CMS Proposes Updates to Medicare OPPS for CY 2018

The Centers for Medicare & Medicaid Services (CMS) recently published its proposed rule to update the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment systems for calendar year (CY) 2018. In the proposed rule, CMS proposes a 1.75% update to OPPS payments for CY 2018, which CMS expects will result in an overall increase in OPPS payments of 2%, amounting to approximately $897 million, compared to CY 2017 levels. Payments to hospitals that fail to meet the Hospital Outpatient Quality Reporting Program (Hospital OQR) reporting requirements would be reduced by 2%.

Also under the proposed rule, CMS would modify the threshold for separate payment for outpatient drugs to cost-per-day that exceeds $120 in CY 2018 (up from $110 in CY 2017). While CMS would generally continue to reimburse non-pass-through, separately payable drugs and biologicals at the rate of average sales price (ASP) plus 6%, CMS proposes to pay separately payable, non-pass-through drugs (other than vaccines) purchased through the 340B drug pricing program at ASP minus 22.5%. In addition, under the proposed rule, CMS has proposed removing total knee arthroplasty from the inpatient-only list procedures, which would allow these procedures to be performed in an outpatient setting. The proposed rule also attempts to modify certain other OPPS policies, including modifications to Hospital OQR measures; revisions to the clinical diagnostic laboratory test date of service policy; and payment rates for partial hospitalization program services furnished in hospital outpatient departments and community mental health centers, among other changes.

With regard to ASC payments, CMS has proposed to increase reimbursement rates by 1.9% for ASCs that meet ASC Quality Reporting (ASCQR) Program requirements. According to CMS estimates, under the proposed rule, total payments to ASCs for CY 2018 would rise by approximately $155 million compared to CY 2017. In addition, CMS is requesting recommendations and input regarding ASC payment system reforms to address the decline in ASC payment rates relative to OPPS payment rates over the past several years, including whether to adopt an alternative update factor for ASC payments, data regarding ASC costs compared to hospital or physician office codes, and whether CMS should collect ASC cost data to use in determining updates. Finally, CMS has also proposed certain updates to the ASCQR Program and revisions to the list of ASC covered surgical procedures. CMS will accept comments on the proposed rule until September 11, 2017.