OPPS 2018: Revised Payment Rates & a New ADLT Date of Service Exemption

With all of the PAMA commotion, CMS’s publication of the 2018 Medicare Hospital and Ambulatory Surgical Outpatient Prospective Payment System (OPPS) final rule has flown under the radar. In case you don’t feel like reading all 1,133 pages, here is a summary of what managers of labs that provide services to hospital and ambulatory surgical center (ASC) outpatients need to know about the new OPPS rules.

1. 2018 OPPS Payment Rates

After last year’s 1.65% increase, CMS is hiking overall OPPS rates for 2018 by 1.35% based on the following factors:

• Market basket update of +2.7%;
• Productivity adjustment of -0.6%;
• Update for ACA payment cuts of -0.75%.

Overall, CMS estimates that OPPS payments will increase by 1.4% during CY 2018.

2. Changes to Laboratory Date of Service (DOS) Rules

Current Rule: Lab tests on hospital patients are incorporated into the bundled rate that CMS pays for hospital services. Under the CMS DOS Regulation, aka 14-day rule, labs may not separately bill for tests unless they are ordered at least 14 days after the patient’s discharge. That poses big problems for labs when testing takes place after tests are ordered and specimens collected but before the 14-day window closes. This is a very common scenario with molecular and genomic panel and cancer testing.

The Concern: Since its inception about a decade ago, critics have contended that the 14-day rule is overly confusing and chills hospitals from billing for tests provided by outside labs, resulting in care delays for cancer patients. In response to these concerns, CMS has already carved out molecular pathology tests from the rule’s scope.

New Rule: The final rule would also exempt advanced laboratory diagnostic tests (ADLTs—aka multianalyte algorithm assays (MAAAs)), i.e., advanced tests performed at a single lab that use a proprietary algorithm to analyze multiple markers, and molecular pathology tests from the 14-day rule. The exclusion would not lead to unbundling abuses, CMS reasons, because these tests “can legitimately be distinguished from the care the patient receives in the hospital.”

What It Means: The problem is figuring out exactly what qualifies as an ADLT.

Under PAMA, tests are subject to separate reimbursement as ADLTs if:

• They are offered and furnished by a single lab; AND EITHER
  • Are approved by the FDA; or
  • Evaluate a patient’s DNA, RNA or proteins; AND provide new clinical diagnostic information that cannot be obtained from any other test or combination of tests; AND Use a unique algorithm that predicts the chance the patient will develop a condition or respond to a treatment condition or respond to a treatment.

Under the DOS exemption, tests qualify as ADLTs exempt from the 14-day rule if:

• They are offered and furnished by a single lab; AND
• Evaluate a patient’s DNA, RNA or proteins; AND provide new clinical diagnostic information that cannot be obtained from any other test or combination of tests; AND Use a unique algorithm that predicts the chance the patient will develop a condition or respond to a treatment condition or respond to a treatment.

In other words, the exemption does not extend to the FDA-approval prong.

Takeaway: The term “final rule” is a misnomer since CMS is legally required to take comments for 60 days after the rule’s Nov. 1, 2017 publication.