The Centers for Medicare & Medicaid Services (CMS) issued a final rule with comment period that updates payment policies and rates for both hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) for calendar year (CY) 2010. The final rule adopts improvements to the Hospital Outpatient Quality Data Reporting Program (HOP QDRP) and establishes procedures to make the data collected through the HOP QDRP publicly available.

CMS projects that total payments for services furnished to people with Medicare in HOPDs during CY 2010 under the Outpatient Prospective Payment System (OPPS) will be $32.2 billion, while total projected CY 2010 payments under the ASC payment system will be approximately $3.4 billion.

Most hospitals will receive an inflation update of 2.1 percent in their payment rates for services furnished to Medicare beneficiaries in outpatient departments. As required, CMS will reduce the update by 2.0 percentage points for hospitals that did not participate in quality data reporting for outpatient services or did not report the quality data successfully, resulting in a 0.1 percent update for those hospitals.

CMS also announced that ambulatory surgical centers (ASCs) will receive a 1.2 percent inflation update beginning Jan. 1, 2010. CMS projects that the aggregate Medicare payments to more than 4,000 hospitals and community mental health centers in CY 2010 will be approximately $32.2 billion, while aggregate Medicare payments to approximately 5,000 ASCs will total $3.4 billion.

The final rule with comment period implements provisions of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) that extend Medicare coverage to important rehabilitative and educational services intended to improve the health of patients diagnosed with certain respiratory, cardiac and renal diseases. Beginning Jan. 1, 2010, hospitals will be able to bill Medicare for new pulmonary and intensive cardiac rehabilitation services furnished in hospital outpatient departments to Medicare beneficiaries. The final rule with comment period also provides payments to rural hospitals for kidney disease education services furnished in outpatient departments to Medicare beneficiaries with Stage IV chronic kidney disease.  

The following is a breakdown of some of the specific changes for 2010:


Strengthening Ties Between Payment and Quality:

  • Payment reduction for failure to report quality measures - MS will reduce the CY 2010 annual inflation update factor by 2.0 percentage points for most services furnished by hospitals that failed to meet the CY 2009 reporting requirements of the HOP QDRP. The reduction will 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 will continue to require hospitals subject to HOP QDRP requirements to provide quality data for the current seven chart-abstracted emergency department and surgical care measures and four claims-based imaging efficiency measures for CY 2011 payment determinations.
  • Validation of quality reporting - CMS will be implementing a HOP QDRP validation requirement to ensure that hospitals are accurately reporting measures using chart-abstracted data. Under this requirement, CMS will select a sample of reported cases, request the corresponding medical records, re-abstract the HOP QDRP chart-abstracted measures and compare the results with the measures reported by the hospital. Hospitals will be required to return paper copies of requested medical records for this CY 2011 requirement within a 45-calendar-day timeframe. The validation results, however, will not affect a hospital's CY 2011 OPPS payment. This initial validation requirement for CY 2011 will provide hospitals an opportunity to become familiar with the process for future years.
  • Public reporting of quality data - CMS is establishing procedures to make HOP QDRP quality measure data publicly available as early as June 2010.

Supervision of Hospital Outpatient Services:

  • Supervision requirements for outpatient services - CMS is revising or further defining several current policies for the supervision of outpatient services. First, in CY 2010, CMS will allow certain nonphysician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives and licensed clinical social workers) to provide direct supervision for all hospital outpatient therapeutic services that they are authorized to personally perform according to their state scope of practice rules and hospital-granted privileges. Under current policy, only physicians may provide the direct supervision of these services.

For purposes of on-campus hospital outpatient therapeutic services, CMS is defining "direct supervision" to mean that the physician or nonphysician practitioner must be present anywhere on the hospital campus and immediately available to furnish assistance and direction throughout the performance of the procedure. For services furnished in an off-campus provider-based department, "direct supervision" would continue to mean that the physician or nonphysician practitioner must be present in the off-campus provider-based department and immediately available to furnish assistance and direction throughout the performance of the procedure.

CMS also will require that all hospital outpatient diagnostic services furnished directly or under arrangement, whether provided in the hospital, in a provider-based department or at a nonhospital location, follow the MPFS physician supervision requirements for individual tests.

Payment for Drugs, Biologicals and Radiopharmaceuticals:

  • Drugs and pharmacy overhead - CMS will pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status at the average sales price (ASP) plus 4 percent in CY 2010. The payment rate of ASP plus 4 percent is based on the cost of separately payable drugs and biologicals calculated from hospital claims and cost reports (ASP minus 3 percent), with an adjustment for pharmacy overhead cost that reflects the redistribution of $200 million of the pharmacy overhead cost currently attributed to packaged drugs and biologicals (both coded and uncoded) to separately payable drugs and biologicals without pass-through status.
  • Therapeutic radiopharmaceuticals - Beginning Jan. 1, 2010, CMS will provide payment for separately payable therapeutic radiopharmaceuticals with ASP data at ASP plus 4 percent. If ASP data are not available, payment will be based upon mean unit cost from hospital claims data.

Payment for Brachytherapy Sources:

CMS is adopting the proposal to pay for brachytherapy sources based on median unit costs in CY 2010, as calculated from claims data according to the standard OPPS rate-setting methodology.

Ambulatory Surgical Centers

ASC Payment Rate Updates:

The revised ASC payment rates were established to reflect the same relativity of resource use among procedures as under the OPPS, taking into consideration the lower costs of surgical procedures performed in ASCs and maintaining budget neutrality in the payment system. By law, CY 2010 is the first year that CMS may provide an inflation update under the revised ASC payment system. The percentage increase in the Consumer Price Index for All Urban Consumers that updates the ASC conversion factor for CY 2010 is 1.2 percent.

Changes to ASC Covered Surgical Procedures and Covered Ancillary Services:

CMS is adding 26 surgical procedures to the list of procedures for which Medicare would pay when performed in an ASC. CMS also is newly designating 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 ASC rate) and temporarily designating an additional 16 procedures as office-based procedures based on coding changes for CY 2010. The final rule with comment period also updates the list of device-intensive procedures and covered ancillary services and their rates, consistent with the OPPS update.

The CY 2010 OPPS/ASC final rule with comment period will be officially published in the November 20 edition of the Federal Register. Comments are due by 5:00 p.m. Eastern on Dec. 29, 2009.

You may find more information here and here.