Proposed changes to the Medicare outpatient prospective payment system (OPPS) for calendar year (CY) 2010 were published in the Federal Register on July 20, 2009. The highlights of the proposed rule impact physician supervision requirements and payment rates for CY 2010.

Physician Supervision

Prior to the issuance of its proposed CY 2009 OPPS rule, CMS had signaled that its requirement that a supervising physician physically be located in a provider-based department did not apply to "on-campus sites." However, in an Orwellian clarification and restatement within the OPPS rule for CY 2009, CMS asserted that a supervising physician was required to be present in all outpatient provider-based departments, on-campus or not, to provide "direct supervision."

Under the proposed CY 2010 OPPS rule, CMS proposes that "direct supervision" for on-campus hospital outpatient services only require that the supervising practitioner be (1) present in the hospital or on the hospital's campus, and (2) immediately available to furnish assistance and direction throughout the procedure, in contrast to the current definition which requires the physician to be present within the on-campus department.

To be "immediately available," the supervising practitioner must be available to step in and perform the service, not just respond to an emergency and must have, within his or her state's scope of practice and hospital-granted privileges, the ability to perform the service or procedure. Consequently, hospitals will have to assure that supervising practitioners are granted privileges that permit them to perform the services or procedures they are supervising. In addition, the supervisory practitioner cannot be involved in other non-interruptible procedures at the same time he or she is supervising a service, nor be too distant to respond in an emergency.

To be present in the hospital, the physician "must be physically present in areas of the hospital's campus that are part of the hospital, that are under the ownership, financial, and administrative control of the hospital ...; that are operated as part of the hospital ...; and for which the hospital ... bills the services furnished under the hospital's CMS Certification Number." CMS specifically states that the supervising practitioner may not be located in any other entity, such as a physician's office, independent diagnostic testing facility (IDTF), co-located hospital or hospital-operated provider or supplier such as a skilled nursing facility, or any other non-hospital space that may be co-located on the hospital's campus. Hospitals should consider carefully the impact of this requirement where the hospital has nonhospital space within its facilities, e.g., a joint venture program within the hospital's campus or a hospital-within-a-hospital on the same campus.

For services furnished in an off-campus provider-based department, "direct supervision" will continue to require the supervising practitioner to be present in the off-campus provider-based department and immediately available to furnish assistance and direction throughout the procedure.

The proposed CY 2010 OPPS rule suggests that the Orwellian physician supervision requirements described in the CY 2009 OPPS rule will continue to be effective and enforced for services provided during CY 2009, notwithstanding the proposed changes for CY 2010.

To unify its supervision requirements, CMS also is proposing that all hospital outpatient diagnostic services, furnished directly or under arrangements wherever provided, follow the Medicare Physician Fee Schedule's physician supervision requirements applicable to the specific service or test. See 42 C.F.R. § 410.32(b)(3). Where "direct supervision" is required, the supervision standards are the same as those for therapeutic services described above.

Mid-Level Practitioner Supervision

CMS proposes allowing mid-level practitioners such as physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives and clinical psychologists to provide supervision of hospital outpatient therapeutic services furnished in connection with the mid-level practitioner's personally-furnished services, if and when their licensure permits them to do so. Currently, a provider must utilize a supervising physician. However, this proposal will not permit mid-level practitioners to supervise (1) services ordered by other practitioners or physicians; (2) diagnostic tests provided to hospital outpatients, even if within the scope of their licensure; or (3) cardiac rehabilitation, intensive cardiac rehabilitation or pulmonary rehabilitation services. This last exception is important as CMS proposes to expand the list of procedures payable under OPPS to include pulmonary and intensive cardiac rehabilitation services.

Payment Updates

A market basket update of 2.1 percent is proposed for CY 2010. Hospitals that do not report their outpatient quality measures in 2010 will receive the market basket update less 2.0 percent for most items and services. CMS also proposes to increase the payment conversion factor from $66.059 in CY 2009 to $67.439 in CY 2010. This increase in the conversion factor, however, is offset by other reductions. Consequently, OPPS payments are expected to increase by approximately 1.9 percent in CY 2010. No changes are proposed to the current 11 outpatient quality measures that hospitals must report; however, CMS will begin publicly reporting the measures in 2010.

An increase in the outlier fixed amount threshold is proposed from $1,800 in CY 2009 to $2,225 in CY 2010. Outlier payments are made when the procedure cost exceeds 1.75 times the Ambulatory Payment Classification (APC) payment amount and exceeds the APC payment rate plus the fixed-dollar threshold.

An increase in the threshold for when drugs, biologicals and radiopharmaceuticals are packaged into the APC with which they are billed from $60 in CY 2009 to $65 in CY 2010 is also proposed. Drugs costing more than the threshold amount are paid separately under their own APC.