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Making a checklist to prepare for the OPPS final rule

Making a checklist to prepare for the OPPS final rule

Editor’s note: Jugna Shah, MPH, president and founder of Nimitt Consulting, writes a bimonthly column for Briefings on APCs, commenting on the latest policies and regulations and analyzing their impact on providers.


The 2017 OPPS final rule will not be out for a couple of weeks, but that doesn’t mean providers can’t be thinking about what their action plan will be once the rule is released.

With only 60 days between the final rule’s release and the January 1 implementation date, providers will be ahead of the curve by spending time now and thinking about the processes they may need to review, change, or implement based on what CMS finalizes and the sort of financial impact the final rule is likely to have.

While I don’t know with 100% certainty what CMS will finalize, revise, delay, or back away from, I offer providers this list of what they should look at immediately upon the rule’s release.


Section 603

With Congress mandating payment changes for all non-grandfathered (those not billing under OPPS prior to November 2, 2015) off-campus, provider-based departments (PBD) starting January 2017, it was no surprise that CMS discussed this issue in the proposed rule. But it was a huge surprise to read CMS’ proposals, which, if finalized, would greatly impact otherwise protected grandfathered locations under Congress’ Section 603.

For example, CMS proposed that if an off-campus PBD moves, changes ownership, or expands its services beyond what it was providing as of November 2, 2015, as defined by APC-based clinical families, then its grandfathered status would be impacted. While this may sound relatively simple, the payment and operational impact would be a nightmare.

There is another aspect of Section 603 and CMS’ proposal to use the Medicare Physician Fee ­Schedule (MPFS) as the "applicable payment system" for ­Medicare Part B services provided at non-grandfathered locations or deemed "non-excepted." Specifically, there are many services for which the MPFS has no facility component for the facility costs associated with performing the procedure because they are only provided in hospital outpatient departments or ambulatory surgery centers. For these services, the industry has to wonder what CMS was thinking, as the agency cannot possibly expect to pay nothing for services that would continue to be rendered in off-campus PBDs.

CMS’ unexpected and hastily configured proposals create such large operational and financial problems that the industry is hoping the agency will simply retreat and delays the implementation of Section 603, or at a minimum revert to paying grandfathered facilities under the OPPS for all of their services, regardless of clinical service expansion, site relocation, or ownership changes. There is precedent for CMS to postpone implementation beyond statutory deadlines. If there were ever a situation where delay is advised, this is one.

Hopefully, providers sent in a surfeit of comments regarding these and other issues and outstanding questions related to the agency’s Section 603 implementation proposals. I hope CMS will acknowledge its proposals have administrative, operational, and financial gaps that are so large, it will be impossible to move forward by January. But even if CMS does choose to put off its proposals until proper payment mechanisms are developed, Congress was clear in its language requiring changes by January 1, 2017, so something is likely going to have to occur.

CMS’ proposals, if finalized, would have drastic long-term implications for all providers, including those who believe that their grandfathered status would protect them; the sad reality is that under CMS’ proposals, there will be massive operational and financial impact, so this is the first topic in the final rule that everyone should review.


Packaging proposals

Providers have gotten used to CMS expanding packaging in each OPPS rule, as the agency calls packaging an essential part of a prospective payment system. With CMS’ expansion of lab packaging from date of service to claim level this year, we should not be surprised if the agency finalizes its proposal of expanding the conditional packaging logic of CPT codes assigned to status indicators Q1 and Q2 to the claim level.

Claim-level packaging of these types of ancillary services will have a huge financial impact on providers submitting multiday claims, such as those for chemotherapy and radiation therapy services, despite the fact that multiday claims for these types of services are not required.

Currently, status indicators Q1 and Q2 are packaged into other OPPS services when provided on the same date of service, even when submitted on a claim that spans more than one day. If CMS finalizes its proposal, providers that continue submitting multiday claims when monthly or series claims are not required should not be surprised when they find themselves no longer receiving separate payment for many services.

This is the time for providers to assess whether they submit multiday claims for any services beyond the required repetitive services listed in the Medicare Claims Processing Manual, Chapter 1, section 50.2.2. While it is true the manual states that is is an option to bill nonrepetitive services on multiday claims, it did not have financial implications. At least, until this year, with the claim-based packaging of labs and proposal for claim-based packaging of Q1 and Q2 services. Providers should determine why they are billing multiday claims and what it would take to change their billing processes. If they elect not to move away from multiday claims, then assessing the financial impact that will occur is an important exercise to go through prior to January 1.

The other packaging proposal providers should look for in the final rule involves the use of modifier -L1 for reporting unrelated laboratory tests when they occur on a claim with other OPPS services. CMS proposes to delete the modifier for CY 2017 as it believes that the vast majority of labs should be packaged regardless of whether they are unrelated to other OPPS payable services.

This would have a big impact on providers who provide reference laboratory or nonpatient services, which the agency requires to be reported on the same claim as other OPPS services performed on the same date. Today, the use of the -L1 modifier allows providers to identify these services as separate and unrelated to the other OPPS services so that payment is received from the Clinical Laboratory Fee Schedule.

If CMS finalizes its proposal to eliminate modifier -L1, we can hope the agency will also update its instructions for reporting reference laboratory services so they can be separately paid even when provided on the same date of service or claim as other OPPS services. If CMS does not make a change, then providers can again expect to see a large financial impact. Both of these packaging proposals should be looked at immediately in the final rule.


Device-intensive procedures

The final set of proposals providers will want to review relates to the changes proposed for device-intensive procedures. This is a place where we hope to see CMS finalizing changes as proposed.

For example, CMS proposes to use the implantable device cost-to-charge ratio (CCR) to calculate pass-through device payments for hospitals that file cost reports designating that cost center, as this is a more accurate CCR for determining separate pass-through payment. Currently, only about two-thirds of hospitals use the implantable device CCR, which means the remaining one-third need to examine their cost reporting process.

Providers should determine whether they are in the group that reports the implantable cost center; if a provider is not reporting, it should find out why and begin making changes. This will have an impact on facilities’ ability to generate much better pass-through payment going forward, when applicable. It will also ensure future payment rates for device-intensive procedures reflect more accurate payment of the device.

Finally, it will be interesting to see whether CMS finalizes the addition of another 25 comprehensive APCs (C-APC) encompassing 1,844 additional status indicator T services; if it does, a financial impact analysis of these services will also be important, as this will be a large increase in C-APCs for a one-year span.

I plan to discuss these and other final rule changes in my next column, as well as in HCPro’s annual OPPS final rule webcast December 1 (see for details), but in the meantime I hope the above checklist will be useful to providers now and in the first weeks of the rule’s release. – Briefings on APCs