2018 OPPS Rule: Summary of Revisions

By William H. Snellgrove and Jay Sutton
| 1/9/2018
2018 Outpatient Prospective Payment System Rule Revisions
On Nov. 1, 2017, the Centers for Medicare & Medicaid Services (CMS) published the final rule for the Hospital Outpatient Prospective Payment System (OPPS) for calendar year (CY) 2018. This rule contains some provisions that may affect how hospitals are paid for outpatient services under OPPS. The following is a summary of several of the significant revisions.

Payment Rate Update

CMS has raised the OPPS rates by 1.35 percent for CY18. This change is based on a hospital market basket increase of 2.7 percent as well as a productivity cut of 0.6 percentage points and an additional reduction of 0.75 percentage points, as required by the Affordable Care Act.

340B Reductions

CMS has enacted a significant reduction in the Medicare payment for drugs that are acquired under the 340B drug pricing program. Under the new rule, CMS will pay for non-pass-through drugs (other than vaccines) purchased through the 340B program at the average sales price (ASP) minus 22.5 percent, rather than current ASP plus 6 percent. In addition, CMS also has added a claim modifier, effective Jan. 1, 2018, for hospitals to report separately payable drugs that were not acquired under the 340B program.

Off-Campus, Hospital-Based, Site-Neutral Reductions

Section 603 of the Bipartisan Budget Act of 2015 requires that, with the exception of dedicated emergency department services, services furnished in off-campus, provider-based departments that began billing under OPPS on or after Nov. 2, 2015 (referred to as “nonexcepted services”), no longer are to be paid under OPPS; rather, they will be paid under another applicable Medicare Part B payment system. For CY17, CMS finalized the Medicare Physician Fee Schedule (PFS) as the applicable payment system for most of these items and services and set payment for most nonexcepted services at 50 percent of the OPPS rate. In CY18, CMS will pay hospitals at 25 percent, rather than 50 percent, of the OPPS rate for nonexcepted services beginning Jan. 1, 2018.

Inpatient-Only List Revisions

CMS has removed total knee arthroplasty (TKA) from the inpatient-only list, which allows for Medicare coverage of TKA in either an inpatient or an outpatient setting. In addition, CMS now prohibits recovery audit contractors’ review for patient status for TKA procedures performed in the inpatient setting for a two-year period.

Hospital Outpatient Quality Reporting (OQR) Program Changes

Beginning with the CY20 payment determination, CMS is removing the following two measures:

  • OP-21: Median time to pain management for long bone fracture
  • OP-26: Hospital outpatient volume data on selected outpatient surgical procedures

CMS also is removing the following four measures:

  • OP-1: Median time to fibrinolysis
  • OP-4: Aspirin at arrival
  • OP-20: Door to diagnostic evaluation by a qualified medical professional
  • OP-25: Safe surgery checklist use

Revision to Laboratory Date of Service Policy

For CY18, CMS has modified the laboratory date of service policy. The change allows labs to bill Medicare directly for molecular pathology tests and advanced diagnostic laboratory tests excluded from the OPPS packaging policy and ordered less than two weeks following the date of a patient’s discharge from the hospital. Under currently policy, if a test is ordered less than two weeks after a patient's discharge date, the hospital must bill Medicare for the test and then pay the lab that performed the test.

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