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In November 2016, the Centers for Medicare & Medicaid Service (CMS) released the 2017 final Medicare Physician Fee Schedule (MPFS) and Hospital Outpatient Prospective Payment System (HOPPS). As a yearly exercise, Oncology Solutions analyzes the fee schedules with a focus on radiation therapy and medical oncology to identify reimbursement changes that may affect cancer care providers. With more than 60% of all cancers occurring in the Medicare-eligible population, it is critical to understand the immediate financial impact to oncology practices and hospital service lines.

Radiation Oncology

For 2017, there are few radiation oncology changes within the hospital outpatient department (HOPD) or freestanding environments. This does not come as a surprise due to the passage of Medicare Payment Reform (MACRA) and the Patient Access and Medicare Protection Act (PAMPA). Together, the laws mandate a small change to the Medicare conversion factor (+0.5% through 2019) and no change to the radiation and imaging Current Procedural Terminology (CPT) G-Codes in calendar year 2017 or 2018.

To calculate reimbursement changes, Oncology Solutions compares the professional and technical Medicare reimbursement per course of treatment across a set of treatment courses, including: traditional 3D external beam (EBRT), intensity-modulated radiation therapy (IMRT), stereotactic radiosurgery (SRS), and stereotactic body radiation therapy (SBRT). We estimate the CPT codes in a standard course of treatment and the overall treatment mix to provide the directional reimbursement impact within radiation therapy. Table 1 summarizes our findings for changes in both the MPFS and HOPPS fee schedules.

Table 1

*Based on Oncology Solutions’ industry experience, the weighted average totals include an estimated RT mix of 35% IMRT, 50% EBRT, and 7.5% each of SRS and SBRT. Actual reimbursement changes may vary based on provider RT mix and provider definition of a standard course of treatment.

Based on the above analyses, the overall impact to radiation therapy in 2017 is +0.4% in the freestanding care delivery setting and +1.4% in the HOPD setting.

While the overall impact to radiation therapy reimbursement is marginal, specific codes can also impact your reimbursement. Two reimbursement changes that cancer care providers should be cognizant of include:

  • The treatment delivery code G6011 was reduced by $31.52 or 11% to $292.86 in the freestanding setting.
  • CMS significantly restructured reimbursement for radiation therapy treatment aid(s) (77332, 77333, 77334) identified via the 2016 high-expenditure specialty screening tool. These changes affect both the MPFS and HOPPS fee schedules.

Medical Oncology

For medical oncology, we analyze four core areas, including pharmaceuticals, clinic visits, chemotherapy administration, and hospital encounters.

Based on industry experience as well as national benchmarking, the overwhelming majority of medical oncology reimbursement is generated by high-cost pharmaceuticals delivered to patients, which Medicare pays for at national average wholesale acquisition cost, or average sales price (ASP), plus six percent. There is one caveat to this for the hospital setting, where a portion of low-cost drugs—those that are less than $110 per unit—are bundled into chemotherapy administration, hydration, and therapeutic injection codes (CPTs: 99360–99549). For 2017, there are no changes to any pharmaceutical reimbursements, and Medicare continues to reimburse at ASP plus six percent in both freestanding and hospital-based practices.

However, the most interesting fee schedule changes occur in the following three areas:

1. Clinic visits (both new and established patient visits)
2. Chemotherapy administration
3. Hospital encounters

Oncology Solutions applied industry benchmark utilization[2] to model the 2017 impact. Our analysis found that, although the percent change within these three categories appeared significant, the revenues from non-pharmaceutical sources account for less than 30% of the overall medical oncology practice/department revenues. Thus, the impact from changes in yearly fee schedules will be minimal except for pharmaceutical reimbursements.

Table 2 below demonstrates Oncology Solutions’ conclusion that the total change in reimbursement for 2017 will be 0.2% in the freestanding setting, 1.4% in the hospital setting, and 1.2% in a hybrid model whereby physician services are reimbursed under MPFS and pharmaceuticals and chemotherapy administration services are reimbursed under HOPPS.

Table 2

*Hybrid practice refers to HOPDs billing clinic services (E&M) as a physician practice (CMS 1500) and billing other services as HOPPS (UB).

Site Neutrality

For hospitals, the final outpatient payment rules provide additional clarification to the site neutrality provisions of the Bipartisan Budget Act of 2015. To curb high rates of physician-practice acquisitions by hospitals, CMS proposed that payments to new, off-campus outpatient departments match MPFS rates, ultimately reducing the amount Medicare will pay for these services.

Under CMS’ latest guidance, new, off-campus HOPDs established after November 2, 2015, will be deemed “non-excepted” from site neutrality. These departments will continue to bill via the UB-04 hospital claim form but with a “PN” modifier attached to each claim. Through 2018, reimbursement for these services will be 50% of the HOPPS/Ambulatory Payment Classification (APC) rates, with all applicable packaging and bundling rules in effect. Starting in 2019, Medicare will model the non-excepted department rates to match those in MPFS. While this provision is still under comment, CMS is planning to move forward with this basic framework.

Oncology Solutions serves as a dedicated partner and trusted advisor to healthcare providers, strategically and operationally transforming their cancer care programs. Our comprehensive operational assessments are designed to help clients achieve the highest levels of performance, including practice benchmarking analyses and coding and billing documentation audits. If you would like to learn more about our methodology or how our operational assessments can help increase your program’s efficiency, please call us at 404.836.2000 or email us at [email protected]. At Oncology Solutions, we are reimagining cancer care—one program at a time.

[1] “The National Practice Benchmark for Oncology: 2015 Report for 2014 Data.” Journal of Oncology Practice 12.4 (2016).
[2] 2014 CMS, Public Use File (PUF).

Author Chartis Oncology Solutions

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