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Released on Jul 14, 2017

Highlights of Proposed Rules for Medicare Physician Fee Schedule and Hospital Outpatient Prospective Payment System

Late yesterday, CMS released two calendar year (CY) 2018 proposed rules that include policy and payment changes for the Medicare Physician Fee Schedule (PFS) and the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Centers (ASCs) Payment System. The ACG, AGA and ASGE are currently reviewing the details of the proposed rules and will provide a more extensive summary soon.

The PFS proposed rule will appear in the Federal Register on July 21 and OPPS and ASC proposed rule on July 20.

This communication offers a topline summary of the proposed changes to the payment rates and policies for Medicare services paid under the Medicare PFS and OPPS.

Here is an overview of the most significant recommendations:

2018 Medicare Physician Fee Schedule Proposed Rule

· 2018 Proposed Conversion Factor: The overall calendar year (CY) 2018 PFS estimated impact on total allowed charges for gastroenterology is -1 percent. The proposed 2018 PFS conversion factor is $35.99, an increase of +0.31 percent from the 2017 PFS conversion factor of $35.89. This update reflects the statutory +0.50 percent update, reduced by 0.19 percent, because net reductions in misvalued codes in 2018 are less than the statutorily set 0.50 percent target of total fee schedule revenue.

· Payment Changes for Anesthesia for GI Procedures: For CY 2018, the CPT Editorial Panel is deleting CPT codes 00740 (Anesthesia for upper GI procedures) and 00810 (Anesthesia for lower GI procedures) and replacing them with the following five new codes. The CY 2017 base unit for upper and lower GI is 5 base units. For CY 2018, CMS proposes:

o 007X1 (Anesthesia for upper GI, not otherwise specified) = 5 base units

o 007X2 (Anesthesia for upper GI, ERCP) = 6 base units

o 008X1 (Anesthesia for lower GI, not otherwise specified) = 4 base units

o 008X2 (Anesthesia for screening colonoscopy) = 4 base units

o 008X3 (Anesthesia for upper and lower GI during the same session) = 5 base units

CMS is also asking for feedback on whether 008X2 should be reduced to 3 base units. Each base unit is approximately $22.

· Chronic Care Management Services: CMS proposes to adopt CPT codes for CY 2018 for reporting several care management services currently reported using Medicare G-codes. CMS seeks comment on how to further reduce burden on reporting practitioners for chronic care management and similar services.

· Payment Rates for Off-campus Provider-Based Hospital Departments: Congress by law requires that certain items and services furnished by certain off-campus hospital outpatient provider-based departments, such as infliximab infusion, be no longer paid under the OPPS as of January 1, 2017.

For CY 2017, CMS finalized the PFS as the applicable payment system for most of these items and services. CMS currently pays for these services under the PFS at 50 percent of the OPPS payment rate. For CY 2018, CMS is proposing to change the PFS payment rates for these services from 50 percent of the OPPS payment rate to 25 percent of the OPPS payment rate.

· PQRS and EHR Incentive Program Reporting Requirements for Payment Year 2018: CMS is proposing to minimize those potentially impacted with a physician quality reporting system (PQRS) and EHR Incentive Program (Meaningful Use) reimbursement cut in 2018. CY 2016 was the reporting year to determine 2018 payment updates. Under the PQRS, eligible professionals and group practices who did not satisfactorily report data on quality measures in 2016 are subject to a 2 percent cut in CY 2018 PFS services. CMS proposes to retroactively ease the 9 reporting measures threshold to better align with the quality payment program’s (QPP) requirement of 6 measures.

CMS proposes to modify previously finalized Physician Quality Reporting System (PQRS) and Electronic Health Records (EHR) Incentive Program reporting requirements to reduce the number of clinicians that who will be subject to a negative payment adjustment in 2018. Because the reporting period has ended, these changes will be applied retroactively and will not impact previous data collections and submission.

· Value Modifier Program: CMS proposes changes to reduce penalties and hold groups harmless if they meet minimum quality reporting requirements to smooth the transition to the Quality Payment Program.

2018 Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems Proposed Rule

· OPPS Conversion Factor: CMS proposes a CY 2018 conversion factor of $76.483. This change is based on the projected hospital market basket increase of 2.9 percent minus both a 0.4 percentage point adjustment for multi-factor productivity and a 0.75 percentage point adjustment required by law. The effective update is 1.75 percent.

· ASC Conversion Factor: CMS proposes a CY 2018 conversion factor of $44.976. ASC payments are annually updated by the percentage increase in the Consumer Price Index for all urban consumers (CPI-U). The Medicare statute specifies a multi-factor productivity (MFP) adjustment to the ASC annual update. For CY 2018, the CPI-U update is projected to be 2.3 percent. The MFP adjustment is projected to be 0.4 percent, resulting in a proposed MFP-adjusted CPI-U update factor of 1.9 percent.

· Modifications to the ASC Quality Reporting (ASCQR) Program: CMS is proposing to delay the mandatory implementation of the Consumer Assessment of Healthcare Providers and Systems Outpatient and Ambulatory Surgery Survey (OAS CAHPS) under the ASCQR Program for CY 2018 data collection.

· Modifications of Hospital Outpatient Department Quality Reporting Program: CMS offers proposals that aim to balance the value of quality data with efforts to limit provider burden. These proposals include formalized chart-abstracted measures validation, educational review procedures, updates to include a corrections process and correspondingregulatory updates to reflect these proposals. Additional proposals include changes to the Notice of Participation deadline and alignment of the naming of the Extraordinary Circumstances Exceptions policy with other quality reporting programs and corresponding regulatory updates to reflect these proposals.

CMS will accept comments on both proposed rules until Sept. 11, 2017, and will respond to comments in a final rule to be issued on or around Nov. 1, 2017. We will keep you updated as we learn more.