Transcript PowerPoints APC Update for CY2016

APC/OPPS Update for CY2016
Sponsored By:
APCNow
www.APCNow.com
Presented By:
Duane C. Abbey, Ph.D., CFP
Abbey & Abbey, Consultants, Inc.
[email protected]
http://www.aaciweb.com
http://www.APCNow.com http://www.HIPAAMaster.com
Version 17 - Generic
Notes © 1994-2016, Abbey & Abbey, Consultants, Inc.
CPT® Codes – © 2014-2016 AMA
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 1
Presentation Faculty
Duane C. Abbey, Ph.D., CFP – Dr. Abbey is a healthcare consultant and educator with over 20
years of experience. He has worked with hospitals, clinics,
physicians in various specialties, home health agencies and other health care providers.
His primary work is with optimizing reimbursement under various Prospective Payment
Systems. He also works extensively with various compliance issues and performs
chargemaster reviews along with coding and billing audits.
Dr. Abbey is the President of Abbey & Abbey, Consultants, Inc. A wide range of consulting
services is provided across the country including charge master reviews, APC compliance
reviews, in-service training, physician training, and coding and billing reviews.
Dr. Abbey is the author of fourteen books on health care, including:
•“Non-Physician Providers: Guide to Coding, Billing, and Reimbursement”
•“Emergency Department: Coding, Billing and Reimbursement”, and
•“Chargemasters: Strategies to Ensure Accurate Reimbursement and Compliance”.
Recent books include: “Compliance for Coding, Billing & Reimbursement A Systematic
Approach to Developing a Comprehensive Program”, “Introduction to Healthcare
Payment Systems”, “Fee Schedule Payment Systems” and “Prospective Payment
Systems” from Taylor and Francis. He has just finished the fourth book in the Healthcare
Payment System Series; “Cost-Based, Charge-Based and Contractual Payment Systems”.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 2
Disclaimer
This workshop and other material provided are designed to provide accurate and
authoritative information. The authors, presenters and sponsors have made every
reasonable effort to ensure the accuracy of the information provided in this
workshop material. However, all appropriate sources should be verified for the
correct ICD-9-CM Codes, ICD-10-CM Diagnosis Codes, ICD-10-PCS Procedure
Codes, CPT/HCPCS Codes and Revenue Center Codes. The user is ultimately
responsible for correct coding and billing.
The author and presenters are not liable and make no guarantee or warranty;
either expressed or implied, that the information compiled or presented is errorfree. All users need to verify information with the Fiscal Intermediary, Carriers,
other third party payers, and the various directives and memorandums issued by
CMS, DOJ, OIG and associated state and federal governmental agencies. The
user assumes all risk and liability with the use and/or misuse of this information.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 3
OPPS Final Update for CY2016
Objectives
 To review the many proposed and finalized changes to APCs for 2016.
 To recognize the general trends for APCs with particular attention to
increased bundling.
 To understand how recent changes in the cost reporting process affect
APCs payments.
 To understand the complex nature of APCs and associated compliance
issues including RAC concerns.
 To review changes in grouping with particular attention to new CPT and
HCPCS codes.
 To appreciate the potential financial and operational impact of the
proposed changes.
 To understand how important it is for hospitals to comment to the
proposed changes.
 To understand the difference between composite and comprehensive
APCs.
 To review the possible impact of the proposed change on high impact
areas such as observation, the Emergency Department, interventional
radiology and associated areas.
 To review changes to and trends for the Provider-Based Rule (PBR).
 To discuss anticipated future changes and directions for APCs.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 4
OPPS Final Update for CY2016
Acronyms/Terminology
















APCs – Ambulatory Payment Classifications
APGs – Ambulatory Patient Groups
ASC – Ambulatory Surgical Center
CAH – Critical Access Hospital
CCRs – Cost-to-Charge Ratios
CPT – Current Procedural Terminology
E/M – Evaluation and Management
FFS – Fee-for-Service
HCPCS – Healthcare Common Procedure Coding System
ICD-9-CM – International Classification of Diseases, Ninth Edition, Clinical
MAC – Medicare Administrative Contractor
MedPAC – Medicare Advisory Commission
MPFS – Medicare Physician Fee Schedule
NCCI – National Correct Coding Initiative
AWV – Annual Well Visit
PPPS – Personalized Preventive Plan Services
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 5
OPPS Final Update for CY2016
Acronyms/Terminology















NCD/LCD – National/Local Coverage Decision
NTIOL –New Technology Intraocular Lens
OCE – Outpatient Code Editor
OPD – [Hospital] Outpatient Department
OPPS – [Hospital] Outpatient Prospective Payment System
PHP – Partial Hospitalization Program
PM – Program Memorandum
PPS – Prospective Payment System
QIO – Quality Improvement Organization
SI – Status Indicator
ASC – Ambulatory Surgical Center
RBRVS – Resource Based Relative Value System
MPFS – Medicare Physician Fee Schedule  Developed through RBRVS
VBP – Value Based Purchasing
PCR – Payment to Cost Ratio
 Note: The Federal Register entry has pages of acronyms!
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 6
OPPS Final Update for CY2016
General Comments
 APCs are becoming increasingly complex and more difficult to understand.
 Enormous Federal Register entries are now the norm.
 APCs represent a payment system that is experiencing significant changes
each year.
 Significantly increased bundling through packaging is still being added.
 APCs appear to be moving back toward APGs.
 There are wide variations in payments from year to year.
 Significant compliance concerns exist within the overall APC payment
system.
 In some cases these compliance concerns result because of lack of
explicit guidance from CMS.
 At some point the RAC auditors will become more involved in APCs.
 APCs and the underlying coding systems (i.e., CPT and HCPCS) generate
constant change and the need to be updated.
 Tracking and verifying that correct payment is received is difficult.
 It is critical to track adjudication and overall payment.
 Major issues with hospital charges, CCRs and the cost report are present.
 Federal Register Fanatics  Look for how many times the word
‘believe’ is used by CMS. What are you allowed to ‘believe’?
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 7
OPPS Final Update for CY2016
General Comments
 Note: Citations to the Federal Register are to the November 13, 2016, 1633F edition (yes, Friday the 13th!) – 311 pages(!)
 This Federal Register entry discusses a number of different topics. Not all
the topics discussed necessarily relate to APCs (Ambulatory Payment
Classifications). ASCs (Ambulatory Surgical Centers) are now paid under a
hybrid payment system of APCs and MPFS (Medicare Physician Fee
Schedule).
 Here are some of the other issues discussed in this Federal Register.
 Hospital Outpatient Prospective Payment and Ambulatory Surgical
Center Payment Systems and Quality Reporting Programs;
 Short Inpatient Hospital Stays;
 Transition for Certain Medicare-Dependent, Small Rural Hospitals under
the Hospital Inpatient Prospective Payment System;
 Provider Administrative Appeals and Judicial Review
 This is a final Federal Register entry, so there are very few topics for which
comments can be made.
 Also, be certain to download all the Addenda that are in compressed
format. Particularly, Addendum A and Addendum B. Note also Addendum
C for the Status Indicators that drive the APC grouping process.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 8
OPPS Final Update for CY2016
APC Background Information
 APC Fundamentals
 Encounter Driven System
• Some Exceptions – Example: Two separate blood transfusions on
the same day or two imaging services at different times on the
same day.
 CPT/HCPCS Code Driven
• If the service is not coded with a CPT or HCPCS (and/or proper
modifiers), then there will be absolutely no payment!
 APC Grouper  Multiple APCs from Given Claim
 Inpatient-Only Procedures
• Surgery, if performed outpatient, will not be paid at all! (Patient
Liability?)
• How is this list determined?
 Covered, Non-Covered and Payment System Interfaces
• Example: Self-Administrable Drugs
 Pass-Through Payments – Directly Based on Charges Made – Covert
Charges to Costs How? (Hint: Cost-to-Charge Ratios)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 9
OPPS Final Update for CY2016
APC Background Information
 APC Weight, and Thus Payment, Determination
 Hospital Charges Converted to Costs
• How is this done?
• Do we charge for everything?
• Do we charge correctly for everything?
 Statistical Process Using the Costs
• Geometric Mean
• Mean Cost for Given APC/Mean Cost for All APCs = the APC Weight
 Variation of Costs Within a Given APC Category
• “ … we annually review the items and services within an APC group
to determine, with respect to comparability of the use of resources,
if the highest cost for an item or service in the APC group is more
than 2 times greater than the lowest cost for an item or service
within the same APC group (referred to as the “2 times rule”).” (80
FR 70373)
 The list for this year is significantly shortened:
o 5165 – Level 5 ENT Procedures
o 5731 – Level 1 Minor Procedures
o 5841 - Psychotherapy
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 10
OPPS Final Update for CY2016
APC Background Information
 Use of Claims to Statistically Develop the APC Weights
 Because outpatient encounters often involve multiple services, the APC
grouping process often (if not a majority of the time) generates multiple
APCs.
 CMS can use only pure claims, that is, claims that group to a single
APC. These are called ‘singleton’ claims.
 CMS is trying very hard to get around this situation because many of
the claims filed by hospitals never get considered when the actual APC
weights are determined.
• Small Example: CPT=86891 – Intra- or Post-Operative Blood
Salvage
 For CY 2016, APC=5674, SI=“Q1” (STV-Packaged)
o Payment is $440.53
o CY2015  $125.07, CY2012  $14.95
o What is going on here?
 A device is used to save blood, reprocess the blood and
generally re-infuse.
 Is it possible to have ONLY 86891 on a claim?
 What are the costs involved?
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 11
OPPS Final Update for CY2016
APC Background Information
 APC Cost Outliers
 Complicated Two-Tiered Formula
 Based on Excessive Costs - How are costs determined?
 Nationally, does CMS make full outlier payments?
 Provider-Based Rule (42 CFR §413.65)
 Provider-Based Clinics
 Provider-Based Clinical Services
 Potentially, two claim forms filed – CMS-1450 (UB-04) for technical
component and CMS-1500 (1500) for professional component.
 Reduction in payment for professional component
• Site-of-Service Differential in RBRVS (MPFS)
• Place-of-Service (POS) driven on CMS-1500
 Series of Criteria to Meet If to be Provider-Based
• On-Campus versus Off-Campus  See New Reporting
Requirements – “-PO” Modifier on UB-04 & POS=19/22 on the 1500
claim form.
• See Physician Supervision Developments  Important
 Changes in rules, regulations and interpretations.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 12
OPPS Final Update for CY2016
APC Background Information
 ASCs – Ambulatory Surgical Centers
 In CY2008 CMS Started a Hybrid of APCs and RBRVS
 FR entries for APCs will now also be for ASCs
 ASC Surgery List
• Regular ASC Surgeries
• Office-Based Surgeries  New Additions & Changes
• Conditions for Coverage (CfCs)
• Additions and Deletions to Lists
 Payment Formula
• ASC Surgery  65% of APC
• Office-Based Surgeries – Lesser of:
 65% of APC or
 Non-Facility PE RVU from MPFS
• Physician Paid Facility MPFS (As With Hospitals)
 Separate Payment for Certain Ancillary Services
 Did all the features of APCs translate over?
• Exercise: The CF for APCs is $73.725, while the CF for ASCs is
$44.177. Is this 65%? $44.177/$73.725 = 0.5992 or 59.92%
• Note: OIG wants ASC approved hospital OP surgeries paid at ASC
level.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 13
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Blood and Blood Products
• There is a longstanding issue of proper CCRs (Cost-to-Charge
Ratios) from the cost report. Some hospitals report detailed
blood/blood products charges and costs, other hospitals do not.
• “In the CY 2016 OPPS/ASC proposed rule (80 FR 39222), for CY
2016, we proposed to continue to establish payment rates for blood
and blood products using our blood-specific CCR methodology,
which utilizes actual or simulated CCRs from the most recently
available hospital cost reports to convert hospital charges for blood
and blood products to costs. This methodology has been our
standard ratesetting methodology for blood and blood products
since CY 2005.” (80 FR 70322)
• “After consideration of the public comments we received, we are
finalizing, without modification, our CY 2016 proposal to continue to
establish payment rates for blood and blood products using our
blood-specific CCR methodology.” (80 FR 70322)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 14
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Blood and Blood Products
• This is an area worth checking the actual APC payments from
Addendum A and Addendum B relative to costs. There has been
great variability is the several past years.
• New P-Codes
•
P9070 (Plasma, pooled multiple donor, pathogen reduced,
frozen, each unit) - $73.08;
•
P9071 (Plasma (single donor), pathogen reduced, frozen, each
unit) - $72.56; and
•
P9072 (Platelets, pheresis, pathogen reduced, each unit) $641.85.
 These are interim payment rates. Hospitals providing these
kinds of blood products should track costs carefully.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 15
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Brachytherapy Sources
• “Section 1833(t)(2)(H) of the Act mandates the creation of additional
groups of covered OPD services that classify devices of
brachytherapy consisting of a seed or seeds (or radioactive source)
(“brachytherapy sources”) separately from other services or groups
of services.” (80 FR 70323)
• “… we believe that adopting the general OPPS prospective payment
methodology for brachytherapy sources is appropriate for a
number of reasons (77 FR 68240).” (80 FR 70323)
• “We based the proposed payment rates for brachytherapy sources
on the geometric mean unit costs for each source, consistent with
the methodology proposed for other items and services paid under
the OPPS, as discussed in section II.A.2. of the proposed rule and
this final rule with comment period.” (80 FR 70323)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 16
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Brachytherapy Sources
• “As stated above, we believe that geometric mean costs based on
hospital claims data for brachytherapy sources have produced
reasonably consistent per-source cost estimates over the past
several years, comparable to the patterns we have observed for
many other OPPS services whose payments are set based upon
relative payment weights from claims data. We believe that our persource payment methodology specific to each source’s
radioisotope, radioactive intensity, and stranded or non-stranded
configuration, supplemented by payment based on the number of
sources used in a specific clinical case, adequately accounts for
the major expected sources of variability across treatments.” (80
FR 70324)
• “Under the OPPS, it is the relativity of costs, not the absolute costs,
that is important, and we believe that brachytherapy sources are
appropriately paid according to the standard OPPS approach. (80
FR 70324)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 17
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Brachytherapy Sources
• “Therefore, when establishing charges for HDR iridium-192, we
expect hospitals to project the number of treatments that would be
provided over the life of the source and establish charges for the
source accordingly.” (80 FR 70324)
• “We believe that some variation in relative cost from year to year is
to be expected in a prospective payment system, particularly for
low-volume items.” (80 FR 70325)
 Why does CMS break out this discussion about payments for
brachytherapy sources?
 How is CMS ‘supposed’ to be paying form brachytherapy
sources.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 18
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Establishment of Comprehensive APCs
• “In the CY 2014 OPPS/ASC final rule with comment period (78 FR
74861 through 74910), we finalized a comprehensive payment policy
that packages payment for adjunctive and secondary items,
services, and procedures into the most costly primary procedure
under the OPPS at the claim level. The policy was finalized in CY
2014, but the effective date was delayed until January 1, 2015, to
allow additional time for further analysis, opportunity for public
comment, and systems preparation. The comprehensive APC (CAPC) policy was implemented effective January 1, 2015, with
modifications and clarifications in response to public comments
received regarding specific provisions of the C-APC policy (79 FR
66798 through 66810).” (80 FR 70325)
• “Payments for adjunctive services are packaged into the payments
for the primary services. This results in a single prospective
payment for each of the primary, comprehensive services based on
the costs of all reported services at the claim level.” (80 FR 70326)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 19
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Comprehensive APCs
• “Under this policy, we designated a HCPCS code assigned to a CAPC as the primary service (identified by a new OPPS status
indicator “J1”).”
• See the related concept of “Significant Procedure Consolidation”
from APGs (Ambulatory Patient Groups).
• See also the NCCI Edit Coding Policy Manual for information
concerning integral part and coding edits.
• What is excluded from the C-APCs?
 Non-Covered Services
 Services that must be paid separately (e.g., mammography,
ambulance, brachytherapy, self-administered drugs, items paid
on a cost pass-through basis.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 20
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Comprehensive APCs
• What about therapy services being included in the C-APCs?
 “In addition, payment for outpatient department services that
are similar to therapy services and delivered either by
therapists or non-therapists is included as part of the payment
for the packaged complete comprehensive service.” (80 FR
70326)
• What about other items?
 “Items included in the packaged payment provided in
conjunction with the primary service also include all drugs,
biologicals, and radiopharmaceuticals, regardless of cost,
except those drugs with pass-through payment status and
those drugs that are usually self-administered (SADs), unless
they function as packaged supplies …” (80 FR 70326)
 “We also excluded preventive services.” (80 FR 70326)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 21
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Comprehensive APC
• “We define each hospital outpatient claim reporting a single unit of
a single primary service assigned to status indicator “J1” as a
single “J1” unit procedure claim (78 FR 74871 and 79 FR 66801). We
sum all line item charges for services included on the C-APC claim,
convert the charges to costs, and calculate the “comprehensive”
geometric mean cost of one unit of each service assigned to status
indicator “J1.” (We note that we use the term “comprehensive” to
describe the geometric mean cost of a claim reporting “J1”
service(s) or the geometric mean cost of a C-APC, inclusive of all of
the items and services included in the C-APC service payment
bundle.) (80 FR 70327)
• “We implement this type of complexity adjustment when the code
combination represents a complex, costly form or version of the
primary service according to the following criteria:
 Frequency of 25 or more claims reporting the code combination
(frequency threshold); and
 Violation of the 2 times rule (cost threshold).” (80 FR 70327)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 22
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Comprehensive APC
• Commenters Objected To Inclusion of Unrelated Services
• “Further, we note that the comments received regarding this issue
were primarily concerned with unrelated services reported on
claims spanning 30 days. We have previously issued manual
guidance in the Internet Only Manual, Pub. 100–4, Chapter 1,
Section 50.2.2, that states that only recurring services should be
billed monthly. We also have specified that, in the event that a
recurring service occurs on the same day as an acute service that
falls within the span of the recurring service claim, hospitals should
bill separately for recurring services on a monthly claim (repetitive
billing) and submit a separate claim for the acute service (79 FR
66804).” (80 FR 70329)
• What about DME?
• “The costs of durable medical equipment, prosthetics, and
orthotics have been accounted for in the OPPS. Funds were
transferred from the DMEPOS Fee Schedule to the OPPS to account
for costs of durable medical equipment.” (80 FR 70330)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 23
OPPS Final Update for CY2016
Final Changes
 Concerns About C-APCs
 There is an extensive Federal Register discussion of the C-APCs which
is appropriate given the degree of bundling that is taking place.
 Is there anyway for hospitals to know if these C-APCs are being
implemented correctly?
 Commenters Suggested the Following Be Broken Out:
• •
Dialysis and emergency dialysis services.
• •
Blood products.
• •
Expensive diagnostic tests, such as angiography.
• H
•igh-cost drugs and devices that account for a high percentage of
the geometric mean cost of a C-APC.
• O
•utpatient services paid under a payment schedule, such as
laboratory services.
 CMS has rejected such recommendations.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 24
OPPS Final Update for CY2016
Final Changes
 Recalibration of APC Relative Payment Weights
 Comprehensive APCs
• “After consideration of the public comments we received, we are
finalizing our proposal with a slight modification to establish 10
additional C-APCs to be paid under the existing C-APC payment
policy beginning in CY 2016.” (80 FR 70332)
 5165 Level 5 ENT Procedures
 5492 Level 2 Intraocular Procedures
 5416 Level 6 Gynecologic Procedures
 5361 Level 1 Laparoscopy
 5362 Level 2 Laparoscopy
 5123 Level 3 Musculoskeletal Procedures
 5125 Level 5 Musculoskeletal Procedures
 5375 Level 5 Urology and Related Services
 5881 Ancillary Outpatient Services When Patient Expires
 8011 Comprehensive Observation Services
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 25
OPPS Final Update for CY2016
Final Changes
 New Observation C-APC 8011
 “As part of our expansion of the C-APC payment policy methodology,
we have identified an instance where we believe that comprehensive
payments are appropriate, that is, when a claim contains a specific
combination of services performed in combination with each other, as
opposed to the presence of a single primary service identified by status
indicator “J1.” To recognize such instances, in the CY 2016 OPPS/ASC
proposed rule (80 FR 39226), for CY 2016, we proposed to create a new
status indicator “J2” to designate specific combinations of services
that, when performed in combination with each other and reported on a
hospital Medicare Part B outpatient claim, would allow for all other
OPPS payable services and items reported on the claim (excluding all
preventive services and certain Medicare Part B inpatient services) to
be deemed adjunctive services representing components of a
comprehensive service and resulting in a single prospective payment
for the comprehensive service based on the costs of all reported
services on the claim.” (80 FR 70333)
• Note: This is a generalized statement that opens a new doorway.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 26
OPPS Final Update for CY2016
Final Changes
 New Observation C-APC 8011
 “As stated earlier, we proposed to assign certain combinations of
procedures within proposed new C-APC 8011 to the proposed new
status indicator “J2,” to distinguish the new C-APC 8011 from the other
C-APCs. Comprehensive payment would be made through the new CAPC 8011 when a claim contains a specific combination of services
performed in combination with each other, as opposed to the presence
of a single primary service identified by status indicator “J1.”” (80 FR
70333)
 “… and all of the OPPS payable services performed would be deemed
adjunctive services to the primary status indicator “J1” service,
including the specific combination of services performed in
combination with each other that would otherwise qualify for payment
through a C-APC based on the primary procedure being assigned to
status indicator “J2.” (80 FR 70334)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 27
OPPS Final Update for CY2016
Final Changes
 New Observation C-APC 8011
 “Accordingly, we are adopting a policy that payment for observation
services will always be packaged when furnished with a procedure
assigned status indicator “T.” For CY 2016, consistent with our
modified final policy discussed in this final rule with comment period,
payment for observation services will be packaged into the surgical
procedure when comprehensive observation services are furnished
with a procedure assigned status indicator “T,” while eligible
separately payable services will receive separate payment.” (80 FR
70334)
 “Allowing all ED visits to be eligible to trigger C-APC payment through
C-APC 8011 means that we will make C-APC payment for the full
spectrum of ED and clinic visits when furnished in conjunction with 8
or more hours of observation and without a surgical procedure.” (80
FR 70334)
 “One commenter requested that CMS withdraw its requirement to
“carve out,” or not include under the reported observation hours, the
number of hours associated with active monitoring.” (80 FR 70335)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 28
OPPS Final Update for CY2016
Final Changes
 New Observation C-APC 8011
 “After consideration of the public comments we received, effective
beginning CY 2016, we are finalizing our proposals to delete APC 8009,
to establish new C-APC 8011, and to develop the geometric mean costs
of the C-APCs based on the costs of all reported OPPS payable
services reported on the claim (excluding all preventive services and
certain Medicare Part B inpatient services). We also are finalizing our
proposal to pay for all qualifying extended assessment and
management encounters through C-APC 8011 and to assign the
services within this APC to proposed new status indicator “J2.” In
addition, we are modifying our proposed criteria for services to qualify
for comprehensive payment through C-APC 8011 and how we identify
all claims used in ratesetting for the new C-APC 8011. Specifically, we
are adopting the following two modifications to our proposal: (1) the
criteria for services to qualify for payment through C-APC 8011 and the
claims identified for purposes of ratesetting for C-APC 8011 will
exclude all claims containing a status indicator “T” procedure from
qualification; and (2) any level ED visit is an eligible service that could
trigger qualification and payment through C-APC 8011, as opposed to
only high-level emergency department visits.” (80 FR 70335) Slide # 29
© 1999-2016 Abbey & Abbey, Consultants, Inc.
OPPS Final Update for CY2016
Final Changes
 New Observation C-APC 8011
 Payment for APC 8011  $2,174.14
 Question: How does this compare with a short stay inpatient
admission?
 Question: How does this handle simple observation through the ED
(e.g., less than a day) compared with a more complex observation
through the ED (e.g., two full days)?
• In other words, is there a wide range of observation services,
particularly with bundling ER visits, that can occur?
 Example: Patient suffers an unrelated laceration requiring intermediate
closure (e.g., CPT 12032) and then spends two days in observation
under a chest pain protocol. What will be paid?
 Example: Patient receives critical care, is stabilized and spends two
days in observation. Will the critical care be separately paid?
 Example: Outpatient surgery followed by two days in observation due
to patients condition. Will the observation be separately paid?
 Exercise: Go to Addendum B and identify all CPT codes with SI=“J2”
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 30
OPPS Final Update for CY2016
Final Changes
 Stereotactic Radiosurgery (SRS) C-APC
 “After consideration of the public comments we received, for CY 2016
and CY 2017, we are finalizing our proposal to remove planning and
preparation services (identified by the following 10 specific HCPCS
codes: 70551, 70552, 70553, 77011, 77014, 77280, 77285, 77290, 77295,
and 77336) from the geometric mean cost calculations for proposed CAPC 5631 which, beginning in CY 2016, will be C-APC 5627 (Level 7
Radiation Therapy). In addition, for CY 2016 and CY 2017, we will
separately pay for planning and preparation services adjunctive to the
delivery of the SRS treatment through either modality, regardless of
whether they are furnished on the same date of service as the primary
“J1” SRS service.” (80 FR 70337)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 31
OPPS Final Update for CY2016
Final Changes
 Data Collection for C-APCs  Pre- and Post- Services
 “As mentioned above, provider practice patterns can create a need for
hospitals to perform services that are integral, ancillary, supportive,
dependent, and adjunctive, hereinafter collectively referred to as
“adjunctive services”, to a comprehensive service prior to the delivery
of that service--for example, testing leads for a pacemaker insertion or
planning for radiation treatment. As the C-APC policy continues to
expand, we need a mechanism to identify these adjunctive services that
are furnished prior to the delivery of the associated primary “J1”
service so that payments under the encounter-based C-APC will be
more accurate. “ (80 FR 70337)
 “We are not finalizing our proposal to require the use of the modifier for
reporting any other C-APC services at this time. We will take these
comments into consideration if we propose a modifier for the other CAPCs in future rulemaking.” (80 FR 70338)
 “Because we are not adopting a policy to require the use of this HCPCS
modifier for other C-APCs at this time, we are not providing additional
information relating to adjunctive services for other C-APCs in this final
rule with comment period.” (80 FR 70338)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 32
OPPS Final Update for CY2016
Final Changes
 Inpatient-Only Composite APC 5881
 “Currently, composite APC 0375 (Ancillary Outpatient Services When
Patient Dies) packages payment for all services provided on the same
date as an inpatient only procedure that is performed on an emergence
basis on an outpatient who dies before admission when the modifier “–
CA” appears on the claim. For CY 2016, we proposed to provide
payment through proposed renumbered C-APC 5881 for all services
reported on the same claim as an inpatient only procedure with the
modifier “–CA.”” (80 FR 70339)
 “We did not receive any public comments on this proposal. Therefore,
we are finalizing, without modification, our proposal to provide
payment through renumbered C-APC 5881 for all services provided on
the same date and reported on the same claim as an inpatient only
procedure with the modifier “–CA.”” (80 FR 70339)
 Payment for C-APC 5881  $6,143.75 (For CY2015  $3,704.16 – Why
the big change?)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 33
OPPS Final Update for CY2016
Final Changes
 Other Composite APCs
 Low Dose Rate (LDR) Prostate Brachytherapy
• See CPT codes 55875 and 77778
• APC 5375  $3,393.73
 Mental Health Services – APC
• “Therefore, we are finalizing our CY 2016 proposal, without
modification, that when the aggregate payment for specified mental
health services provided by one hospital to a single beneficiary on
one date of service, based on the payment rates associated with the
APCs for the individual services, exceeds the maximum per diem
payment rate for partial hospitalization services provided by a
hospital, those specified mental health services will be assigned to
renumbered composite APC 8010 (Mental Health Services
Composite) (existing APC 0034) for CY 2016.” (80 FR 70334)
• APC 8010  $212.67
 Multiple Imaging Composite APCs (8004, 8005, 8006, 8007, 8008)
• No logic changes.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 34
OPPS Final Update for CY2016
Final Changes
 Conditionally Packaged Ancillary Services
 “After consideration of the public comments we received, we are
finalizing our proposal to conditionally packaged ancillary services
assigned to APCs 5734, 5673, and 5674 for CY 2016.” (80 FR 70345)
• 5734 Level 4 Minor Procedures Q1 $119.58
• 5673 Level 3 Pathology Q2 $229.13
• 5674 Level 4 Pathology Q2 $459.96
 What does this mean? Can you think of any examples where this might
be problematic?
 “After consideration of the public comments we received, we are
finalizing our policy to continue to exempt preventive services from the
ancillary services packaging policy for CY 2016.” (80 FR 703454)
 Drugs and Biologicals That Function as Supplies When Used in a
Surgical Procedure
• “Supplies can be anything that is not equipment and include not
only minor, inexpensive, or commodity-type items but also include
a wide range of products used in the hospital outpatient setting,
including certain implantable medical devices, drugs, biologicals,
or radiopharmaceuticals … “ (80 FR 70346)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 35
OPPS Final Update for CY2016
Final Changes
 Conditionally Packaged Ancillary Services
 “In CY 2014, we finalized a policy to package payment for most clinical
diagnostic laboratory tests in the OPPS (78 FR 74939 through 74942
and 42 CFR 419.2(b)(17)). Under current policy, certain clinical
diagnostic laboratory tests that are listed on the Clinical Laboratory Fee
Schedule (CLFS) are packaged in the OPPS as integral, ancillary,
supportive, dependent, or adjunctive to the primary service or services
provided in the hospital outpatient setting on the same date of service
as the laboratory test. Specifically, we conditionally package laboratory
tests and only pay separately for a laboratory test when (1) it is the only
service provided to a beneficiary on a given date of service; or (2) it is
conducted on the same date of service as the primary service, but is
ordered for a different diagnosis than the other hospital outpatient
services and ordered by a practitioner different than the practitioner
who ordered the other hospital outpatient services. (80 FR 70348)
 See the “-L1” modifier
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 36
OPPS Final Update for CY2016
Final Changes
 Conditionally Packaged Ancillary Services
 “We concluded that hospitals generally do not view laboratory tests
occurring on a different day than a primary service during an outpatient
stay as a reason for separate payment. Therefore, we proposed to
package laboratory tests that are reported on the same claim with a
primary service, regardless of the date of service.” (80 FR 70349)
 See Molecular Biology Tests  81490, 81535, 81536, 81538
 SI=“Q4 Conditionally packaged laboratory tests. Paid under OPPS or
CLFS.
• "(1) Packaged APC payment if billed on the same claim as a HCPCS
code assigned published status indicator “J1,” “J2,” “S,” “T,” “V,”
“Q1,” “Q2,” or “Q3.”"
• "(2) In other circumstances, laboratory tests should have an SI=A
and payment is made under the CLFS.“
 Note that this is at a claim level, not a date of service level.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 37
OPPS Final Update for CY2016
Final Changes
 Conversion Factor
 There is a long discussion in the FR entry.
 There is a problem with packaging of laboratory tests.
• “Therefore, we overestimated the adjustment necessary to account
for the new policy to package laboratory tests and underestimated
the amount of spending that would continue for laboratory tests
paid at the CLFS rates outside the OPPS by approximately $1
billion. This $1 billion effectively resulted in inflation in the OPPS
payment rates resulting from excess packaged payment under the
OPPS for laboratory tests for all OPPS services and duplicate
payments for certain laboratory tests because we are paying the
laboratory tests through packaged payment incorporated into the
OPPS payment rates as well as through separate payment at the
CLFS payment rates outside the OPPS.” (80 FR 70353)
• What does this mean? Can you relate this to your hospital?
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 38
OPPS Final Update for CY2016
Final Changes
 Conversion Factor
 “As a result of these finalized policies, the OPD fee schedule increase
factor for the CY 2016 OPPS is 1.7 percent (which is 2.4 percent, the
estimate of the hospital inpatient market basket percentage increase,
less the 0.5 percentage point MFP adjustment, and less the 0.2
percentage point additional adjustment). For CY 2016, we are using a
conversion factor of $73.725 in the calculation of the national
unadjusted payment rates for those items and services for which
payment rates are calculated using geometric mean costs. That is, the
OPD fee schedule increase factor of 1.7 percent for CY 2016, the
required wage index budget neutrality adjustment of 0.9992, the cancer
hospital payment adjustment of 0.9994, the -2.0 percent adjustment to
the conversion factor to eliminate the effects of classification changes
that would otherwise result in an increase in aggregate OPPS payments
(due to excess packaged payment under the OPPS for laboratory tests),
and the adjustment of -0.13 percentage point of projected OPPS
spending for the difference in the pass-through spending result in a
conversion factor for CY 2016 of $73.725.” (80 FR 70357)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 39
OPPS Final Update for CY2016
Final Changes
 Wage Index
 Surprisingly Long Discussion
 “After consideration of the public comment we received, we are
finalizing our proposal, without modification, to continue to use an
OPPS labor-related share of 60 percent of the national OPPS payment
for the CY 2016 OPPS. We also are finalizing the use of the final FY
2016 IPPS post-reclassified wage index for urban and rural areas in its
entirety, including the frontier State wage index floor, the rural floor,
geographic reclassifications, and all other applicable wage index
adjustments, as the final CY 2016 wage index for OPPS hospitals and
CMHCs based on where the facility is located for both the OPPS
payment rate and the copayment standardized amount, …” (80 FR
70359)
 Statewide Average Default CCRs
 See Table 14
 These statewide averages (rural and urban) can be informative to
hospitals relative to the hospitals CCRs.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 40
OPPS Final Update for CY2016
Final Changes
 SCHs and EACHs
 “After consideration of the public comments we received, we are
finalizing our proposal for CY 2016 to continue our policy of a 7.1
percent payment adjustment that is done in a budget neutral manner
for rural SCHs, including EACHs, for all services and procedures paid
under the OPPS, excluding separately payable drugs and biologicals,
devices paid under the pass-through payment policy, and items paid at
charges reduced to costs. “ (80 FR 70362)
 Outlier Payments
 “We simulated aggregated CY 2016 hospital outlier payments using
these costs for several different fixed-dollar thresholds, holding the
1.75 multiple threshold constant and assuming that outlier payments
will continue to be made at 50 percent of the amount by which the cost
of furnishing the service would exceed 1.75 times the APC payment
amount, until the total outlier payments equaled 1.0 percent of
aggregated estimated total CY 2016 OPPS payments. We estimated that
a fixed-dollar threshold of $3,250, combined with the multiple threshold
of 1.75 times the APC payment rate, will allocate 1.0 percent of
aggregated total OPPS payments to outlier payments. (80 FR 70365)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 41
OPPS Final Update for CY2016
Final Changes
 Beneficiary Copayment Amounts
 The goal is to have the coinsurance be at 20%.
• This is the same coinsurance as with the physician MPFS.
• Note: CMS distinguishes coinsurance (a %) from copayment ($
amount).
 With the number of changes that occur each year, that is, APC
assignments, CPT/HCPCS changes and CPT/HCPCS mappings to
APCs, the calculation of the copayment amount for each APC is
sometimes problematic.
 Particularly with new APCs the copayment amount may be above that
which would be calculated at the 20% coinsurance amount.
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 42
OPPS Final Update for CY2016
Final Changes
 New Technology APCs
 Additional 22 New Technology APC Groups for CY2016
 Procedures Assigned to New Technology APC Groups
• Transprostatic Urethral Implants Procedures
• Retinal Prosthesis Implant Procedures
 Payment for Devices
 Expiration of Transitional Pass-Through Payments
 Reducing Transitional Pass-Through Payment to Offset Packaging
 Device-Intensive Procedures
• “After consideration of the public comments we received, we are
finalizing our proposal, without modification, that, beginning in CY
2016, only the procedures that require the implantation of a device
that are assigned to a device-intensive APC will require a device
code on the claim.” (80 FR 70377)
 No Cost/Full Credit and Partial Credit Devices
• See “-FB” and “-FC” Modifiers
 Adjustments to Payment for Discontinued Device-Intensive Procedures
• See “-73”, “-74” and “-52” Modifiers
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 43
OPPS Final Update for CY2016
Final Changes
 Final OPPS APC-Specific Policies
 Treatment of New CPT/HCPCS Codes
 Each year CMS addresses specific areas. Depending upon your
hospital’s services, some of these may be of interest.
 Here are some examples:
• Airway Endoscopy Procedures
• Cardiac Rehabilitation
• Cardiac Telemetry
• Eye Surgery
• Gastrointestinal (GI) Procedures
• Gynecologic Procedures
• Orthopedic Procedures
• Skin Procedures
• Pathology Services
• Radiation Oncology
• Urology
• Vascular Procedures
• ENT Procedures
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 44
OPPS Final Update for CY2016
Final Changes
 Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals
 “After consideration of the public comments we received, we are
finalizing our proposal to provide payment for drugs, biologicals,
diagnostic and therapeutic radiopharmaceuticals, and contrast agents
that are granted pass-through payment status based on the ASP
methodology. If a diagnostic or therapeutic radiopharmaceutical
receives pass-through payment status during CY 2016, we will follow
the standard ASP methodology to determine the pass-through payment
rate that drugs receive under section 1842(o) of the Act, which is
ASP+6 percent. (80 FR 70428)
 Reducing Transitional Pass-Through for Policy-Packaged Drugs and
Biologicals to Offset Costs Packaged into APC Groups
• Diagnostic Radiopharmaceuticals
• Contrast Agents
• Drugs and Biologicals that Function As Supplies
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 45
OPPS Final Update for CY2016
Final Changes
 Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals
 Payment for Drugs, Biologicals and Radiopharmaceuticals without PasThrough Status
• Threshold-Packaged Drugs
• High Cost/Low Cost Threshold for Packaged Skin Substitutes
• Same Drug or Biological But Different Dosages
 Payment for Drugs and Biologicals without Pass-Through Status That
Are Not Packaged
• SCODs – Specified Covered Outpatient Drugs
 Payment Policy for Therapeutic Radiopharmaceuticals
 Payment Adjustment for Radioisotopes
 Payment for Blood Clotting Factors
 Payment for Nonpass-Through Drugs, Biologicals and
Radiopharmaceuticals with HCPCS but No Claims Data
 Payment for Biosimilar Biological Products
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 46
OPPS Final Update for CY2016
Final Changes
 Final OPPS Payment for Hospital Outpatient Visits
 “After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue to use HCPCS
code G0463 (for hospital use only) to represent any and all clinic visits
under the OPPS for CY 2016. In addition, we are finalizing our proposal
to reassign HCPCS code G0463 from existing APC 0634 to renumbered
APC 5012 and to use CY 2014 claims data to develop the CY 2016 OPPS
payment rate for HCPCS code G0463 based on the total geometric
mean cost of HCPCS code G0463, as CY 2014 is the first year for which
claims data are available for this code. We note again that, as we
established in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75042), we no longer have a policy to recognize a distinction
between new and established patient clinic visits.” (80 FR 70449)
 APC 5012 - $102.12 – CY2015 - $98.06
• Status Indicator “V”
• 4.14% Increase for CY2016
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 47
OPPS Final Update for CY2016
Final Changes
 Final OPPS Payment for Hospital ED Visits & Critical Care
 “After consideration of the public comments we received, we are
finalizing our proposals, without modification, to continue to use our
existing methodology to recognize the existing CPT codes for Type A
ED visits as well as the five HCPCS codes that apply to Type B ED
visits, and to establish the CY 2016 OPPS payment rates using our
established standard process. We intend to further explore the issues
described above related to ED visits, including concerns about
excessively costly patients, such as trauma patients. We note that we
may propose changes to the coding and APC assignments for ED visits
in the future rulemaking.” (80 FR 70449) SI=“J2”
 “After consideration of the public comments we received, we are
finalizing our proposals, without modification, to continue our policy to
recognize the existing CPT codes for critical care services and
establish a payment rate based on historical claims data, and to
continue to implement claims processing edits that conditionally
package payment for the ancillary services that are reported on the
same date of service as critical care services in order to avoid
overpayment. (80 FR 70450) SI=“J2”
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 48
OPPS Final Update for CY2016
Final Changes
 Final OPPS Payment for Chronic Care Management (CCM) Services
 Fairly Long Discuss
• Documentation Requirements
• Coordination with MPFS Statement
 “We reiterate that one hospital (paid under the OPPS) and one
practitioner (paid under the MPFS) may furnish and be paid for services
described by CPT code 99490 during a calendar month when CCM
services are furnished by a physician in an HOPD to an eligible patient.
Specifically, in this scenario, the physician or nonphysician practitioner
may bill Medicare for services described by CPT code 99490 under the
MPFS and report the hospital outpatient setting as the place of service.
The hospital also may bill for the services described by CPT code
99490 under the OPPS. The physician or nonphysician practitioner
would be paid under the MPFS at the facility rate, and the hospital
would be paid under the OPPS.” (80 FR 70451)
 APC 5011 – SI=“V” - $54.41
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 49
OPPS Final Update for CY2016
Final Changes
 Final Payment for Partial Hospitalization Services
 As usual, there is a long discussion of a CMS’s ability to break CMHCs
out and use CMHCs’ costs versus hospital costs.
APC
Group Title
APC Payment
For CY2016
5851
5852
5861
5862
Level I PHP for CMHCs
Level II PHP for CHMCs
Level I PHP for Hospitals
Level II PHP for Hospitals
$94.49
$143.00
$183.41
$212.67
 Status Indicator “P”
• Partial Hospitalization Paid under OPPS; per diem APC payment.
 Inpatient-Only List
 “After consideration of the public comments we received, we are
finalizing our proposal to remove procedures described by CPT codes
0312T, 20936, 20937, 20938, 22552, 54411, and 54417 from the inpatient
only list for CY 2016. In addition, we are removing the procedures
described by CPT codes 27477 and 27485 from the inpatient only list for
CY 2016, as recommended by the commenter.” (80 FR 70468)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 50
OPPS Final Update for CY2016
Final Changes
 Final Nonrecurring Policy Changes
 Provider-Based Clinics
• Special Claims Requirements for Off-Campus Provider-Based
Operations
 Modifier “-PO” on UB-04
 POS – New 19 correlated with changed 22 for the 1500
• See also, Bipartisan Budget Act of 2015 – Section 603
 Equalization of provider-based and freestanding clinic
payment.
 Provider-based clinics before November 2, 2016 are
grandfathered.
 Advance Care Planning Services
• CPT 99497 – SI=“Q1” - $54.41
• CPT 99498 – SI=“N”
 Computed Tomography (CT)  See “-CT” Modifier
 Lung Cancer Screening with Low Dose CT
• G0296 – 5822 $69.65 SI="S"
• G0297 - 5570 $112.49 SI="S“
 Payment for Procurement of Corneal Tissue – CPT 66180/66185
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 51
OPPS Final Update for CY2016
Final Changes
 CY 2016 OPPS Payment Status and Comment Indicators
 “In the CY 2016 OPPS/ASC proposed rule (80 FR 39302), for CY 2016,
we proposed to create two new status indicators:
• "J2
” to identify certain combinations of services that we proposed
to pay through new proposed C-APC 8011 (Comprehensive
Observation Services). We refer readers to section II.A.2.e. of this
final rule with comment period for a detailed discussion of this
change and any public comments that we received.
• "Q4" to identify conditionally packaged laboratory tests. We refer
readers to section II.A.3. of this final rule with comment period for a
detailed discussion of this new status indicator and any public
comments that we received.” (80 FR 70473)
 We note that, as discussed in sections II.A.2.e. and II.A.3. of this final
rule with comment period, we are finalizing the two new status
indicators “J2
” and ”Q4
”. (80 FR 70473)
 “ … new comment indicator “NP” that would be used in the proposed
rule to identify a new code for the next calendar year or an existing
code with substantial revision to its code descriptor in the next
calendar year as compared to current calendar year proposed APC
assignment, …” (80 FR 70473)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 52
OPPS Final Update for CY2016
Policy Changes
 Short Inpatient Hospital Stays – Over 2-Midnight Rule
 Why did CMS develop the ‘Over 2-Midnight Rule’?
 For auditing purposes, are inpatient admissions that result in stays
over 2-midnight considered appropriate.
 When does the clock start with the counting of over 2-midnights?
 RAC Changes
• Look-back period 6 months, but only for inpatient vs. outpatient
status.
 Hospital must submit claim with 3 months of the date that it
provides services.
 Open Door Forums – Probe and Educate Audits by MACs
 QIO Involvement – Revised Determination Reviews
 Solicitation of Potential Short-Stay Payment Policies
• Question: Is it possible for two patients who are admitted with the
same conditions, both stay for 36 hours, but one case would violate
the 2-midnight rule?
• Question: Is it possible for two patients, with the same conditions,
for one to be in observation for 36 hours and the other admitted as
in inpatient for 36 hours?
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 53
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule – QIO Involvement
 “In addition to the formal QIO medical review process mentioned
above, we intend to continuously monitor and evaluate the changes to
the 2-midnight payment policy and medical review strategy.” (80 FR
70546)
 “QIOs will conduct “Revised Determination Reviews” (42 CFR 405.980)
on hospital short-stay Medicare Part A claims. QIOs will conduct
patient status reviews to determine the appropriateness of Medicare
Part A payment for these short-stay inpatient hospital admissions, in
accordance with section 1862(a)(1)(A) of the Act. In conducting these
reviews, QIOs will use the information documented in the patient’s
medical record, and may use evidence-based guidelines and other
relevant clinical decision support materials as components of their
review activity (we refer readers to 42 CFR 476.100 relating to setting
standards for QIO reviews).” (80 FR 70547)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 54
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule – Documentation
 “For payment purposes, the following factors, among others, would be
relevant to determining whether an inpatient admission where the
patient stay is expected to be less than 2 midnights is nonetheless
appropriate for Part A payment:
• The severity of the signs and symptoms exhibited by the patient;
• The medical predictability of something adverse happening to the
patient; and
• The need for diagnostic studies that appropriately are outpatient
services (that is, their performance does not ordinarily require the
patient to remain at the hospital for 24 hours or more).” (80 FR
70541)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 55
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule – Minor Surgery
 “Accordingly, we would expect it to be rare and unusual for a
beneficiary to require inpatient hospital admission after having a minor
surgical procedure or other treatment in the hospital that is expected to
keep him or her in the hospital for only a few hours and not at least
overnight. We stated in the proposed rule that we will monitor the
number of these types of admissions and plan to prioritize these types
of cases for medical review.” (80 FR 70542)
 Exercise: A cardiologist is going to insert a pacemaker. The operative
procedure is performed at 10:00 a.m. The physician also admits the
patient overnight to make certain the leads are positioned correctly and
that the patient properly tolerates the procedure.
• What kind of documentation will the physician need to provided.
• Is a pacemaker insertion a ‘minor surgical’ procedure?
• Is this mainly a payment issue? Medical necessity issue?
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 56
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule – Commenters’ Recommendation to Rescind
 “Comment: Several commenters, including MedPAC and the American
Medical Association (AMA), recommended that CMS rescind the 2midnight rule in its entirety. Some of the commenters stated that any
time-based admission policy would interfere with physician judgment.
In addition, MedPAC expressed concern that the 2-midnight rule may
provide hospitals with an incentive to lengthen hospital stays in order
to avoid scrutiny and that longer stays generally increase costs and
expose Medicare beneficiaries to greater physical risk while also
conflicting with the general incentives of the prospective payment
system to reduce hospital lengths of stay. MedPAC also stated that the
Commission recommended that CMS withdraw the 2-midnight rule
because it becomes redundant in light of MedPAC recommendations
related to the Recovery Audit Program. The AMA expressed concern
that the 2-midnight rule places considerable burden on the admitting
physician and erodes the ability of physicians and providers to improve
health outcomes through personalized, evidence-based clinical care
because it detracts from admission criteria that depend upon clinical
judgment.” (80 FR 70542-70543)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 57
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule – Comment
 “Comment: One commenter suggested that CMS (1) clarify that
inpatient hospital admissions with expected lengths of stay less than 2
midnights are neither rare nor unusual; (2) reemphasize that inpatient
care and observation services are not the same level of care and,
therefore, inpatient hospital admissions are not appropriate as a
substitute for lengthy (greater than 2 midnights) outpatient hospital
stays; (3) allow the 2-midnight benchmark to serve exclusively as a
medical review threshold to determine the general appropriateness for
claim payment; and (4) realign its policy with existing guidance by
asserting that, regardless of the expected length of stay,
documentation of the medical necessity as well as the need for
inpatient hospital care is the requisite component of every inpatient
admission appropriately paid under Medicare Part A.” (80 FR 70544)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 58
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule – Observation Different From Inpatient
 “With respect to the comment about hospital level of care, we note that
while we do not refer to “level of care” in guidance regarding hospital
inpatient admission decisions, but, rather, have consistently provided
physicians with the aforementioned time-based guidelines regarding
when an inpatient hospital admission is payable under Part A, we do
note that, by definition, there are differences between observation
services furnished in the outpatient setting and services furnished to
hospital inpatients. Specifically, observation services, as defined in
Section 290 of Chapter 4 of the Medicare Claims Processing Manual,
are a well-defined set of specific, clinically appropriate services, which
include ongoing short-term treatment, assessment, and reassessment,
that are furnished while a decision is being made, regarding whether
patients will require further treatment as hospital inpatients or if they
are able to be discharged from the hospital.” (80 FR 70545)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 59
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule
 “After consideration of the public comments we received, we are
finalizing, without modification, our proposal to revise our previous
“rare and unusual” exceptions policy to allow for Medicare Part A
payment on a case-by-case basis for inpatient admissions that do not
satisfy the 2-midnight benchmark, if the documentation in the medical
record supports the admitting physician’s determination that the
patient requires inpatient hospital care despite an expected length of
stay that is less than 2 midnights. Accordingly, we also are finalizing
our proposal to revise § 412.3(d) to reflect the above policy
modification and to increase clarity.” (80 FR 70545)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 60
OPPS Final Update for CY2016
Policy Changes
 Over 2-Midnight Rule - Announcement Regarding QIO Involvement
 “After consideration of the public comments we received, we are not
adopting national medical review criteria at this time. As announced in
the proposed rule, QIOs assumed medical review responsibilities of
short hospital stay claims on October 1, 2015 based on the existing 2midnight policy in effect for 2015. Beginning on January 1, 2016, QIOs
will conduct these medical reviews based on the revised 2-midnight
policy adopted in this final rule with comment period. In conducting
these reviews, QIOs will use the information documented in the
patient’s medical record, and may use evidence-based clinical
guidelines, and other relevant clinical decision support materials as
components of their review activity in order to determine whether an
inpatient admission where the patient stay is expected to be less than 2
midnights is nonetheless appropriate for Medicare Part A payment.” (80
FR 70548)
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 61
OPPS Final Update for CY2016
Additional Topics
 Outpatient Quality Reporting (OQR)
 “CMS seeks to promote higher quality and more efficient healthcare for
Medicare beneficiaries. In pursuit of these goals, CMS has implemented
quality reporting programs for multiple care settings including the
quality reporting program for hospital outpatient care, known as the
Hospital Outpatient Quality Reporting (OQR) Program, …” (80 FR
70502)
 Other Quality Reporting – Physicians, LTHs, ASCs, etc.
 Much of the discussions surrounds adding and/or deleting measures
for CY2017, CY2018 and/or CY2019
• OP-34: Emergency Department Transfer Communications (EDTC)
(NQF #0291) – Implement for CY2019 instead of CY2018
 Seven Subcomponents – Administrative Data, Patient
Information, Vital Signs, Medication, Physician Information,
Nursing Information, and Procedures and Tests Results.
 How does this (or not) fit into EMTALA?
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 62
OPPS Final Update for CY2016
Additional Topics
 Cost Reports – Appropriate Claims & Administrative Appeals & Judicial
Review
 There is a long discussion of cost report changes as provided in the
Code of Federal Regulations (CFR)
• Yes, this whole issue is tacked onto the OPPS update Federal
Register.
 Cost Report Preparation and Process
 Administrative Appeals
 Appropriate Claims in Provider Cost Reports
 Addition to the Cost Reporting Regulations – Substantive
Reimbursement Requirement
 Revision to Provider Reimbursement Appeals Regulations
 Information Requirements and Impacts
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 63
OPPS Final Update for CY2016
Summary and Conclusions
 APC Numbering Has Been Significantly Revised. Why?
 CMS Appears To Be Accelerating Bundling and Packaging
 Comprehensive APCs  Continued Bundling Process
 Comprehensive vs. Composite
 Standard Updating
 Conversion Factor (Hospital OPPS and ASCs)
 Device Dependent APCs
 Drugs and Biological
 2-Times Rule Violations
 Special Hospitals – SCHs – 7.1% Continues
 Outlier Payments
 Status Indicator Updating
 The SIs drive the APC grouping process, particularly for increased
packaging and bundling.
 APC Specific Policies
 Data Collection for Off-Campus Provider-Based Clinics
 ASC Payment System Update – Hybrid of APCs and MPFS
 Quality Reporting
 And More!
© 1999-2016 Abbey & Abbey, Consultants, Inc.
Slide # 64