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January 25, 2018

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Medical Coding News Archives

Medicare Payment Increase Proposed for Outpatient Departments

August 16, 2010:

Hospital outpatient departments could see a Medicare payment increase of 2.4 percent in calendar year 2011 if proposed rates become final.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively known as the Affordable Care Act (ACA), contributed several changes to amendments to the outpatient prospective payment system (OPPS). The first mandate from the ACA requires the Centers for Medicare and Medicaid Services (CMS) to reduce the outpatient department (OPD) fee schedule increase, or the hospital operating market basket increase factor, for calendar year 2011 by 0.25 percentage points. The CY 2011 proposed payment rates reflect a hospital operating market basket increase factor of 2.15 percent (an estimated increase factor of 2.4 percent minus the 0.25 percentage point reduction). CMS projects that total payments for services furnished to people with Medicare in hospital OPDs during CY 2011 will be approximately $40 billion.

The ACA waives beneficiary cost sharing for most Medicare-covered preventive services, including the initial preventive physical examination and preventive services that have been recommended by the United States Preventive Services Task Force with a grade of A or B. This waiver applies to the 20 percent coinsurance for the physician’s service and to any cost-sharing related to the separate facility payment when the service is furnished in an HOPD.

The ACA requires Medicare to adjust payments under the OPPS to 11 cancer hospitals that meet the classification criteria set forth in the statute if costs those hospitals incur related to ambulatory payment groups are higher than the costs other hospitals under OPPS incur. Medicare is proposing an adjustment for those cancer hospitals with some reductions in payments to other hospitals to meet the budget-neutrality requirement for these changes.

The ACA also mandates “frontier” state wage provisions. Frontier states are those in which at least 50 percent of the counties have a population per square mile of less than 6, excluding Alaska and Hawaii. The wage adjustment factor applicable to any HOPD in these states may not be less than 1. CMS proposes to adjust the wage index for all OPPS hospitals in a frontier state in a non-budget-neutral manner

The CY 2011 proposed rule includes several significant changes to OPPS in addition to those required by the Affordable Care Act. These proposals include:

  • Modification of the supervision requirements for outpatient therapeutic services
  • Separate payment rates for partial hospitalization programs in community mental health centers (CMHCs) and for hospital-based programs, while continuing the differentiation based on the number of services rendered
  • Payment for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status that are furnished in HOPDs at 106 percent of the manufacturers’ average sales prices
  • Expansion of the set of measures that must be reported by HOPDs to qualify for the full payment update in the succeeding year. The proposed rule includes proposals for additions to the set for reporting in CYs 2011, 2012, and 2013 to make it easier for hospitals and the agency to prepare for the changing reporting requirements.

Regina Magnani, RHIT
Clinical/Technical Editor, Coding Solutions


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