CMS Proposed 2018 Medicare Rules: What Lies Ahead?

Here in Washington, D.C., as we count down the days remaining in the Congressional August recess, the Centers for Medicare & Medicaid Services (CMS) has reminded us that big changes in healthcare are not limited to the political brinkmanship of ACA repeal. On July 13, 2017, the agency released its CY 2018 proposed Hospital Outpatient Prospective Payment System (OPPS) and Physician Fee Schedule (PFS) rules. The proposed OPPS rule was the big news this year, signaling major changes may be in store for hospital reimbursement in 2018. The agency is proposing significant reduction in payment for drugs purchased under the 340B Drug Pricing Program and for 2018, CMS is proposing further reimbursement reductions for new off-campus provider-based departments (PBDs).

Holy OPPS!
The 340B Drug Pricing Program, created in 1992, requires drug manufacturers to provide outpatient drugs at a discounted price to eligible healthcare facilities who are generally providing care to a certain percentage of indigent patients. While the 340B program has grown, and reform has been widely debated by policymakers over the past decade, CMS’ rule proposes to fundamentally alter the way providers will get reimbursed for drugs purchased through the program. It’s worth noting though that 340B oversight is under the jurisdiction of the Health Resources & Services Administration (HRSA), an agency of the U.S Department of Health and Human Services, and not under CMS purview.

For 2018, under the OPPS CMS proposes to reduce Medicare reimbursement for separately payable drugs without pass-through status purchased through the 340B Program from average sale price (ASP) plus six percent to ASP minus 22.5 percent. Further, because CMS cannot currently identify 340B drugs in Medicare OPPS claims data, CMS also proposes to require that hospitals submitting claims for separately payable drugs not acquired through the 340B program use a modifier on the claim to be reimbursed at ASP plus six percent.

Medicare’s HOP Panel Weighs In
ACCC continues to work through the details of the proposal and meet with policymakers and other stakeholders to put forward meaningful, workable solutions for reforming the 340B program. Most recently, on August 21, ACCC and other stakeholders testified at Medicare’s Advisory Panel on Hospital Outpatient Payment (HOP) meeting, outlining the deleterious impact this proposal would have on cancer programs participating in the 340B program. (ACCC also testified against the agency’s proposal to related to packaging Level 1 and 2 drug administration services, more on this below.) At the conclusion of the meeting, the HOP Panel voted to recommend to CMS that the agency drop the current proposal to cut 340B payments.

To learn more about CMS’ proposal and ACCC advocacy efforts, join us in Nashville, Oct. 18-20 at the 34^th ACCC National Oncology Conference.

And There’s More
Another significant proposed change relates to packaging of drug administration services. Currently CMS excludes packaging of low-cost drug administration services (i.e., costing less than or equal to $100) from the ancillary services packaging policy. For 2018, the agency is proposing to package Level 1 and 2 drug administration services when these services are performed with another separately payable service, but pay for them separately when performed alone. CMS believes that this “conditional” packaging of drug administration services will promote equitable payment between physician offices and hospital outpatient departments. ACCC disagrees with the agency’s rationale and will be urging CMS not to finalize this policy.

Opportunity to Comment on 14-Day Rule
In the 2018 proposed OPPS rule, CMS is also soliciting comments on the “14-Day Rule.”  This is a policy that determines when a hospital may bill Medicare for a clinical diagnostic laboratory test versus when the laboratory performing the test may bill Medicare directly. CMS is considering potential modifications to the “14-Day Rule” that would allow labs to bill Medicare directly for molecular pathology tests and advanced diagnostic laboratory tests. ACCC played an active role in requesting that this policy be reopened for public comment.

Moving to the Proposed 2018 PFS Rule: CMS Proposes Change to Site-Neutral Payment
For 2018, CMS is proposing to further reduce reimbursement for non-excepted off-campus provider-based departments (PBDs). [Notably, this provision is included in the PFS proposed rule, despite impacting facilities traditionally billing under the OPPS, because in 2017, the PFS was the “applicable payment system” for these non-excepted PBDs and CMS reimbursed them under the PFS at non-facility rates.] Read on for details.

In the 2018 PFS  rule, CMS  proposes to significantly change last year’s site-neutral payment policy and further reduce reimbursement for non-excepted off-campus provider-based departments (PBDs). In general, these are entities that began billing Medicare as an off-campus PBD after November 2015.  For these non-excepted PBDs, the agency is proposing to decrease payment from 50% to 25% of OPPS rates. The agency is basing this proposed rate reduction on a comparison of payment rates for clinic and office visits under both payment systems (i.e., the OPPS and PFS). CMS expressed concern that paying 50% of the OPPS rate might result in payments for items and services that are greater than would otherwise be paid to physician offices under the PFS. Early analysis by ACCC, however, shows that reimbursement at 25% of OPPS will be well below PFS rates for certain services.

Of note: In the proposed rule, CMS does not address whether the payment reduction for drugs acquired under the 340B Program or the modifier for drugs not acquired under that program would apply to these non-excepted office-campus provider-based departments

More on the 2018 Proposed PFS Rule
While, overall, the Physician Fee Schedule was fairly quiet this year, one notable provision is CMS’ approach to payment for biosimilars. For 2018, the agency is proposing to continue its approach (from 2016) that biosimilars will generally share a single HCPCS code and that these products will be grouped into the same payment calculation for the purposes of determining a single ASP payment limit. While CMS isn’t officially opening this policy for comments, the agency requests feedback on how this already-implemented policy will impact the ability to create a competitive marketplace and encourage innovation in the biosimilars market.

Big Picture
Overall, CMS estimates that OPPS payments will increase by nearly two percent next year (except for the impact of the 340B proposal), while under the proposed PFS, payment rates will see no change for hematology/oncology and a one percent increase for radiation oncology in 2018.

Let Us Hear From You
CMS is taking comments on both the OPPS and PFS CY 2018 Proposed Rules through Sept. 11, 2017, and, importantly, also seeking open-ended comments from the public on policies that would maintain flexibility and efficiencies in the Medicare program while reducing unnecessary burdens for clinicians and patients. ACCC is busy drafting its comments and we want to hear from you. Please contact Leah Ralph, Health Policy Director, at lralph@accc-cancer.org with your input. We also encourage you to submit comments directly to CMS at regulations.gov.