On July 19, 2013, CMS published a proposed rule that would update Medicare outpatient prospective payment system (OPPS) and ambulatory surgical centers (ASCs) policies and rates for CY 2014. Key provisions of the proposed rule include the following:

  • CMS proposes to update the OPPS market basket by 1.8% for 2014, which reflects a 2.5% hospital market basket increase, minus a 0.4% multifactor productivity (MFP) adjustment and an additional 0.3% reduction (both mandated by the ACA). The OPPS update is subject to other adjustments, including a 2% reduction for hospitals that do not meet quality reporting requirements.
  • CMS proposes larger payment bundles to maximize hospitals’ incentives to provide care in an efficient manner, including by encouraging hospitals “to effectively negotiate with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements.” Specifically, CMS proposes to package the following seven new categories of supporting items and services into the procedural ambulatory payment classification (APC) payment: (1) Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; (2) drugs and biologicals that function as supplies or devices when used in a surgical procedure; (3) certain clinical diagnostic laboratory tests; (4) procedures described by add-on codes; (5) ancillary services assigned status indicator “X”; (6) diagnostic tests on the bypass list; and (7) device removal procedures. Note that in some cases separate payment is permitted if these services are reported alone on a claim.
  • In a separate provision, CMS proposes to create 29 all-inclusive, “comprehensive APCs” to replace 29 existing device-dependent APCs and prospectively pay for device-dependent services associated with 136 HCPCS codes. CMS is proposing to package into the comprehensive APCs all “adjunctive services” provided during the delivery of the comprehensive service, including: diagnostic procedures, laboratory tests and other diagnostic tests, and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; uncoded services and supplies used during the service; outpatient department services delivered by therapists as part of the comprehensive service; durable medical equipment, prosthetic and orthotic items, and supplies when provided as part of the outpatient service; and any other components reported by HCPCS codes that are provided during the comprehensive service (except charges that cannot be covered by Medicare Part B or that are not payable under the OPPS).
  • CMS proposes to collapse the current five levels of outpatient visit codes into a single code for each unique type of outpatient hospital visit.
  • CMS proposes to continue a policy adopted last year setting OPPS payment for separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6% (which it refers to as the "statutory default" rate), without an adjustment for pharmacy overhead costs. The proposed 2014 threshold for separate payment for outpatient drugs would be a cost per day that exceeds $90, compared to $80 in 2013.
  • With regard to ASC policy, CMS is proposing to increase ASC payment rates by 0.9%, which is derived from a 1.4% inflation update reduced by a 0.5% MFP adjustment. ASCs that do not meet quality reporting requirements would be subject to a 2% payment reduction. CMS also proposes that ancillary or adjunctive services that would be packaged under the OPPS also would be packaged under the ASC payment system for CY 2014.
  • In addition, the proposed rule addresses, among many other things: refinements to the Hospital Outpatient Quality Reporting Program, the ASC Quality Reporting Program, and the Hospital Value-Based Purchasing Program; payment for partial hospitalization services; a requirement that individuals furnish “incident to” hospital or critical access hospital outpatient services in compliance with state law; and changes to Quality Improvement Organization eligibility and contracting rules

CMS will accept comments on the proposed rule until September 6, 2013.