OPPS 2017 Changes and Opportunities

BOTH PRIVATE PAYERS AND the Centers for Medicare and Medicaid Services (CMS) recognize that outpatient services present a myriad of opportunities for moving healthcare forward. As such, they have made these services the focal point of innovative and important changes they are striving to implement as quickly as possible. New models are being proposed and tested, and new or changed rules promulgated and implemented for the 2017 outpatient calendar year, beginning Jan. 1, 2017. The year covered by the inpatient prospective payment system began Oct. 1, 2016. Following are selected highlights affecting drugs and biologicals from the recently published proposed outpatient prospective payment system (OPPS), as well as suggestions for how to implement best practices.

What Remains Unchanged

The proposed 2017 OPPS rule is unique as there are no reimbursement changes for items that include payments for:

• drugs, biologicals and radiopharmaceuticals that do not have pass-through status (average sales price [ASP] plus 6% minus 2% sequestration)
• drugs, biologicals and radiopharmaceuticals with pass-through status (ASP plus 6% minus 2% sequestration)
• separately payable and specific covered outpatient drugs (ASP plus 6% minus 2% sequestration)
• biosimilar products (100% of biosimilar ASP plus 6% of reference product ASP while in a pass-through status minus 2% sequestration)
• blood clotting factors (ASP plus 6% minus 2% sequestration plus a furnishing fee)
• blood and blood products (established using CMS blood-specific cost-to-charge ratio methodology)

Note that there are no separate payments for blood and blood products when they appear on the same claim as services assigned to comprehensive Ambulatory Payment Classifications (C-APCs). This is because costs of blood and blood products are reflected in the overall costs of C-APCs.

Some Changes in 2017

Drugs that are not separately payable but are packaged/bundled due to cost. The threshold for these drugs, biologicals and radiopharmaceuticals is rising from $100 per day (as determined by ASP) to $110 per day. This applies when administered to Medicare outpatients. Payment is bundled into the code for the visit.

Determine which drugs in your outpatient settings will be affected, and budget for that revenue loss in the separately payable category. Consider whether there is a viable mechanism for transfer of the drug component of bundled/packaged payment to the pharmacy budget (intrafacility unbundling and distributing the payment segments). These products must continue to be dropped into the bill even though they will not be separately payable. This vital step helps guarantee an accurate and complete picture of all therapy a patient receives and assists in the future pricing of the bundle/package. Additionally, drug administration fees will continue to be paid for these products, but only if the product itself also appears on the bill. The revenue cycle team must cooperate in this and not discard charges that will not be separately reimbursable.

Drug administration fees. Several changes to the 42 healthcare common procedure coding system (HCPCS) codes that describe drug administration services are proposed, ranging from negligible changes of less than 1 percent to a 95 percent increase for three codes (96360, 96373, 96374) and a 43 percent decrease for two codes (96401, 96411). These fees are paid in addition to the drug or biological, but they come with documentation requirements.

Loss of revenue from the misuse and inconsistent use of drug administration services across all patient areas of the hospital continues to plague many facilities. Developing a strategy for correcting this, such as restructuring your electronic health record to accommodate this with ease, is essential.

Choosing correct HCPCS codes. CMS is highlighting HCPCS codes and assigned billing units that describe the same drug/biological but in different doses. In some cases, drug-specific packaging will be used to determine which payment methodology applies. These products will be separately payable as indicated by status indicator (SI) K. The cost of these are above the $110 daily threshold:

• C9257 Injection, bevacizumab, 0.25 mg (SI K)
• J9035 Injection, bevacizumab, 10 mg (SI K)
• J1460 Injection, gamma globulin, intramuscular, 1 cc (SI K)
• J1560 Injection, gamma globulin, intramuscular, over 10 cc (SI K)

Billing for waste. On June 10, CMS announced that MACs must delay until Jan. 1, 2017, implementation of a policy requiring the use of the JW modifier on Part B claims for appropriately discarded leftovers from single-use vials or packages.

The billing for waste rule, which provides payment for some injectable drugs that have been wasted, went into effect in 2007 in part to compensate for Medicare’s OPPS 2004 rule to reimburse only for actual dose administered indicated by billing unit conversion. Outpatient providers were losing money after Medicare stopped paying for an entire vial and began reimbursing only for the actual dose administered.

The original rule also required:

1. the amount wasted and the reason needed to be documented in the medical record (this requirement has not changed).
2. billing for both the drug itself and the amount wasted on the same claim, with both amounts converted into billing units. Differentiating which was waste and which was drug administered was accomplished by using two lines, with one line used for the actual drug used and the second line used for the wasted drug, notated by the JW modifier code. Subsequently, CMS gave MACs the leeway to determine whether they required the JW modifier and two-line billing. Some chose to stick with it, and some moved to one-line billing (a big problem with lack of transparency, poor documentation, potential abuse of the system, etc.). CMS has now rescinded that leeway and moved back to two-line billing.

Billing for waste is not mandatory, but if a facility wants to capture some of the cost of wasted drug, this is the process for doing that. It applies only:

• to Medicare outpatients
• when single-dose vials, amps, syringes, etc., are used
• when the drug itself is separately paid for (not for drugs costing less than $110/day, drugs paid in bundles or packages and drugs that Medicare doesn’t pay for at all) (See Billing for Waste Example.)

Payment for off-campus physician-based departments (PBDs). This change is perhaps the most surprising and controversial and the most likely to at least initially cause billing errors. It reflects the implementation of section 63 of the Bispartisan Budget Act, and it is the next step in reining in the rising costs to Medicare and personally to patients (who sounded the alarm) when these practice sites are used. This complicated rule, which grandfathers in specific sites based on date of acquisition or affiliation, reduces payments to nonqualifying sites to physician rates (PFS) from OPPS rates. PFS rates are generally lower, while OPPS rates are generally higher and often accompanied by added-on facility fee charges. Additionally, the proposed rule limits the items and services payable under the OPPS for excepted off-campus PBDs and creates 19 clinical families to define this. The excepted items or services would be determined on a PBD-by-PBD basis according to whether an item or service is in the same clinical family as items or services billed for by off-campus PBD prior to the enactment date.

The impact of this rule on 340B eligibility (managed and determined by the Health Resources and Services Administration) is unclear. Eligibility will be based on a hospital’s Medicare cost report, and left to be determined is whether off-campus PBDs that are no longer reimbursed under the OPPS would be included in the report.

It’s imperative that facilities work with their legal teams to vet each and every possible site affected and adjust budgets accordingly.

Preparing for 2017

Plan for a revenue cycle tune-up! Telling the patient’s story completely and accurately and in a manner that can be coded is critical from both data and reimbursement standpoints. It’s everyone’s responsibility: The revenue cycle team can’t code and ask for reimbursement or share data if the clinical support documentation is missing. Take the changes as an opportunity to review and then improve upon current practice to yield a healthier 2017.

Reach out to Medicare administrative contractors (MACs). Your MAC can provide guidance about the exact steps needed to document and bill for an unusual circumstance. Know which MAC covers your area and how to access the valuable information they provide. For example, Novitas provides billing and coding information regarding uses, including off-label uses, of anti-vascular endothelial growth factor for treating ophthalmological diseases (A53121). See the following link that shows which jurisdictions are covered by MACs for that drug: www.cms.gov/medicare-coverage-database/details/article-details.aspx?articleId=53121.

In my next column, I will discuss the final rule and include tables of drugs that have been affected. v