CMS finalizes comprehensive APCs for 2015 in OPPS final rule

HCPRO Website, November 1, 2014

 By Steven Andrews 

The 2015 OPPS final rule, released October 31, continues CMS' trend toward expanding packaging, while also finalizing comprehensive APCs (C-APCs) and introducing the concept of complexity adjustments to the OPPS.
"It’s not surprising CMS moved forward with more packaging and the introduction of C-APCs, which are like mini-DRGs," says Jugna Shah, MPH, president and founder of Nimitt Consulting, based in Washington, D.C., and Spicer, Minnesota. "The agency has been telling us for years that it's wanted to make the OPPS less of a fee schedule and more of a prospective payment system, like the IPPS.
"What may come as a surprise to providers are the nuances of the operational and financial impact of these changes that go live on January 1, 2015," she says.
CMS identified certain high-cost, typically device-related outpatient procedures to serve as the primary service for C-APCs. These services will receive separate payment, while other services reported on the same claim will be packaged, with some minor exceptions. 
The CPT® codes that are part of the C-APC logic are assigned status indicator J1, and when a J1 service is reported on a claim, CMS will pay for it. CMS will consider most other items and services on the claim adjunctive, supportive, related, or dependent. These items and services will be packaged in 2015, even though they currently generate separate payment, according to Shah.
Services that are statutorily excluded from the OPPS, pass-through drugs and devices, and self-administered drugs will be excluded from packaging with C-APCs.
CMS finalized a policy to recognize more complex cases and to pay for them accordingly using a complexity adjustment, such as when two J1 procedures are reported on the same claim. When the facility reports one of these combinations, CMS will increase the payable APC to the next higher APC in the clinical group, similar to DRGs on the inpatient side.
CMS established 25 C-APCs for 2015 and expects to create more in subsequent years.
"It’s a little unfortunate that CMS did not make changes based on commenters' requests related to the C-APC packaging logic for all services reported on a single claim, since claims can span multiple days and may have more than just the C-APC-related services submitted,” says Shah. 
"This is definitely an issue for providers who use multi-day claims, who will have to assess the impact of these changes prior to January 1, 2015," she says.
CMS did not finalize three of the proposed C-APCs because of provider concern regarding higher-cost unrelated services that are often performed with those proposed C-APCs.
“Providers spoke up and CMS listened to these comments, backing off its original proposal," says Shah. "If finalized, those C-APCs would have had an inappropriate and potentially large financial impact on certain providers.”
Device-dependent edits
CMS finalized its proposed changes to device-dependent edits beginning in 2015 and will require facilities to report a device code for procedures currently assigned to a device-dependent APC.
Providers will be required to report any medical device C code listed among the device codes, rather than a particular device C code to meet the requirement for reporting a device for device-dependent procedure APCs, according to Shah.
CMS will implement additional changes to ensure only the correct claims receive edits for these services. 
Expanded packaging
CMS has been expanding packaging each year in the OPPS, and the 2015 OPPS final rule is no different, with more changes being finalized for packaged services.
"CMS is moving full-steam ahead with packaging and finalized all of its proposals for expanding packaging," says Shah.
CMS finalized changes to conditional packaging of ancillary services, which includes services that currently have a status indicator X (ancillary services), as well as those with a geometric mean cost of less than or equal to $100, with some exceptions for preventive services, counseling/psychiatry, and drug administration services.
CMS will delete status indicator X as of January 1, 2015, because services assigned to this indicator will either be assigned status indicator Q1 (conditionally packaged) or S (significant procedure, not discounted when multiple).
Ancillary services that currently generate separate payment will not in 2015 when they are provided on the same date of service as a procedure or visit.
CMS also finalized the packaging of add-on codes assigned to device-dependent APCs.
All medical and surgical supplies covered under the OPPS will now be packaged as well. CMS will also change the status indicator for all prosthetics on the Durable Medical Equipment Prosthetic and Orthotics Supplies fee schedule from A (services that are paid under a fee schedule or payment system other than OPPS) to N (items and services packaged into APC rates).
Data collection for off-campus, provider-based departments
To better understand the frequency and types of services furnished in provider-based departments in off-campus locations, CMS finalized a new data collection requirement that impacts both physician and hospital reporting.
In the 2015 OPPS proposed rule, CMS proposed a HCPCS modifier be appended to every code for a service furnished in a hospital's off-campus provider-based department on both the CMS-1500 claim form for physicians’ services and the UB-04 form (CMS Form 1450) for hospital outpatient services.
Despite receiving many detailed comments opposing this change, CMS says commenters did not present a consensus alternate and therefore it is moving forward with implementing its policy, with some modifications.
Physicians will only be required to report a new place of service (POS) code, but hospitals will have to append the new modifier on all services provided in an off-campus provider-based department.
"CMS’ modification for physician reporting will make physicians' lives easier, but unfortunately no such luck for hospitals," says Shah. "Hospitals will have to report a modifier on each and every outpatient service provided in an off-campus provider-based department. The only good news is that CMS is allowing a one-year voluntary reporting period during which time hospitals can figure out how to implement the reporting."
The new reporting requirement will become mandatory for hospital reporting starting January 1, 2016, but likely sooner for physician reporting, since physicians already report POS codes.
CMS plans to request two new POS codes to replace POS code 22 (hospital outpatient), but does not expect them to be available before July 1, 2015. Once they are available, CMS will require the new codes on applicable professional claims.
Physician certification of inpatient services
Currently, CMS requires physician certification, including an admission order, for all inpatient admissions, but that will change in 2015 due in part to provider feedback on the requirement.
CMS finalized a policy to only require physician certification for long-stay cases of 20 days or longer, as well as outlier cases. Many commenters supported this proposal because it would help increase efficiency and reduce administrative burden.
"For these two types of cases, CMS says physician certification is needed and has finalized formal certification requirements beyond the admission order to substantiate the medical necessity of these cases," says Shah. "But CMS stresses that it does not a specific template or method for how this certification must be done."
Other changes
CMS increased the packaging threshold to $95 in 2015 after proposing to keep it at the 2014 level. CMS will maintain payments of average sales price plus 6% for all separately payable drugs, biologicals, and radiopharmaceuticals.
The packaging of diagnostic radiopharmaceuticals and contrast agents did not change, nor did the payment methodology of therapeutic radiopharmaceuticals or brachytherapy.
One year after introducing radical changes to E/M services, CMS did not propose or finalize any changes for 2015. Providers will continue to report the single visit G code and the current CPT and G codes for Type A and Type B ED visits.
Based on provider comments, CMS is removing the following add-on procedure codes from the inpatient-only list:
  • 63043, laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, foraminotomy and/or excision of herniated intervertebral disc, reexploration, single interspace; each additional cervical interspace
  • 63044, laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, foraminotomy and/or excision of herniated intervertebral disc, reexploration, single interspace; each additional lumbar interspace
These codes have been assigned status indicator N (no additional payment, payment included in line items with APCs for incidental service).
CPT code 22222 (osteotomy of spine, including discectomy, anterior approach, single vertebral segment; thoracic) will be added to the inpatient-only list for 2015.
A full list of inpatient-only procedures is included in Addendum E of the final rule.
CMS is increasing OPPS payments by 2.2%, which is based on the final hospital inpatient market basket percentage increase of 2.9%, minus .7% in adjustments due to the Affordable Care Act and multifactor productivity.
CMS will continue to implement a statutory 2 percentage point reduction in payments for hospitals that fail to the meet outpatient quality reporting requirements by applying a reporting factor of .980 to applicable services.
For more analysis on the changes in the 2015 OPPS final rule and how to implement them, join Shah and Valerie A. Rinkle, MPA, at 1 p.m. (Eastern) on Tuesday, December 9, for HCPro's 12th annual OPPS final rule webcast.