CMS has issued its final rule for Medicare payments to hospital outpatient departments, awarding a lower reimbursement rate increase while approving a new bundled rate for outpatient clinics in calendar year 2014.
More than 4,000 hospitals are paid under Medicare's outpatient prospective payment system. CMS said total OPPS payments in 2014 are projected to increase by $4.4 billion from 2013 levels as healthcare continues to shift care delivery to the outpatient setting.
Here are some of the major provisions from CMS' final rule to hospital OPPS Medicare payments.
• HOPD payment update. According to the final rule, HOPDs will receive a 1.7 percent boost in Medicare reimbursements — lower than the 1.8 percent rate increase in CMS' proposed rule from earlier this summer. This total was achieved by taking the projected hospital market basket increase from CMS' inpatient hospital final rule (2.5 percent), and subtracting a productivity adjustment (0.5 percent) and an outpatient adjustment provision required under the Patient Protection and Affordable Care basket (0.3 percent). Sole community hospitals will receive a 7.1 percent boost to outpatient Medicare reimbursements.
• Payment for outpatient clinics. Due to concerns about upcoding and inaccurate payments, CMS will pay hospitals a flat rate for Medicare beneficiaries who enter hospitals' outpatient clinics. CMS will essentially collapse five levels of hospital outpatient visits into one code, similar to how it pays for hospital inpatient care. CMS justified this change, saying a single code and payment for clinic visits "is more administratively simple for hospitals and better reflects hospital resources involved in supporting an outpatient visit," according to a government fact sheet. However, CMS will not package payment for emergency department visits, as it previously proposed.
CMS also finalized five categories of primary services that will be packaged into a single payment: drugs, biologicals and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; drugs and biologicals that function as supplies or devices when used in surgeries; certain diagnostic lab tests; procedures described by add-on codes; and device removal procedures. This is less than the original seven proposed.
• Direct supervision for small hospitals. CMS will end the direct supervision enforcement delay for critical access hospitals and small rural hospitals on Dec. 31. The "direct supervision" provision for CAHs and small hospitals essentially requires those organizations to have a supervising physician be physically present for certain services at all hours. The American Hospital Association has opposed this provision, saying CAHs and small hospitals cannot afford constant supervision, and it could reduce access to care.
• Delay of new ambulatory payment classifications. CMS proposed creating 29 new APCs to pay for the most costly device-dependent services. (APCs are groups to which an outpatient service falls under.) After considering public comments, CMS will delay this policy until 2015.
• Hospital outpatient quality reporting program. CMS finalized four new quality measures that will affect payments in calendar year 2016, and data collection will start next year. The new measures are flu vaccination coverage among healthcare personnel, endoscopy/polyp surveillance follow-up, endoscopy/polyp surveillance colonoscopy intervals and cataracts.
• Ambulatory surgery center payment update. CMS will bump up Medicare rates to ASCs by 1.2 percent next year, higher than the originally expected rate increase of 0.9 percent. There are about 5,000 Medicare-certified ASCs that receive payments from the federal government. CMS projects a 1.2 percent boost will increase overall Medicare payments to ASCs by $143 million.
CMS officials said the final rules will help change the healthcare system's incentives for the better.
"These changes are essential if we're going to create a healthcare system that delivers better care at lower cost," CMS Principal Deputy Administrator Jonathan Blum said in a news release. "The final OPPS/ASC rule gives hospitals a stake in managing their resources to generate better coordinated and ultimately, more affordable outpatient care."
The American Hospital Association heavily criticized the final rule, particularly the provision that will package primary services in outpatient clinics. The group said hospitals that care for complex patients will not receive appropriate reimbursement for the services provided, and hospitals will have to scramble to implement the new changes.
"We continue to have concerns that CMS may not have used accurate information in developing these policies, and that hospitals will have neither the time nor the data to understand how these changes will affect their ability to provide patient services," said Rick Pollack, AHA executive vice president, in a statement. "In adopting these proposals, CMS has put hospitals in the difficult position of having only 35 days to implement significant changes in Medicare's policies, procedures and payment formulas."
CMS will publish the rule on Dec. 10. To view the 1,281-page final rule on Medicare OPPS and ASC payments for 2014, click here.
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