CMS has released its proposed rules for the 2018 Physician Fee Schedule (PFS), Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System, with the biggest change being halving the Medicare reimbursement for off-campus services.

In announcing these proposed rules, CMS Administrator Seema Verma, MPH, said both reduced physician burden and a renewed focus on “patient-centered care.”

“These changes require innovative strategies, and we look forward to receiving stakeholder comment and incorporating new ideas in our final rule this fall,” Verma said in a statement. “Additionally, the proposed rule takes a critical step towards fulfilling President Trump’s promise to lower the cost of drugs, particularly for Medicare beneficiaries.”

1. Cut to off-campus services

In the PFS rule, CMS is proposing to drop by half what it pays when care is received at hospital-owned off-campus facilities, going from 50 percent to 25 percent of what they would have been paid under outpatient rates.

“CMS believes that this adjustment will encourage fairer competition between hospitals and physician practices by promoting greater payment alignment,” the agency’s fact sheet on the proposed rule said.

The original payment level, part of the site-neural payment provisions in the 2015 Bipartisan Budget Act, had already been considered harmful by hospitals in the 2017 PFS rule. The American Hospital Association (AHA) quickly came out against the additional cut.

“We remain concerned that the agency’s continued short-sighted policies on the relocation of grandfathered off-campus provider-based departments will prevent communities from having access to the most up-to-date services,” AHA’s executive vice president, Tom Nickels, said in a statement.

2. Drop in PFS rates after misvalued code target

The overall payment update in the proposed PFS rule would be slightly bigger than 2017, when payment rates increased by 0.24 percent after accounting for both mandated budget neutrality cuts and a required bump from the Medicare Access and CHIP Reauthorization Act (MACRA).

For 2018, payments would increase by 0.31 percent. However, the agency is required to make adjustments based on potentially misvalued services. CMS proposed those code changes would achieve 0.31 percent in net expenditure reductions, resulting in a net 0.19 reduction to payments.

3. Adding joint replacements for ASCs

The ASC proposed rule would increase payment rates by 1.9 percent to facilities meeting quality reporting requirements, resulting in an overall increase of $155 million over 2017.

The rule also proposed adding three new procedures to its covered list for ASCs: total knee arthroplasty, partial hip arthroplasty and total hip arthroplasty.

4. 340B drug pricing cuts

The OPPS rule proposed a big change to the 340B pricing program for outpatient drugs. In an effort to lower out-of-pocket costs for beneficiaries, CMS would pay “separately payable, non pass-through drugs (other than vaccines) purchased at a discount through the 340B drug pricing program at the average sales price (ASP) minus 22.5 percent rather than ASP plus 6 percent,” citing an estimate of the average minimum discount hospitals received for 340B drugs.

This was another change opposed by the AHA, which said it “punitively targets” safety-net hospitals while ignoring the larger issue of “skyrocketing” pharmaceutical costs.

5. Delaying diabetes model

The 2017 PFS rule established the new Medicare Diabetes Prevention Program (MDPP) would begin offering services on Jan. 1, 2018. The proposed rule would push back the start date until April 1 to allow new suppliers to have time to enroll in Medicare after the final rule for 2018 is published. The proposed rule would also clarify that if MDPP beneficiaries develops diabetes while enrolled in the program, that wouldn’t prevent them from continuing to receive MDPP services.