On Oct. 30, 2008, the Centers for Medicare and Medicaid Services (CMS) issued a final Outpatient Prospective Payment System (OPPS)/Ambulatory Surgical Center (ASC) Payment System rule with comment period, updating payment policies and rates for hospital outpatient departments (HOPD) and ASCs for calendar year (CY) 2009. CMS projects that the final CY 2009 payment rates under the OPPS will result in a 3.9 percent increase in Medicare payments for providers paid under the OPPS. Among other things, the Rule makes changes to the Hospital Outpatient Quality Data Reporting Program (HOP QDRP), and establishes new conditions for coverage for ASCs. CMS also proposes a health care-associated conditions payment policy that will not reimburse for medical care in a hospital outpatient department that harms patients or leads to complications th at could have been prevented. In addition, the Agency is seeking public comment regarding potential changes to the revenue code-to-cost center crosswalk upon which OPPS cost estimation is based.

Outpatient Prospective Payment System

CMS will focus on strengthening ties between payment and quality by: (1) reducing the CY 2009 payment update factor by two percentage points for most services for hospitals that were required to report quality measures but failed to meet the requirements of the HOP QDRP for CY 2009; (2) increasing the number of measures that hospitals are required to report to receive the full CY 2010 market basket update from seven measures in CY 2008 to 11 measures in CY 2009 (CMS added four imaging efficiency measures that will be calculated using Medicare claims data); (3) implementing a voluntary test validation program beginning with January 2009 encounters; and (4) analyzing ways to align payment incentives for high quality of care across settings.

CMS is also making changes to Ambulatory Patient Classifications (APCs) by: (1) establishing five imaging composite APCs that provide a single APC payment when multiple imaging procedures are provided in a single session using the same imaging modality; (2) adopting four new APCs for certain Type B emergency department visits; and (3) adopting two separate Partial Hospital Program rates calculated using cost data from hospitals.

Other Payment Provisions

There are a number of other payment provisions contained in the Rule. First, CMS will pay for separately payable drugs and biologicals under the OPPS at the average sales price (ASP) plus 4 percent. Based on hospitals' claims and cost report data, CMS calculated hospitals' average costs for drugs and biologicals to be equivalent to ASP plus 2 percent. Second, CMS is extending payment for therapeutic radiopharmaceuticals and brachytherapy sources provided in HOPDs based on individual hospital charges adjusted to cost until Dec. 31, 2009. Third, CMS is focusing on long-term approaches, including improved and more precise cost reporting, to improve the accuracy of OPPS cost-based payment weights.

Ambulatory Surgical Center Provisions

The Rule also modernizes Medicare's ASC Conditions for Coverage. Specific changes include:

  • Defining an ASC as a distinct entity that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization and in which the expected duration of services would not exceed 24 hours following admission;
  • Strengthening patients' rights regarding disclosure of physician financial interests in the ASC, advanced directives, the grievance process and confidentiality of clinical records;
  • Imposing stronger obligations on the governing body of an ASC to oversee its quality assessment and performance improvement (QAPI) program, while allowing ASCs flexibility to use their own information to assess and improve patient services, outcomes and satisfaction; and
  • Requiring the ASC to adopt a disaster-preparedness plan.

The Final Rule will not be published in the Federal Register until Nov. 18, 2008. Comments are due by 5 p.m. EST, Dec. 29, 2008. For more information, please click here.