Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

CMS Finalizes 2018 Hospital, Physician Medicare Reimbursement

Major changes to Medicare reimbursement policies for hospitals and physicians in 2018 include lower payments for 340B drug and site-neutral services.

Hospitals, physicians, and Medicare reimbursement

Source: Thinkstock

By Jacqueline LaPointe

- In a series of final rules released earlier this month, CMS updated and modified Medicare reimbursement rates for hospitals and physicians in 2018.

The rules aim to “reflect a broader Administration-wide strategy to create a healthcare system that results in better accessibility, quality, affordability, empowerment, and innovation,” the federal agency stated.

Medicare Hospital Outpatient Prospective Payment System

The final rule for the 2018 Medicare Outpatient Prospective Payment System (OPPS) detailed an increase in hospital payments rates next year, as well as significant changes to the 340B Drug Pricing Program and rural hospital supervision requirements.

Hospitals can expect a 1.35 percent boost in Medicare reimbursement rates in 2018. The rate increase stemmed from a 2.7 percent market basket increase minus a 0.6 percentage point adjustment for multi-factor productivity and a 0.75 percentage point reduction as mandated by law.

The facilities should also anticipate their Medicare Part B reimbursements to substantially change in 2018. The federal agency finalized a policy that would modify the reimbursement rate for qualifying hospitals purchasing and administering drug under the 340B Drug Pricing Program.

READ MORE: The Difference Between Medicare and Medicaid Reimbursement

Under the final rule, hospitals will receive the average sales price of the medication less 22.5 percent. The program previously reimbursed participating hospitals average sales price plus 6 percent.

The new prescription drug rate will apply to separately payable, non-pass-through drugs and biologicals, except vaccines. All other medications purchasing outside of the 340B Drug Pricing Program will continue to be reimbursed at the average sales price plus 6 percent.

Rural Sole Community hospitals, cancer hospitals exempt from the OPPS, and children’s hospitals will not be subject to the new prescription drug rates in the program, CMS added.

The federal agency implemented the reimbursement rate to “address recent trends of increasing drug prices, for which some of the cost burden falls to Medicare beneficiaries.”

Savings incurred from lower 340B reimbursements will be redistributed in a budget neutral manner to the OPPS. CMS plans to use the projected $1.6 billion decrease in 340B hospital payments for non-drug items and services across the OPPS.

READ MORE: Key Ways to Improve Claims Management and Reimbursement in the Healthcare Revenue Cycle

Industry groups have called on CMS to abandon the 340B prescription drug rate change, fearing the lower payments would threaten patient access to necessary medications. While the federal agency finalized the change, officials noted that CMS may reconsider the policy in 2019 and would like to explore other policies that address safety-net hospital needs.

Additionally, CMS intends to address rural hospital challenges with recruiting physicians by extending the moratorium on direct supervision requirements for Medicare reimbursement.

The final OPPS rules from 2010 clarified that hospitals, including critical access hospitals and provider-based departments within hospitals, must have direct physician supervision for hospital outpatient therapeutic services.

CMS has enforced a moratorium on the requirement for critical access and small, rural hospitals since its introduction. The most recent moratorium is slated to expire at the end of this year, but CMS re-instated the non-enforcement of the rural for those hospitals for 2018 and 2019.

Other major provisions in the final Medicare OPPS rule included removing total knee arthroplasty and five other procedures from the inpatient-only list, continuing conditionally package payments for low-cost drug administration, and allowing laboratories to directly bill Medicare for ADLTs and molecular pathology tests exempt from the OPPS packaging policy under certain conditions.

Medicare Physician Fee Schedule

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The most recent Medicare Physician Fee Schedule rule will increase physician payments by 0.41 percent in 2018. CMS also included major provisions pertaining to site-neutral payments, telehealth services, and biosimilar reimbursement in the rule.

Starting on Jan. 1, 2017, certain items and services furnished in off-campus hospital outpatient provider-based departments were no longer reimbursed under the hospital OPPS. Instead, the off-campus hospital outpatient departments received payment under the Physician Fee Schedule, with special rates based on a percentage of the OPPS rate.

The payments were about half of the outpatient rate in 2017.

For 2018, CMS finalized a policy to reduce site-neutral payments by 20 percent. The reduction partly stemmed from CMS lowering the percentage from 50 percent of the OPPS payment to 40 percent.

The federal agency stated that the “adjustment will provide a more level playing field for competition between hospitals and physician practices by promoting greater payment alignment.”

Additionally, the final 2018 Physician Fee Schedule rule will expand covered telehealth services. In 2018, CMS will add the following codes to the list of covered telehealth services:

• HCPCS code G0296 for a visit to determine low dose computed tomography eligibility

• CPT code 90785 for interactive complexity

• CPT codes 96160 and 96161 for health risk assessments

• HCPCS code G0506 for chronic disease management care planning

• CPT codes 90839 and 90840 for crisis psychotherapy

Other telehealth service changes included the elimination of telehealth modifier GT reporting for professional claims and separate payment for remote patient monitoring (CPT code 99091).

CMS also finalized a policy to separately code and reimburse biosimilar products under Medicare Part B. Starting in 2018, newly approved biological biosimilar products with a common reference product will not be grouped into the same billing code, the federal agency stated.

“CMS believes that a solution that increases provider and patient choice is superior to existing policy and may lead to additional cost savings over the long-term,” officials wrote. “By encouraging innovation and greater manufacturer participation in the marketplace, we believe that this policy change will result in the licensing of more biosimilar products, thus creating a stable and robust market, driving competition and decreasing uncertainty about access and payment.”

The final rule also included a postponement of the Medicare Advanced Diagnostic Imaging program until 2020, an expansion of the Medicare Diabetes Prevention Program model, and Medicare Shared Savings Program modifications, including new chronic disease management and behavioral and assignment changes for ACOs including federally qualified health centers.


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