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Fall 2022 - Innovation

Proposed Payment Systems and Fee Schedules in 2023

Proposed rules revising the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Ambulatory Surgical Center (ASC) services, along with new physician fee schedule (PFS) rule sets will significantly impact providers in 2023.

Proposed rules revising the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Ambulatory Surgical Center (ASC) services, along with new physician fee schedule (PFS) rule sets will significantly impact providers in 2023. Understanding new regulations, upgrading reimbursement skill sets and recognizing implications of billing decisions is crucial.

Key Pharmaceutical Focus Areas

Inpatient only (IPO) list. The IPO list delineates the services for which Medicare will pay only when performed in the inpatient setting. The Centers for Medicare and Medicaid Services (CMS) proposes removing 10 services from the IPO list, having determined that the procedures meet the current criteria for removal.

340B program. The proposed OPPS rule offers insight into how CMS may respond to a recent Supreme Court decision on 340B payment cuts and evaluates how to apply this to prior calendar years (2018-2022). CMS anticipates applying a payment rate of average sales price (ASP) +6% to certain drugs purchased through the program.

Nonopioid product payment. Section 6082 of the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act requires payment review under OPPS/ASC for opioids and evidence-based, nonopioid alternatives for pain management to ensure no financial incentives to use opioids instead of nonopioids were offered. CMS proposes separate or modified payment for nonopioid pain management drugs and/or biologicals functioning as supplies in ASC settings when those products meet certain CMS criteria. Ensuring there are no financial incentives for the use of nonopioid pain management drugs is a key provision. Separate payment outside of the bundled procedure payment is proposed for four nonopioid drugs functioning as surgical supplies. Additional nonopioid products are also being considered.

Pass-through drugs. The concept of a unique payment category for pass-through drugs originated several years ago as prices began to rise for new breakthrough products used primarily in outpatient settings. Remember that although under PFS, physician offices are paid at ASP +6% by statute. Under OPPS, payments can be variable at ASP plus a defined percentage that may be less than 6 percent.

The Medicare, Medicaid and State Children’s Health Insurance Program Balanced Budget Refinement Act of 1999 includes a pass-through payment provision requiring additional payments to hospitals for current orphan drugs; current drugs, biologicals and brachytherapy sources used in cancer therapy; and current radiopharmaceutical drugs and biologicals. “Current” refers to those types of drugs or biologicals categorized above that are hospital outpatient services under Medicare Part B, for which transitional pass-through payment was made on the first date the hospital OPPS was implemented. Transitional pass-through payments also are provided for certain “new” drugs and biologicals not being paid for as a hospital-based outpatient department service as of Dec. 31, 1996, and whose cost is “not insignificant” in relation to OPPS payments for the procedures or services associated with the new drug or biological. For pass-through payment purposes, radiopharmaceuticals are included as “drugs.” Products given pass-through status are assigned status indicator G (SI G) to differentiate them from SI K, outpatient products paid for separately, or SI N, products paid for as part of a bundle.

The statute requirement of ASP +6% was lengthened to three years after payment was first made for the product as a hospital outpatient service under Medicare Part B. Quarterly reviews with additions and deletions were implemented as well. During the COVID-19 public health emergency (PHE), several products were given extensions ranging from at least one quarter to several quarters. A table detailing these rules and expiration status is available on the Medicare website (cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates). Refer to Addendum B to determine SI G, SI K or SI N status. Payment amounts will be posted during the first quarter of 2023.

Rural emergency hospitals (REH). CMS will consider all covered outpatient REH services at a higher payment rate than the standard OPPS payment rate, plus 5 percent. In some cases, REHs may provide certain outpatient services beyond those paid under the OPPS and will be paid without an additional 5 percent. Sole rural community hospitals will be exempt from the site-neutral clinic visit cuts and will instead pay for clinic visits furnished in accepted off-campus provider-based departments of these hospitals at the full OPPS rate. REHs receive a monthly facility payment increased annually by the hospital market basket percentage.

2023 Proposed Payment Systems and Fee Schedules in 2023

New drugs not yet assigned unique HCPCS codes New pass-through drugs Non pass-through separately payable drugs costing >$135/day based on ASP Policy packaged or lower-cost packaged products costing ≤$135/day based on ASP
SI G SI K SI N
On the bill as separate line items On the bill as separate line items Not on the bill as separate line items
See Addendum B for specific payment ASP +6% Policy packaged offsets may apply ASP +6% if not purchased under the 340B program No change from 2022
Payment based on wholesale acquisition cost (WAC) + 3% until enough ASP data is gathered No separate reimbursement Drug costs are bundled into the procedure
Formal proposed: ASP -22.5% if 340B purchased (some exceptions apply) WAC-priced drugs: WAC -22.5% Average wholesale price (AWP)-priced drugs: 69.46% of AWP Likely: ASP +6% based on court rulings Due to threshold price of $135/day or statute Includes:

  • Diagnostic radiopharmaceuticals
  • Contrast agents
  • Anesthesia drugs
  • Implantable biologicals
  • Drugs, biologicals or radiopharmaceuticals used as supplies in a diagnostic test or procedure
  • Drugs, biologicals used as supplies or implantable devices in surgical procedures

Key Physician Focus Areas

Part B drug coverage. In physician office settings, Part B drug coverage remains at ASP +6% by statute. However, a $1.53 decrease in the Medicare PFS conversion factor to $3.08 will lead to significant cuts to physician reimbursement.

Access to care. Other policy changes increase access to care, including behavioral healthcare and accountable care organizations. Certain chronic pain management services are bundled into monthly payments to increase team-based care access with two new payment codes. Opioid treatment and recovery services furnished in mobile units to boost access for homeless and rural populations will be covered. A continued rollout of electronic prescribing of controlled substances under Part D continues with evaluating prescriber compliance and imposing steeper penalties by 2025.

Telehealth. A number of telehealth codes will remain available until 151 days after the end of the COVID-19 PHE. This allows CMS more time to determine whether codes should be made permanent. However, the temporary exception to allow direct supervision virtually for the provision of telehealth services by the clinical staff of physicians and other practitioners, including pharmacists, incident to their own professional services would no longer apply.

Vaccines and antibodies. Regular updates to the payment for preventive vaccines and clarification about payment policies for vaccines and monoclonal antibody products for COVID-19 will remain in effect until the emergency use authorization for drugs and biological products ends, regardless of when the larger COVID-19 PHE ends. Implementing requirements for manufacturers of certain single-dose container or single-use package drugs to provide refunds for discarded amounts applies to waste billing in this setting as well. (See Rules and Regulations Affecting Revenue on page 10 of the Spring 2022 issue of BioSupply Trends Quarterly, available at cloud.3dissue.com/2744/3598/8733/BSTQ_2022-04_Online-Issue/index.html.)

Bonnie Kirschenbaum, MS, FASHP, FCSHP
Bonnie Kirschenbaum, MS, FASHP, FCSHP, is a freelance healthcare consultant with senior management experience in both the pharmaceutical industry and the pharmacy section of large corporate healthcare organizations and teaching hospitals. She has an interest in reimbursement issues and in using technology to solve them. Kirschenbaum is a recognized industry leader in forging effective alliances among hospitals, physicians, pharmaceutical companies and distributors and has written and spoken extensively in these areas.