On November 1, 2016, CMS released the final payment rates and policy changes in the Hospital Outpatient Prospective Payment System (OPPS) final rule (OPPS Final Rule) and Ambulatory Surgical Center Payment System Final Rule (ASC Final Rule) for CY 2017.  Included in these rules was as an Interim Final Rule with comment period (IFC) to establish Medicare Physician Fee Schedule (MPFS) rates for “non-excepted” items and services furnished by off-campus provider-based departments (PBDs) and to finalize changes to quality and performance programs.  The OPPS Final Rule, ASC Final Rule and IFC are expected to be published in the Federal Register on November 14, 2016, and CMS will accept comments through December 31, 2016.  

Off-Campus Provider-Based Changes

The OPPS Final Rule implements Section 603 of the Bipartisan Budget Act of 2015, which states that CMS may not pay for certain items and services provided in off-campus hospital outpatient departments under the OPPS beginning January 1, 2017.  For CY 2017, CMS will instead pay hospitals 50 percent of the corresponding OPPS payment rate for non-excepted services through a subset of rates established in the MPFS.  In addition, CMS will permit excepted PBDs to alter their service mix and retain excepted status after January 1, but will not permit a PBD that relocates or changes ownership to retain its excepted status.  King & Spalding issued a Client Alert on November 2, 2016, available here, describing these changes in detail. 

Other OPPS Final Rule Provisions

CMS is increasing payment rates under the OPPS by an outpatient department fee schedule increase factor of 1.65 percent.  This change reflects a market basket increase of 2.7 percent minus a 0.75 percent adjustment required by the Affordable Care Act and a 0.3 percent multi-factor productivity adjustment.  CMS is continuing the 2.0 percentage point reduction for hospitals that fail to meet the hospital outpatient quality reporting requirements, continuing the 7.1 percent adjustment to certain rural sole community hospitals, including essential access community hospitals, and continuing to provide additional payments to cancer hospitals.

CMS is adding 25 new comprehensive ambulatory payment classifications (C-APCs) for CY 2017, which are primarily major surgery APCs.  The new C-APCs will add to the existing 37 C-APCs in 2016 and result in a total of 62 C-APCs in CY 2017.  CMS is also adding a C-APC and dedicated cost center for bone marrow transplants.

CMS also finalized the following:

• Three policy refinements with respect to packaging all integral, ancillary, supportive, dependent or adjunctive services into primary services;
• Two policies regarding device-intensive procedures, which are APCs with a device offset greater than 40 percent;
• The removal of seven procedures from the IPO list, which include 5 spinal procedures and 2 laryngoplasty procedures;
• Updates to the Medicare payment rates for partial hospital program (PHP) services furnished in hospital outpatient departments and Community Mental Health Centers (CMHC) by replacing the two-tiered APC structure for PHPs with a single APC by provider type for providing three or more services per day;
• A CMHC outlier payment cap of 8 percent of its CMHC total per diem payments; and
• Changes to payment for non-excepted hospital-based PHP services to align with Section 603 of the Bipartisan Budget Act of 2015.

ASC Final Rule Payment Update

ASC payments are updated for CY 2017 by an adjusted Consumer Price Index for all urban consumers (CPI-U) update factor of 1.9 percent.

Quality and Performance Program Changes

With respect to the Hospital Value-Based Purchasing (VBP) Program, CMS removes the pain management dimension from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey beginning with the FY 2018 program year.  CMS will continue to develop and test alternative questions related to pain management.  In the meantime, however, HCAHPS survey data on all dimensions of care, including pain management, will be publicly reported under the Hospital Inpatient Quality Reporting (IQR) Program.

With respect to the Hospital Outpatient Quality Reporting (OQR) Program, CMS is adding seven measures, two claims-based and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey-based measures, starting in the CY 2020 payment determination.  CMS is also finalizing its proposals to publicly display data on the Hospital Compare website as soon as possible after data is submitted to CMS and granting hospitals approximately 30 days to preview their data. 

CMS also makes changes to the organ transplant program.  The agency revises an outcome requirement in the Medicare Conditions of Participation for organ transplant programs and finalizes changes to the conditions for coverage for organ procurement organizations.

With respect to the electronic health record (EHR) incentive program:

• CMS finalizes a 90-day EHR reporting period in both 2016 and 2017 for all returning eligible professionals, eligible hospitals and critical access hospitals that previously demonstrated meaningful use in the Medicare and Medicaid EHR Incentive Programs.  Thus, the EHR reporting period is any continuous 90-day period between January 1 and December 31 in both CY 2016 and CY 2017;
• CMS eliminates the Clinical Decision Support (CDS) and Computerized Provider Order Entry (CPOE) objectives and measures for eligible hospitals and critical access hospitals attesting under the Medicare EHR Incentive Program for Modified Stage 2 and Stage 3 and dual-eligible hospitals that participate in both the Medicare and Medicaid EHR Incentive Programs;
• CMS finalizes the provision that eligible professionals, eligible hospitals and critical access hospitals that have not successfully demonstrated meaningful use in a prior year will be required to attest to Modified Stage 2 objectives and measures;
• CMS finalizes proposals permitting certain eligible professionals to apply for a significant hardship exception from the 2018 payment adjustment pursuant to an application process; and
• CMS modifies measure calculations for actions outside of the EHR reporting period.

Finally, CMS adds 7 measures to the ASC Quality Reporting (ASCQR) Program beginning with the CY 2020 payment determination.  CMS is also finalizing its proposals to publicly display data on the Hospital Compare website as soon as possible after data is submitted to CMS, and grant ASCs approximately 30 days to preview their data. 

Display copies of the OPPS Final Rule, ASC Final Rule and IFC are available here.