On July 18, 2011, CMS published its proposed rule updating the Medicare hospital outpatient prospective payment system (OPPS) and the ASC payment system rates and policies for CY 2012.  Highlights of the lengthy rule are discussed after the jump.

  • The proposed OPPS update for 2012 is 1.5%, which reflects a 2.8% market basket update reduced by two adjustments mandated by the ACA: (1) a 0.1 percentage point reduction for 2012, and (2) a “multi-factor productivity” (MFP) adjustment that is projected to be 1.2% in 2012. CMS proposes special payment adjustments for cancer hospital OPPS payments and for partial hospitalization services provided in hospital-based programs and freestanding community mental health centers. Furthermore, the impact of the proposed rule on reimbursement for individual procedures varies. 
  • The OPPS update is reduced by 2.0 percentage points for certain hospitals that do not meet quality reporting requirements. CMS is proposing to expand the set of measures that must be reported by hospital outpatient departments to qualify for the full payment update. To allow hospitals more time to prepare, CMS is proposing measures for reporting in CYs 2014 and 2015. CMS also proposes to modify the process for validating hospital reporting of chart-abstracted measures. In addition, the proposed rule would update the measures and scoring methodology for the Hospital Value-Based Purchasing Program for inpatient stays.
  • CMS proposes to increase the threshold for separate payment of hospital outpatient drugs and biologicals to those with a cost-per-day that exceeds $80, up from $70 currently. Payment for separately-payable drugs and biologicals without pass-through status would equal the ASP plus 4% (compared to the current rate of ASP plus 5%). This amount reflects the cost of separately-payable drugs and biologicals, calculated from hospital claims and cost reports, with an adjustment for pharmacy overhead cost that reflects the redistribution of $215  million of pharmacy overhead costs currently attributed to packaged drugs and biologicals to separately-payable drugs and biologicals. 
  • In response to concerns about policies adopted in 2011 modifying supervision requirements for outpatient therapeutic services, CMS is proposing to establish an independent advisory review process for consideration of stakeholder requests for assignment of supervision levels other than direct supervision for specific outpatient hospital therapeutic services.  CMS would refer such requests to the Ambulatory Payment Classification (APC) Panel, which would be expanded to include representatives of critical access hospitals solely for deliberations relating to supervision levels. 
  • With regard to ASC services, CMS estimates that the ASC factor for CY 2012 would be 0.9%, based on a 2.3% inflation update offset by a 1.4% productivity adjustment mandated by the ACA.  CMS also proposes a new quality reporting program for ASCs, which require reporting of eight quality measures beginning in CY 2012 for the CY 2014 payment determination.
  • The proposed rule would implement an ACA requirement that CMS develop an exceptions process related to the ACA’s prohibition on expanding an existing physician-owned hospital’s facility capacity.

Comments on the proposed rule will be accepted until August 30, 2011.