On July 18, 2008, CMS is publishing its proposed rule updating Medicare hospital outpatient prospective payment system (OPPS) and ambulatory surgical center (ASCs) payments and related policies for CY 2008.

With regard to the OPPS, the proposed rule would, among other things:

  • Provide a 3.0 percent market basket update tied to the reporting of quality measures. Specifically, in order to receive the full OPPS payment update for services furnished in CY 2009, hospitals must report data in CY 2008 on seven quality measures regarding emergency department and perioperative surgical care. For hospitals that do not report such data services, the inflation update will be reduced by 2.0 percentage points for hospitals. CMS proposes adding four new imaging efficiency measures for the CY 2010 update, and the agency seeks public comment on 18 other potential quality measures under consideration for future years in areas such as cancer care, screening for fall risk, and management of certain clinical conditions such as stroke and rehabilitation and community-acquired pneumonia. Note that the payment reduction would not apply to payments for pass-through drugs and devices, separately payable drugs and biologicals, separately payable therapeutic radiopharmaceuticals, and services assigned to new technology ambulatory payment classifications (APCs). CMS also is seeking comment on options for reducing payments for care associated with preventable conditions (a similar policy has been adopted for Medicare inpatient hospital services, effective October 1, 2008).
  • In addition, CMS proposes payment changes to recognize efficiencies available when hospitals perform multiple imaging procedures of a particular type during a single session. Under the proposal, CMS would establish the following five OPPS imaging bundles, called composite APCs: (1) ultrasound; (2) computed tomography (CT) and computed tomographic angiography (CTA) without contrast; (3) CT and CTA with contrast; (4) magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA) without contrast; and (5) MRI and MRA with contrast. CMS would provide a single payment (including associated packaged services) when two or more imaging procedures in the same composite APC were provided in a single session.
  • CMS proposes to continue separate payments for outpatient drugs that have a cost per day that exceeds $60. However, CMS to set payment for separately payable drugs and biologicals at average sales price plus 4 percent. Moreover, CMS proposes to modify the Medicare cost report to establish two cost centers for reporting drugs with high and low pharmacy overhead costs to enable more accurate ratesetting in the future. CMS also is proposing to restructure the drug administration APCs from six levels to five levels in order to more appropriately reflect clinical and resource homogeneity.
  • CMS also sets forth proposed payment policies for other specific categories of services, including device-dependent APCs, nuclear medicine procedures, therapeutic radiopharmaceuticals, brachytherapy sources, and implantable biologicals. CMS also proposes changes in payment for partial hospitalization services and certain emergency room services, and it wouldcontinue its phase-in of reduced beneficiary coinsurance obligations.
  • CMS proposes more limited changes for ASCs for 2009. The ASC prospective payment system (ASC PPS) is in the second year of a four-year transition that aligns ASC rates with OPPS rates. For CY 2009, rates would be based on a blend of 50 percent of the CY 2007 ASC payment weight for the procedure and 50 percent of the proposed CY 2009 fully implemented ASC weight (65 percent of the corresponding OPPS rate). CMS notes that the statute does allow an inflation update to the ASC PPS for CY 2009. CMS proposes to continues to expand the list of covered ASC services by adding nine additional surgical procedures (three new codes and six previously-excluded procedures). CMS is also proposing to add five procedures to the list of office-based procedures that are subject to payment at the lesser of the office practice expense payment to the physician or the standard ASC rate, and to update the list of device-intensive procedures and covered ancillary services and their rates, consistent with OPPS policy.

CMS will accept comments on the proposed rule until September 2, 2008. CMS has posted an unofficial, advance copy of the proposal here.