Help Your Lab Brace for Key Medicare Outpatient Reimbursement Changes

With the 2018 Clinical Laboratory Fee Schedule (CLFS) still in the works, CMS proposed changes to the Hospital Outpatient Prospective Payment System (HOPPS) rules on July 13. There are three items affecting laboratories that provide tests to Medicare patients on an outpatient basis that you should bring to the attention of your CEO (or CFO).

1. Revised Lab Date of Service Rules
Start your C-suite briefing with the part of the new HOPPS proposal that will probably have the most impact on your labs: CMS’s proposed changes to the rules for calculating the date of service (DOS) for outpatient lab tests.

Current Rules: The DOS for outpatient lab services is normally the date the specimen is collected, as opposed to date of order, testing or analysis. Exception: The date the test is performed is the DOS if:

• The doctor orders the test at least 14 days after a patient is discharged from the hospital;
• The specimen is collected during a hospital surgical procedure;
• Collecting the sample at another time would be medically inappropriate;
• Test results don’t guide treatment provided during the hospital stay; and
• The test is reasonable and necessary for treating an illness.

Explain that the “14-day rule” is significant because when it applies, the test is paid separately under Part B. If the rule doesn’t apply, the test is bundled into the payment for the hospital stay.

Proposed Change: Let your CEO know that CMS is proposing to carve out exceptions to the 14-day rule that would allow labs to bill Medicare directly under the CLFS for certain molecular pathology tests and advanced diagnostic laboratory tests (ADLTs), towit tests that are:

1. Excluded from OPPS packaging rules; and
2. Ordered less than 14 days after a patient’s hospital discharge.

The DOS for the excepted tests would be the date of testing rather than specimen collection. Explain that the change is just a proposal at this point and that CMS will issue final rules after collecting public comments.

2. 2.0 Percent OPPS Rate Hike
The other two issues worth covering in the briefing are the proposed HOPPS fee increases. First, let the CEO know that CMS is proposing a 2018 OPPS fee schedule rate increase of 1.75 percent. Explain that the increase is based on a projected 2.9 percent increase in the hospital market basket, minus two other adjustment factors:

• 0.4 percent adjustment for multi-factor productivity; and
• 0.75 percent adjustment required by the Affordable Care Act (ACA).

Bottom Line: When combined with other proposed policy changes, hospitals would receive overall OPPS pay increases of 2.0 percent in 2018, according to CMS estimates.

3. 1.9 Percent ASC Rate Hike
Finally, tell the CEO that CMS has also proposed a similar increase in Ambulatory Surgical Center (ASC) payments based on a CPI urban consumers update of 2.3 percent minus both the 0.4 percent multi-factor productivity adjustment factor and mandatory ACA 0.75 percent adjustment.

Bottom Line: When combined with other proposed policy changes, ambulatory surgical centers would receive overall 1.9 percent ASC pay increases for lab and other covered outpatient services in 2018.

Takeaway: Most of the proposed HOPPS changes are positive ones for labs. But pathologists didn’t make out as well. CMS specifically rejected an industry recommendation to create a pathology composite to pay claims with only multiple pathology services and no other separable payable services such as a clinic visit or surgical procedure. Accordingly, where multiple conditionally packaged services billed on the same claim, paying services will continue to be bundled and payment made on the basis of the highest single paying service.