CMS Final Rule Is Changing Medicare Physician and Hospital Payments in 2018

With the introduction of modified payment models, healthcare providers have also transformed the way they use to deliver care services. The issue of payment of the physicians upsurges every year and follows with hefty discussions and findings. Interpreting the concerns of physicians, their income is not sufficient enough to fulfill the requirements of running a medical practice. Most of the incentive payment programs seem to be futuristic; portraying a steady increase in the incentive payments based on the data submitted every year. However, the operational cost of running a physician practice is at present and with no compensation from the payers. A majority of the physicians are still dependent on the fee-for-service payment system.

The Centers for Medicare & Medicaid Services (CMS) introduced a much-awaited Final Rule implementing the Medicare physician payment reforms according to which specific changes were seen in the physician payments. OPPS and ASC Final Rule highlights the following changes in the payment model that will be effective from Jan. 1, 2018.

Highlights of the OPPS and ASC Final Rule

1) The decrease in payment for drugs and biologicals purchased with a 340B Program Discount. CMS implemented a significant Medicare Part B payment reduction for separately payable, non-pass-through drugs provided in the hospital outpatient setting. In 2018, CMS will cut Part B reimbursement for certain 340B drugs from ASP plus 6 percent to ASP minus 22.5 percent.

2) Revisions to the laboratory date of service policy to allow laboratories to bill Medicare directly. CMS finalized its proposal to allow laboratories to bill Medicare directly for molecular pathology tests and advanced diagnostic laboratory tests ADLTs.

3) Removal of total knee arthroplasty from the inpatient-only list as well as five other procedures. This year, CMS finalized a policy to remove total knee arthroplasty (TKA) from the Medicare inpatient-only list (IPO) allowing Medicare to reimburse on an outpatient basis.

Highlights of the MPFS Final Rule

1) Changes the Physician Fee Schedule (PFS) payment rates for non-excepted off-campus provider-based hospital departments (PBDs) from 50 percent of the OPPS payment rate to 40 percent of the OPPS rate. For off-campus sites that were not mid-build, CMS paid half of hospital outpatient rates in 2017. The final policy will change the MPFS payment rates for these services from 50 percent of the OPPS payment rate to 40 percent of the OPPS rate.

2) Adds several codes to the list of telehealth services. Additional codes include health risk assessment, care planning for chronic care management and interactive complexity. CMS also finalized separate payment for code 99091, which describes certain remote patient monitoring services.

3) Changes biosimilar payment policies. Newly approved biosimilar biological products with a common reference product will no longer be grouped into the same billing code.

Highlights of the Quality Payment Program Year 2

1) Weighs the Merit-Based Incentive Payments System (MIPS) Cost performance category to 10 percent of a provider’s total MIPS final score and the Quality performance category to 50 percent. In 2018, CMS will begin to measure cost performance, but it will have a low impact on physicians’ overall performance score. CMS also is allocating bonus points that will increase physicians’ performance scores for things such as demonstrating year-to-year improvement in quality or cost performance, treating complex patients and reporting data as a solo practitioner or part of a small practice.

2) Allows the use of 2014 Edition and/or 2015 Edition Certified Electronic Health Record Technology (CEHRT) in Year 2 for the Advancing Care Information performance category; bonus for using only 2015 CEHRT. CMS will not require physicians to migrate to 2015 Edition certified EHRs but instead will allow them to use the 2014 Edition or a combination of the 2014 and 2015 Editions to satisfy the advancing care information category requirements. Those who use the 2015 Edition exclusively in 2018 can earn a bonus of 10 percentage points toward their performance scores.

3) Adds Virtual Groups as participation options for MIPS. Under this option, individual physicians and those practicing in groups of 10 or fewer physicians may voluntarily form a virtual group, regardless of specialty or practice location. This means that their combined performance will be assessed on quality and cost metrics, and the virtual group will be scored together in those categories.

4) Excludes individual MIPS-eligible clinicians or groups with less than/equal to $90,000 in Part B allowed charges or less than/equal to 200 Medicare Part B beneficiaries. MACRA exempts from MIPS those physicians who provide a low volume of Medicare services. In 2017, physicians were exempt if they billed $30,000 or less in Part B allowed charges or provided care to 100 or fewer Part B patients.

For a detailed study, see Final Rule Overview

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