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The Centers for Medicare & Medicaid Services (CMS) on Nov.1, 2017, published a Final Rule that updates payment rates and policy changes in the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. For further details, see the OPPS/ASC Final Rule and the related CMS Fact Sheet.

Additional Key Highlights Proposed Hospital Outpatient Department (HOPD) Payment Updates: CMS finalized a 1.35 percent increase in the conversion factor (CF).

Though the direct supervision requirement has been applicable to CAHs and small rural hospitals for a number of years, the requirement has not historically been enforced due to CMS instructions or legislative action and stakeholder concerns regarding the difficulty in staff recruiting, particularly with specialty services, for these types of providers.

Low-Cost Drug Administration Services: CMS proposes to include drug administration into the bundle payment finalized in CY 2015 for add-on procedures with a geometric mean cost of 0 or less.

Hospital Inpatient List: The Medicare inpatient-only (IPO) list includes procedures that are only paid for under the Hospital Inpatient Prospective Payment System.

Each year, CMS reviews the list to determine whether any procedures should be taken off of the list.

With CMS' reimbursement rate of ,384 for inpatient TKAs and ,122 for outpatient TKAs, a shift of 48 percent of Medicare TKA cases to outpatient settings would result in an 18 percent decrease in reimbursement for providers and 1 million in savings for Medicare.

In addition, CMS is precluding the recovery audit contractor (RAC) from reviewing the TKA procedures for "patient status" (i.e., site of service) for a period of two years and noted that it will monitor changes in site of service to determine whether changes may be necessary to the Comprehensive Care for Joint Replacement (CJR) or the Bundled Payment for Care Improvements (BPCI) models.CMS will continue to solicit comments broadly on potential reforms to the current ASC payment system, including but not limited to: Payment Changes for the 340B Program: CMS implemented a significant Medicare Part B payment reduction for separately payable, non-pass-through drugs provided in the hospital outpatient setting.In 2018, CMS will cut Part B reimbursement for certain 340B drugs from ASP plus 6 percent to ASP minus 22.5 percent.The Final Rule will be published in the Federal Register on Nov. These policy changes and payment rates are effective as of Jan. Public comments on this Final Rule are due to CMS by 5 p.m. Of significance, the Final Rule reduces hospital payment for drugs purchased through the 340B program from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent.However, Rural Sole Community Hospitals, PPS-exempt Cancer Hospitals and Children's Hospitals will be exempted from this policy for Calendar Year (CY) 2018.CMS may alter this policy for CY 2019 and seeks to explore policies to address the needs of safety net hospitals.

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