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How Medicare's final rules affect imaging in 2019

November 12, 2018

    Last week, CMS released final rules governing hospital outpatient facility and provider payments  for calendar year (CY) 2019. The rules outline major payment and regulatory updates for radiology, including changes to site-neutral payments and clinical decision support policies.

    To help you prepare for new payment rates and regulatory updates, we read through more than 3,000 pages and identified five key takeaways below for imaging leaders and radiologists. For more on how the 2018 Medicare Final Rules affect your imaging strategy, join us for a webconference on December 5.

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    1. Overall hospital and clinician payments remain flat, but radiology reimbursement a mixed bag

    Hospital outpatient payments: CMS finalized a 1.35% increase in payment for hospital outpatient services as it did for 2018. 

    Clinician payments: CMS finalized a $36.04 conversion factor for 2019, only 5 cents greater than the 2018 conversion factor.

    While overall payment updates remain relatively flat, aggregate reimbursement for radiology specialties faired differently. Interventional radiology will see a 2% payment increase, while radiology remained neutral. Nuclear medicine and independent diagnostic testing facilities (IDTF) payments will both decrease – 1% and 5% respectively – due to a drop in practice expense RVUs.

    This table summarizes aggregate payment updates by specialty, but individual services within each will experience varying impacts. For example, expect significant cuts to the professional component of ultrasound practice expense RVUs.

    What this means for radiology: Aside from interventional radiology, payment rates will remain flat or decrease for imaging providers, adding pressure to present financial strains. Imaging programs must focus on controlling costs and securing revenue to prepare for margin pressure that will likely increase in future years.

    2. CDS program will begin in 2020 with new clarification around documentation and consultation

    Starting January 1, 2020 ordering providers will be required to consult CDS for all outpatient advanced imaging exams, and furnishing providers to document that consultation for Medicare reimbursement. The first year, though mandatory, will be an "educational and testing" period, meaning claims will be paid regardless of proper documentation. Beginning January 1, 2021, Medicare will deny claims (technical and professional) that do not include necessary information.

    In the final rule, CMS upheld their plan to establish G-codes and modifiers for reporting CDS consultation on Medicare claims. Next year, they will release more information, including the specific codes and modifiers they plan to use.

    Additionally, CMS answered one of the most frequently asked questions: Who can consult CDS? Now, clinical staff "working under the direction of the ordering professional" can consult CDS. This means that that ordering providers may have their staff (but not radiology staff) consult CDS on their behalf.

    CMS also expanded the policy to require imaging performed at independent diagnostic testing facilities to report CDS consultation. At the same time, the agency also created new hardship exemptions and clarified that emergency services will be exempt. Look out for an upcoming blog analyzing the finalized changes in greater depth.

    What this means for radiology: Without doubt, imaging leaders must begin CDS implementation today. Programs that have implemented CDS should focus on ordering provider education, particularly for community physicians that have to go outside their EHR to use the tool. For support, check out our tools and resources designed to help imaging leaders and radiologists throughout the implementation process.

    3. Site-neutral payments policy expands to include a payment reduction for all off-campus HOPD clinic visits but does not remove exemption for expanded services

    CMS first implemented site-neutral payments in 2017 to level reimbursement discrepancy between hospital outpatient departments (HOPDs) and provider-based sites, e.g., physician offices and freestanding clinics. The policy mandates that newer off-campus HOPDs receive reimbursement at a site-specific MPFS rate, which is currently set at 40% of the hospital rate. Off-campus HOPDs acquired, opened, or built before November 1, 2015 are considered "excepted sites" and are not subject to this reduced rate.

    CMS finalized the 40% rate again for CY 2019 and signaled that it could remain in place for the foreseeable future. The agency also finalized a proposal to cut payment rates for code G0463, hospital outpatient clinic visit for assessment and management of a patient, across all off-campus HOPDs. In other words, G0463 will be paid at the site-neutral rate at any off-campus HOPD, regardless of excepted status. CMS will phase this payment cut in over a two-year period:

    • Phase one (2019): Excepted sites will see a 30% cut in payments for this code, which will reduce the average national payment rate for this procedure from $116 to $81.
    • Phase two (2020): All payment for G0463 will be paid at the site-neutral level, i.e., 40% of the hospital rate. Based on 2018 rates, the national average reimbursement for this code would be $46.

    Based on Advisory Board analysis, 78% of diagnostic radiology claims for this code are provided at currently-exempt off-campus sites, which means that imaging programs will see a significant payment reduction for these clinic visits.

    CMS did not finalize a proposal to include new services offered at excepted HOPDs in site-neutral payment when those services belong to a different clinical family than those in place in November 2015.This is the second time that such a proposal has appeared but not been finalized. While the agency did not finalize the proposal, certain procedures are clearly viewed as an area of continued interest for CMS.

    In addition, CMS created a new modifier (ER) for services furnished by off-campus emergency departments. This modifier will enable CMS to monitor how services are shifting to freestanding and off-campus emergency departments, which are currently exempt from the site-neutral payment policy. CMS is concerned about this shift, and the creation of the modifier may be a first step towards reducing the payment gap in the future.

    What this means for radiology: CMS continues to view HOPDs payments as a source of potential cost savings. While the proposal to cut payment for expanded services was not finalized, this proposal and the finalized payment reduction for routine clinic visits clearly signal that the agency will continue to push for more cuts in future rulemaking. With this in mind, programs should consider how future cuts to HOPD payments may impact their growth strategy.

    4. Inclusion of square feet methodology for MRI, CT cost centers delayed another year to avoid reimbursement reductions

    Currently, CMS uses "dollar assignment" and "dollar value" cost allocation methods to estimate payment for MRI and CT Ambulatory Payment Classifications (APCs). Over the past five years, CMS excluded a third method, the "square feet" methodology. Although many imaging programs currently report cost allocations using "square feet," if CMS included this method when calculating APC payment, reimbursement would go down.

    CMS will delay including the "square feet" cost allocation method until 2020 to give providers more time to switch to one of the preferred methods ("dollar assignment" or "dollar value"). This will be the last year CMS will make this exclusion.  

    What this means for radiology: Before 2020, imaging leaders should adopt either the "dollar assignment" or "dollar value" cost allocation methods to avoid significant CT and MRI payment reductions. The chart below shows the impact excluding "square foot" methodology has on CT and MRI rate calculations:

    5. E/M coding, documentation, and payments streamlined—but implementation delayed

    Under the current system, CMS uses five levels to determine physician reimbursement for E/M visits, allowing providers to receive higher reimbursement for higher acuity patients that require more time and resources. CMS proposed to replace levels two through five with a single level, but scaled back the changes in the final rule and delayed implementation for two years.

    Beginning in CY 2021, CMS will collapse current code levels 2 through 4 into one and will pay providers a single rate (one each for established and new patients), which is set between the current reimbursement rate of levels 3 and 4. The level 5 code, which accounts for care provided to the most complex patients, will remain. The agency also backed away from another controversy and did not finalize a payment cut for E/M visits furnished on the same day as procedures.  For more details on these changes

    As part of its “patients over paperwork” initiative, smaller changes to the E/M code standards, such as re-recoding patient information, intended to reduce physicians' administrative burdens will take effect next year.

    What this means for radiology: In the short term, changes to the coding standards should ease the clinical documentation burden on providers. The streamlining of codes in 2021 may lead to an overall reduction in payment for physicians who treat a high percentage of complex patients, such as interventional radiologists; however the move to keep level 5 should help mitigate the impact.

    Other notable proposals impacting imaging:

    • Relaxed supervision requirements for radiologist assistants (RAs): CMS changed the supervision requirements for diagnostic tests furnished by a certified RA from "personal" to "direct." This means that instead of requiring physicians to be in the room during the tests, the physician must be immediately available. This change more closely aligns with state supervision requirements.

    • Removed three imaging related measures from the Hospital OQR Program: The OQR Program is a quality payment program that helps CMS create hospital ratings on Hospital Compare. Failure to meet program requirements will result in a 2% payment decrease for hospital outpatient departments. CMS removed three imaging related measures: mammography follow up rates (OP-9), use of contrast material for CT (OP-11), and simultaneous brain and sinus CT (OP-14).

    • Continued shift toward outpatient payment bundling with three new Comprehensive-APCs (C-APCs): CMS finalized the creation of three new C-APCS: Level 3 ENT Procedures, Level 3 Vascular Procedures, and Level 4 Vascular Procedures, the latter two of which contain interventional radiology procedures. This brings the total number of C-APCs up to 65.

    • Demonstrated focus on managing cost growth under OPPS: CMS sought public comment on a number of methods for managing cost growth under OPPS, including the possibility of using preauthorization and medical review within Medicare. While most comments focused on the burden that such policies could add for imaging programs and CMS has not proposed any specific initiatives, the agency is continuing to explore new options for managing cost.



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