Original release: July 1, 2009; Correction: July 9, 2009

        Hospitals would be able to bill Medicare for pulmonary and intensive cardiac rehabilitation services furnished in outpatient departments beginning January 1, 2010 under a proposed rule issued today by the Centers for Medicare & Medicaid Services (CMS  ).  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. 

The proposals, which would implement provisions of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), were contained in a notice of proposed rulemaking (NPRM) that would revise payment policies and update the payment rates for services furnished to beneficiaries during calendar year (CY) 2010 in hospital outpatient departments under the Outpatient Prospective Payment System (OPPS).   Additional proposals to incorporate an adjustment for hospital pharmacy costs that would result in OPPS payment at the Average Sale Price (ASP) plus four percent for most separately payable drugs and biologicals and to adapt current requirements for physician supervision of hospital outpatient services to the changing health care environment would help ensure beneficiary access to safe, cost-effective health care at all hospital outpatient sites.

The NPRM also includes proposals for policy changes and payment rates for services in ambulatory surgical centers (ASCs), which would continue the expansion of surgical procedures Medicare would cover when performed in ASCs.  The proposed rule seeks to ensure that beneficiaries have access to outpatient services in all appropriate settings, while improving the quality and efficiency of service delivery. 

             “In this proposed rule, CMS is continuing to strengthen the connection between Medicare payment and efficient, high quality care,” said CMS Acting Administrator Charlene Frizzera.  “The payment proposals are also designed to ensure that when services can be performed in a variety of settings, such as a physician’s office, a hospital outpatient department, or an ambulatory surgical center, the choice of setting is based on the patient’s needs, rather than payment incentives.”

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 the OPPS, which also sets payment policies and payment rates for partial hospitalization services furnished by community mental health centers.  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.

There are approximately 5,000 Medicare-participating ASCs.  Since January 1, 2008 , ASCs have been paid under a revised payment system that not only aligns ASC payment rates with the rates paid for similar services when furnished in hospital outpatient departments, but also greatly expands the number and types of surgical services that are covered by Medicare when performed in ASCs.  CY 2010 is the third year of a four-year phase-in of the ASC payment rates calculated under the standard ratesetting methodology and the first year for which CMS is authorized to apply an update to the conversion factor.   CMS is projecting the percentage increase in the Consumer Price Index for All Urban Consumers that would update the ASC conversion factor to be 0.6 percent.  Total CY 2010 payments to ASCs are estimated to be $3.4 billion.

The proposed rule affects Medicare payments to hospitals and ASCs for the resources ‑ such as equipment, supplies, and hospital or ASC staff ‑ they use to furnish ambulatory health care services to beneficiaries.  CMS pays separately for the services of physicians and nonphysician practitioners under the Medicare Physician Fee Schedule (MPFS).

Under the Hospital Outpatient Department Quality Reporting Program (HOP QDRP), hospitals that did not participate in the program or did not successfully report the quality measures will receive an update in CY 2010 equal to the annual payment update factor minus 2.0 percentage points, or 0.1 percent.   Hospitals that are exempt from the Inpatient Prospective Payment System – such as long-term care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, cancer hospitals, and children’s hospitals – as well as hospitals in Puerto Rico are not subject to the HOP QDRP payment reduction. 

CMS  is proposing to continue to require HOP QDRP participating hospitals to report the existing seven emergency department and perioperative care measures, as well as the four existing claims-based imaging efficiency measures for the CY 2011 payment determination.   Although it is not proposing to adopt any new measures for the CY 2011 update, CMS is seeking public comment on 16* potential additional quality measures for consideration for future OPPS updates.  The potential measures relate to a number of areas including cancer care, emergency department throughput, diabetes, medication reconciliation, immunization, imaging efficiency, and surgical care.

CMS  is also proposing to phase in a new HOP QDRP validation requirement to ensure that hospitals are accurately reporting measures for chart-abstracted data, but the validation results will not have any impact on outpatient department payments in CY 2011.  In addition, CMS is proposing to establish procedures to make quality data collected under the HOP QDRP for quarters beginning with the third quarter of CY 2008 publicly available.

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 . 

For more information on the CY 2010 proposals for the OPPS and ASC payment system, please see the CMS  Web site at:  

OPPS:   http://www.cms.hhs.gov/HospitalOutpatientPPS/

ASC payment system:   http://www.cms.hhs.gov/ASCPayment/ 

*/  In a press release issued July 1, 2009, CMS inadvertently stated that measures relating to stroke and rehabilitation, respiratory, health information technology, cataract surgery, and overuse/appropriate use were also under consideration for future inclusion in the Hospital Outpatient Quality Data Reporting Program.

# # #