‘Mid-build’ outpatient departments: submit paperwork soon to qualify for OPPS exemption

Off-campus provider-based hospital outpatient departments (HOPDs) that qualify for the mid-build exception must submit the required materials to their Medicare Administrative Contractor by February 13, 2017, to qualify for the exception for services provided in 2018. The hospital must (1) attest that department requirements are met; (2) include the department on the provider’s enrollment form; and (3) and submit a written certification that the department met the mid-build requirement that is signed by the CEO or COO of the main provider. All attestations must be audited by HHS for accuracy.

Outpatient prospective payment changes

Under the 2017 Outpatient Prospective Payment System (OPPS) Final rule (81 FR 79562), CMS implemented section 603 of the Bipartisan Budget Act (P.L. 114-74), which disallows payment made to off-campus HOPDs under the OPPS (see OPPS, ASC payment rates updated; off-campus PBD billing system established, Health Law Daily, November 2, 2016). This provision was created to ensure that services are billed at a uniform rate, regardless of the facility in which the services are provided.

21st Century Cures Act

Section 16001 of the 21st Century Cures Act (P.L. 114-255) provides an important “mid-build” exception for off-campus HOPDs that had a written contract with an outside party for construction of the facility before November 2, 2015. CMS’ preliminary guidance outlines the requirements for HOPDs that qualify for the 2018 exception. It also clarifies that attestations received from providers before December 2, 2015, qualifies that provider for the exception, and that these HOPDs should continue to use the ‘PO’ modifier when billing, rather than the ‘PN’ modifier. Those that did not submit timely attestations are to use ‘PN,’ which triggers the Medicare physician fee schedule (MPFS) payment.

The Cures Act also excepted HOPDs of cancer hospitals from the change to OPPS. Departments that met the requirements of 42 C.F.R. section 413.65 between November 1, 2015, and December 13, 2016, will qualify, as long as attestation is received February 13, 2017. HOPDs of cancer hospitals that meet regulatory requirements after December 13, 2016, will be exempt as long as an attestation is received within 60 days of meeting the requirements.

OIG challenges industry to come up with an upgraded statistical sampling tool

CMS handles more than a trillion dollars in Medicare and Medicaid claims every year. Because not every claim can be scrutinized, statistical sampling is essential for effective oversight of these claims. The current sampling tool, RAT-STATS, was originally designed by the HHS Office of Inspector General (OIG) to give nonexperts a robust method for selecting statistically valid samples. It is the primary statistical tool for OIG’s Office of Audit Services. Although OIG does not require the use of RAT-STATS, many providers download the software and use it in their efforts to fulfill the claims review requirements for corporate integrity agreements or provider self-disclosure protocol.

The OIG has recently announced the launch of the Simple Extensible Sampling Tool Challenge (Challenge) to develop the foundation for an upgraded version of RAT-STATS. According to the OIG, while the current version of RAT-STATS is well validated, its user interface can be difficult to navigate and the underlying code makes the software costly to update. Therefore, the OIG needs a new, modern version of the software that is easy to use and can be extended in a cost-effective manner.

Current RAT-STATS

The RAT-STATS software was originally created in 1978 and has gone through several upgrades since then. Unlike a full statistical package that attempts to answer all types of questions for a wide range of users, RAT-STATS serves as a streamlined solution to handle the specific task of developing valid statistical samples and estimates within the health care oversight setting.

For example, an OIG investigator may pull a simple random sample in order to estimate damages for a provider suspected of fraud. RAT-STATS then generates valid pseudo-random numbers and outputs all of the information needed to replicate the sample. Once the investigator finishes reviewing the sample, he or she can then enter the results into RAT-STATS to get the final statistical estimate. While the investigator may need some basic training in statistics, they do not need the same level of expertise as would be required to navigate the many options available in a full-service statistical or data analysis package.

The Challenge

In order to complete the Challenge participants must create a software package that replicates the operation of four of the functions of the original RAT-STATS software: (1) single stage random numbers;
(2) unrestricted attribute appraisal; (3) unrestricted variable appraisal; and (4) stratified variable appraisal.

Teams of one or more members can participate in this Challenge. Each team must have a captain. Individual team members and team captains must register in accordance with the registration process set forth in the Federal Register notice.  The team captain is to serve as the corresponding participant
with OIG about the Challenge and to submit the team’s Challenge entry. While the OIG will notify all registered Challenge participants by email of any amendments to the Challenge, the team captain is expected to keep the team members informed about matters germane to the Challenge.

Submissions must meet all of the 20 rules and requirements outlined in the Federal Register notice. The technical specifications behind the four RAT-STATS functions along with 10 test datasets are available on the OIG website.

The Challenge began on September 28, 2016. The submission period runs from September 28, 2016, to May 15, 2017. The judging period runs from September 28, 2016, to June 15, 2017. A winner will be announced no later than July 1, 2017. The grand prize is $25,000.

 

Innovative payment models may reduce Part B spending

Some of CMS’ payment plan proposals may have the effect of reducing Part B drug costs, even if not specifically designed to do so. Avalere Health reviewed three categories of programs and found that episode payment models (EPMs), a disease-specific model, and accountable care organizations (ACOs), incentivize providers to reduce Part B spending due to the financial responsibilities imposed. The Center for Medicare and Medicaid Innovation (CMMI) is continually developing and testing new models with the goal of offering higher quality care while minimizing costs.

EPMs

EPMs include the Bundled Payments for Care Improvement (BCPI) demonstration and the mandatory (for metropolitan area hospitals) Comprehensive Care for Joint Replacement (CJR) model. Providers are held accountable for costs incurred over a patient’s episode of care, bearing risk for Part A and B expenditures that begin with a hospital stay. A target is provided based on historical expenditures, and providers are financially responsible for excess spending. Over 1,300 providers now participate in BPCI. CJR covers the initial hospital stay and 90-days after discharge for major joint replacements in the lower extremity, including Part B spending. A proposal has been issued to include non-joint replacement hip and femur treatments.

Similarly, the Oncology Care Model (OCM) provides a fixed monthly payment to providers for management and coordination of patient care for six months while a patient is receiving chemotherapy. This model includes payments for novel oncology therapies to ensure that there is no disincentive to use expensive new treatments.

Disease-specific and ACOs

End stage renal disease (ESRD) beneficiaries are often excluded from payment model demonstrations, so CMMI created the Comprehensive ESRD Care (CEC) model to determine whether improved outcomes and savings are possible for these patients. Providers are accountable for Part A and B spending per beneficiary, per year, including dialysis treatments.

The Medicare Shared Savings Program (MSSP), Next Generation ACOs, and Pioneer ACOs all place risk on providers in various ways, allowing them to share in savings and losses. This includes responsibility Part B spending and the opportunity to receive savings based on low-cost decision-making.

Off-campus outpatient department payment proposal meets industry criticism

CMS’ proposal to revise the outpatient prospective payment system’s (OPPS) method for reimbursing hospitals and physicians for services performed at off-campus locations has received harsh critiques from the industry. Hospitals are concerned that as written, the Proposed rule would require them to enter into financial arrangements with physicians that may otherwise violate fraud and abuse laws. Yet without making such arrangements, hospitals would be required to pay for these off-campus facilities but receive no reimbursement for services.

Proposed rule

The Proposed rule (81 FR 45603) in question is a lengthy one that concerns several programs and entities. One of the many things proposed is implementation of section 603 of the Bipartisan Budget Act, which mandated that certain services furnished off-campus will not be considered outpatient department (OPD) services, but paid under the applicable Part B system. For new off-campus departments that billed for Medicare outpatient services under the OPPS after November 2, 2015, the physician fee schedule will be applied in 2017 for most services.

Hospitals often have multiple departments and facilities spread across an area, and these must meet certain criteria to be considered provider-based. An off-campus outpatient department must be located within a 35 mile radius of the hospital, be held out to the public as part of the hospital, operate its finances fully integrated with the hospital, and provide clinical services integrated with the main hospital.

Objections

The American Hospital Association recently published a letter stating its objection, accompanied by a legal memorandum. Calling the policies “short-sighted and unworkable,” the letter states that hospitals will not be provided reimbursement for some Medicare services under the site-neutral policies. The AHA reasons that off-campus departments that have existing financial arrangements with physicians may run afoul of the Stark law (42 U.S.C. §1395nn) and the Anti-kickback Statute (AKS) (42 U.S.C. § 1320a-7b). The AHA believes that CMS must delay site-neutral policy implementation for at least one year in order to address the significant compliance risks.

The accompanying legal memorandum provided by Hogan Lowells dives deeper into the policy implications. The memorandum finds that the new policy may result in physicians receiving payment for expenses to own and operate the facility, even though it is an off-campus department of a hospital. Hospitals are prohibited from providing free goods and services to referring physicians under the AKS and Stark law. Even furnishing items for a physician to use in his practice may be implicated under these laws, if the items reduce a physician’s cost of doing business and are offered with intent to induce referrals. Under the new policy, physicians would receive a benefit of reimbursement for services when they paid nothing for the location in which the services were provided.

Other comments

Lawrence Vernaglia, Foley & Lardner health attorney, offered the opinion that implementing these new payments would impose unreasonable difficulties on outpatient departments that wanted to add new services. He suggested that CMS alter the requirement that grandfathered facilities remain exactly the same as before the rule was implemented and allow departments to make necessary changes. In addition, because site-neutral payments are unlikely, in his opinion, to reduce outpatient department costs, hospitals may decide to close off-campus facilities which could limit access.

America’s Essential Hospitals (AEH) focused on these access issues in its comments, stating that CMS policies “will perpetuate health care deserts” by limiting flexibility and withholding payments to outpatient departments. It emphasized that establishing and sustaining new off-campus facilities is a challenging process when serving vulnerable patients, and that the policy will make new facilities “economically unsustainable.”

These access comments should have been of little surprise to CMS, as on May 19, 2016, a very large group of senators signed a letter addressed to Acting Administrator Andy Slavitt requesting flexibility in applying the new policies. The senators emphasized the necessity of providing hospitals a predictable landscape while providing them the leeway needed to ensure access. The senators specifically asked for flexibility for services provided at dedicated emergency departments (DEDs) as well as off-campus departments that sought to relocate, rebuild, expand, or change ownership in order to meet a community’s needs.