Summer was no vacation for the Centers for Medicare & Medicaid Services (CMS). The agency released a series of significant rules that signal the nature and pace of CMS Medicare payment and policy changes for hospitals and physicians under the Trump administration. For anyone who did take a vacation, this article provides a rulemaking cheat sheet, providing links to the rules you may have missed and highlighting a few of the notable provisions in this CMS guidance. Comments are due soon on a number of the proposed rules, and final rules are expected this fall.

Cancellation of New Mandatory Cardiac and Orthopedic Bundles and Changes to the CCJR Payment Model

On August 17, 2017, CMS published its proposal to cancel the Episode Payment Models and Cardiac Rehabilitation incentive payment models finalized in the waning days of the Obama administration’s CMS. Originally set to become effective this summer, these models were twice delayed after Tom Price took over as Secretary of the U.S. Department of Health and Human Services (DHHS). The proposed rule would also change the Comprehensive Care for Joint Replacement Model (CJR) by roughly cutting its geographic areas in half and making participation voluntary for low-volume and rural hospitals in the 33 remaining areas. CMS cited concern with the mandatory nature of the models and noted that it expects to continue to offer providers opportunities to participate in voluntary initiatives, including episode-based payment models. This change would impact the ability of affected physicians to qualify for the Advanced APM track of the QPP, described below.

CMS will accept comments on this proposed rule until October 16.

FY 2018 Inpatient Prospective Payment System Final Rule

The IPPS final rule, published August 14, 2017, addressed the ongoing operational requirements for the Hospital Inpatient Quality Reporting Program, Hospital Value-Based Purchasing Program (VBP), Hospital Readmissions Reduction Program (RRP), Hospital Acquired Conditions Reduction Program (HAC) and Medicare EHR Incentive Program (MU). There were no significant surprises with respect to the finalized proposals for these programs, except that CMS signaled its intent to incorporate a methodology that considers social risk factors as part of the various CMS quality programs. CMS discussed looking at variables such as income, education, race and ethnicity, employment, disability, community resources, and social support to determine the impact on measured performance and overall quality data reported. Public comment was generally supportive of this approach; however, CMS did not commit to a finalized policy in the final rule.

CMS did not finalize a less popular proposal that would have required a CMS-approved accrediting organization to post all final accreditation survey reports and acceptable plans of correction on their publicly accessible websites. Though CMS believed that the proposal would foster transparency, CMS withdrew the provision altogether without discussing stakeholder comments and only stating that it “may appear as if CMS was attempting to circumvent” the Social Security Act. CMS also finalized a proposal to eliminate the term “newspaper” from the required forms of public notice for the Medicare termination of Ambulatory Surgical Centers, Federally Qualified Health Centers, Rural Health Centers and Organ Procurement Organizations.

CY 2018 Hospital OPPS/ASC Proposed Rule

On July 13, 2017, CMS released the calendar year (CY) 2018 Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs proposed rule (OPPS/ASC Rule).

The OPPS/ASC rule introduced some positives, including a 1.75 percent increase to outpatient hospital prospective payment rates. And after years of discussion at CMS and innovations in total knee arthroplasty (TKA) procedures, the OPPS/ASC rule proposes to remove TKA from the inpatient-only list and add it to the ASC procedures list. CMS is soliciting comments on whether to make the same change for partial and total hip procedures. CMS has previously cited impacts on the CJR and Bundled Payments for Care Improvements Models in rules declining to move TKA to the outpatient setting, so this proposal is consistent with CMS’s change in approach to bundled payment models.

But the OPPS/ASC rule outlined changes that could have major negative ramifications for hospitals. If the proposed rule is finalized, there would be significant payment reductions for the 340B Drug Pricing Program. While hospitals have been reimbursed traditionally for 340B drugs at an average manufacturer sales price plus six percent, under CMS’s proposal, hospitals would only receive payment at the rate of the average manufacturer sales price minus 22.5 percent. Although CMS noted that it was open to comment on the “appropriate” rate, a significant reduction in 340B drug payments could be a hard pill to swallow for participating hospitals.

Finally, while CMS will not finalize a proposal implementing the site-neutral payment policies of Section 603 of the Bipartisan Budget Act of 2015 that would have restricted hospitals’ expansion of services at those excepted hospital departments not subject to the payment adjustments, the agency is still focused on reducing payment rates and differentials, including through its companion Part B rulemaking. CMS will accept comments on the OPPS/ASC proposed rule until September 11.

CY 2018 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B

Published on the same day as the OPPS rule, the CY 2018 Physician Fee Schedule rule hits some high and low notes. On a high note, CMS continues to slowly phase in the requirement that Medicare claims for advanced diagnostic imaging include information about the appropriate use criteria. Under the current proposals, providers will be required to include these criteria on claims starting in January 2019. CMS is considering additional chronic care management and telehealth services codes, and the agency seeks comments on whether it should delete the requirement for reporting the telehealth modifier for professional claims.

On a low note, CMS proposes that hospitals will receive 25 percent, rather than the previously established 50 percent, of the applicable OPPS payment rate for services furnished in non-excepted off campus hospital departments beginning in CY 2018. Stakeholders, including the American Hospital Association, strongly object to the rate of reduction for CY 2018. As part of its proposal, CMS requested public comment regarding whether a higher rate, such as 40 percent, might be more acceptable during the transition. CMS also restated its decision not to finalize a policy that restricted the expansion of service lines at off-campus provider-based departments in the CY 2018 OPPS/ASC rule. However, CMS stated that it will continue monitoring the data for changes in billing patterns and utilization.

CMS will accept comments on this Part B proposed rule until September 11.

CY 2018 Updates to the Quality Payment Program

On June 30, 2017, CMS issued another Part B rule, the much anticipated CY 2018 Updates to the Quality Payment Program (QPP), which outlines proposed payment and policy changes to the QPP created by the Medicare Access and Chip Reauthorization Act of 2015 (MACRA). The QPP rule signals CMS’s intent to reduce the pace and burdens of MACRA implementation.

The QPP rule includes key changes impacting both of its tracks: (1) the default Merit-based Incentive Payment System (MIPS) path, which includes upward or downward payment adjustments based on scores in four performance categories, and (2) the Advanced Alternative Payment Model (Advanced APM) path for clinicians who meet the criteria of a Qualifying APM Participant (QP) in an Advanced APM. It also provides detail on new policies that become effective in and after Year 2 of the QPP. We took a deeper dive into the QPP rule this summer through our blog but a few key highlights include:

  • Excluding more clinicians from MIPS by increasing the low-volume threshold.
  • Implementing the virtual group provision of MACRA to allow solo practitioners and groups of 10 or fewer clinicians to combine resources and participate in MIPS as a group.
  • Implementing an option for facility-based clinicians to use their institution’s performance in value-based programs to assess performance in the quality and cost performance categories of MIPS.
  • Allowing flexibility in reporting, providing opportunities for additional bonus points and delaying weighting of the cost performance category of MIPS.
  • Extending, through performance year 2020, the revenue-based nominal risk standard for an alternative payment model to qualify as an Advanced APM, which is eight percent of the average estimated Parts A and B revenues, and lessening certain Advanced APM pathway requirements for participants in medical homes and the Comprehensive Primary Care Plus Model.
  • Updating policies that will apply to the All-Payer Combination Option, which will allow QP status to be determined based on participation both in the current Medicare Part B Advanced APMs and in other alternative payment models that meet the criteria to be an Advanced APM. CMS invites comments on the challenges it recognizes will be involved with this option, which will be limited only to Medicaid, Medicare Advantage and CMMI multi-payer models in performance year 2019.

The comment period on the QPP rule closed August 21.