Proposed Hospital Outpatient Prospective Payment Rule for 2006

On July 25, CMS published in the Federal Register the proposed hospital outpatient PPS (HOPPS) rule for 2006. Comments will be accepted on the proposed rule until September 16.

Overall, payments for all hospitals will be going up by 3.2 percent with a larger increase for sole community hospitals in rural areas. Payments for individual services and APC’s will go up or down a varying amount since the APC rates are derived from median hospital charges for a service in a prior year.

Chart 1 contains a summary of the proposed changes in payment for various procedural services of interest to hematology. Chart 2 provides this data for the chemotherapy APC’s. And, Chart 3 is an excerpt from the proposed rule containing a summary of the proposed payment changes for blood and blood products.

For hematology services, there are a few substantial changes of note. The payment for APC 112, which includes photopherisis (Code 36522) and selective apheresis (Code 36516), would be reduced from $2,127 to $1,583. However, consistent with ASH comments, Code 36515 is being added to this APC from APC 111. While we presume the payment reduction for APC 112 is directly attributable to changes in the median charge for this service, we need to do further analysis of the data to more fully understand the basis for the reduction.

Another positive change, also directly attributable to ASH comments to CMS, is the proposed increase in the payment for flow cytometry services. Payment for Code 88184, first marker and 88185, each additional marker, is being increased from $11.78 for each code to $47.24 and $28.27 respectfully. With an average of 15-30 markers billed, this is obviously a substantial increase. Finally, one more piece of good news is that the bone marrow/stem cell transplant codes, 38240 and 38241 are proposed for substantial increases from $608 to $1,358.

Consistent with a statutory provision, CMS is also proposing to change the method of payment for drugs which are separately reimbursable and which are not new pass-through drugs. Generally, drugs costing over $50 per dose are separately reimbursed as are all anti-emetics. Currently, these drugs, which would include most chemotherapy agents, are reimbursed on the basis of 83% of AWP. Beginning in 2006, payment will be the same as in the physician office; i.e., based on 106% of ASP. However, the law directs CMS to pay additional amounts for the costs incurred by hospital pharmacies in providing these drugs over and above the product costs such as pharmacist’s salaries. CMS will be gathering data to be used in setting a rate for these costs beginning in 2008. However, as an interim measure, CMS has decided to add 2 percent to the drug payment to cover these costs so that payment would be essentially 108% of ASP.

Currently, CMS reimburses hospitals for drug administration services on a per visit basis. Thus, CMS does not recognize any differentiation in payment based on the time of an infusion (i.e., each additional hour) as is the case in the physician office setting. For 2006, CMS will be adopting the new drug administration codes approved by CPT. The CPT codes are essentially equivalent to the temporary G codes used for 2005 in the physician office. (The CPT numbers assigned to these codes have not yet been published.) Chart 4 is an excerpt from the rule showing a crosswalk of the current CPT codes to these HCPCS codes. Since it will be some time until cost data is available on these codes, CMS is maintaining the per visit APC’s for 2006 and possibly 2007.