The U.S. Centers for Medicare and Medicaid Services (CMS) has moved incrementally to date on the Medicare inpatient-only (IPO) list for a number of procedures, but the agency recently proposed to eliminate the IPO list altogether by 2024. The Advanced Medical Technology Association (Advamed) cautioned that the elimination of the entire IPO list should at the least be accompanied by a monitoring of outcomes to ensure that quality of the services is not affected, but also said the translation of payment codes for outpatient performance of these procedures might lead to inadequate reimbursement rates.

The agency posted the draft inpatient fee schedule for calendar year 2021 early in the month of August, and explicitly asked for feedback on the pace of the IPO list elimination. The matter came up in the Aug. 31 meeting of the CMS advisory panel for hospital outpatient payment, and DeChane Dorsey, vice president for payment policy at Advamed, said the association understands the impulse to give patients more leeway in deciding the site of service.

CMS approach to retirement from IPO unclear

One of the issues Advamed has with the proposal is that the inpatient draft offered little in the way of details regarding how the CMS would select the procedures that would first come off the IPO list. Dorsey said the sheer pace of the retirement of the IPO list is also a source of concern, adding that the migration of procedures from the inpatient setting to the outpatient setting will require some finesse when assigning the services to existing ambulatory payment codes (APCs).

Dorsey said there are a number of APC code groups that have historically defied rational pricing due to high variability in the demands on clinical staff and on non-personnel resources from one code to another in that group. This would have to be resolved prospectively in order to avert short payment of hospital outpatient departments and ambulatory surgical centers (ASCs), but she also cited the prospect that the implications for practice patterns might damage patient outcomes. Thus, Advamed recommended that a mechanism be placed to track outcomes, but also that CMS engage with stakeholders to tie these procedures to appropriate clinical and new technology APC groupings in order to stave off any financial hits for operators of hospital outpatient departments and ASCs.

Advamed is also concerned about the effect of removing total ankle replacement and total shoulder replacement from the IPO in large part because the CMS is considering an assignment of the related procedures to level 5 of APC grouping 5115. In a January 2020 update for the current outpatient year, CMS noted that services provided under APC 5115 are subject to an offset from the pass-through payment amount, and Dorsey said assignment to APC 5115 would ding rates sufficiently to possibly hamper access. She recommended the agency convene with stakeholders to find a more plausible APC assignment, and suggested CMS exempt these procedures from denials of claims and from reviews by recovery audit contractors for two years should they be removed from the IPO.

MITA says radiopharmaceutical packing is obsolete

Speaking on behalf of the Medical Imaging & Technology Alliance, Ann Marie Dawidczyk of GE Healthcare Pharmaceutical Diagnostics said the outpatient fee schedule encodes some “inappropriate” packaging of certain diagnostic radiopharmaceuticals. Dawidczyk said the current approach pays rates that leave hospitals holding part of the tab for these procedures for later-generation products, but argued that the CMS should treat these agents “like other FDA-approved drugs and paid separately” from the index procedure.

These agents are typically paid via a three-year pass-through payment calculation, after which they are reimbursed only via a packaged APC rate that covers only 10% to 20% of the actual cost in some instances. Dawidczyk added that these products are usually not interchangeable with less expensive contrast agents, adding that hospitals are often unwilling to use these agents. More routine use of these products may stave off procedures that could have been ruled out, she said.

The solution may be to use existing CMS payment authorities that would allow separate payment without the ordinary adjustment for diagnostic radiopharmaceuticals, a move that could be applied toward products approved by the FDA from 2008 onward. Dawidczyk also recommended that CMS boost the drug packaging threshold rate to $500 per day, a set point she said would not expand beyond the agents currently suffering from access-crimping reimbursement rates. The affected imaging agents account for 2% or less of the total volume of Medicare-covered imaging procedures, a shift Dawidczyk said is backed by the Medicare Payment Advisory Commission.

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