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OPPS Rule Proposes Payment Increase and Expansion of ASC Services

July 28, 2009:

In addition to the projected 1.9 percent increase in Medicare payments for providers paid under the outpatient prospective payment system, the Centers for Medicare and Medicaid Services is proposing a number of additional policies that will affect payments.

A proposed rule released in early July contains a number of policies that could affect payments under the OPPS. 

Physician Supervision
CMS is proposing to revise or clarify several policies currently in effect for the physician supervision of outpatient services. The agency is proposing that nonphysician practitioners, specifically physician assistants, nurse practitioners, certified nurse specialists, and certified nurse-midwives, may directly supervise all hospital outpatient therapeutic services they are personally able to perform within their state scope of practice and hospital-granted privileges. Currently, only physicians may provide the direct supervision of these services. 

The agency is also proposing to define “direct supervision” for on-campus hospital outpatient services to mean that the physician or nonphysician practitioner must be present in the hospital or on-campus provider-based department of the hospital and immediately available to furnish assistance and direction throughout the performance of the procedure. This contrasts with the current definition, which requires the physician to be present in the on-campus provider-based department. 

For services furnished in an off-campus provider-based department, “direct supervision” would continue to mean that the physician or nonphysician practitioner must be present in the off-campus provider-based department. The provider must also be immediately available to furnish assistance and direction throughout the performance of the procedure. The agency is also proposing to require that all hospital outpatient diagnostic services furnished directly or under arrangement, whether provided in the hospital, in a provider-based department, or at a nonhospital location, follow the Medicare physician fee schedule (MPFS) physician supervision requirements assigned to the service. 

Drugs and Pharmacy Overhead
In the proposed rule, the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status would be paid at the average sales price (ASP) plus 4 percent in calendar year 2010. This payment rate is based upon the cost of separately payable drugs and biologicals calculated from hospital claims and cost reports (ASP minus 2 percent), with an adjustment for pharmacy overhead cost. This reflects the redistribution of $150 million of the pharmacy overhead cost currently attributed to packaged drugs and biologicals, to separately payable drugs and biologicals without pass-through status.

Pass-through Implantable Biologicals
Also proposed in the rule is that, beginning next year, implantable biologicals that are surgically implanted and that are not receiving pass-through payment before January 1, 2010, will be evaluated for pass-through status using the device category pass-through process rather than the drug and biological pass-through process. This affects drugs that are implanted through a surgical incision or an orifice. Implantable biologicals that initially qualify for pass-through status beginning on or after January 1, 2010, would be paid at hospitals’ charges adjusted to cost under this proposal.

Other proposed policy changes contained in the rule that could affect payment include:

  • Partial hospitalization services
  • Kidney disease education
  • Pulmonary and cardiac services
  • Therapeutic services
  • Brachytherapy

ASC Proposals
According to the OPPS proposed rule, CMS would like to expand the number and type of surgical services that will be covered by Medicare when performed in an ambulatory surgery center. Additionally, 2010 will be the third year of a four-year phase-in of the calculation of the ASC payment rates under the standard rate-setting methodology and the first year in which CMS will update the conversion factor. The agency is projecting the update to the Consumer Price Index for all urban consumers will result in a 0.6 percent update to the ASC conversion factor.

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 pays separately for the services of physicians and nonphysician practitioners under the MPFS.

Quality of Care Proposals
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 calendar year 2010 equal to the annual payment update factor minus 2.0 percentage points, or 0.1 percent. By law, CMS must make a payment reduction for failure to report quality measures, and the proposed rule includes a reduction to the projected CY 2010 annual payment update factor of 2.0 percentage points for most services furnished by hospitals that failed to meet the requirements of the HOP QDRP. The reduction would not apply to payments for separately payable pass-through drugs and biologicals and devices, separately payable non-pass-through drugs and nonimplantable biologicals, separately payable therapeutic radiopharmaceuticals, and services assigned to new technology APCs. Hospitals that are exempt from the inpatient prospective payment system—such as long-term care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, cancer hospitals, and children’s hospitals—as well as hospitals in Puerto Rico are not subject to the HOP QDRP payment reduction. 

Although not proposing any new measures, CMS is proposing to continue requiring hospitals that participate in the HOP QDRP to report the existing seven emergency department and perioperative care measures, as well as the four existing claims-based imaging efficiency measures for the CY 2011 payment determination. However, CMS is seeking public comment on potential additional quality measures for consideration for future OPPS updates. The potential measures relate to the care for such conditions as cancer, diabetes, stroke and rehabilitation, and osteoporosis as well as services such as medication reconciliation, emergency department throughput, health information technology, cataract surgery, overuse/appropriate use, imaging efficiency, and surgical care.

CMS will accept comments on the proposed rule until August 31, 2009, and will respond to comments in a final rule slated to be issued by November 1, 2009. 

Deborah C. Hall
Clinical/Technical Editor


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