Proposed Hospital Outpatient Prospective Payment System

On July 25, 2018, the Centers for Medicare & Medicaid Services (CMS) released the 2019 Hospital Outpatient Prospective Payment System (HOPPS) proposed rule. Comments on the proposed rule are due September 24, 2018.

In the Medicare hospital outpatient environment, hospital reimbursement is based on Ambulatory Payment Classifications or APCs. CMS assigns CPT codes to an APC based on clinical and resource use similarity. All services in an APC are reimbursed at the same rate. Cost data collected from OPPS claims are used to calculate rates. Certain services are considered ancillary and their costs are packaged into the primary service. Packaged services do not receive separate payment. For example, in the hospital outpatient environment imaging is not paid separately when reported with treatment delivery services. Below is a summary of key issues impacting radiation oncology.

Update

CMS proposes increasing the payment rates under the OPPS by an Outpatient Department (OPD) fee schedule increase factor of 1.25 percent. This increase factor is based on the hospital inpatient market basket percentage increase of 2.8 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS), minus a 0.8 percentage point adjustment for multifactor productivity (MFP), and a 0.75 percentage point adjustment required by the Affordable Care Act. Based on this update, CMS estimates that proposed total payments to HOPPS providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix), for 2019 will be approximately $74.6 billion, an increase of $4.9 billion compared to 2018 HOPPS payments.

Comprehensive Ambulatory Payment Classifications (C-APCs)

CMS continues to expand the Comprehensive Ambulatory Payment Classification (C-APC) methodology by proposing new C-APCs for ears, nose, and throat (ENT) services and vascular procedures. The addition of these new C-APCs increases the total number of C-APCs to 65. Under the C-APC policy, CMS provides a single payment for all services on the claim regardless of the span of the date(s) of service. Conceptually, the C-APC is designed so there is a single primary service on the claim, identified by the status indicator (SI) of “J1”. All adjunctive services provided to support the delivery of the primary service are included on the claim. While ASTRO supports policies that promote efficiency and the provision of high quality care, we have long expressed concern that the C-APC methodology lacks the appropriate charge capture mechanisms to accurately reflect the services associated with the C-APC.

In the 2019 HOPPS proposed rule, CMS does not propose to make any modifications to existing radiation oncology C-APCs. Below is a comparison table of the 2018 payment rates and proposed 2019 payment rates for the radiation oncology services in several key C-APCs:

 Ambulatory Payment Classifications (APC)

CMS is proposing to make modest changes to the payment rates of traditional radiation oncology APCs in the 2019 HOPPS proposed rule. Below is a list of radiation oncology APCs with proposed 2019 payment rates:

Brachytherapy Sources

In the 2019 HOPPS proposed rule, CMS is proposing to use costs derived from 2017 claims data to set the proposed 2019 payment rates for brachytherapy services. The payment rates are proposed to be based on the geometric mean costs for each source, which is consistent with the methodology used for other services under HOPPS. The Agency is not proposing any changes to payment policies for brachytherapy sources.

Stranded/Non-Stranded
CMS proposes to pay for HCPCS codes C2698 Brachytherapy source, stranded, not otherwise specified and C2699 Brachytherapy source, non-stranded, not otherwise specified, at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively on a per source basis. For 2019 the proposed rates are $35.90 for C2698 and $25.10 for C2699. This is an increase of 3 percent and 31 percent over the 2018 rates of $34.73 and $19.16.

New Brachytherapy Sources with No Claims Data
For CY 2018 and subsequent years, CMS is proposing to continue the policy they first implemented in 2010 regarding payment for new brachytherapy sources for which they have no claims data. The policy is intended to enable CMS to assign new HCPCS codes for new brachytherapy sources to their own APCs, with prospective payment rates set based on consideration of external data and other relevant information regarding the expected costs of the sources to hospitals.

C2645 Brachytherapy planar, p-103
CMS is proposing to continue to assign status indicator “U” (Brachytherapy Sources, Paid under HOPPS; separate APC payment) to HCPCS code C2645. The Agency proposes to use invoice prices and other relevant information to establish the proposed APC payment rate of $4.69 per mm. This is the same rate that was in effect for 2017 and 2018.

C2644 Brachytherapy cesium 131 chloride
CMS is proposing to assign status indicator “E2” (Items and Services for Which Pricing Information and Claims Data Are Not Available) to HCPCS code C2644. Although this code became effective January 1, 2014, it was not reported on 2017 claims. Therefore, the Agency is unable to calculate a proposed payment rate based on the general HOPPS rate-setting methodology.

New Brachytherapy Source Codes
CMS continues to invite recommendations for new codes to describe new brachytherapy sources.

Device-Intensive Procedure Criteria

In 2017, CMS assigned device-intensive status at the HCPCS code level for all procedures reporting the implantation of a medical device, in which the individual HCPCS level device offset is greater than 40 percent. In the 2019 HOPPS proposed rule, CMS is proposing to modify the device-intensive criteria to allow procedures that involve single-use devices, regardless of whether or not they remain in the body after the conclusion of the procedure, to qualify as device-intensive procedures. The Agency is also proposing to allow procedures with a device offset percentage of greater than 30 percent to qualify as device-intensive procedures. Under this proposal CPT code 19296 Placement of radiotherapy afterloading expandable catheter into the breast for interstitial radioelement application following partial mastectomy is considered a device-intensive procedure.

CMS is also proposing to continue their current policy of, in certain rare instances (for example, in the case of a very expensive implantable device), temporarily assigning a higher offset percentage if warranted by additional information such as pricing data from a device manufacturer.

For CY 2019 and subsequent years, in limited instances where a new HCPCS code does not have a predecessor code as defined by CPT, but describes a procedure that was previously described by an existing code, CMS is proposing to use clinical discretion to identify HCPCS codes that are clinically related or similar to the new HCPCS code but are not officially recognized as a predecessor code by CPT, and to use the claims data of the clinically related or similar code(s) for purposes of determining whether or not to apply the default device offset to the new HCPCS code.

Finally, CMS is soliciting comments on whether any high-cost devices (other than capital equipment) should be left out of the definition of single-use devices or, alternatively, whether their proposed definition excludes devices that commenters believe should be subject to their device-intensive policy.

New Device Pass-Through Application - SpaceOAR®

Augmenix, Inc. submitted an application for a new device category for transitional pass-through payment for the SpaceOAR® system. SpaceOAR® is a polyethylene glycol hydrogel spacer that temporarily positions the anterior rectal wall away from the prostate to reduce the radiation delivered to the anterior rectum during prostate cancer radiation therapy.

CMS establishes specific criteria for hospitals to receive pass-through payments for devices that offer substantial clinical improvement in treatment of Medicare beneficiaries. Devices must meet the following criteria 1) receive FDA approval or clearance 2) the device is determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part; and 3) the device is an integral part of the service furnished, is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted, or applied in or on a wound or other skin lesion. Finally, the device must not be an item for which depreciation and financing expenses are recovered and it is not a supply or material furnished incident to a service.

With respect to the criteria, the FDA classified SpaceOAR® as a class II device under section 5139(f)(2) of the Federal Food, Drug, and Cosmetic Act on April 1, 2015. Augmenix submitted several studies that highlight the benefits and techniques for using hydrogel spacers to limit exposure to the rectum in prostate radiation therapy in order to meet the requirements of the second criterion. Additionally, Augmenix asserted that SpaceOAR® is considered integral to the service provided, is used for one patient only, comes in contact with human skin, and is applied in or on a wound or other skin leision as required in criterion three. Finally, Augmenix claims in its application that SpaceOAR® is not item for which depreciation of financing expenses are recovered and it is not furnished incident to a service.

Based on the evidence submitted CMS does not believe that it has sufficient evidence that SpaceOAR® provides a substantial clinical improvement over other products. The Agency seeks comments on whether the SpaceOAR® system meets the substantial clinical improvement criterion.

In addition to meeting criteria for pass-through payment, SpaceOAR® must meet specific criteria for CMS to establish a new category of devices. Currently, there is not an existing pass-through category that describes SpaceOAR®. Augmenix recommended “Absorbable perirectal spacer” as a category descriptor in its application. CMS seeks comments on this descriptor.

The criteria for establishing a new category of devices require that the device is not appropriately described by any other category; and that it have an average cost that is not insignificant relative to the payment amount for the procedure or service with which the device is associated by demonstrating: 

1. The estimated average reasonable costs of devices in the category exceeds 25 percent of the applicable APC payment amount for the service related to the category of devices;
2. The estimated average reasonable cost of the devices in the category exceeds the cost of the device-related portion of the APC payment about for the related service by at least 25 percent; and
3. The difference between the estimated average reasonable cost of the devices I the category and the portion of the APC payment amount for the device exceeds 10 percent of the APC payment amount for the related service.

CPT code 55874 Transperineal placement of perirectal spacer was assigned to APC 5374 Level 4 Urology and Related Services. APC 5374 had a payment rate of $2,542.56 in 2017. CPT code 55874 had a device offset amount of $587.07, a significant difference from the Augmenix supported value of $2,850.

The estimated average reasonable cost of SpaceOAR®, set at $2,850, exceeds applicable APC payment of $2,542.56 by 112 percent meeting cost criterion one. The cost of SpaceOAR® also exceeds the cost of the device-related portion of the APC payment of $587.07 by 485 percent meeting criterion two. Finally, the difference between the cost of SpaceOAR® and the portion of the APC payment amount for the device of $587.07 exceeds the APC payment amount for the service of $2,542.56 by 89 percent, meeting criterion three.

CMS invites comments on whether the SpaceOAR system meets the device pass-through payment criteria as discussed in this section.

Two Times Rule Exception

CMS established two-times rule criteria within the APC methodology that requires that the highest calculated cost of an individual procedure categorized to any given APC cannot exceed two times the calculated cost of the lowest-costing procedure categorized to that same APC. However, the Agency can exempt any APC from the two-times rule for any of the following reasons:

• Resource homogeneity
• Clinical homogeneity
• Hospital concentration
• Frequency of service (volume)
• Opportunity for upcoding
• Code fragmentation

Based on 2017 claims data available for the 2019 proposed rule, CMS is proposing exceptions to 16 APCs found to violate the two-times rule, including APC 5612 Level 2 Therapeutic Radiation Treatment Preparation and APC 5113 Level 3 Musculoskeletal Procedures. CMS states that the proposed APCs on the exemption list meet one or more of the exemption criteria listed.

Method to Control Unnecessary Increases in Volume of Outpatient Services

In 2017, CMS implemented section 603 of the Bipartisan Budget Act of 2015. The Agency established “excepted” off-campus provider-based departments (PBDs) as those departments that billed for items and services under HOPPS prior to November 2, 2015. PBDs who were billing for items and services under HOPPS after that date were consider “non-excepted” off-campus PBDs.

Effective January 1, 2017, the “non-excepted” items and services were paid by applying a Physician Fee Schedule (PFS) Relativity Adjuster set at 50 percent of the HOPPS payment. In 2018 the PFS Relativity Adjuster was set at 40 percent of HOPPS and CMS proposes to retain the 40 percent PFS adjuster in the 2019 MPFS proposed rule. The PFS Relativity Adjuster did not apply to “excepted” off-campus PBDs.

In the 2019 HOPPS proposed rule, CMS continues to express concern regarding the continued growth in Medicare expenditures for hospital outpatient services paid under the HOPPS. While changes required by section 603 of the Bipartisan Budget Act of 2015 address some of the Agency’s concerns related to shifts in sites of care and overutilization in the hospital outpatient setting, CMS remains concerned that the majority of hospital outpatient departments continue to receive full HOPPS payment. Full HOPPS payment is often higher than payment for a similar service furnished in a physician office setting.

To address this issue, CMS is proposing to cap the HOPPS payment at the MPFS rate for clinic visits as described by G0463, regardless of whether the PBD delivering the service met the “excepted” status as implemented in 2017. CMS believes this is an effective way of controlling the volume of unnecessary services delivered in higher cost settings. The Agency estimates that this proposal will save Medicare $760 million in the first year.

CMS is seeking comments on this proposal, as well as recommendations for additional items and services paid under HOPPS that may represent unnecessary increases in OPD utilization. The Agency is also interested in other methods, including the use of prior authorization, to control unnecessary increases in volume for outpatient services.

Expansion of Excepted Services at Off-Campus Provider-Based Departments (PBDs)

As described in the previous section, excepted off-campus PBDs are those departments that billed for items and services under HOPPS prior to November 2, 2015. Because these PBDs billed under HOPPS for services prior to November 2, 2015, they are not affected by the PFS relativity adjuster that is applied to items and services delivered in PBD settings after November 2, 2015.

In the 2017 and 2018 HOPPS rules, CMS proposed but did not finalize limitations on service line expansion for excepted off-campus PBDs. In the 2019 HOPPS proposed rule, the Agency proposes to pay new services at the MPFS rate.

The Agency is aware of stakeholder concern regarding limitations on service line expansion, particularly for specific clinical families, which may be restrictive and administratively burdensome. CMS identifies 19 clinical families, including radiation oncology, that may require the addition of new services to be considered as “excepted items and services” to account for new technology or innovation. The Agency seeks comment on the proposed clinical families described below.

TABLE 32. - PROPOSED CLINICAL FAMILIES OF SERVICES FOR
 PURPOSES OF SECTION 603 IMPLEMENTATION

Payment of Drugs, Biologicals, and Radiopharmaceuticals

For 2019, CMS is proposing to pay separately payable drugs and biological products that do not have pass-through payment status and are not acquired under the 340-B program at wholesale acquisition price (WAC) plus 3 percent instead of WAC plus 6 percent. If WAC data are not available the Agency will continue its policy to pay at 95 percent of Average Wholesale Price (AWP).

Cancer Hospitals

 In the 2019 HOPPS proposed rule, CMS proposes to continue its policy to provide cancer hospitals with additional payments. The additional payments are made to ensure that the cancer hospital’s payment-to-cost ratio (PCR) are equal to the weighted average PCR for other HOPPS hospitals. The Agency is proposing a target PCR of 0.88 that will be used to determine the 2019 cancer hospital payment adjustment. This reflects the 1 percentage point reduction in the PCR as required by the 21st Cures Act.

Hospital Outpatient Quality Reporting Program (OQR)

 The Hospital Outpatient Quality Reporting (OQR) Program is a pay-for-reporting program for services rendered in the hospital outpatient setting. The program requires hospital outpatient facilities to meet quality reporting requirements or receive a reduction of 2 percentage points from their annual payment update, if they fail to meet the requirements. In the 2019 HOPPS proposed rule, CMS is proposing changes to payment determinations, measure removal policies, clarification on topped out measures, and updates to participation status for the Hospital Outpatient Quality Reporting (OQR) program. The Agency is also proposing the removal of one measure beginning in 2020 and nine measures effective January 1, 2021. CMS proposes to retain the use of OP-33: External Beam Radiotherapy (EBRT) for Bone Metastases.

Request for Information on Price Transparency

 In an effort to secure greater price transparency for health care services, CMS is seeking comment on whether providers can and should be required to inform patients about charge and payment information for healthcare services and out of pocket costs. Additionally, effective January 1, 2019, the Agency proposes to update its guidelines to require hospitals to make available a list of current charges via the Internet in a machine-readable format and to update this information at least annually, or more often as appropriate.
As part of a Request for Information, the Agency is considering additional actions that further engagement with consumers regarding the cost of care, particularly the patient’s financial liability for services they obtain. CMS is seeking public comment on the following:

• How should we define “standard charges” in various provider and supplier settings? Is there a definition for those settings that maintain chargemasters, and potentially a different definition for those settings that don’t maintain chargemasters?
• What types of information would be most beneficial to patients? How can CMS and providers help third parties create patient-friendly interfaces with these data?
• Should providers and suppliers be required to inform patients how much their out-of-pocket costs for a service will be?
• Can we require providers and suppliers to provide patients with information on what Medicare pays for a particular service?
• How does Medigap coverage affect patients’ understanding of their out-of-pocket costs before they receive care?

Additional information about the 2019 HOPPS final rule can be found at the following links:

A display copy of the final rule can be found at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-15958.pdf

 The Addenda relating to the HOPPS proposed rule are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1695-P.html

 A fact sheet on this proposed rule is available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2018-Fact-sheets-items/2018-07-25.html