Provider-Based Clinics Can Expect Major Changes

The final rule on provider-based clinics is expected in early November.

To understand changes being made relative to provider-based clinics, both Federal Registers must be read, and due to the complexity of the language, studied with care. Note that these are proposed rule changes. We will have to wait until early November for the final changes to be published.

Besides the normal Outpatient Prospective Payment System/Ambulatory Payment Classifications (OPPS/APCs) updates (e.g., the cost outlier formula, inpatient-only listing, rural adjustments, etc.), there is a somewhat extended and sometimes confusing discussion of provider-based clinics – including excepted, off-campus clinics as well as those falling under Section 603, Bipartisan Budget Act of 2015 (BiBA 2015), or nonexcepted clinics.

After several years, the Centers for Medicare & Medicaid Services (CMS) seems prepared to address the expansion-of-services issue that has been discussed in previous Federal Registers. From the summary section of the recent OPPS Federal Register:

“Expansion of Services at Off-Campus Provider-Based Departments (PBDs) Paid under the OPPS (Section 603): For CY 2019, we are proposing that if an excepted off-campus PBD furnishes a service from a clinical family of services for which it did not previously furnish a service (and subsequently bill for that service) during a baseline period, services from this new clinical family of services would not be covered (outpatient) services. Instead, services in the new clinical family of services would be paid under the PFS.” (Page 19, Examination Copy CMS-1695-P)

Note that this addresses excepted off-campus clinics. Section 603 clinics are already paid at the lower level.

There are several issues in play here. First, let us consider the baseline period. CMS has logically chosen the period of Nov. 1, 2014 through Nov. 1, 2015. This make some sense in that BiBA 2015 was enacted on Nov. 2, 2015. Here is the actual language from the Federal Register:

“In order to determine the types of services provided at an excepted off-campus PBD, for purposes of OPPS payment eligibility, excepted off-campus PBDs will be required to ascertain the clinical families from which they furnished services from Nov. 1, 2014 through Nov. 1, 2015 (that were subsequently billed under the OPPS). In addition, items and services furnished by an excepted off campus PBD that are not identified below in Table 32 of this proposed rule must be reported with modifier “PN.” We selected the year prior to the date of enactment of the Bipartisan Budget Act of 2015 as the baseline period because it is the most recent year preceding the date of enactment of Section 603, and we believe that a full year of claims data would adequately reflect the types of service lines furnished and billed by an excepted off-campus PBD.” (Page 398, Examination Copy CMS-1695-P)

The “PN” modifier must be used to drive the payment reduction. Now, what about Table 32 and the service lines?

Here are the 19 families that can be identified through the associated APCs.

1. Airway Endoscopy, 5151 – 5155
2. Blood Product Exchange, 5241 – 5244
3. Cardiac/Pulmonary Rehabilitation, 5771, 5791
4. Diagnostic/Screening Test and Related Procedures, 5721 – 5724; 5731 – 5735; 5741 – 5743
5. Drug Administration and Clinical Oncology, 5691 – 5694
6. Ear, Nose, Throat (ENT), 5161 – 5166
7. General Surgery and Related Procedures, 5051 – 5055; 5061; 5071 – 5073; 5091 – 5094; 5361 – 5362
8. Gastrointestinal (GI), 5301 – 5303; 5311 – 5313; 5331; 5341
9. Gynecology, 5411 – 5416
10. Major Imaging, 5523 – 5525; 5571 – 5573; 5593 – 5594
11. Minor Imaging, 5521 – 5522; 5591 – 5592
12. Musculoskeletal Surgery, 5111 – 5116; 5101 – 5102
13. Nervous System Procedures, 5431 – 5432; 5441 – 5443; 5461 – 5464; 5471
14. Ophthalmology, 5481, 5491 – 5495; 5501 – 5504
15. Pathology, 5671 – 5674
16. Radiation Oncology, 5611 – 5613; 5621 – 5627; 5661
17. Urology, 5371 – 5377
18. Vascular/Endovascular/Cardiovascular, 5181 – 5184; 5191 – 5194; 5200; 5211 – 5213; 5221 – 5224; 5231 – 5232
19. Visits and Related Services, 5012; 5021 – 5025; 5031 – 5035; 5041; 5045; 5821 – 5823

If you have excepted off-campus clinics, then you will need to document which families of services were being provided during the baseline period. Whether affirmative reporting will be required or if you simply need to have documentation is something that will need to be determined by CMS.

This whole change raises some interesting questions. What if, in 2017, you expanded the service lines at a given clinic? Will the payment reduction start Jan. 1, 2019, or will there be any attempt to go back and recoup payments already made?

Interestingly enough, while CMS addresses the expansion (and thus, increased volume of services due to new service lines), it does not address increased volumes of service within already established service lines due to increases in personnel. For instance, there may be an off-campus clinic with four physicians that is expanded to 10 physicians, but within already established service lines. How is CMS going to reduce payments for this type of expansion of volume?

CMS is proposing a major change in payment for visits (G0463) to excepted off-campus clinics. The non-excepted off-campus clinics already have a payment reduction. Thus, this would apply to all off-campus clinics:

“In section X.B. of this proposed rule, we discuss our CY 2019 proposal to control for unnecessary increases in the volume of outpatient service by paying for clinic visits furnished at an off -campus provider-based department at a PFS: (the) equivalent rate under the OPPS rather than at the standard OPPS rate. As a result of this proposal, we estimated decreases of 1.2 percent to urban hospitals and … 1.3 percent to rural hospitals, with the estimated effect for individual groups of hospitals depending on the volume of clinic visits provided at off-campus provider-based departments.” (Page 698, Examination Copy CMS-1695-P)

“In CY 2019, for an individual Medicare beneficiary, the standard unadjusted Medicare OPPS proposed payment for the clinic visit is approximately $116, with approximately $23 being the average copayment. The proposed PFS equivalent rate for Medicare payment for a clinic visit would be approximately $46, and the copayment would be approximately $9. This would save beneficiaries an average of $14 per visit. Under this proposal, an excepted off-campus PBD would continue to bill HCPCS code G0463 with the “PO” modifier in CY 2019, but the payment rate for services described by HCPCS code G0463 when billed with modifier “PO” would now be equivalent to the payment rate for services described by HCPCS code G0463 when billed with modifier ‘PN.’” (Page 371, Examination Copy CMS-1695-P)

While CMS calculates the beneficiary savings of $14, the actual decrease in payment to the hospital is $70 per visit. This is a major financial loss for hospitals with off-campus, provider-based clinics. From a financial perspective, the higher payment rate for clinic visits is one of the reasons we even have provider-based clinics.

The 340B drug program is also enmeshed in the provider-based issue. This brings non-excepted, off-campus provider-based clinics in line with other 340B payments:

“Proposal to Apply 340B Drug Payment Policy to Off-Campus Departments of a Hospital Paid under the Medicare Physician Fee Schedule: For CY 2019, we are proposing to pay average sales price (AS ) minus 22.5 percent for 340B-acquired drugs furnished by non-excepted , off-campus provider-based departments (PBDs) . This is consistent with the payment methodology adopted in CY 2018 for 340B-acquired drugs furnished in hospital departments paid under the OPPS.” (Page 20, Examination Copy CMS-1695-P)

There is a new modifier, the “ER” modifier, for use by off-campus, provider-based emergency departments. This is where the provider-based rule and EMTALA (Emergency Medical Treatment and Labor Act) intersect. For instance, an off-campus urgent care clinic can be deemed an emergency department (actually, a DED, or dedicated emergency department) if certain criteria are met, such as frequency of emergency care provided:

“We will create a HCPCS modifier (ER, Items and services furnished by a provider-based, off – campus emergency department) that is to be reported with every claim line for outpatient hospital services furnished in such a department. The modifier would be reported on the UB–04 form (CMS Form 1450) for hospital outpatient services. Critical access hospitals (CAHs) would not be required to report this modifier. (Page 355, Examination Copy CMS-1695-P)

Generally, the OPPS Federal Register addresses regulatory issues for provider-based clinics. Now that we have the Section 603 clinics, there are some special payment processes that are addressed in the MPFS Federal Register involving the relative adjuster:

“…we are proposing a PFS relativity adjuster of 40 percent for CY 2019, meaning that non-excepted items and services furnished by non-excepted off-campus PBDs would be paid under the PFS at a rate that is 40 percent of the OPPS rate. In developing our proposal to maintain the PFS relativity adjuster at 40 percent, we updated our analysis to include a full year of claims data.” (Page 1,025, Examination Copy CMS-1693-P)

The way in which CMS is paying for the Section 603 (or non-excepted) clinics is to pay the professional side with the site-of-service reduction (i.e., the non-facility payment under MPFS) and then use a proxy for the facility component. CMS calls this proxy the “PFS relativity adjuster,” and again, it is proposed to be set at 40 percent for CY 2019.

The discussion above about reducing the payment for clinic visits (G0463) now makes some sense. If the payment rate for G0463 is $116, then the 40 percent payment is about $46, which is what CMS is proposing for excepted, off-campus clinics.

In summary, the OPPS/APC Federal Register, as it applies to provider-based clinics, is quite complex, will require great study, and has significant financial implications.

Program Note:

Listen to Duane Abbey report this story during the next edition of Monitor Monday on Monday, Oct. 29, 10-10:30 a.m. ET