2010-07-20

On July 2, 2010, the Centers for Medicare and Medicaid Services (CMS) posted a copy of the hospital outpatient prospective payment system (OPPS) proposed rule for 2011. In addition to updating OPPS payments and regulations the proposed rule also implements provisions of the recently passed health reform legislation, the Patient Protection and Affordable Care Act (PPACA). Comments on the rule may be submitted through August 31, 2010 and a final rule is expected to be published around November 1, 2010. The provisions of the rule are effective January 1, 2011 unless stated otherwise.

CMS is proposing an OPPS overall payment update of  2.15 percent for 2011. This reflects a 2.4 percent inflationary increase in the conversion factor reduced by 0.25 percent as mandated by the ACA. The full 2.15 percent update only applies to hospitals which successfully reported CMS designated quality measures in 2010. If a hospital did not successfully report these quality measures, the update will be 0.15 percent.

Payment for Non Pass through Drugs

Currently under OPPS, drugs costing less than $65 per day are not paid separately, but are packaged into the relevant APC payment. For 2011, CMS proposes to increase the drug packaging threshold to $70 per day. CMS will continue to pay for non-packaged drugs which are not new pass-through drug at the rate of ASP+6 percent.

At one time, antiemetics were all separately payable regardless of the per day costs. In the 2010 OPPS final rule, CMS implemented a policy to treat oral and injectable forms of 5-HT3 antiemetics similarly to other packaged drugs under the standard requiring that drugs costing less than $70 per day be packaged in the relevant APC. With the exception of palonosetron HCL, which will be paid for separately, in 2011, CMS is proposing to continue the policy of not exempting these 5-HT3 antiemetic products from the standard packaging methodology. That is, if the per day costs based on 2009 data of the HT3 anti-emetics is less than $70, the costs will be packaged into the procedural APC.  

Payment for Blood Products

For 2011, CMS proposes to continue to establish payment rates for blood and blood products using the blood-specific cost to charge ratios from the most recently available hospital cost reports.

APC for Stem Cell Transplantation

At its February 2010 meeting, the APC Panel recommended that CMS consider creating a composite APC or custom APC that captures the costs of stem cell acquisition performed in conjunction with recipient transplantation and preparation of tissue. CMS has indicated it will consider the APC panel's recommendation and will report the results of their assessment to the APC Panel at a future meeting.

Hospital Outpatient Quality Data Reporting Program (HOP QDRP)

As noted above, to receive the full payment update in 2011, hospitals needed to report 11 quality measures in 2010. If they failed to do so, 2011 payments will be reduced by 2 percent.  For 2011 reporting purposes, CMS proposes to keep the existing 11 measures and to add 6 additional measures, which will impact the 2012 update. In addition, CMS is seeking comments on additional measures proposed for 2012 and 2013. A complete list of the current and proposed new measures is attached.

Currently, the HOP quality reporting program is based on hospital self reporting. CMS is proposing to validate hospital reported data from 800 randomly selected hospitals during 2011.

Supervision Requirements

Over the last several years, CMS has attempted to clarify Medicare policy regarding physician supervision of services performed in the hospital outpatient department. In the final OPPS rule for 2010, CMS required direct supervision for all therapeutic services and defined direct supervision as requiring a physician or non-physician practitioner to be present on the same campus and immediately available to furnish assistance and direction throughout the performance of the procedure. While CMS did not view this as a change in current policy, hospitals - particularly small rural hospitals and critical access hospitals - raised concerns that physicians were not always available when therapeutic services were provided, particularly in the case of services of long duration such as blood transfusions and very lengthy infusions.  

On the basis of these concerns, CMS has identified a limited set of non-surgical services for which direct supervision will be required for the initiation of the service only, following that general supervision will be sufficient. (A service provided under general supervision is furnished under the overall direction and control of the physician, but his or her physical presence is not required during the performance of the procedure.)

The list of services, referred to as “non-surgical extended duration therapeutic services,” includes services with a lengthy monitoring component that typically have a low risk of complication after an assessment is made at the beginning of the service. The list consists of a limited number of injection and infusion codes and two observation care services. Because of quality concerns, CMS considered and rejected a proposal to offer hospitals the flexibility to broaden the list to include chemotherapy and blood transfusions, which some stakeholders also maintain do not require direct supervision.

Physician- Owned Hospitals

Physicians are subject to a prohibition against referring Medicare patients for certain designated health services to entities in which they or a family member has a financial relationship. One of the exceptions to this prohibition is that physicians are permitted to refer patients if their ownership is in the whole hospital as opposed to a particular department. There is also an exception for rural providers. The proposed rule incorporates a provision of the ACA which narrows access to the whole hospital and rural provider exceptions by prohibiting their use by new physician-owned hospitals and limiting the ability of existing physician-owned hospitals to expand their capacity or qualify for the rural exception. 

Payment for Outliers

Under OPPS, unusually costly cases or outliers are paid additional amounts over and above the APC rate. For 2011, CMS is proposing a change in the hospital outlier threshold. Under the proposal, outlier payments would be triggered when the cost of furnishing a service or procedure by a hospital exceeds 1.75 times the APC payment amount and exceeds the APC payment rate by $2,025. CMS limits total spending on outlier cases to 1 percent of the estimated aggregate total payments under OPPS.

Clinic Visits

CMS indicates it will continue to define a new or established patient status based on whether the patient has been registered as an inpatient or outpatient of the hospital within the past three years. CMS will not establish national standards for the level of clinic and emergency department visits to report. CMS advises hospitals to continue to use their internal guidelines to determine the levels of clinic and emergency department visits to be reported, consistent with the CPT code descriptors and the intensity of hospital resources utilized in relation to the CPT codes.

Implementation of Provisions of the Patient Protection and Affordable Care Act (PPACA)

There are several provisions of PPACA affecting the OPPS included in the proposed rule:

• Waiver of beneficiary cost-sharing for preventive services
  Preventive services assigned a grade of A 'strongly recommended' or B 'recommended' from the U.S. Preventive Services Task Force (USPDTF) as well as the initial preventive physician examination (IPPE) and annual wellness exam provided in hospital outpatient departments will not have any deductible or coinsurance applied. These include ultrasound screening for aortic abdominal aneurism, screening pap smears, colonoscopies for colorectal cancer screening, and bone density tests.
• Payment adjustment for certain cancer hospitals
  Currently, 11 cancer hospitals are paid the higher of their submitted costs or the OPPS payment rate.  PPACA directed CMS to conduct a study of cancer hospitals to assess the relation of their costs to payments compared to other hospitals and to provide an adjustment to the OPPS payment on a hospital-specific basis as appropriate. As a result of this analysis, beginning in 2011, CMS will adjust individual cancer hospital's OPPS payments from 5.9 to 82.6 percent (MD Anderson).  CMS intends to move to paying these hospitals the adjusted OPPS payment rate, but will continue to pay the higher of costs or OPPS at this time. CMS plans to reevaluate the adjustment factor periodically.
• Graduate Medical Education (GME)
  The proposed rule also includes proposals to implement the graduate medical education (GME) provisions of PPACA.  The law requires CMS to identify unused residency slots and redistribute them to certain hospitals with qualified residency programs, with a special emphasis on increasing the number of primary care physicians.  The law also requires CMS to redistribute residency slots from hospitals that close down to other teaching hospitals, giving preference to hospitals in the same or a contiguous area as the closed hospital.  In addition, the law specifies how CMS is to count hours spent by a resident in certain training and research activities, as well as how to count hours spent by a resident in patient care activities in a non-hospital setting, such as a physician’s office.
• Frontier state wage provisions
  CMS is proposing to set a floor on the wage index in States with a population of less than 6 per mile in more than half of the counties.

HOP QDRP Program Current And Proposed Quality Measures For Reporting In CY 2011 Through CY 2013

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