On November 1, 2017, the Centers for Medicare & Medicaid Services (CMS) released the 2018 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System policy changes, quality provisions, and payment rates final rule. Please note that physician payment is made under the Physician Fee Schedule; hospitals are paid for outpatient services under the OPPS and ASCs are paid under the ASC payment system, both detailed in this rulemaking.

The ASC Payment Indicator for 63 CPT codes changed from J8 to G2 from the 2018 proposed rule to the 2018 final rule. ASC procedures assigned to J8 are designated as device-intensive, meaning the device cost exceeds 40 percent of the procedure’s mean cost. Device-intensive procedures are priced using a device-intensive payment methodology so that only the non-device (service) portion of the procedure is subject to the OPPS relative payment weight and uniform ASC conversion factor calculation. ASC procedures assigned to G2 are calculated solely based on the OPPS relative payment weight and the ASC conversion factor, without regard to any device costs.

Of the 63 codes impacted, the following spine codes changed from J8 to G2 from the 2018 proposed rule to the 2018 final rule:

ISASS submitted comments to CMS flagging the potential error and on December 22, the Centers for Medicare and Medicaid Services (CMS) issued a correction to the 2018 Final Hospital Outpatient and ASC rule. As part of the Correction Notice, CMS updated the payment indicators of several codes incorrectly assigned a G2 ASC payment indicator instead of a J8 (device-intensive) ASC payment indicator in the final 2018 rule. As part of the 2018 Correction Notice, CMS changed the ASC payment indicators for the following two surgical spine codes from G2 back to J8, thereby avoiding a decrease of more than $2,800.00 to ASCs for the procedures:

However, CMS did not change the ASC payment indicator for the following surgical spine code back to J8 from G2, meaning CMS does not believe that the procedure meets its “clinical criteria” for device intensive status. This change in payment indicator results in a decrease of more than $900.00 to ASCs for endoscopic lumbar decompression from 2017 to 2018:

According to CMS policy, procedures must meet the following criteria for device-intensive status:

1. All procedures must involve implantable devices that would be reported if device insertion procedure were performed;
2. the required devices must be surgically inserted or implanted devices that remain in the patient’s body after the conclusion of the procedure (at least temporarily); and
3. the device offset amount must be significant, which is defined as exceeding 40 percent of the procedure’s mean cost.

Please note, these changes do not impact surgeon reimbursements under the Physician Fee Schedule. Click here for an updated comparison of OPPS and ASC reimbursements from 2017 to 2018.