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It’s the Most Wonderful Time of the Year! CMS Final Regs are Here

11/30/17

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Chelsea Arnone, Regulatory Affairs and Government Relations Director

Traditionally, November means fall weather, candy hangovers, pumpkin spice everything and Thanksgiving. In Washington, D.C., however, it’s just a TAD less warm and fuzzy.

This is also the time of year for the release of final payment regulations from the Centers for Medicare & Medicaid Services (CMS). And it was a full-fledged frenzy – starting with the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment system final rule for 2018. The 2018 final rules for the Medicare Physician Fee Schedule (PFS) and the Quality Payment Program (QPP) – otherwise known as MACRA – quickly followed.

The total number of pages of not-so-light reading? Drumroll please … 4,196. Reading a summary of more than four thousand pages of regulations hardly signals a good time, since that summary could easily be one thousand pages itself, so the Vizient Office of Public Policy is here to provide the highlights and major takeaways of CMS’ end-of-year activity.

First and foremost – one of the most talked-about topics – 340B. There was one major proposal we were eagerly awaiting in the final OPPS rule, and although not surprising, it was disappointing news. More details can be found in a brief summary of the final 340B policy, but the bottom line is – absent legislative activity or legal action – major cuts (28.5 percent, to be exact) are coming to 340B-eligible hospitals on Jan. 1, 2018.

Coming in at a not-too-distant second place are site-neutral payment policies. After Congress passed a bill in 2015 that would attempt to equalize payments between hospital outpatient departments (HOPDs) and physician offices for some services, CMS has been expeditiously implementing the law and steadily reducing reimbursements to HOPDs. In 2016, CMS finalized a rule that lowered reimbursements to HOPDs by paying them 50 percent of the outpatient rate.

In this year’s PFS rule, they further reduced outpatient payments to HOPDs and will now pay only 40 percent of the outpatient rate beginning Jan. 1, 2018. CMS said the payment change “will provide a more level playing field for competition between hospitals and physician practices by promoting greater payment alignment.” Vizient raised concerns about the proposal and recommended other changes in our comment letter to CMS.

Although the final PFS rule includes a lesser cut to HOPDs than was originally proposed, it represents the ongoing thinking of CMS that site-neutral payment policies are here to stay, and will likely mean further cuts to Medicare payments to off-campus hospital outpatient departments over time. Further, CMS indicated in the final rule that they are continuing to evaluate the payment rates, and could (in my opinion, more likely, will) consider additional reductions in the future.

Finally, not to be outdone by drastic payment reductions to hospitals, is MACRA. This rule finalized policies for Year 2 of the QPP. There weren’t many changes from the proposed rule; CMS kept most of their transition year policies and made a handful of minor changes. One of the changes CMS finalized was right on par with what we suggested in our comments – to increase the weight of the cost performance category at a slower rate, giving clinicians more time to understand the new measures. CMS also granted another of our requests in the final rule by increasing a complex patients bonus for clinicians based on the medical complexity of the patients they see from 3 points (proposed) to 5 points.

Wait, did I say “finally?” What I meant was, the future of bundled payments is still somewhat up in the air. Just this morning, CMS released an interim final rule with comment (IFC) that essentially ends mandatory demonstration programs. We prepared a summary of the proposed rule and as expected, CMS has largely finalized it as is. As previously mentioned, although the drive towards value continues, the IFC confirms CMS will continue offering voluntary initiatives, including episode-based payment models. New voluntary demos and value-based payment programs will likely be rolled out starting next year.

Thanksgiving is over, the holidays are near, and the regulatory rush has slowed. 2018 is just around the corner, and the annual payment regulation cycle will begin again. Until then, I invite you to enjoy this time with loved ones, and please enjoy a piece of pie (or two) for me. Preferably, apple.

About the author. As regulatory affairs and government relations director in the Vizient Washington, D.C. office, Arnone analyzes legislative and regulatory issues impacting hospitals, drafts public comment letters, strategy memos and summaries for members. She engages directly with members of Congress and staff on federal legislative and regulatory developments of importance to Vizient and its members. Arnone joined Vizient after serving as the regulatory and policy director at a D.C.-based health care consulting firm, and has also previously worked in the House of Representatives and consulted for several U.S. Senate, House and gubernatorial campaigns.

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