New CMS recommendation gives small boost to hospital outpatient depts

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Hospitals would be able to bill Medicare for pulmonary and intensive cardiac rehabilitation services furnished in outpatient departments beginning Jan. 1, 2010 under a proposed rule issued July 1 by the Centers for Medicare & Medicaid Services (CMS).

The proposals, which would implement provisions of the Medicare Improvements for Patients and Providers Act of 2008, would revise payment policies and update the payment rates for services furnished to beneficiaries during 2010 in hospital outpatient departments under the Outpatient Prospective Payment System (OPPS).   

The agency said additional proposals to incorporate an adjustment for hospital pharmacy costs that would result in OPPS payment at the average sale price (ASP) plus 4 percent for most separately payable drugs and biologicals and to adapt current requirements for physician supervision of hospital outpatient services at all hospital outpatient sites.

The proposals also include policy changes and payment rates for services in ambulatory surgical centers (ASCs), which would continue the expansion of surgical procedures Medicare would cover when performed in ASCs.

"The payment proposals are also designed to ensure that when services can be performed in a variety of settings, such as a physician's office, a hospital outpatient department, or an ambulatory surgical center, the choice of setting is based on the patient's needs, rather than payment incentives," said CMS Acting Administrator Charlene Frizzera. 

Medicare currently pays more than 4,000 hospitals -- including acute-care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute-care hospitals, children's hospitals and cancer hospitals -? for outpatient services under the OPPS. CMS is projecting a market basket update for 2010 of 2.1 percent for outpatient departments, and estimates total payments of $31.5 billion under the OPPS in 2010.

There are approximately 5,000 Medicare-participating ASCs. Since Jan. 1, 2008, ASCs have been paid under a revised payment system that aligns ASC payment rates with the rates paid for similar services when furnished in hospital outpatient departments, and also expands the number of surgical services covered by Medicare. According to CMS, 2010 will be the third year of a four-year phase-in of the ASC payment rates calculated under the standard rate-setting methodology and the first year for which CMS is authorized to apply an update to the conversion factor. CMS is projecting the percentage increase in the consumer price index for all urban consumers that would update the ASC conversion factor to be 0.6 percent. The agency said its total 2010 payments to ASCs are estimated to be $3.4 billion.

The proposed rule affects Medicare payments to hospitals and ASCs for the resources -? such as equipment, supplies, and hospital or ASC staff ?- they use to furnish ambulatory health care services to beneficiaries. CMS said it pays separately for the services of physicians and non-physician practitioners under the Medicare Physician Fee Schedule.

Under the Hospital Outpatient Department Quality Reporting Program (HOP QDRP), hospitals that did not participate in the program or did not successfully report the quality measures will receive an update in 2010, equal to the annual payment update factor minus 2 percentage points, or 0.1 percent. 

CMS is proposing to continue to require HOP QDRP participating hospitals to report the existing seven emergency department and peri-operative care measures, as well as the four existing claims-based imaging efficiency measures for the 2011 payment determination. Although it is not proposing to adopt any new measures for the 2011 update, the agency is seeking public comment on potential additional quality measures for consideration for future OPPS updates. The potential measures include: emergency department throughput; diabetes, stroke and rehabilitation; medication reconciliation; health IT; overuse/appropriate use; imaging efficiency; and surgical care.

Also, CMS is proposing to phase in a new HOP QDRP validation requirement to ensure that hospitals are accurately reporting measures for chart-abstracted data, but the validation results will not have any impact on outpatient department payments in 2011. In addition, CMS is proposing to establish procedures to make quality data collected under the HOP QDRP for quarters beginning with the third quarter of 2008 publicly available.

CMS will accept