CMS Issues Proposed Outpatient PPS/ASC Payment Update

August 6, 2008

On July 18, 2008, CMS posted its proposed changes and updates to the Medicare Outpatient Prospective Payment System (OPPS) and to Ambulatory Surgical Center (ASC) payments, which would apply beginning in calendar year (CY) 2009. The proposed rule can be viewed at http://edocket.access.gpo.gov/2008/pdf/E8-15539.pdf.

Comments are due by September 2, 2008. The proposed rule:

Would punish hospitals that fail to report quality measures in CY 2009 by reducing their CY 2010 market basket inflation update by two percentage points. The proposed reduction would not affect payment for pass-through drugs and devices, separately payable items or services assigned to New Technology ambulatory payment codes (APCs).
Would add four imaging efficiency measures to the existing seven quality measures.
Solicits comment regarding eighteen potential quality measures for future updates.
Would establish a process for validating quality reporting. Beginning in CY 2010, CMS would randomly select 800 hospitals and validate quality reporting with respect to encounters occurring in January 2009 and later.
Would establish four new APCs for emergency visits to Type B emergency departments (emergency departments that are not open twenty-four hours a day, seven days a week). The new APCs would replace the current system, which reimburses hospitals for Type B emergency visits at the same rate as non-emergency outpatient department visits. The change reflects recent data indicating that Type B emergency visits, while typically less expensive than visits to Type A emergency departments (open twenty-four hours a day, seven days a week), are generally more expensive than clinic visits.
Would establish four new composite APCs, each encompassing several related imaging procedures. The new APCs would provide for a single APC payment when a hospital bills for multiple procedures in the same imaging family on a single date of service.
Would maintain the established methodology for settling payment rates for device-dependent APCs.
Would establish payment for separately payable drugs and biologicals at hospitals' average sales price (ASP) plus 4%.
Would create a low pharmacy overhead cost center and a high pharmacy overhead cost center in order to capture pharmacy costs more accurately in future reporting.
Would restructure APCs for drug administration services into a 5-level structure from the current 6-level structure.
Would use the established ratesetting methodology to set the payment rates for nuclear medicine procedures.
Would set payment for separately payable radiopharmaceuticals at ASP plus 4%. In cases where ASP data are not available, the rule would set payment based on mean costs from hospital claims data.
Would utilize the standard OPPS payment methodology to calculate payment for brachytherapy sources from median unit costs.
Would package payment for implantable biologicals (other than implantable biologicals with pass-through status) in order to make payment consistent with payment for implantable non-biological devices.
Would establish two separate rates for partial hospitalization services provided by community mental health centers (CMHCs). Medicare would pay $140 for days with three services and $174 for days with more than three services. The rule would also maintain the current CMHC multiple outlier threshold, which is 3.4 times the APC payment amount.
Would add nine surgical procedures to the list of procedures that are reimbursable under Medicare when performed in an ASC.
Would add five procedures to the list of office-based procedures that are reimbursable under the Ambulatory Payment System.
Would update the list of ASC procedures designated as "device-intensive" for CY 2009 consistent with the updated list of device-dependent APCs under the OPPS.
Would update the list of covered ancillary services under the ASC payment system consistent with the updated list of covered ancillary services under the OPPS.
Would revise the ASC payment rates in generally the same manner as modified under the OPPS, accounting for the lower relative costs of ASC services and the budget neutrality requirement initiated in CY 2008. There will be no inflation update to the ASC payment system for CY 2009.