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Highlights from the CY2023 Hospital Outpatient Prospective Payment System Proposed Rule

By Teri Bedard, RT(R)(T), CPC

August 18, 2022
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On July 15, 2022, the Centers for Medicare & Medicaid (CMS) released its proposed rule for the Hospital Outpatient Prospective Payment System (HOPPS). Stakeholders have until September 13, 2022, to submit their comments to CMS on the proposed changes for calendar year (CY) 2023. Below are several of the key items in the HOPPS proposed rule that relate or impact oncology programs and providers. Note: some payment impacts are outside CMS’ authority to change.

Payment Increase

CMS proposed a 2.7 percent increase to the Outpatient Department fee schedule. The agency estimates that total payments to providers from the HOPPS will be approximately $86.2 billion, an increase of approximately $6.2 billion when compared to CY 2022 HOPPS payments. However, due to a U.S. Supreme Court ruling related to the 340B Drug Discount Program, CMS provided an alternate payment file for CY 2023 HOPPS rates, which takes into account the shift from 340B drug reimbursement at a rate of average sales price (ASP) -22.5 percent to a revised rate of ASP +6 percent.    

Scalp Cooling Caps Will Continue to Be Assigned to New Technology APC for 2023

Scalp cooling is a new technology that became effective July 1, 2021, and is used to describe initial measurement and calibration of a scalp cooling device for patients’ use during chemotherapy administration to prevent hair loss. The scalp cooling device is included in Medicare’s national coverage determination (NCD) policy, specifically, NCD 110.6 (Scalp hypothermia during chemotherapy to prevent hair loss).

The scalp cooling cap is classified as a supply and is not paid separately under HOPPS. CMS has received comments that indicate that there are substantial resource costs ($1,900 to $2,400) for cap calibration and fitting. The Category 3 code 0662T is billable once per chemotherapy session, which CMS interprets this to be once per course of chemotherapy. Scalp cooling was new under the CY2022 HOPPS, so there is no claims data yet for this technology. As such, CMS proposed to continue assigning scalp cooling to a New Technology Ambulatory Payment Classifications for CY 2023.

Drugs, Biologicals, and Radiopharmaceuticals Payment

CMS proposed the following payment policies for drugs, biologicals, and radiopharmaceuticals:

  • Packaging of drugs and biologicals estimated at a per-day administration cost less than or equal to $135. (Note: in CY 2022, this amount was set at less than or equal to $130). 
  • Continuing to separate payment for items with an estimated per-day cost greater than $135, except for diagnostic radiopharmaceuticals, contrast agents, anesthesia drugs, drugs, biologicals, radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure, and drugs and biologicals that function as supplies or devices when used in a surgical procedure. 
  • Continuing the policy of making packaging determinations on a drug-specific basis rather than by HCPCS code for those codes that describe the same drug or biological in different dosages. 
  • Continuing the policy to make all biosimilar biological products eligible for pass-through payment and not just the first biosimilar biological product approved for a reference product. 
  • Continuing to provide payment for diagnostic and therapeutic radiopharmaceuticals that are granted pass-through payment status based on ASP methodology, as CMS considers these to be drugs under HOPPS.  

340B Drug Discount Program

In the CY 2018 HOPPS final rule, CMS finalized the policy to pay for drugs purchased under the 340B Drug Discount Program at ASP -22.5 percent. (Note: this payment policy did not include drugs with pass-through payment status or vaccines.) This rate was significantly different than the previous rate of ASP+6 percent. Since this payment policy was updated in CY 2018, there has been significant litigation that has resulted in varying decisions, some which favored the plaintiffs and some which favored the defendant (CMS). In response to these rulings, the payment policy for the 340B Drug Discount Program has had some back-and-forth adjustments between the ASP+6 percent and ASP -22.5 percent rates.

On June 15, 2022, the U.S. Supreme Court filed a decision in the American Hospital Association v. Becerra, No. 20-1114, 2022 WL 2135490 case. The court reversed the decision of the U. S. Court of Appeals for the District of Columbia Circuit, citing that the Secretary of Health and Human Services may not vary payment rates for drugs and biologicals among groups of hospitals in the absence of having conducted a survey of hospitals’ acquisition costs. While the court’s decision concerned CY 2018 and CY 2019 payments, the decision has implications for CYs 2018 through 2022 and the upcoming calendar year.  

Utilizing the separately paid line items with modifier JG (the modifier used to identify drugs purchased under the 340B Drug Discount Program) in the CY 2021 claims data available for HOPPS rate-setting, the estimated payment differential would be an increase of approximately $1.96 billion in HOPPS drug payments. To ensure budget neutrality, CMS would apply this offset and decrease HOPPS payments by factoring in a 0.9596 adjustment for a revised CY 2023 conversion factor of $83.279.

In comparison, CMS originally proposed the CY 2023 conversion factor, with payments for 340B drugs at ASP -22.5 percent, as $86.785. CMS provided 340B alternate payment files for CY 2023, which reflect a decrease in values; the files do not reflect how payments would be adjusted for CYs 2018 to 2022, which must also be paid back to hospitals. CMS is seeking comments on how to incorporate these additional adjustments for the aforementioned years. 

Comment Period

Comments for the HOPPS proposed rule are open to stakeholders and must refer to file code CMS-1772-P. All comments must also be received no later than 5:00 PM EST on September 13, 2022. Electronic submission is encouraged by CMS. To submit your comments, follow the instructions under the “submit a comment” tab.

The CY 2023 HOPPS final rule is expected to be released on or before November 1, 2022. This is when we will find out if the various payment policies and regulatory updates were finalized as proposed or something different. 

To read highlights on the CY2023 Medicare Physician Fee Schedule proposed rule, read my previous blog.

Teri Bedard, RT(R)(T), CPC, is executive director, Client & Corporate Resources at Revenue Cycle Coding Strategies in Des Moines, Iowa

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