In 2017, CMS implemented a site-neutral payment provision to reduce payment discrepancies between services performed at 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 Medicare Physician Fee Schedule (MPFS) rate. Currently, this rate equals 40% of the hospital rate.
Last month, CMS proposed significant updates to the program for calendar year 2019. If finalized, these proposals are estimated to save the agency more than $600 million next year.
Read on to learn more about key site-neutral payment updates and the impact on imaging.
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Key site-neutral payment proposed updates
1. Site-neutral payment adjustment still 40% of hospital outpatient rate
CMS proposed to maintain the current MPFS relativity adjuster for non-exempted items and services at 40% of the outpatient prospective payment system (HOPPS) amount. The agency made this decision based on claims data specific to non-exempted facilities, which validated continuing the 40% rate. The rate will likely remain constant in future years unless new data or considerations warrant a change in approach.
Implications for imaging: This consistency allows imaging leaders to plan for future reimbursement. Organizations should continue using the PN modifier on claims to signify non-exempted HOPDs.
2. The number of facilities impacted by site-neutral payments will increase
Although CMS maintained the payment rate adjustment, the agency made significant changes impacting exempt facilities. Currently, only sites meeting the following criteria are impacted:
The proposed rule contains two key policies that would significantly expand services paid at the site-neutral rate.
Policy #1: New services no longer exempt
CMS proposed to pay the site-neutral rate for any new groups of services not offered between November 1, 2014, and November 1, 2015. Groups of services, or clinical families, are segmented by Ambulatory Payment Classification (APC) groups, many of which impact imaging. Review the table for select clinical families and example imaging services. For a full list of codes that fall under the APCs, download Addendum C at CMS.gov.
For example, let's say a facility offering MRI, CT, and x-ray is currently not subject to site-neutral payments, but began offering interventional radiology services in 2016 that fall under the "vascular/endovascular/cardiovascular" clinical family. Two scenarios could play out:
- Scenario 1: During the 2014-2015 timeframe, the facility did not offer any other services within that clinical family.
Outcome: Since the HOPD began offering IR services that falls into a new clinical family, all services within the new family will now be subject to the 40% of HOPPS payments. However, services in different clinical families that were offered during the 2014-2015 timeframe (in this example, MRI, CT, and x-ray) continue to be paid at the hospital rate.
- Scenario 2: Although the interventional radiology services are new offerings, the facility performed other services within the larger clinical family during 2014-2015.
Outcome: Services within that clinical family will not be subject to the 40% of HOPPS payments. The facility remains exempted, and may continue to bill on HOPPS for all services.
Implications for imaging: If finalized, organizations will need to follow these steps to determine coding and payment changes for each off-campus HOPD:
- Step 1: Outline services offered between November 1, 2014 to November 1, 2015, and map those to clinical families;
- Step 2: Outline services currently offered, again mapped to clinical families; and
- Step 3: Crosswalk services currently offered to those offered within the 2014-2015 time period.
For services in clinical families not offered during that timeframe, prepare for reduced payment rates. In other words, a single facility may bill for certain services at the higher hospital rate, while others at the lower site-neutral rate.
Keep in mind that CMS proposed similar criteria in previous rulemaking cycles that were not finalized due to stakeholder concerns. Expect more information to be released in the final rule, which is due in early November.
Policy #2: Routine clinical visits now truly site-neutral
Last year, CMS found that one procedure code accounted for more than 50% of all codes billed at off-campus HOPDs. The code, G0463: hospital outpatient clinic visit for assessment and management of a patient, is currently reimbursed at $116 under HOPPS. To further equalize payments, CMS proposed to make this procedure non-exempt from site-neutral payments at all sites. In other words, previously exempted HOPDs will receive 40% of the HOPPS rate ($46) for clinic visits.
Implications for imaging: Based on Advisory Board analysis, 78% of diagnostic radiology claims for this code are provided at exempted off-campus sites. That means if finalized, imaging programs will see a significant payment reduction for these clinic visits. This proposal also signifies a trend towards further payment equalization. During the same analysis that identified this specific HCPCS code, CMS looked at the top 22 codes commonly performed at off-campus HOPDs. Of those, eight are imaging-related, including chest CTs and chest x-rays. If finalized, imaging leaders should watch out for additional procedure-level reimbursement cuts in the future.
3. 340B rate cut expanded to non-excepted HOPDs
In 2018 rulemaking, CMS enacted major changes to the 340B Drug Pricing Program. Specifically, the agency reduced reimbursement for part B drugs purchased at the 340B rate from average sales price (ASP) plus 6% to ASP minus 22.5%. It’s estimated this will reduce drug payments by $1.6 billion in 2018 alone.
CMS proposes to extend this provision next year to the approximately 115 340B eligible off-campus HOPDs reimbursed at the site-neutral rate. These sites were exempt from 340B rate cuts in 2018, so the proposal removes the incentive for hospitals to shift drug administration services to non-excepted off-campus HOPDs.
Implications for imaging: Imaging leaders aren’t directly impacted by the drug reimbursement cuts, and may actually experience a small benefit. In 2018, hospitals experienced an additional 3.2% bump in outpatient payment rates for all non-drug services, including imaging procedures, due to the 340B payment cuts.
Medicare will accept comments on all proposals until September 24 and release the final rule in November 2018. We encourage you to submit your thoughts and concerns to CMS.
In addition to the site-neutral payments, CMS proposed many other changes in the rules, including updates on reimbursement. Our team will post a larger analysis of the impact on imaging in the coming weeks on "The Reading Room" blog, but in the meantime review our broader analysis.
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Your top 10 site-neutral payment questions for imaging, answered
Under Medicare's final rules for site-neutral payments, impacted sites—newly opened off-campus facilities—will see reimbursement further reduced, from 50% of the hospital rate in 2017 to 40% for next year.
Read on for answers to your 10 most pressing questions about the policy.