CMS recently published the Outpatient Prospective Payment System (OPPS) proposed regulation that proposes many changes in how hospital outpatient services are reimbursed. Medicare currently pays more than 4,000 hospitals, including general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals and cancer hospitals, for outpatient services under OPPS. CMS is projecting a market-basket update for CY 2010 of 2.1 percent for outpatient departments, and estimates total payments of $31.5 billion under the OPPS in CY 2010.

Among the significant proposed changes is that hospitals would be able to bill Medicare for pulmonary and intensive cardiac rehabilitation services furnished in outpatient departments beginning January 1, 2010. The proposed rule would also provide for payments to rural hospitals for kidney disease education services furnished in their outpatient departments for Medicare beneficiaries with Stage IV chronic kidney disease. What follows is a summary of the significant provisions:

Proposals to Strengthen Ties between Payment and Quality

  • Validation of quality reporting - CMS is proposing to implement a new Hospital Outpatient Quality Data Reporting Program (HOP QDRP) validation requirement to ensure that hospitals are accurately reporting measures of quality. CMS would take a sample of actual patient records, determine how the HOP QDRP chart-abstracted measures should have been reported and compare the results with the measures reported by the hospital. CMS will begin validating hospital submitted data for purposes of the CY 2011 update, but the validation results will not affect a hospital's OPPS payment until CY 2012. This timeline should give hospitals sufficient advance notice to become familiar with the process. 
  • Payment reduction for failure to report quality measures - the proposed rule includes a reduction to the projected CY 2010 annual payment update factor of two percentage points for most services furnished by hospitals that failed to meet the requirements of the HOP QDRP for the CY 2010 payment update. The reduction would not apply to payments for separately payable pass-through drugs, biologicals and devices, separately payable non-pass-through drugs and non-implantable biologicals, separately payable therapeutic radiopharmaceuticals, and services assigned to new technology APCs.
  • Quality measures to be reported - CMS is proposing to continue to require hospitals participating in HOP QDRP to report the existing seven chart-abstracted emergency department and perioperative measures, and four existing claims-based imaging efficiency measures for the HOP QDRP for CY 2011 payment determination.
  • Quality measures under consideration for future years - CMS is also seeking public comment on potential quality measures for consideration for future OPPS updates, but is not proposing to add them to the quality measures for the CY 2011 update. The potential measures relate to a number of areas including cancer care, emergency department throughput, diabetes, stroke and rehabilitation, osteoporosis, medication reconciliation, respiratory, immunization, health information technology, cataract surgery, overuse/appropriate use, imaging efficiency and surgical care.
  • Public reporting of quality data - CMS is proposing to establish procedures to make publicly available HOP QDRP quality data collected for quarters beginning with the third quarter of CY 2008.

Proposed Payment Provisions

  • Physician supervision requirements - CMS is proposing to revise or further define several current policies for the physician supervision of outpatient services. First, CMS is proposing that non-physician practitioners, specifically physician assistants, nurse practitioners, certified nurse specialists and certified nurse-midwives, may directly supervise all hospital outpatient therapeutic services that they are able to personally perform within their state scope of practice and hospital-granted privileges.
  • Partial hospitalization services - CMS is proposing to continue paying two separate partial hospitalization program rates: one for days with three services ($148) and one for days with four or more services ($211). CMS is also proposing to continue the CMHC multiple outlier threshold at 3.4 times the APC payment amount for higher-intensity partial-hospitalization days for CY 2010.

In addition, CMS proposed to add 28 surgical procedures to the list of procedures for which Medicare will pay when performed in ambulatory surgical centers. CMS also proposes to designate six procedures as office-based procedures and update the list of device-intensive procedures and covered ancillary services and their rates.

CMS will accept comments on the proposed rule until August 31, 2009, and will respond to comments in a final rule to be issued by November 1, 2009. To download the entire proposed regulation, click here.