On July 1, 2009, CMS released its proposed rule updating the Medicare hospital outpatient prospective payment system (HOPPS) and the ambulatory surgical center (ASC) payment system for 2010. With regard to the HOPPS update, CMS estimates that the rule would increase HOPPS rates by 1.9% compared to total spending in CY 2009. This reflects a 2.1% market basket increase (reduced for hospitals that do not report quality data, as discussed below), adjusted for changes in the pass-through estimate and estimated outlier payments and the expiration of special wage index payments. Other proposals affecting HOPPS payments and other policies include the following:

  • By law, the HOPPS update is reduced by 2.0 percentage points for certain hospitals that do not meet requirements under the Hospital Outpatient Quality Data Reporting Program (HOP QDRP). For the proposed CY 2010 rule, CMS is seeking public comment on potential quality measures for consideration for future HOPPS updates, but it is not proposing additions to the quality measures for the CY 2011 update. CMS is proposing, however, to implement a new HOP QDRP validation requirement to ensure that hospitals accurately report measures using chart-abstracted data. CMS also proposes to make available to the public HOP QDRP quality data collected for quarters beginning with the third quarter of CY 2008.
  • CMS proposes to increase the threshold for separate payment for outpatient drugs to drugs with a cost per day that exceeds $65, up from $60 in 2009. CMS proposes to continue making payment for separately payable drugs and biologicals at average sales price (ASP) plus 4%, representing a combined payment for both the acquisition and pharmacy overhead costs of separately payable drugs and biologicals. CMS uses a new methodology to reach this proposed rate. In short, based upon the cost of separately payable drugs and biologicals calculated from hospital claims and cost reports (ASP minus 2%), with an adjustment for pharmacy overhead cost that reflects the redistribution of $150 million of pharmacy overhead cost currently attributed to packaged drugs and biologicals to separately payable drugs and biologicals without pass-through status. CMS also proposes to reduce the cost of packaged drugs and biologicals included in the payment for procedural ambulatory payment classifications to offset the $150 million adjustment. CMS is further proposing that claims data for 340B hospitals be included in the calculation of payment for drugs and biologicals.
  • CMS is proposing to begin the two to three year pass-through payment eligibility period for a new drug or nonimplantable biological on the date of first sale of the drug or nonimplantable biological in the United States following approval by the Food and Drug Administration (FDA), rather than on the date that the first pass-through payment is made under the HOPPS. CMS also proposes establishing a payment offset for pass-through contrast agents in accordance with its standard offset methodology. CMS also proposes a new payment methodology for pass-through implantable biologicals.
  • For CY 2010, CMS is proposing to continue paying for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite payment methodology established in CY 2009, without modification.
  • CMS is proposing changes and clarifications to its policies regarding physician supervision of hospital outpatient services. CMS would allow physician assistants, nurse practitioners, certified nurse specialists, and certified nurse-midwives to directly supervise all hospital outpatient therapeutic services that they may personally perform within their state scope of practice and hospital-granted privileges. CMS also would define “direct supervision” for on-campus hospital outpatient services, and require all hospital outpatient diagnostic services furnished directly or under arrangement to follow the specific MPFS physician supervision level (i.e., general direct or personal) for various individual tests.

With regard to ASC services, the proposed rule would provide a 0.6% inflation update to the conversion factor. CMS also proposes to add 28 surgical procedures to the list of procedures covered when performed in an ASC (including two new codes and 26 procedures that previously were excluded). In addition, the rule would newly designate six procedures as office-based procedures (subject to payment at the lesser of the national office practice expense payment to the physician or the national standard ASC rate), and it would update the list of device-intensive procedures and covered ancillary services. The official version of the rule is scheduled to be published in the Federal Register on July 20, 2009. Comments on the proposed rule are due August 31, 2009.