HealthChoice “J1 bundling” variation proposed

Posted on: 7/25/18

Oklahoma’s HealthChoice plan may exempt rural hospitals from a proposed outpatient reimbursement methodology change that would be effective for dates of services beginning January 1, 2019. The state’s Employee’s Group Insurance Division (EGID) informed a volunteer task force of hospital representatives of this possibility on July 24. EGID held a public hearing on the topic of “J1” bundled procedure payment reductions on May 25.

The claims affected by this change are those with multiple procedure codes, when at least one of the claim’s procedure codes is assigned the status indicator of “J1” by the Centers for Medicare and Medicaid Services (CMS). HealthChoice payment rates for outpatient hospital surgical procedures are set at a percentage over Medicare’s standard payment rates for these services.  Medicare does not pay extra amounts for additional procedures when the claim includes a J1 procedure. HealthChoice had not adopted the CMS J1 bundling policies, instead paying separately for line items that Medicare does not pay. (See “HealthChoice to reduce some outpatient payments,” 5/16/18 Hotline)

At the May 25 public hearing on this payment reduction, EGID proposed a “limited” J1 bundling policy different from Medicare’s. EGID proposed to bundle many J1 procedures, but to maintain separate payment for several services and items that Medicare does not pay for when provided with a J1 procedure:

• Non-pass-through drugs and biologicals (status indicator K).
• Blood products (status indicator R).
• DME (status indicator Y).
• Therapy services (status indicator A).

EGID also proposed to limit the bundling logic to procedure codes in the ranges of 10000-69999 and 92900-93999.

In addition to concerns about the resulting payment reductions, hospitals expressed concerns about these exceptions to Medicare pricing policy as administratively difficult.

At the July 24 meeting, EGID said they are now considering an alternative implementation of the policy change, under which:

• All CMS J1 bundling rules would apply; and
• Rural hospitals would be exempted from the new J1 policy.

The additional savings from using the full CMS method for J1 procedures rather than EGID’s “limited” proposal will approximate the amount not saved by excluding rural hospitals from the change.  Under either option, EGID estimates the new J1 policy will save the state about $14 million annually.

EGID expects to post information on this alternative proposal, including their July 24 J1 task force presentation, to their Providers web page.

Hospitals can receive an analysis of their payment changes under the “limited” or “full Medicare” J1 methods by emailing Teresa South, EGID Director Network Management with the hospital’s name(s), NPI(s), and TIN(s). EGID requests comments from hospitals by Aug. 17.  (Rick Snyder)