It’s a busy week for rules. We summarize the latest rules from CMS: PFS, QPP, and OPPS.

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Nov. 2, 2018


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Oy With the Rules Already: CMS Releases PFS, QPP, and OPPS Final Rules


Yesterday, the Centers for Medicare & Medicaid Services (CMS) released a final rule addressing updates to the Medicare Physician Fee Schedule (PFS) and other Medicare Part B payment policies, as well as a host of other programs and policies. This was the third big rule we found ourselves reading in the past week (more below). We provide an initial thumbnail sketch of the PFS and Quality Payment Program (QPP) changes below.

PFS Changes

PFS Payment Update

The PFS conversion factor (CF) for calendar year (CY) 2019 is $36.0391, reflecting the 0.25% statutory update as required by the Bipartisan Budget Act of 2018 and a −0.14% budget-neutrality adjustment. The CY 2019 payment adjustment factor represents a 0.11% increase over the CY 2018 CF of $35.9996.

Adjustment to WAC-Based Payment for Part B Drugs

New drugs paid under Part B typically need 1 quarter of sales data before they can be paid based on their average sales price (ASP). Until ASP is available, therefore, CMS pays for new Part B drugs based on their wholesale acquisition cost (WAC). The WAC-based payment had included a 6% add-on.

CMS finalized its policy that, effective January 1, 2019, WAC-based payments for Part B drugs during the first quarter of sales when ASP is unavailable will be subject to a 3% add-on in place of the 6% add-on. The agency stated the payment reduction “will help curb excessive spending, especially for new drugs with high launch prices, and will also decrease beneficiary cost sharing.” The change was supported by the Medicare Payment Advisory Commission (MedPAC) in its June 2017 Report to the Congress.

Evaluation and Management (E/M) Coding and Payment

CMS is implementing a number of policies that will occur in 2 phases: 1) CY 2019 and beyond; and 2) CY 2021 and beyond.

2019 and Beyond E/M Changes

For CY 2019 and beyond, CMS finalized the following policies:

  • Eliminated the requirement to document the medical necessity of a home visit in lieu of an office visit
  • For office/outpatient visits for established patients, when relevant information is already contained in the medical record, practitioners can focus their documentation on what has changed since the last visit, or on pertinent items that have not changed
  • For E/M office/outpatient visits for new and established patients, practitioners can indicate they reviewed and verified the information, so they do not need to re-enter in the medical record information on the patient’s chief complaint and history that has already been entered by ancillary staff or the beneficiary.
  • Removed potentially duplicative requirements for notations in medical records that may have previously been included in the medical records by residents or other members of the medical team for E/M visits furnished by teaching physicians

2021 and Beyond E/M Changes

CMS simplified payment for E/M office/outpatient visits; payment will vary primarily on attributes that do not require separate, complex documentation. Finalized policies for 2021 and beyond will:

  • Collapse E/M office/outpatient level 2 through 4 visits for established and new patients into 1 payment rate
  • Permit practitioners to choose to document E/M office/outpatient level 2 through 5 visits using medical decision-making or time instead of applying the current 1995 or 1997 E/M documentation guidelines
  • Allow flexibility for how E/M office/outpatient level 2 through 5 visits are documented; specifically, practitioners can use the current framework, medical decision-making, or time
  • Implement add-on codes that describe the additional resources inherent in visits for primary care and particular kinds of non-procedural specialized medical care.
  • Adopt a new “extended visit” add-on code for use with E/M office/outpatient level 2 through 4 visits to account for the additional resources required when practitioners need to spend extended time with the patient

Access to Virtual Care

CMS finalized proposals to pay separately for 2 newly defined physicians’ services furnished using communication technology:

  • Brief communication technology-based service—eg, virtual check-in (HCPCS code G2012)
  • Remote evaluation of recorded video and/or images submitted by an established patient (HCPCS code G2010)

CMS also finalized policies to pay separately for new codes describing chronic care remote physiologic monitoring (CPT codes 99453, 99454, and 99457) and interprofessional internet consultation (CPT codes 99451, 99452, 99446, 99447, 99448, and 99449).

Payment Rates for Non-Excepted, Off-Campus, Provider-Based Hospital Departments

The Bipartisan Budget Act of 2015 requires that certain items and services furnished by certain off-campus hospital outpatient provider-based departments are no longer paid under the Hospital Outpatient Prospective Payment System (OPPS) and are, instead, paid under the applicable payment system. In CY 2017, CMS finalized the PFS as the applicable payment system for most of these items and services. The purpose behind this policy is to encourage competition between hospitals and physician practices by promoting greater payment alignment between outpatient care settings. CMS will maintain the PFS Relativity Adjuster’s rate that is based on a percentage of the OPPS payment rate to pay for these services to remain at 40% for CY 2019.

QPP Changes During Year 3

MIPS Highlights

CMS added the following new clinician types eligible for the Merit-based Incentive Payment System (MIPS):

  • Physical therapists
  • Occupational therapists
  • Speech-language pathologists
  • Audiologists
  • Clinical psychologists
  • Registered dietitians or nutrition professionals

CMS also added a third element to the low-volume threshold determination and gave eligible clinicians who meet 1 or 2 elements the choice to participate in MIPS (referred to as the opt-in policy).

CMS also added new episode-based measures to the Cost performance category, restructured the Promoting Interoperability (formerly Advancing Care Information) performance category, and created an option to use facility-based Quality and Cost performance measures for certain facility-based clinicians.

APM Highlights

For year 3 of the QPP, CMS finalized the following policies for the Advanced Alternative Payment Models (Advanced APMs):

  • Update the Advanced APM Certified Electronic Health Record Technology (CEHRT) threshold—at least 75% of eligible clinicians in each APM entity are required to use CEHRT; and for Other Payer Advanced APMs, as of January 1, 2020, the number of eligible clinicians participating in the other payer arrangement who are using CEHRT must be 75%
  • Extend the 8% revenue-based nominal amount standard for Advanced APMs and Other Payer Advanced APMs through performance year 2024
  • Increase flexibility for the All-Payer Combination Option and Other Payer Advanced APMs for non-Medicare payers to participate in the QPP

CMS noted throughout the final rule that it wanted to continue to provide physicians and other healthcare practitioners relief from excessive regulation and to reduce compliance needs that interfered with patient care. However, with the QPP, International Pricing Index Model, and other demonstrations, it does not appear that way.

Given the release of the International Pricing Index model last week, it is not surprising that the final rule contained few provisions affecting drug pricing, other than the WAC plus 3% provision. Of course, the strictures of the statutes affecting Medicare Part B leave little room to modify drug pricing, so most changes must be effected through the Center for Medicare and Medicaid Innovation or legislation.

The document is scheduled to be published in the Federal Register on November 23, 2018. In addition to the final rule, interested parties can review the press release, PFS fact sheet, and QPP executive summary of CY 2019 changes for additional perspective.


OPPS Final Rule Makes an Appearance Earlier Today


CMS released the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) final rule at 8:45 AM today—barely in time to make it into Health Policy Weekly. Below is a summary of the noteworthy provisions, based on an initial skim of the final rule.

Hospital Payment and Site Neutrality

The CF used to calculate the Ambulatory Payment Classification payment rates for services provided increases 1.1% to $79.490 in CY 2019, from $78.636 in CY 2018.

CMS finalized its proposal to promote site neutrality between hospital outpatient departments and ASCs by applying a PFS-equivalent payment rate for the clinic visit service when provided at an off-campus provider-based department (PBD) that is paid under the OPPS.

CMS will apply a higher-paying PFS payment rate than what it proposed for clinic visits performed at off-campus hospital outpatient departments. The new rate would lower the cost of clinic visits from $116 with a $23 beneficiary copay to $81 with a $16 beneficiary copay, instead of the proposed $46 payment and $9 copay. CMS estimates savings of $380 million for 2019, the first year of a 2-year phase-in that the agency is using to implement this policy.

Drug Payment and 340B Program

CMS finalized its proposal to increase the packaging threshold in CY 2019 to $125, up from $120 in CY 2018.

For separately payable drugs and biologicals, CMS finalized its proposal to continue to pay at ASP plus 6%. This is the same add-on amount since 2013.

CMS finalized its proposal to align with the PFS final rule to pay for drugs, biologicals, and radiopharmaceuticals that do not have ASP data available (eg, new drugs on the market) and are not acquired under the 340B program, and reimburse at WAC plus 3% instead of WAC plus 6%. If WAC data are not available for a drug or biological, CMS plans to continue its policy to pay separately payable drugs and biological products at 95% of average wholesale price (AWP).

Drugs and biologicals acquired under the 340B program will continue to be paid at ASP minus 22.5%, WAC minus 22.5%, or 69.46% of AWP, as applicable.

CMS finalized its proposed policy to pay ASP minus 22.5% for 340B-acquired drugs furnished by non-excepted, off-campus PBDs paid under the PFS.

The pass-through payment status of 23 drugs and biologicals will expire on December 31, 2018, and pass-through payment status will continue for 60 drugs and biologicals.


CMS finalized its proposed payment policy for biosimilar products to continue the policy in place from CY 2018 to make all biosimilar biological products eligible for pass-through payment, and not just the first biosimilar biological product for a reference product.

It also finalized the proposal to pay nonpass-through biosimilars acquired under the 340B program at the biosimilar’s ASP minus 22.5% of the biosimilar’s ASP, instead of the biosimilar’s ASP minus 22.5% of the reference product’s ASP.

High-Cost/Low-Cost Threshold for Packaged Skin Substitutes

CMS finalized the proposal to continue the policy established in CY 2018 to assign skin substitutes to the low-cost or high-cost group. In addition, CMS presented several payment ideas to change how skin substitute products are paid under the OPPS and solicited comments on these ideas to be used for future rulemaking.

Hospital Quality Reporting Program

CMS is not finalizing removal of 2 of the 10 measures proposed for removal. The agency will remove 1 quality measure beginning with the CY 2020 payment determination and 7 quality measures beginning with the CY 2021 payment determination. It is retaining the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients (OP-29) and the Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery (OP-31) measures.

The OPPS final rule was accompanied by a press release and fact sheet. It is scheduled to be published in the November 21 issue of the Federal Register and will become effective January 1, 2019.


Barcelona Bound? Join Xcenda at ISPOR Europe 2018


November 10–14, 2018 | Barcelona, Spain

Xcenda’s global HEOR team is excited to join nearly 5,000 attendees from around the world at ISPOR Europe 2018 in Barcelona, Spain. Timely topics such as global market access strategy and prospective studies are just a part of our focus, and we look forward to learning more about your most current challenges.

Stop by booth #314 to meet our team and explore how we can provide the local expertise you may need to reach your global goals.

Learn more >



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ACOs: We Believe They Can Achieve, Just Not That Fast


A bipartisan group of 9 members of Congress wrote a letter to CMS asking the agency to reconsider the decision to reduce the time for new accountable care organizations (ACOs) to assume financial risk from 6 years to 2 years and to leave the shared savings rate at its current 50%, rather than the proposed 25%. Lawmakers are concerned that reducing shared savings and shortening the time given to ACOs to assume financial risks could discourage new ACOs from joining the program. They noted the Advanced APM track under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) primarily includes ACO models.

The request sent by the lawmakers is similar to those previously submitted to CMS by other stakeholders. In September, 9 organizations in the ACO community sent a letter to CMS expressing concerns about the same 2 issues.

In their letter to CMS, the lawmakers appealed to CMS to modify the proposals in the final rule to ensure that ACOs continue to participate in the program. They asserted under the Medicare Shared Savings Plan (MSSP) the importance of ACO participation remaining a workable option. The group was careful to acknowledge support of CMS’ movement to a value-based healthcare system that rewards quality and decreases costs.

If CMS decides not to follow the requests from the lawmakers and the ACO organizations, the concern is that it could slow the growth of the MSSP program. A compromise between those who support the acceleration and those who oppose it may be to follow the MedPAC suggestions to increase the shared-savings rates in the basic track and not require participants to leave the program if they are not generating savings for 1 or 2 years.

HPW Rebuild


The Timing Sox: MA and Part D Proposed Rule Strikes Out a Friday Night


Late Friday, as many were gearing up for a much longer World Series game than they ever imagined, CMS slid in the proposed rule for Medicare Advantage (MA) and Part D PFS for plan year 2020. A day after stakeholders were left shell-shocked by the announcement of the Administration’s proposed International Price Index (IPI) for Part B drugs, this proposed rule was technical and banal. Here is the overview:

1.    Bipartisan Budget Act of 2018 provisions are proposed for implementation. CMS plans to:

  • Cover additional telehealth services for all beneficiaries whether located in rural or urban areas, as part of government-funded “basic benefits”
  • Align the appeals and grievance processes of Medicare and Medicaid services for MA Dual-Eligible Special Needs Plans (D-SNPs)
  • Establish a process to allow Part D plan sponsors to request extracts of Medicare Parts A and B claims data for their enrollees

2.    Quality Star Ratings methodology changes proposed to improve stability and predictability

  • CMS proposes 2 additional parameters in the method for determining cut points (the specified value used to sort MA plans into discrete categories) including use of both:
    • Mean resampling technique to calculate
    • Guardrail of 5% in either direction (above or below the prior year’s cut points) for measures that have been in the Part C and D Star Ratings program for more than 3 years
  • CMS also proposes several updates to existing measures—controlling high blood pressure, Medicare plan finder price accuracy, all-cause readmissions, and improvement measures
  • Additionally, a plan would be held harmless for extreme and uncontrollable circumstances, such as hurricanes

3.    Stronger program integrity

  • As a follow-up to a previous regulation that CMS would not pay for Part D drugs and MA items or services that are prescribed or furnished by providers on a “preclusion list,” in this proposed rule, CMS proposes to clarify requirements under the preclusion list
  • Audits conducted by CMS at the contract-level use Risk Adjustment Data Validation (RADV) to confirm that payments made to MA organizations are accurate. CMS proposes to use various sampling and extrapolation methodologies in audits used to recover improper payments. Savings to the Medicare Trust Fund resulting from the audits are estimated at $4.5 billion over 10 years

As beneficiaries look at plans during open enrollment through December 7 to decide about re-enrollment, they will have approximately 600 more MA plans available across the country serving them. CMS also notes enrollment is projected to grow by 11.5% next year, and the average MA premium will decline by 6.1%.

In the proposed rule, CMS notes that it plans to release another proposed Medicare rule on drug pricing in the near future.

A press release and fact sheet accompanied the release of the CY 2020 Medicare Advantage and Part D PFS proposed rule. An analysis on the application of a fee-for-service adjuster in determining the MA payment recoveries is also available. Comments are due to CMS by December 31.


I (Now) Feel the Need for Speed: Moving Up 340B Change


This week, the Department of Health and Human Services (HHS) announced in a proposed rule that it would accelerate the implementation of a final rule to penalize manufacturers for overcharging providers in the 340B drug discount program. The policy now becomes effective on January 1, 2019—6 months earlier than the Trump Administration had planned.

The Obama-era 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties (CMP) final rule has had quite the rollercoaster ride. Originally scheduled to take effect April 1, 2017, it was delayed 5 times by the Trump Administration, most recently in May. In June, HHS announced the final rule would become effective July 1, 2019, expressing concern that new drug-pricing programs in development for Medicare, Medicaid, and 340B could impact the 340B ceiling-price rule. However, on Wednesday, HHS indicated that finalizing the rule will not interfere with other drug-pricing policies being developed.

A “penny pricing” policy for drugs that undergo large price increases would no longer be delayed and would become effective beginning in 2019. The 340B program requires manufacturers to add discounts when they increase prices above the rate of inflation; in some cases, this drops the price to zero, and hospitals are charged a penny. Manufacturers had asked HHS to let them charge a higher rate.

The agency indicated in the past that it might also change the criteria for when hospitals could be penalized for overcharging by amending the definition of “knowingly and intentionally.” Hospitals felt this would hamper HHS’ ability to impose penalties. The new proposed rule notes HHS envisions penalizing manufacturers in rare situations, as most cases of overcharging result from technical errors and are not intentional.

The American Hospital Association supported the implementation of the final rule, with its General Counsel encouraging HHS to fulfill other commitments:

“The rule also requires that HHS make pricing information available online to 340B hospitals and other providers. We strongly encourage HHS to publish that website promptly, which is critical to enforcement of the 340B program, as soon as possible after Jan. 1.”

Comments are due in 21 days (November 23) rather than the usual 30- or 60-day period.


Information Buffet (AKA, Other Stuff That Caught Our Attention)


We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:

  • Late Thursday, CMS released the final rule on the payment system for Durable Medical Equipment (DME) and End-Stage Renal Disease (ESRD) Programs. Market-based reforms to Medicare’s DMEPOS Competitive Bidding Program (CBP) will begin in 2019, and the Transitional Drug Add-on Payment Adjustment (TDAPA) for new ESRD drugs and biologicals will become effective January 1, 2020.
  • Aw nuts: The Institute for Clinical and Economic Review (ICER) announced plans to assess the comparative clinical effectiveness and value of VIASKIN PEANUT (DBV Technologies) and AR101 (Aimmune Therapeutics), with an expected application submission to the Food and Drug Administration (FDA) by the end of this year. The comparative clinical effectiveness and value of these potential new treatments for peanut allergy will be reviewed at the June 2019 California Technology Assessment Forum (CTAF) public meeting.
  • ICER also released draft scoping documents for the assessment of siponimod for treatment of secondary progress multiple sclerosis (approval expected in March 2019) and esketamine for treatment-resistant depression (approval expected in May 2019).
  • Sandoz announced it received US FDA approval for its biosimilar HYRIMOZ™ (adalimumab-adaz) for treatment of patients with chronic illnesses, such as psoriasis and rheumatoid arthritis. This is the 13th biosimilar approved by the FDA, with only 5 available on the market.
  • Idaho Governor Butch Otter announced his endorsement of a provision for Medicaid expansion. The initiative is expected to be approved, but a funding mechanism for the $40 million to cover more than 60,000 Idaho residents in its first year of implementation has still not been identified.
  • CMS released the Home Health Care Prospective Payment System final rule with significant updates as part of its effort to strengthen and modernize Medicare. Changes finalized for 2019 include improved access to solutions via remote patient monitoring technology, reduced reporting requirements, and temporary transition payments for home infusion therapy services. The rule also includes finalized changes for 2020—updated payments using a new case-mix system and a change in payment from 60 to 30 calendar days—and summarizes public comments on the implementation of the new home infusion therapy benefit in 2021.
  • An editorial in The Wall Street Journal calls President Trump’s proposed IPI model just another version of “Drug Reimportation Light,” a way around the ban on reimporting cheaper drugs from other countries. However, if implemented, the model would still negatively impact manufacturers’ innovation, which could lead to government-funded research and development—and would further politicize drug development.


“We have required that the test label make clear that it is not intended to provide information on a patient’s ability to respond to any specific medication. Health care providers should not use the test to make any treatment decisions without additional testing.”

– Jeffrey Shuren, MD, JD, Director of the FDA’s Center for Devices and Radiological Health, and Janet Woodstock, MD, Director of the FDA’s Center for Drug Evaluation and Research, in a statement issued October 31—a day after the FDA approved a 23andMe test aimed at linking genetics with patients’ ability to metabolize some medications





Discount that AbbVie is offering in the EU for patients to take its Humira drug rather than the biosimilar

Source: “AbbVie offers up 80% Humira discount in EU tender market to hold off biosimilars: report,” FiercePharma, October 31


ISPOR Europe 2018

November 10–14 | Barcelona, Spain
Are you Barcelona bound? Xcenda’s global HEOR team is excited to join nearly 5,000 attendees from around the world at ISPOR Europe 2018 in Barcelona, Spain. Timely topics such as global market access strategy and prospective studies are just a part of our focus, and we look forward to learning more about your most current challenges. Stop by booth #314 to meet our team and explore how we can provide the local expertise you may need to reach your global goals. Learn more


Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.


Jennifer Snow
Vice President,
Reimbursement and
Policy Insights,

Scott Shields
Associate Director,
Health Policy



Amy Grogg, PharmD
Senior Vice President | Commercialization Solutions | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Commercial Consulting | Xcenda


Stacie Heller | Isabell Kang | Jenna Kappel | Scott Shields | Jennifer Snow | Tammy Washington | Stephen Wilson


Laurie Kozbelt | Ellen Olson


Nov. 2, 2018


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