2016 OPPS final rule establishes negative payment update, moves 2-midnight rule review to QIOs

HCPRO Website, November 5, 2015

By Steven Andrews
The policies in the 2016 OPPS final rule, released Friday, October 30, present a give and take for providers, as CMS finalized a negative payment update for the first time ever, but also listened to commenters on some potentially burdensome proposals.
“CMS’ language is quite firm in parts of the rule when explaining why some proposals were finalized, but the agency also showed its willingness to listen to providers who submitted detailed comments for other proposals,” says Jugna Shah, MPH, president and founder of Nimitt Consulting, based in Washington, D.C., and Spicer, Minnesota.
Despite congressional pressure, CMS finalized its proposal to reduce the conversion factor by 2% to account for its overestimation of dollars for packaged labs built into the 2014 APC rates. The 2% reduction, along with other adjustments, results in decreasing APC payment rates under the OPPS by 0.3% in 2016. This will lower payments to hospitals by approximately $133 million compared to 2015, excluding estimated changes in enrollment, utilization, and case mix.
CMS’ main reason for applying the 2% reduction is to fix an error it made: The agency underestimated the amount of money it would need to have available to separately pay for laboratory tests under the Clinical Laboratory Fee Schedule (CLFS) and overestimated how many dollars to package into OPPS payment rates in 2014.
Basically, CMS believes it packaged too many dollars into the OPPS and has made duplicate payments this year—both through packaged payment incorporated into the OPPS payment rates and also through separate payment made through the CLFS, says Shah.
CMS limits data collection modifier, adds C-APCs
CMS finalized 10 new comprehensive APCs (C-APC) for 2016, including an observation C-APC to replace the existing extended assessment and management composite APC. The observation C-APC will provide payment for all services furnished during a nonsurgical outpatient encounter when the patient receives eight or more hours of observation. 
A win for providers is that CMS will allow any ED visit level code to qualify for the new C-APC, rather than just the high-level codes as is the case with the current composite APC, says Shah.
CMS finalized a new data collection modifier for providers to use when reporting related/adjunctive services associated with the comprehensive service (status indicator J1) of stereotactic radiosurgery (SRS), rather than extending the modifier to all C-APCs as had been proposed. 
Commenters expressed operational concerns and raised questions to CMS about using the new modifier to report “related/adjunctive” services for all C-APCs, and the great news is that CMS listened; it backed off its proposal and only finalized use of this modifier for the SRS C-APC, says Shah.
CMS will require modifier -CP (adjunctive service related to a procedure assigned to a C-APC procedure, but reported on a different claim) for adjunctive services related to SRS services described by HCPCS codes 77371 and 77372 but reported on a separate claim. CMS expects the new modifier to be used with adjunctive services provided within 30 days prior to SRS treatment. Providers can expect more details on the use of this modifier and responses to commenters’ technical questions through subregulatory guidance that CMS intends to release before January 1, 2016, says Shah.
“The fact that modifier -CP is only being applied to SRS is a big win for now,” she says. “But providers will still have to determine how they will operationalize this modifier for SRS.”
2-midnight rule changes finalized
CMS finalized its proposals regarding the 2-midnight rule, including moving responsibility for rule enforcement and education from Recovery Auditors to Quality Improvement Organizations (QIO). This latter change occurred October 1, 2015.
For stays in which the physician expects the patient will need less than two midnights of hospital care, inpatient admission may be allowed on a case-by-case basis determined by the judgment of the admitting physician. The documentation must support the admission and will be subject to review by a QIO. CMS expects inpatient admission for minor surgical procedures to be unlikely and will prioritize those cases for medical review. For hospital stays expected to last two midnights or longer, CMS policy remains unchanged.
Finalizing the 2-midnight rule proposal doesn’t come as much of a surprise, says Shah, but what remains to be seen is how the QIOs handle the review process compared to Recovery Auditors. For providers who worked with the physician staff and currently see good documentation, this change is likely to have little or no impact, she says.
Coding and billing updates
In addition to the new policies and payments outlined in the final rule, providers will find some guidance on specific coding and billing issues.
CMS released HCPCS codes G0296 (counseling visit to discuss need for lung cancer screening using low-dose CT scan) and G0297 (low-dose CT scan for lung cancer screening) for billing January 1, 2016. It’s great to see CMS finally release these long-awaited codes, says Shah, and it’s good to see the rule specify that the effective date for these codes goes back to the NCD effective date of February 5, 2015.
“Unfortunately, CMS did not extend the timely filing date for these claims, so providers will need to prepare and submit claims for payment as soon as possible after January 1,” says Shah.
The final rule also includes specific guidance about hospital billing and payment for intensity-modulated radiotherapy (IMRT) services reported by HCPCS codes 77290 (therapeutic radiology simulation-aided field setting; complex) and 77301 (IMRT planning). CMS responded to commenters who were confused about the professional and technical billing for these codes.
Providers will need to review the information in the final rule carefully and watch for updated guidance in the Medicare Claims Processing Manual, says Shah.
Packaging expansion
CMS finalized nearly all of its proposals related to packaging for 2016. It expanded packaging of labs, except for existing and new molecular pathology services and all preventive lab tests, from date of service to the claim level.
The packaging of labs across claims, as well as the introduction of more C-APCs where claim-level payment is occurring, are two more signs that CMS is continuing to move the OPPS from a fee-for-service system to more of a bundled payment system, says Shah.
CMS did finalize assignment of status indicator Q4 to all labs that are eligible to be packaged. “This is something providers asked for and is good news, as this will allow automatic CLFS payment when labs are basically the only service billed on a claim,” Shah says.
All CPT®/HCPCS codes assigned to Level 4 minor surgical procedures will be conditionally packaged (status indicator Q2). CPT/HCPCS codes assigned to Level 3 and 4 pathology service APCs will also be conditionally packaged (status indicator Q1). Three separately payable drugs used as supplies with a surgical procedure will also be packaged starting in 2016.
CMS also released the 2016 Medicare Physician Fee Schedule final rule on October 30, but has not yet released the final Comprehensive Care for Joint Replacement rule. For coverage of these rules, see upcoming issues of Briefings of APCs.
For full analysis of the final rule, including information about reconfigured APC families and device-intensive procedure APCs, join Shah and Valerie Rinkle, MPA, for HCPro’s annual OPPS final rule webcast Tuesday, December 8.The 2016 OPPS final rule will appear in the November 13 issue of the Federal Register.