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Geographers 100(4):992-1002. 12-98 Mandate for this report: The SUPPORT for Patients and Communities Act of 2018 O n October 24, 2018, the Substance UseDisorder Prevention that Promotes Opioid
Recovery and Treatment (SUPPORT) for
Patients and Communities Act became law. The
SUPPORT Act requires the Medicare Payment
Advisory Commission to report on opioid payment,
adverse incentives, and data under the Medicare
program by March 15, 2019. Specifically, the Act calls
for the Commission to provide the following:
• a description of how the Medicare program pays
for pain management treatments (both opioid and
non-opioid pain management alternatives) in both
inpatient and outpatient hospital settings; Introduction
The Substance Use-Disorder Prevention that Promotes
Opioid Recovery and Treatment (SUPPORT) for Patients
and Communities Act of 2018 requires the Commission
to describe how Medicare pays for both opioid and nonopioid pain management treatments in the inpatient and
outpatient hospital settings, any incentives under the
inpatient and outpatient prospective payment systems for
prescribing opioids and non-opioids, and how opioid use
is monitored through Medicare claims data (see text box
on the SUPPORT Act). The Commission’s report is due
March 15, 2019.
To meet the requirement of a mandated report, this chapter
reviews how Medicare pays for opioids and non-opioid
alternatives in inpatient and outpatient hospital settings.
In addition, we present data on the extent to which the
inpatient and outpatient prospective payment systems
introduce financial incentives for prescribing opioids
versus non-opioid alternatives and discuss options for
addressing any adverse incentives. We also describe how
Medicare monitors opioid use through claims and other
data in Part D. Finally, we discuss policy options for
monitoring opioid use in Part A and Part B. • the identification of incentives under the hospital
inpatient prospective payment system and
incentives under the hospital outpatient prospective
payment system for prescribing opioids and
incentives under each system for prescribing nonopioid treatments, and recommendations as the
Commission deems appropriate for addressing any
of such incentives that are adverse incentives; and • a description of how opioid use is tracked and
monitored through Medicare claims data and other
mechanisms and the identification of any areas
in which further data and methods are needed for
improving data and understanding opioid use. ■ How Medicare pays for opioids and
non-opioid alternatives in hospital
Medicare uses bundled payments to pay for pain
management drugs and services in both the inpatient
and outpatient settings. Bundled payments are applied
differently in the two settings. The inpatient prospective
payment system (IPPS) assigns stays to categories on the
basis of patients’ conditions and sets payment bundles
that reflect the average costs of providing all items
and services supplied during the stay. In contrast, the
outpatient prospective payment system (OPPS) groups
services into categories on the basis of clinical and cost
similarity and sets payment bundles to cover the costs
of providing integral items and services along with the
primary service. Additional items and services are paid
separately or are not paid under the OPPS.
Inpatient hospital payment for opioids and
Medicare Part A pays for drugs and other pain
management services administered during an inpatient
hospital stay through the IPPS. The IPPS sets payment Report to the Congress: Medicare Payment Policy | March 2019 455 Chapter 12 References Smith and Stephenson 2013. citing Liu, M. and J. Kronbak. 2010. The potential economic viability of
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systems. Energy & Environmental Science 8.2(2015): 389-400. 12-99 New medical services and technology payments T he inpatient prospective payment system
includes a design feature to accommodate
hospitals’ adoption of innovative, expensive
pain treatments. If a new pain drug or other pain
management service is too costly to be assigned
to an existing Medicare severity–diagnosis related
group (MS–DRG), there is a mechanism for a special
(additional) payment. Hospitals using certain costincreasing medical services and technologies can apply
for and receive add-on payments for new technologies.
CMS evaluates applications by technology firms rates to reflect the average costs that hospitals incur in
furnishing care.1 These costs include the provision of all
items and services supplied by the hospital during the stay,
including pain management.2
To account for the patient’s needs, Medicare assigns
discharges to Medicare severity–diagnosis related groups
(MS–DRGs), which group patients with similar clinical
conditions that are expected to require similar amounts of
hospital resources. Each MS–DRG has a relative weight
that reflects the expected relative costliness of inpatient
treatment for patients in that group. Providers then have
flexibility in determining the mix of items and services to
provide for each stay.
CMS annually reviews the MS–DRG definitions to ensure
that each group continues to include cases with clinically
similar conditions requiring comparable amounts of
inpatient resources. When the review shows that subsets
of clinically similar cases within an MS–DRG consume
significantly different amounts of resources, CMS can
reassign them to different MS–DRGs with comparable
resource use or create a new MS–DRG. There are special
payments for services with insufficient data for CMS to
assign them to an MS–DRG (see text box on new medical
services and technology payments).
Outpatient hospital payment for opioids and
Any covered nondrug pain management services
employed during an outpatient visit are paid under 456 and others for add-on payments based on criteria of
newness, substantial clinical improvement, and the
costliness of the service or technology beyond the
level of the current MS–DRG payment amount. Newtechnology payments are additional to the MS–DRG
payment and thus are not budget neutral.
To date, there have been no opioid or non-opioid drugs
included on the inpatient new-technology add-on
payment list. ■ Part B through the OPPS. The OPPS sets payments for
individual services (identified by Healthcare Common
Procedure Coding System (known as HCPCS) codes)
using a set of relative weights, a conversion factor
(which translates the relative weights into dollar payment
rates), and adjustments for geographic differences in
input prices. CMS classifies individual services into
ambulatory payment classifications (APCs) on the basis
of clinical and cost similarity. All services included in an
APC have the same payment rate. In each APC, CMS
“packages” services and items integral to the primary
service to create a global payment rate. In deciding which
services to package, CMS considers comments from
hospitals, hospital suppliers, and others. In response to
these comments, CMS pays separately for corneal tissue
acquisition costs, blood and blood products, and many
Over time, CMS has expanded the number of services
that are included in APC payments for associated primary
services. For example, beginning in 2014, CMS added
certain clinical diagnostic laboratory tests and drugs,
biologicals, and radiopharmaceuticals that function
as supplies when used in a diagnostic test or surgical
procedure to the list of OPPS packaged items and services.
The intent of expanded packaging was to make hospitals
more cost conscious regarding the services used in an
outpatient visit. In a system that packages related services
under a single global payment, hospitals have a financial
incentive to furnish services most efficiently and to
manage their resources with maximum flexibility.3 Mandated report: Opioids and alternatives in hospital settings—Payments, incentives, and Medicare data ...
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