CMS finalizes changes to cancer centers, separately payable drug payments in 2012 OPPS final rule

HCPRO Website, November 2, 2011

by Michelle A. Leppert, CPC-A

The 2012 OPPS final rule contains some significant wins, including changes to cancer center payments and separately payable drug payments, for facilities and one major loss involving intensity modulated radiation therapy.

CMS finalized changes to cancer center payments for 11 hospitals, cardiac resynchronization therapy payment, and physician supervision in its final rule released November 1.

“This is one of the first rules in the last three or four years that I recall where I can go down the list of big ticket items and see that CMS responded to commenters’ suggestions and concerns very carefully,” says Jugna Shah, MPH, president of Nimitt Consulting based in Washington, DC. “This doesn’t necessarily mean increased APC payment rates for all services, but this rule definitely reflects a lot of thoughtful analyses and changes to initial proposals resulting in sound policy making for 2012, which adds up to a lot of nice wins for providers.”

Payment for cancer centers

One of CMS’ biggest proposed OPPS changes turned into a win for multiple stakeholders in the final rule despite what CMS had originally proposed. For calendar year (CY)2012, CMS finalized a revised version of its initial proposal of providing a payment adjustment to 11 cancer centers. After studying how the centers’ costs and payments compared to the costs and payments for all other providers, which CMS was required to do by law, the agency found that a payment fix was warranted.

CMS’ original proposal for 2012 would have resulted in a large financial impact on beneficiaries and on the payment that non-cancer hospitals would receive due to CMS’ budget neutral implementation. In addition to these impacts, CMS’ proposal for CY 2012 would not have solved the main problem at hand for cancer hospitals, Shah says.

CMS received numerous comments from industry stakeholders on its proposal, including the inappropriate financial impact that beneficiaries and other hospitals would have to bear and as a result, the agency revised its proposal, Shah says.

“CMS should be commended for figuring out a different and better way to implement the payment adjustment for the cancer centers that does not come on the backs of beneficiaries or other hospitals in the manner it would have under CMS’ original proposal,” she says.

“CMS clearly listened to issues raised by commenters,” she adds, “and significantly revised its proposal in terms of what has now been finalized for 2012 and the net result appears positive for everybody.”

Cardiac resynchronization therapy payment

Also welcome news for providers: CMS decided not to implement a proposal to limit payment for cardiac resynchronization therapy defibrillator (CRT-D) procedures provided in the outpatient to the inpatient MS-DRG 0227 payment rate.

As part of the 2012 OPPS proposed rule, CMS announced plans to create a new composite APC for CRT-D procedures and cap payment for those services at the lesser of the newly established APC median cost or the inpatient standardized payment for MS-DRG 227, resulting in a proposal to decrease payments to hospitals for this service when provided in the outpatient setting.

Under that proposal, hospitals would have received lower payment for outpatient CRT-D procedures compared to what they would have received if CMS had based payment on outpatient claims data, Shah says.

“Historically we haven’t seen CMS crossing payment systems in determining payment policy even when providers have asked CMS to create parity, for example between drug reimbursement in the physician office and hospital setting,” Shah says. CMS received numerous comments from the industry indicating that its proposal was not appropriate and that it should not be implemented.

As a result of comments received and CMS’ own further analyses, the agency decided not to finalize its proposal for CY 2012. Instead CMS indicated it believes looking across payment system to set payment rates is within its scope and will consider this appropriate in the future. “At the end of the day, I think CMS realized that its proposal was simply not inappropriate for implementation at this time,” Shah says. As a result, the CRT-D rate set by Medicare in the outpatient setting for CY 2012 is based on outpatient claims data only and will be much higher than what CMS had originally proposed. This is another victory for outpatient providers, Shah says.

Drug payment changes

Providers received more good news with respect to drug payments. First, CMS proposed increasing the drug packaging threshold to $80, but reduced that to $75 in the final rule.

Second, and perhaps more importantly, CMS recognized that it has a flaw in its separately payable drug reimbursement calculation methodology, Shah says. CMS’ proposed average sales price (ASP) plus percentage typically drops by one percentage point from the proposed rule to the final rule. CMS proposed ASP+4%, but it was expected to drop to ASP+3% in the final rule due to the use of more complete claims and cost data, Shah says. This has happened in previous years as well and this year CMS examined this issue by conducting additional analyses during the comment process.

“I think CMS deserves kudos here for taking on the analytical question of why the ASP plus percentage has dropped each of the past three years from the proposal to the final rule and for conducting analysis to really understand what’s going on,” Shah says.

To make a long mathematical story short, CMS analysts realized that they should be redistributing a proportion of packaged drug costs to the pool of separately payable drugs prior to computing the ASP plus percentage rather than redistributing a fixed dollar amount. That way, when additional claims and cost data are used to generate the final rule, the mathematical relationship of the amount of costs to move from packaged drugs is preserved since a proportion is relied upon rather than raw dollars.

“It’s great that CMS looked into this and uncovered a mathematical issue that resulted in the ASP plus percentage fluctuating between the proposed and final rule. It’s also good that CMS finalized a change in its computation methods for CY 2012, which results in separately payable drug APC payments dropping to ASP+4% for CY 2012,” Shah says.

APCs for abdominal and pelvic CTs

CMS finalized its proposal to create two new APCs for computed tomography (CT) of abdominal and pelvis. The American Medical Association (AMA) introduced new CPT® codes for combined CT of the abdomen and pelvis in 2011. CMS assigned those new CPT codes to existing APCs with payment rates that many felt were far too low to cover the costs of providing the combined (two) service.

CMS did not use historical data in the form of the predecessor codes that it could have used in setting payment rates for 2011 and if it had, hospitals would have received better reimbursement this year for the combined service. This has been a very hot point of contention all year long, Shah says.

CMS proposed and finalized the use of historical predecessor code information for these services for CY 2012 and the result is hospitals will see greatly improved APC payment rates for the combined services next year.

Shah sees this as another victory for hospitals, especially because this is another example of CMS listening to hospital comments and making a change. “It also sets a good precedent for how CMS will approach the APC rate-setting process in the future when we are likely to see even more combination codes.”

Physician supervision changes

CMS finalized two significant changes to the physician supervision requirements. Neither is a surprise, Shah says.

First, CMS agreed to a delay in the enforcement of physician supervision rules for critical access and small and rural hospitals that have 100 or fewer beds.

Second, CMS will use the Federal Advisory Panel on Ambulatory Payment Classification Groups (APC Panel) review supervision levels for outpatient services. Those reviews could begin as soon as the winter 2012 APC Panel meeting, Shah says. “I think we’re going to see some new efforts on this front and everyone is going to want to pay attention to this.”

Device construction for intensity modulated radiation therapy

Hospitals saw one significant loss as part of the OPPS final rule and it is really an operational lesson for facilities, Shah says.

The AMA in 2010 replaced CPT code 77334 (treatment devices, design and construction; complex [irregular blocks, special shields, compensators, wedges, molds or casts]) with code 77338 (multi-leaf collimator [MLC] device[s] for intensity modulated radiation therapy [IMRT], design and construction per IMRT plan).

Facilities could report an unlimited number of units for code 77334, so they were paid for each device they used, Shah says. However, they cannot report multiple units of 77338. Hospitals are restricted to reporting a single unit of service.

In 2011, CMS proposed assigning code 77338 to APC 0305 (Level II therapeutic radiation treatment preparation), which was a very low-paying APC compared to what hospitals previously received for this service.

CMS did not finalize its proposal for 2011 and instead listened to commenters about the units issue and placed the code in a higher paying APC. However the agency brought this same issue back in the 2012 proposed rule. This time, CMS ignored providers’ comments that not all facilities had updated their chargemasters with the correct payment/charge amount to reflect multiple device units on average and therefore, CMS was seeing an artificially low billed charge when only one unit of CPT code 77338 is billed, Shah says.

“Unfortunately, CMS was not sympathetic to provider statements about lagging billing/charging practices and instead finalized its proposal to use its usual rate setting methodology, which relies on claims data to generate the median cost for CPT 77338 and to place it in the most appropriate APC, APC 305, even if that means hospitals will see large reductions in reimbursement” Shah says.

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