Experience. Integrity. Advocacy.
Experience. Integrity. Advocacy.

Proposed Changes to the Medicare Payment Systems for Outpatient and ASC Services


The Centers for Medicare and Medicaid Services (CMS) recently released a proposed rule outlining changes to the way Medicare pays for outpatient (OPPS) and ASC services. Most notably, CMS plans to pay for services provided by outpatient provider-based departments (PBDs) under the Medicare Physician Fee Schedule, to remove pain management questions from the patient surveys that are part of the Hospital Value-Based Purchasing Program, to align the current EHR Incentive program with the new Merit-Based Incentive Payment System (MIPS), and to add seven new measures to the Ambulatory Surgical Center Quality Reporting (ASCQR) Program effective with the 2020 payment year.

Site-Neutral Payment Provisions

The proposed rule seeks to implement the Section 603 provisions of the Bipartisan Budget Act of 2015 regarding off-campus PBDs beginning January 1, 2017 by no longer paying a “facility” fee under the outpatient payment system and instead reimbursing physicians practicing in these settings entirely under the Medicare Physician Fee Schedule (MPFS) as “non-facility” services.

While the MPFS reimbursement for “non-facility” services is generally higher than services offered in a “facility,” the change means hospitals can no longer bill the additional charge for use of the room or other resources and will have to receive their portion of the reimbursement from the physician, unless the physician is employed by the hospital and the MPFS billing has been re-assigned to the hospital by the physician.

Previously, off-campus PBDs that began billing under the OPPS on or after Nov. 2, 2015, were simply no longer paid for most services under the OPPS. Moving these services into another Medicare payment system represents a significant shift in policy. Some exceptions do apply. The following will continue to be billed under the OPPS:

  • All items and services furnished in a dedicated emergency department. (Professional services by emergency physicians will continue to be billed under the MPFS.)
  • Items and services that were being furnished and billed by an off-campus PBD prior to November 2, 2015. (This does not mean specific services billed on dates of serviceprior to November 2, 2015; rather it is referring to the types of items and services that were being provided in an outpatient PBD on November 2, 2015, and continue to be provided and billed after that date.)
  • Items and services furnished in a hospital department within 250 yards of a remote location of the hospital.

Outpatient PBDs that were operating prior to November 2, 2015, may have their services moved under the MPFS, however, under the following conditions:

  • if they expand the items and services offered and billed beyond those within the clinical families of services being offered and billed as of November 2, 2015;
  • if the outpatient PBD moves to a new physical location; or
  • if the outpatient PBD has a change of ownership and the new owners do not accept the existing Medicare provider agreement from the prior owner.

Or, to say it another way, outpatient PBDs operating prior to November 2, 2015, can continue to bill under the OPPS if they offer and bill the same items and services, if they remain in the same location, if they do not change ownership, or if they do change ownership and the new owners accept the existing Medicare provider agreement.

This change follows the June recommendation by the Office of Inspector General that CMS eliminate the “provider-based facility” place of service designation because there is no reliable way to track or audit payments or potential overpayments.

Pain Management Questions

Another change being proposed in the OPPS is to eliminate questions regarding pain management from patient surveys used as part of the value-based purchasing (VBP) program for hospitals.

The VBP program withholds and redistributes money to hospitals for inpatient performance based on several factors, including the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey. According to feedback received by CMS, some stakeholders believe that evaluating hospitals based on the pain management perceptions of patients may inadvertently “creates pressure on hospital staff to prescribe more opioids in order to achieve higher scores on this dimension.”

CMS asserted that there has been no evidence to validate the connection between the two but proposed to exclude those questions from the VBP program “in an abundance of caution.” The questions will remain part of the HCAHPS survey, however, and the results will be published publicly even though they are excluded from analysis in the VBP program. CMS also is working on an alternate set of pain management questions that might alleviate stakeholder concerns.

EHR Incentive Program

Physicians and other eligible practitioner providers will no longer be part of the Medicare EHR Incentive Program and Meaningful Use as of 2017 as they transition to the new MIPS program that replaces and combines the EHR Incentive Program along with PQRS and the Value-Based Payment Modifier. Hospitals and other facility providers will continue under the existing EHR Incentive Program, however, so CMS has proposed some changes to help align the two and ease the transition.

For instance, CMS has proposed a 90-day EHR reporting period in 2016 for all EPs, eligible hospitals, and CAHS, which is the same as the 2015 reporting year, to allow for more flexibility for providers. As well, EPs, eligible hospitals, and CAHs that have not successfully demonstrated meaningful use in a prior year would be allowed to attest to Modified Stage 2, rather than Stage 3, by October 1, 2017.

Finally, certain EPs who have not successfully demonstrated meaningful use in a prior year but who intend to attest as part of the MIPS advancing care information performance category in 2017 can apply for a significant hardship exception from the 2018 payment adjustment.

New ASCQR Program Measures

CMS also has proposed seven new measures for the ASCQR program that would be in effect for payment determination in 2020 and subsequent years. The seven measures are:

  • ASC-13: Normothermia Outcome, which assesses the percentage of patients having surgical procedures under general or neuraxial anesthesia of 60 minutes or more in duration who are normothermic within 15 minutes of arrival in the post-anesthesia care unit (PACU).
  • ASC-14: Unplanned Anterior Vitrectomy, which assesses the percentage of cataract surgery patients who have an unplanned anterior vitrectomy (removal of the vitreous present in the anterior chamber of the eye).
  • ASC-15(a-e): Five proposed measures that are collected using the Outpatient and Ambulatory Surgical Center Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) survey, a patient experience of care survey which assesses patients’ access to care, interactions with facility staff, and overall experience at the facility.

For more information about the proposed 2017 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System policy changes, quality provisions, and payment rates, review the CMS Fact Sheet or the entire proposed rule (CMS-1656-P). Or read the following articles which offer helpful information about the proposals and provided background information as we prepared this article:

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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