Act Now to Implement the 2018 Medicare OPPS Changes

Last Month, Medicare issued the Medicare Outpatient Prospective Payment System (OPPS) final rule changes for 2018. This left about six weeks for hospital finance leaders to review the rule, understand the implications for their organizations, and develop strategies to assess and address the key issues.

Key actions should include:

  • Understanding the financial impact of the final rule on your organization
  • Evaluating the impact of conditional packaging of drug administration services costing $100 or less
  • Assessing the accuracy of HCPCS Codes and billing units for pass-through drugs with status indicator G
  • Implementing the modifier requirement for imaging services performed with computed radiography technology
  • If your organization is a 340B drug program hospital, implementing the reporting requirements for separately payable drugs with status indicator K

Understand the Estimated OPPS Financial Impact

In the OPPS final rule, the Centers for Medicaid & Medicare Services (CMS) estimate a 1.4 percent increase in OPPS payments to all 3,878 OPPS facilities in aggregate. However, this does not mean that every individual organization will realize this increase.

Low-Level Drug Administration Services Conditional Packaging

In 2015, CMS implemented conditional packaging of ancillary services with a geometric mean cost of $100 or less, but excluded drug administration services from this conditional packaging.

In 2018, CMS will partially remove the exception for low-level drug administration services and has assigned these services status indicator Q1. Exceptions will remain for low-level drug administration services that are described as add-on services.

Determine financial impact. Implement financial modeling of the 2017 Medicare outpatient payment versus 2018 Medicare outpatient payment for Medicare infusion therapy and chemotherapy services to determine financial impact. This is particularly important in facilities with high-volume service levels.

Ensure that all services will continue to be charged accurately. Clinical departments should not stop charging for services because they are “packaged” by Medicare.

Pass-Through Drug HCPCS Code Accuracy

Pass-through drugs, assigned status indicator G, are separately payable drugs under OPPS no matter what other status indicators are present on the Medicare outpatient claim. Whether the pass-through drugs are provided during an emergency department visit, clinic visit, ambulatory surgery procedure, or chemotherapy service, pass-through drugs are always paid separately if the correct HCPCS code and units of service are billed to Medicare.

In the OPPS final rule, there are 50 pass-through drugs eligible for separate payment in 2018. Even if your organization has been very diligent in maintaining drug HCPCS codes throughout the year, it is a good practice to review the list of pass-through drugs in the final rule with your pharmacy department to validate that the correct HCPCS codes and units of services are being billed.

Billing Requirements for Computed Radiography Technology-Based Imaging Services

CMS will implement a legislatively mandated seven percent payment reduction for imaging services performed using computed radiography technology. Computed radiography technology is cassette-based imaging that uses an imaging plate. CMS will require institutions to append an “FY” modifier to the CPT Codes for these services.

Besides surveying the imaging department in their institutions, finance leaders should remember to include any other locations where this may apply, such as hospital-owned physician practices and clinics.

340B Drug Program Billing Requirements

In 2018, CMS will implement a significant payment reduction for separately payable (status indicator K) drugs purchased through the 340B Drug Discount Program and the Prime Vendor Program (PVP) under 340B. This represents a substantial payment reduction for many hospitals. The reduction does not impact pass-through drugs (status indicator G) and vaccines (status indicators L or M). In addition, rural sole community hospitals, children’s hospitals, (Prospective Payment System)-exempt cancer hospitals that participate in the 340B program will be exempt from the payment reductions. Critical access hospitals are also exempt from the payment reductions in addition to modifier reporting requirements.

Assuming legal actions by organizations opposed to this payment reduction are not successful in delaying implementation, hospitals participating in the 340B program will have to meet these billing requirements:

  • For rural sole community hospitals, children’s hospitals and PPS-exempt cancer hospitals, a “TB” informational modifier must be appended to each status indicator K drug purchased through the 340B program and administered to a Medicare outpatient. There will be no payment reduction for these institutions.

For all other OPPS hospitals, a “JG” modifier must be appended to each Status Indicator K drug HCPCS Code purchased through the 340B program and administered to a Medicare outpatient.

With little time until the OPPS final rule goes into effect, finance leaders must act to address the key issues that may affect your organizations. If you wait, your team may have to spend extra time resolving issues that could have been avoided.

About The Contributor

Mike Kovar, Director of Acute Consulting–McBee

Mike has 30 years of extensive experience specializing in revenue integrity. Kovar utilizes his expert knowledge in Medicare rules and regulations, particularly in the Hospital Outpatient Prospective Payment System, to develop effective operational and revenue capture strategies for acute providers.