2018 Medicare Reimbursement Rates Make Deciding Whether to Convert a VAC or OBL Into an ASC Even More Challenging JASON S. GREIS +1 312.849.8217 | email@example.com 77 West Wacker Drive Suite 4100 Chicago, IL 60601-1818 JAKE A. CILEK +1 312 849 8106 | firstname.lastname@example.org 77 West Wacker Drive Suite 4100 Chicago, IL 60601-1818 November 10, 2017 www.mcguirewoods.com McGuireWoods marketing communications are intended to provide information of general interest to the public. Marketing communications are not intended to offer legal advice about specific situations or problems. McGuireWoods does not intend to create an attorney-client relationship by offering general interest information, and reliance on information presented in marketing communications does not create such a relationship. You should consult a lawyer if you need legal advice regarding a specific situation or problem. Contents © 2017 McGuireWoods LLP. 2018 Medicare Reimbursement Rates Complicate Questions About Converting an OBL or VAC to an ASC | Earlier this month the Centers for Medicare and Medicaid Services (CMS) issued the 2018 Medicare Physician Fee Schedule (MPFS) and Ambulatory Surgical Center Fee Schedule (ASCS), which included updates to payment policies, payment rates and quality provisions for services furnished during the 2018 calendar year. The 2018 reimbursement rates continue to place significant financial pressure on physicians who provide dialysis vascular access services in a Place of Service-11 (POS-11) vascular access center (VAC) or office-based laboratory (OBL) setting, while at the same time significantly decreasing any site-specific financial benefit of providing such services in a Medicare-certified ambulatory surgery center (ASC). Significant changes in reimbursement for dialysis vascular access care were first implemented in 2017 by CMS as a result of a new payment policy requiring services billed together more than 75 percent of the time to be bundled. The following interventional CPT code bundles were developed, which resulted in significant Medicare reimbursement reductions for a variety of commonly performed interventional services: Procedure 2016 CPT Codes 2016 FFS Reimbursement 2017 Bundled CPT Code 2017 MPFS (POS-11) Reimbursement % Change (2016- 2017) Angiogram of access 36147 $855 36901 $581 -32% Angiogram with angioplasty 36147 35476 75978 $2,052 36902 $1,235 -40% Angiogram with stent 36147 37238 $4,712 36903 $5,663 17% Thrombectomy 36147 36148 36870 $2,567 36904 $1,801 -30% Thrombectomy with angioplasty 36147 36148 36870 35476 75978 $3,222 36905 $2,304 -20% Thrombectomy with stent 36147 36148 36870 37238 $5,701 36906 $6,868 17% These dramatic reimbursement cuts made it financially difficult for many physicians to continue providing dialysis vascular access care in a POS-11 setting and, as a result, a significant number of VACs and OBLs closed in 2017 and additional centers are slated to close in 2018. It is 2018 Medicare Reimbursement Rates Complicate Questions About Converting an OBL or VAC to an ASC | widely believed that a significant number of VACs and OBLs that exclusively provided dialysis vascular access care (and which do not perform peripheral arterial disease (PAD) services) experienced a net financial loss of between — 10 percent and 0 percent in 2017 in providing these services, depending upon a center’s patient volume, case mix and payor mix. A number of trade groups and organizations, including the Renal Physicians Association (RPA), the Dialysis Vascular Access Coalition (DVAC) and the American Society of Diagnostic and Interventional Nephrology (ASDIN), actively engaged with CMS to advise the agency of the consequences of its reimbursement changes, including decreased availability of quality officebased care for this at-risk patient population, and increased cost to the Medicare program resulting from patients receiving dialysis access-related services in more expensive hospital outpatient departments. In an attempt to address the medical needs of this critically vulnerable patient population, some providers have considered the financial, operational and legal viability of converting their VAC or OBL into a Medicare-certified ASC and/or expanding their service offering to include PAD and other interventional procedures consistent with a physician’s relevant training and experience. The table below highlights the difference in 2017 Medicare reimbursement for certain dialysis vascular access services performed in an office-based VAC or OBL, as compared to the same services performed in an ASC setting: Procedure Bundled CPT Code 2017 MPFS Final Rate 2017 ASC Final Rate $ Differential Angiogram of access 36901 $581 $316 $265 Angiogram with angioplasty 36902 $1,235 $3,445 $2,210 Angiogram with stent 36903 $5,663 $6,058 $395 Thrombectomy 36904 $1,801 $3,445 $1,644 Thrombectomy with angioplasty 36905 $2,304 $6,058 $3,754 Thrombectomy with stent 36906 $6,868 $9,395 $2,527 Based upon the 2018 MPFS rates it appears that these organizations’ concerns have been addressed in a limited manner. CMS has made modest increases in Medicare reimbursement for services performed in an ASC or OBL in 2018 as demonstrated in the following table: Procedure Bundled CPT Code 2018 MPFS Final Rate 2016 MPFS Final Rate 2017 MPFS Final Rate $ Change (2016- 2018) $ Change (2017- 2018) Angiogram of access 36901 $611 $855 $581 -$244 $30 Angiogram with angioplasty 36902 $1,272 $2,052 $1,235 -$780 $37 2018 Medicare Reimbursement Rates Complicate Questions About Converting an OBL or VAC to an ASC | Angiogram with stent 36903 $5,725 $4,712 $5,663 $1,013 $62 Thrombectomy 36904 $1,849 $2,567 $1,801 -$718 $48 Thrombectomy with angioplasty 36905 $2,344 $3,222 $2,304 -$878 $40 Thrombectomy with stent 36906 $6,949 $5,701 $6,868 $1,248 $81 The financial impact of the 2018 MPFS rates presents a “mixed bag” of news. When compared against the 2017 MPFS reimbursement rates, CMS made minor positive reimbursement changes to the entire crosswalk of dialysis vascular access codes, including to the industry’s most commonly billed CPT code (36902), which will experience a 3 percent reimbursement increase versus the 0.8 percent decrease that was originally proposed in the 2018 Proposed Rule. However, when the 2018 MPFS reimbursement rates are compared against the 2016 MPFS reimbursement rates one can see that 2018 Medicare reimbursement for a significant number of the most commonly used dialysis vascular access codes still falls far below 2016 reimbursement rates. CMS also unexpectedly made significant reimbursement cuts to codes for dialysis vascular access services performed in an ASC setting in 2018 when it released the 2018 Final ASCS, which changes had not been previously discussed in the 2018 Proposed ASCS earlier this year: Procedure Bundled CPT Code 2018 ASC Final Rate 2017 ASC Final Rate $ Change % Change Angiogram of access 36901 $319 $316 $3 1% Angiogram with angioplasty 36902 $2,525 $3,445 -$920 -27% Angiogram with stent 36903 $4,481 $6,058 -$1,577 -26% Thrombectomy 36904 $2,524 $3,445 -$921 -27% Thrombectomy with angioplasty 36905 $4,481 $6,058 -$1,577 -26% Thrombectomy with stent 36906 $6,926 $9,395 -$2,469 -26% Industry groups continue reaching out to CMS to voice their concern about these reimbursement cuts, which may continue to enhance the problem of patients seeking out dialysis vascular access care in a more expensive hospital outpatient department setting. According to Jan Dees, President of American Vascular Access, a national provider of VAC and OBL services, “it is estimated there are 30 million patients in the United States in need of procedures impacted by these and other similar CPT codes. It is therefore critically important for patients to have easy access to VAC and OBL sites of service that can continue to provide conveniently located, high quality, timely and lower cost services.” 2018 Medicare Reimbursement Rates Complicate Questions About Converting an OBL or VAC to an ASC | Yet, despite this decrease in Medicare reimbursement for dialysis vascular access care provided in an ASC setting, there continues to be a significant reimbursement differential between dialysis vascular access care provided in an OBL or VAC as compared against care provided in an ASC: Procedure Bundled CPT Code 2018 MPFS Final Rate 2018 ASC Final Rate $ Differential Angiogram of access 36901 $611 $319 $292 Angiogram with angioplasty 36902 $1,272 $2,525 $1,253 Angiogram with stent 36903 $5,725 $4,481 $1,244 Thrombectomy 36904 $1,849 $2,524 $675 Thrombectomy with angioplasty 36905 $2,344 $4,481 $2,137 Thrombectomy with stent 36906 $6,949 $6,926 $23 These Medicare reimbursement changes come at a time when many providers are considering converting their VACs and OBLs into Medicare-certified ambulatory centers as we discussed in a recent Whitepaper entitled Practical Considerations for Medical Practices Considering Converting Their Vascular Access Centers Into Medicare-Certified Ambulatory Surgery Centers. These reimbursement changes and the possible eventual elimination of site-of-service payment reimbursement differentials by CMS across outpatient care settings as CMS moves to site-neutral payments, will only make conversion decisions more challenging. Jason Greis is a partner in the McGuireWoods Healthcare Department. Jake Cilek is an attorney in the McGuireWoods Healthcare Department.