to identify portions of the APC payment amounts for the related procedure that were associated with the cost of a predecessor device. Category C1840 (Lens, intraocular (implantable)) and C1886 (Catheter, extravascular tissue ablation, any modality (insertable)) have offset amounts included in the Pricer for CY 2013, because CMS was able to identify portions of the APC payment amounts for the related procedures that were associated with the cost of certain predecessor devices. Pass-through offset amounts are adjusted annually;
- Effective January 1, 2013, there will be one diagnostic radiopharmaceutical receiving pass-through payment in the OPPS Pricer logic. For APCs containing nuclear medicine procedures, Pricer will reduce the amount of the pass-through diagnostic radiopharmaceutical payment by the wage-adjusted offset for the APC with the highest offset amount when the radiopharmaceutical with pass-through appears on a claim with a nuclear procedure. The offset will cease to apply when the diagnostic radiopharmaceutical expires from pass-through status. The offset amounts for diagnostic radiopharmaceuticals are the “policy-packaged” portions of the CY 2013 APC payments for nuclear medicine procedures and may be found on the CMS website;
- Effective January 1, 2013, the OPPS Pricer will continue to apply a reduced update ratio of 0.980 to the payment and copayment for hospitals that fail to meet their hospital outpatient quality data reporting requirements or that fails to meet CMS validation edits. The reduced payment amount will be used to calculate outlier payments, if any;
- Pricer will continue to update the payment rates for drugs, biologicals, therapeutic radiopharmaceuticals, and diagnostic radiopharmaceuticals with pass-through status when those payment rates are based on ASP, on a quarterly basis.
Again, hospitals and CAHs are encouraged to review this transmittal closely to assure that they are prepared to comply with these changes effective for applicable services provided on and after 1/1/13.
Right on cue, CMS released the 2013 OPPS Final Rule on November 1 and then followed up with the MPFS Final Rule. In a breaking news story, HCPro summarized the changes – the good, the bad and the ugly – that will impact hospitals across the country. I wanted to take this time to review several changes that will impact two high volume departments in the hospital outpatient setting – therapy services and laboratory.
Many laboratory departments have been struggling with the complexity and the number of CPT codes for molecular pathology – now at 115 codes in two different tiers – and how to implement the new codes, even though CMS had allowed hospitals to bill the “stacked codes” instead for 2012. That will all change with dates of service on January 1, 2013 when the stacked codes will be invalid and the CPT codes for the actual molecular pathology services will need to be reported and will be paid under the clinical Laboratory Fee Schedule (CLFS).
In 2012 when these codes first came into play, CMS stated they were not valid of payment and hospitals should still report combinations of “regular” CPT codes for payment that described various steps to perform a specific test – referred to as stacking because different groups of codes are billed depending on the components of the actual test. CMS also clarified in a Hospital Open Door Forum call that hospitals should also report the new molecular pathology codes with the stacked codes so that CMS could use that information for setting rates for implementation in 2013.
Hospitals need to begin now to get ready to implement the new codes as this has the potential to be a major project. This includes updating chargemasters, order entry and charge tickets so there will not be a delay in billing and reimbursement. Physicians, laboratory staff and coders may want to review the AMA CPT Assistant May 2012 and June 2012 for guidance on how to select the appropriate code. Keep in mind that hospitals will be responsible for creating their own pricing based on their current methodology and the CLFS as there is not a one-to-one crosswalk from the current CPT codes over to the molecular pathology codes.
Another major change for hospitals will be reporting functional limitation indicators and outcomes for outpatient rehabilitation therapy. This information will be found in the MPFS Final Rule and not under OPPS because therapy services are paid under the MPFS.
The MCTRJCA, the same Act that implemented the therapy caps and manual medical review for hospital outpatient services from October through December 2012, also required a claims-based data collection process to help reform the Medicare payment system. Of concern to Congress and CMS is that between 1998–2008, Medicare expenditures for outpatient therapy services increased at a rate of 10.1% per year while the number of Medicare beneficiaries receiving therapy services only increased by 2.9% per year. Beginning on page 221 of the display copy of the MPFS Final Rule, a thorough explanation is provided regarding what data CMS will be looking for under the five-year CMS project titled “Development of Outpatient Therapy Payment Alternatives” (DOTPA).
In summary, because current ICD-9 diagnosis codes cannot provide the data needed, specific G-codes will be used to identify what type of functional limitation is being reported and whether the report is on the current status, projected goal status or discharge status. Modifiers will also be used to indicate the severity/complexity of the functional limitation being tracked. The difference between the reported functional status at the start of therapy and projected goal status will represent any progress the therapist anticipates the beneficiary would make during the course of treatment. This reporting will apply to all therapy claims, including those for services above the therapy caps and those that include the -KX modifier.
Again, this will be a major undertaking to update the charge master, order entry systems and charge tickets with new G-codes for services that occur on January 1, 2013. Although this is not a change in the current reimbursement structure and hospitals will be given a six-month testing period to implement no later than July 1, 2013, therapists and billers, as well as other involved in coding and billing of therapy services should become familiar with the new data reporting requirement prior to January 1.
For the second time this year, the Hospital Outpatient Payment Panel has made its recommendations to establish supervision levels different than the default level of direct supervision for certain outpatient therapeutic services. The alternate level of supervision must take into consideration the quality and safety for the delivery of the service in relation its clinical nature and inherent risks.
Beginning in 2012, CMS established a sub-regulatory process for an independent panel made up of members from the prospective payment system hospital and critical access hospital communities to recommend, at the request of CMS or the public at large, the alternate levels of supervision (e.g. general or personal) for individual services described by HCPCS codes.
The panel held their first meeting in March of this year and the CMS approved recommendations became effective on July 1, 2012. The second meeting was held in August and based on those recommendations; CMS is proposing the following changes to the current supervision levels for these categories:
- Influenza, pneumococcal and hepatitis B vaccine administration;
- Trimming of nails;
- Venipuncture via vein, VAD or central catheter;
- Foley catheter insertion;
- Changing of cystostomy tube;
- Bladder scan for residual urine measurement;
- Refilling portable pump;
- Irrigation of implanted VAD; and,
- IV hydration, initial hour and each additional hour.
The last service, IV hydration, had been previously identified by CMS as a “non-surgical extended duration service” in the CY 2011 OPPS final rule. Those types of services must be provided under direct supervision during the initiation of the service followed by general supervision for the remainder of the service. Initiation of the service is defined as the beginning portion of the service until the supervising physician or non-physician practitioner determines the patient is stable and the remainder of the service can be delivered safely under general supervision. The supervising physician must document the transition from direct to general supervision in the patient’s medical record.
However, CMS would not accept the Panel’s recommendations that the following services to be furnished under general supervision because the services either involve assessment by a physician or there is a significant potential for patient complications or reactions that would require the supervising physician or appropriate non-physician practitioner to be immediately available:
- IV infusions and injections that are currently designated as non-surgical extended duration services;
- H1N1 vaccine administration with family counseling.
- Bladder irrigation;
- Two casting/strapping procedures; and,
- Direct admission for observation and observation per hour.
Of note is the fact that observation services were not addressed in the first meeting by the Panel, possibly because those services had been previously categorized into the non-surgical extended duration services; however, that did not alleviate the supervision concerns that critical access hospitals had raised. CMS announced in the 2013 OPPS proposed rule that they are considering giving CAHs and small rural hospitals one more year of non-enforcement for meeting supervision rules and also stated that it would most likely be the last year for that “waiver.” Based on CMS’ position that there is a significant potential for patient complications in regards to observations services, it is highly unlikely that we will see this move to a general supervision category any time soon and smaller hospitals should begin to prepare now.
These recommendations are open for public comment through October 24, 2012 and the final decisions will become effective on January 1, 2013. Hospitals that may have a stake in loosening the supervision requirements for the delivery of these outpatient services may submit their comments via email to: HOPSupervisionComments@cms.hhs.gov .
Each year on October 1, the inpatient prospective payment system (IPPS) changes go into effect along with a few other changes and updates in the outpatient arena. This year, hospitals will fall under the outpatient therapy cap exceptions regulation, something they have not had to deal with in the past. Under the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA), these caps will now be implemented for dates of service October 1 – December 31, 2012 for outpatient physical therapy, occupational therapy, and speech-language pathology services provided in a hospital outpatient department, as well as Part B SNF, comprehensive outpatient rehabilitation facilities (CORFs), rehabilitation agencies (ORFs), private practices, and HHAs (TOB 34X). Several transmittals that were released last week explain how this process will work – R2537CP and R1117OTN. There was also a CMS Special Open Door Forum call held last week called Manual Medical Review of Therapy Claims and the slides can be downloaded at:
http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/ODF_Hospitals.html. Unfortunately, in my opinion, the slides and the call did little to explain how the process will work for hospitals.
In 2012, the cap on incurred expenses is $1,880 for physical therapy and speech-language pathology services combined. For occupational therapy services, the separate cap is $1,880 as well. Deductible and coinsurance amounts applied to therapy services count toward the amount accrued before a cap is reached. Although claims processing requirements associated with the caps are only applicable to hospitals on/after October 1, 2012, claims paid for hospital outpatient therapy services since January 1, 2012, are included in calculating the cap.
The MCTRJCA also required a manual review process for those exceptions where the beneficiary therapy services for the year reach a threshold of $3,700. The separate thresholds triggering manual medical reviews build upon the separate therapy caps. This manual review will be implemented for revenue codes 042X, 043X and 044X when billed on Type of Bill 013X or 012X.
So how will the manual medical review affect hospital outpatient therapy services? According to the regulation, all requests for outpatient therapy services above $3,700 must be approved or disapproved in advance of payment for services through a manual review process by the Medicare contractor. The provider will need to send a request for approval, including the supporting documentation, to the MAC in advance of providing service. Currently, there are no automatic exceptions through the use of modifiers or condition codes that providers can report to prevent the manual review process.
Once the request is made by the provider, the Medicare contractor will make a decision and inform the hospital and beneficiary within 10 business days of receipt of the documentation. Failure to make a decision within 10 business days will lead to an automatic approval of the request. Providers need to be aware that they can only request preapproval for up to 20 additional therapy treatment days per discipline each time the beneficiary is expected to require more therapy treatment days than previously approved. This could be quite burdensome for providers to track and request approval in advance of the therapy over at least the next three months while this provision is in effect. Keep in mind that a provider can chose to provide the services without preapproval and submit the claim. However, the contractor will deny the claim and the provider can then enter into the lengthy and costly appeals process.
Contractors will use the current coverage and payment policies included in the Medicare Benefit Policy Manual, Chapter 15, § 220 as well as their own local coverage determinations when making decisions if a service will be preapproved. Any department involved in providing and billing hospital outpatient therapy services should become very familiar with these policies to prevent the financial impacts of the denial and appeal process. Providers should be watching for more information coming directly from their MACs on how the review procedures will be implemented in their region.
Note: Unless Congressional action is taken, all of these provisions expire for dates of service after December 31, 2012. However, the regulations may be extended from year to year or for a portion of a year like what we are seeing in 2012. Medicare Claims Processing Manual Transmittal 2537 further explains that critical access hospitals (CAH) are not subject to any therapy cap policies and that “Indicator B” in the Common Working File is being created to prepare for possible future legislation to include these claims.
Hospitals need to be aware of changes to OPPS payment rates and IPPS and OPPS wage indices that may impact their payments for OPPS and/or IPPS services during portions of CY 2011, CY 2012 and FY 2012.
In its July quarterly update to the OPPS, CMS reminded hospitals that it had published initial corrections to OPPS payment rates for CY 2012 in the Federal Register on January 4, and additional corrections to CY 2012 OPPS payment rates on April 24, 2012. These corrections, which are retroactive to dates of service on and after January 1, 2012, were fully incorporated into the July 1updates to Addenda A and B of the CY 2012 OPPS Final Rule. The updated addenda can be downloaded from the CMS website. Hospitals should check to see whether payments made for dates of service during the first half of CY 2012 were made in error, based upon these subsequent corrections. If so, CMS has informed hospitals that they must take the initiative and request adjustment of the previously improperly processed claims.
Under the Middle Class Tax Relief and Job Creation Act of 2012 (the MCTRJCA), Congress extended applicable reclassifications and revised wage indices for certain “Section 508” reclassified hospitals, as well as for certain non-section 508 and special exception hospitals. For IPPS payments, the resulting revised wage indices are applicable to discharges on or after October 1, 2011 and on or before March 31, 2012. There is an exception, however, if the published FY 2012 wage index is higher for that hospital than the otherwise applicable revised wage index. In other words, hospitals are not to be harmed by application of these revised wage indices.
For OPPS payments, the revised wage indices for section 508 hospitals are applicable to services furnished on or after October 1, 2011 and on or before March 31, 2012, unless the published CY wage index for the last quarter of CY 2011 (October 1-December 31, 2011) and/or the first quarter of CY 2012 (January 1-March 31, 2012) for a specific hospital is higher for that hospital than the otherwise applicable revised wage index. Section 508 hospitals are not to be harmed by application of the revised wage indices. In other words, Section 508 hospitals will receive either the revised or published CY wage index, whichever is higher, for that period. In any event, section 508 hospitals will revert to the published CY 2012 wage indices for services furnished on and after April 1, 2012 through December 31, 2012.
For non-section 508 and special exception hospitals, the revised OPPS wage indices are applicable to services furnished on or after January 1, 2012 and on or before June 30, 2012, reverting to the published CY 2012 wage indices for services furnished on and after July 1, 2012 through December 31, 2012.
Hospitals should determine whether they are subject to these wage index revisions, and, if so, what the applicable wage indices are for the revision periods that apply to them in order to assure that their payments have been accurately calculated.
Slipping by somewhat unnoticed, CMS posted a set of Q&As on their Three-Day Window website a few weeks ago. The questions focus on the more recent guidance for freestanding entities, such as physician offices and ASCs that are wholly-owned or wholly-operated by a hospital. The questions also contain some information more broadly applicable to other service settings.
One interesting answer related to what is considered a diagnostic service. In the hospital setting, this has always been defined by diagnostic revenue code and in some instance HCPCS code. CMS had published a list of these revenue codes and HCPCS codes in Medicare Claims Processing Manual, Chapter 3 § 40.3.
This list has a couple of problems though. First, the list has not been updated since the major change to the payment window in 2010. This has resulted in the list containing outdated HCPCS codes that have been replaced by the CPT. Second, defining diagnostic services by revenue code is not helpful in the physician environment because their claims are submitted on a CMS 1500 and do not use revenue codes.
The new Q&As state that the term diagnostic is defined more broadly as it is defined in the Benefit Policy Manual: An examination or procedure to which the patient is subjected, or which is performed on materials derived from a hospital outpatient, to obtain information to aid in the assessment of a medical condition or the identification of a disease. This means providers need to evaluate services beyond the traditional diagnostic laboratory and x-ray services, to determine if they would be considered diagnostic and therefore subject to bundling under the rule. This would include surgical procedures that could be considered diagnostic in nature, similar to the list of HCPCS codes CMS currently lists in § 40.3.
There is also a helpful Q&A related to critical access hospitals (CAHs) and the payment window. They make clear that it is true that if the admitting hospital is a CAH, the payment window does not apply. However, they also clarify that if the admitting hospital wholly owns or operates a CAH, the outpatient services at the CAH are subject to bundling under the payment window. This is helpful because many CAH providers are under the mistaken impression the payment window never applies to their services.
As to services provided at a freestanding entity, interestingly CMS states it is the hospital’s responsibility to determine which non-diagnostic services are related to an admission at the hospital and therefore subject to bundling. Operationally, however, this responsibility is likely to fall on the physician’s office or ASC because, as they note in another answer, the decision will require knowledge of the specific clinical circumstances of the patient.
One thing the Q&As do well is make clear the exact portions of the freestanding practice’s claim that are subject to bundling. They clarified that the technical portion of diagnostic services and the non-facility practice expense relative value units for related non-diagnostic services are paid through the IPPS under the payment window and must be bundled to the hospital claim. As a result, it is easy to see that the practice would still be paid for the professional portion of diagnostic services and for non-diagnostic services, the facility rate which does not include practice office expense
In order to operationalize this, CMS adopted the -PD modifier (Diagnostic or related non-diagnostic item or service provided in a wholly owned or operated entity to a patient who is admitted as an inpatient within three days or one day). CMS clarified that modifier -PD should be used by both wholly-owned and operated freestanding physician practices and ASCs as appropriate, but should not be used for services performed in the hospital (i.e. at provider-based clinics and outpatient departments). Hospitals and freestanding entities were to have coordinated billing practices in place to ensure the proper application of the -PD modifier by July 1, 2012.
Codes with the -PD modifier pay at the professional rate for those codes with a -26/-TC split, however the Q&As specify that the -26 professional-services-only modifier should also be appended to these codes. Codes that do not have a -26/-TC split reported with the -PD modifier will pay at the facility rate to ensure the non-facility practice office expense is not paid to the freestanding entity.
CMS also makes note of the fact that because the practice office expenses (the direct costs of clinic staff, equipment and supplies) of non-diagnostic related services are paid through the IPPS payment, the costs should be billed on the claim for the inpatient stay and be included in the hospital’s cost report. They do not indicate exactly how the hospital should operationalize this, but they do indicate that the freestanding entity may, but is not required to, adjust its charge for these related non-diagnostic services on its claim.
All in all the Q&As are worth a read, although there are no new significant changes contained in them.
Lastly, I’d like to take the opportunity to encourage you to comment on CMS’ request for comments related to patient status. I am currently working on an article on the proposals and request for comments for HCPro’s Revenue Cycle Institute which should come out later this week. The details are in the section titled “XI. Outpatient Status: Solicitation of Public Comments” beginning on page 95-97 of the OPPS Proposed Rule. It is a short read and I believe almost every provider has strong opinions on this issue which they now have the opportunity to express to CMS by submitting comments by September 4 either by mail or through this website:
Last week we announced that the CY 2013 OPPS Proposed Rule had been published by CMS in a display copy and highlighted some of the key proposals. This week I wanted to go into more detail on the proposed change, from calculating APC relative weights using median cost data to using geometric mean cost data.
CMS has given several reasons why this shift has been proposed, including bringing OPPS more in line with the Inpatient Prospective Payment System (IPPS), which uses mean costs to determine the relative payment weights associated with each of the payment classification groups. CMS stated that the proposal to base the APC relative payment weights on the geometric mean costs rather than the median costs of services within an APC “would not significantly impact most providers”. Payments to low volume urban hospitals and to hospitals for which disproportionate share hospital (DSH) data are not available would increase by an estimated 2.1% and 4.0%, respectively. In contrast, payments to CMHCs would decrease by an estimated 6.9% due primarily to lower payments for APC 0173.
Using the CMS 2013 OPPS NPRM Geometric Mean-Median Based Payment Compare File, here is a comparison of what CMS would pay in 2012 vs. 2013 for the same service.
Patient presents to the Emergency Department for lower leg pain after a fall. The physician ordered an infusion, an IV push, and x-ray of the lower leg. The E/M level was assigned to a level four and the physician performed a closed treatment of a tibial shaft fracture. Keep in mind that specific drugs that may be separately payable are not included in the example below, as well as any packaged items or supplies.
July Add B Payment
Geometric Mean Costs Payment
This simple scenario demonstrates that payments in 2013 may increase overall – more so using the Geometric Mean data – which is good news for providers. Unfortunately, this will not be true across the board. The following is an example of a more complex fracture, most likely requiring the use of the operating room for the closed treatment of a tibia fracture with manipulation and with or without skeletal traction.
July Add B Payment
Geometric Mean Costs Payment
CMS has used the median cost data for payment calculations since we began APCs in 2000. This change could potentially have a far reaching and as yet unknown impact into future reimbursements. At a minimum, hospitals should review the impact of this proposed payment methodology change for their high volume and/or high cost outpatient services and provide comments to CMS.
Correction: In last week’s note I stated that CMS is proposing to maintain the current payment rate that covers the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6.0%. Upon further review, I realized this is actually an increase of 2% over the current ASP plus 4%. I apologize for that misstatement.