Oncology Rounds

6 takeaways for cancer programs from Medicare's 2021 proposed rules

by Ashley Riley and Emily Zuehlke Heuser

With everything going on with Covid-19, you may have missed CMS' release of the 2021 Hospital Outpatient Prospective Payment System (HOPPS) Proposed Rule last week. But don't worry—we've got you covered.

We pulled out the three proposed changes with the biggest implications for cancer programs below. We also included three other reimbursement updates that may have fallen off your radar, including highlights from the 2021 Inpatient Prospective Payment System (IPPS) Proposed Rule, 2021 Medicare Physician Fee Schedule (MPFS) Proposed Rule, and price transparency final rule.

Learn about the broader impact of the 2021 HOPPS Proposed Rule on hospitals

2021 HOPPS Proposed Rule

1. Court upholds previous 340B rate cut, as CMS proposes even bigger cut for next year

July 31 marked another milestone in the legal battle over CMS' 2018 and 2019 340B rate cuts, two and a half years after the agency reduced Medicare payment rates for drugs acquired under the 340B Program to ASP-22.5%. In a 2-1 decision, the U.S. Court of Appeals in the District of Columbia held that CMS has the authority to change 340B drug payments. This reverses previous rulings that CMS' actions were unlawful. But this fight may not be over yet, as hospital groups have indicated they will challenge the most recent ruling.

CMS isn't done yet either. The agency proposed cutting the 340B reimbursement rate even more for calendar year (CY) 2021, reducing it to ASP-28.5%. However, keeping it at ASP-22.5% is still on the table and the agency is seeking public comment on the best option through Oct. 5. 

This is the second legal blow to hospitals' reimbursement this year, as the courts also upheld CMS' site neutrality rate cuts for off-campus hospital outpatient (HOPD) clinic visits. To prepare your cancer program for success in the face of these reimbursement cuts, use our infusion center resources to help you determine the best billing strategy and create a financially sustainable infusion center.

2. Radiation therapy and drug administration reimbursement remains relatively steady

CMS proposed increasing reimbursement for radiation therapy ambulatory payment classifications (APCs) by 2%-5% for Levels 1-3 and 5 but decreasing it slightly (<1% before rounding) for Levels 4, 6, and 7.  

The outlook is slightly better for drug administration: CMS is proposing increasing reimbursement across the board for the four APCs. Most notably, the agency is proposing a 12% payment increase for Level 3.

3. Cancer-related protein-based MAAAs to be separately paid under CLFS instead of OPPS

CMS is proposing to exclude cancer-related protein-based multianalyte assays with algorithmic analyses (MAAAs) from the OPPS clinical diagnostic laboratory test (CDLT) packaging policy and add them to the laboratory date of service (DOS) exception rule.

Reimbursement for tests included under the CDLT packaging policy is bundled with the payment to the hospital for the outpatient encounter. In contrast, reimbursement for tests included in the laboratory DOS exception rule is paid separately directly to the laboratory performing the test under the Clinical Laboratory Fee Schedule (CLFS). The key deciding factor in how a laboratory test is reimbursed is whether it is related to the care being provided during the hospital outpatient encounter during which the sample was collected. Because cancer-related protein-based MAAAs are typically used to determine the need for future surgeries or chemotherapy, CMS believes that they would almost never affect the treatment regimen during the same hospital service in which the specimen was collected and should be billed separately.

Other CMS rules  

4. CMS proposes new DRG for CAR T-cell therapy in 2021 IPPS Proposed Rule

CMS took another step to remove reimbursement barriers for CAR T-cell therapy by proposing a new dedicated DRG (MS-DRG 018) for the treatment. This comes one year after the agency finalized its National Coverage Determination for Medicare coverage of CAR T-cell therapy and increased add-on payments for emerging therapies like CAR T. CMS is proposing to pay providers $239,490.17 per case for the new DRG in 2021. This is just under the $242,450 that cancer programs are currently reimbursed for CAR T, which is billed under MS-DRG 016 (autologous bone marrow transplant with CC/MCC) and supplemented with an emerging technology add-on payment.

While the new DRG is a step in the right direction, the reimbursement amount attached to the DRG still leaves cancer programs on the hook for $133,510 of the $373,000 average cost of therapy (not including the cost of hospitalization, labor, or supplies). However, the reimbursement amount for the new DRG could change (for better or worse) in the final rule.

Find out who the "winners" and "losers" are in the 2021 IPPS Proposed Rule

5. CMS proposes expansion of telehealth coverage in 2021 MPFS Proposed Rule, including extending its virtual supervision policy

CMS proposed several modest updates to its telehealth policies. The agency proposed adding 22 services to the Medicare telehealth list—some permanently and others temporarily during the Covid-19 public health emergency (PHE)—and updating its remote physiologic monitoring policies. It also proposed extending its interim final policy revising the definition of direct supervision to include the virtual presence of the supervising provider using interactive audio/video real-time communications technologies (excluding audio-only technologies) through the end of 2021 instead of just for the duration of the Covid-19 PHE. This presumably includes supervision for chemo and radiation therapy provided in the physician office or freestanding settings.

This temporary change comes less than one year after CMS finalized its proposal to loosen the minimum required level of supervision in the HOPD setting from direct supervision to general supervision for all hospital outpatient therapeutic services, explicitly including chemo and radiation therapy. Virtual direct supervision is still more stringent than general supervision in that it requires the supervising provider to be "immediately available" via audio and video technology, but this move could foreshadow a permanent relaxation of supervision rules in the physician office and freestanding settings, which could reduce provider burden. CMS is seeking public comment on whether it should consider extending this policy further or impose "any guardrails" on the policy.

Learn more about the 2021 MPFS Proposed Rule

6. Judge rejects hospital group lawsuit against CMS price transparency rule

In June, the U.S. District Court for the District of Columbia rejected a lawsuit filed by a coalition of hospital groups that argues that CMS' price transparency rule is "unlawful," violating the First Amendment and exceeding the administration's authority. CMS finalized this rule at the end of last year, requiring all hospitals to publish the prices they negotiate with insurers in a consumer-friendly format online for at least 300 "shoppable" services starting in 2021. Hospital groups have the right to appeal the ruling, but this initial outcome shows that CMS is standing by its price transparency efforts (even during an epidemic that has placed a significant financial burden on hospitals) and seemingly has the legal backing to do so. 

Although expensive cancer treatments, such as chemo and radiation, aren't on the list of 70 services CMS will require hospitals to include in the 300 services posted online, that doesn't mean that cancer programs won't be impacted by this rule. We can't say for sure how patients will respond to seeing price information, but it's possible that being able to see this information for non-cancer services will increase patient expectations that price information will be available for cancer services as well, even if it's not mandated. Cancer programs need to identify opportunities to control costs where they can and be prepared to prove their value proposition and provide financial support for patients where they can't. For cancer programs with low costs already, proactively publishing your prices could be an effective strategy to differentiate your program to patients. Use our interactive tool to review the results from our 2019 Cancer Patient Experience Survey and understand which groups of patients prioritize cost when deciding where to go for cancer care.

Read more about the price transparency ruling and what it means for hospitals

Cheat sheets: Medicare payment 101

Feeling overwhelmed by all of the new proposed rules CMS has released? Get back to basics by viewing our cheat sheets which provide an overview of different payment programs, who they affect, when they're updated and what goes into payment calculations.

Download our one-page cheat sheets for a quick overview of each rule's scope:

Access the Cheat Sheets