FINAL 2009 POLICY, PAYMENT CHANGES FOR HOSPITAL OUTPATIENT DEPARTMENTS AND AMBULATORY SURGICAL CENTERS

OVERVIEW

 

On October 30, 2008, 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) 2009.  The update to ASC rates constitutes the second year of a four-year transition to align these rates with those paid to HOPDs for similar services.  The transition is intended to minimize the impact for ASCs under the revised payment system.

 

The final rule also seeks to promote higher quality, efficient services for people with Medicare by adopting improvements to the Hospital Outpatient Quality Data Reporting Program (HOP QDRP) and by finalizing new conditions for coverage (CfCs) for ASCs.   

 

CMS projects that total payment for services furnished to people with Medicare in HOPDs during CY 2009 under the Outpatient Prospective Payment System (OPPS) will be $30.1 billion, compared with projected payment of $28.5 billion in CY 2008, while total projected CY 2009 payments under the ASC payment system will be approximately $3.9 billion, compared with projected payment of $3.5 billion in CY 2008.

 

This Fact Sheet addresses the general provisions of the OPPS/ASC CY 2009 Final Rule.  A separate Fact Sheet discussing payment for drugs and biologicals is posted on the CMS Web site at: www.cms.hhs.gov/apps/media/fact_sheets.asp.

 

BACKGROUND

 

Outpatient Prospective Payment System:   Since August 2000, Medicare has paid hospitals for most services furnished in their outpatient departments under the OPPS.  Medicare currently pays more than 4,000 hospitals and community mental health centers (CMHCs) for outpatient services under the OPPS, including general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children’s hospitals, and cancer hospitals.  The OPPS payments cover the costs of facilities, equipment, supplies, and hospital staff, but do not pay for the services of physicians and nonphysician practitioners who are paid separately under the Medicare Physician Fee Schedule (MPFS). 

 

All services under the OPPS are classified into groups called Ambulatory Payment Classifications (APCs).  Services in each APC are similar clinically and in terms of the resources they require.  A payment rate is established for each APC.  The APC payment rates are adjusted for geographic cost differences, and payment rates and policies are updated annually through rulemaking.  The final rule is generally issued by November 1 each year and, unless otherwise specified, becomes effective January 1 of the subsequent year.

 

Beneficiaries share in the cost of services under the OPPS by paying either a 20 percent coinsurance rate or, for certain services, a copayment required under the Medicare law not to exceed 40 percent of the total payment for the APC.   The statutory copayment is gradually being replaced by the 20 percent coinsurance as payment rates for the APCs increase.  CMS estimates that the beneficiary share of the total payments for Medicare covered outpatient services will be about 23 percent in CY 2009, which will result in a decrease in total beneficiary liability for copayments of approximately $62 million in CY 2009 compared to CY 2008.

 

In addition to the APC payments, the OPPS allows for temporary (two to three-year) pass-through payments to ensure beneficiary access to certain new drugs and biologicals, as well as devices that lead to substantial clinical improvements in care.  During this period, CMS will pay for these new devices at cost as it collects cost data that will allow it to determine how to incorporate payment for these technologies into payment for existing or new APCs.  The system also allows for an additional payment for hospitals, referred to as an outlier payment, when the cost of furnishing an item or service in the APC group exceeds 1.75 times the APC payment rate, as well as a fixed-dollar threshold set at $1,800 for CY 2009.

 

Ambulatory Surgical Centers (ASCs):     There are currently more than 5,100 Medicare-participating ASCs.  Since January 1, 2008, ASCs have been paid under a revised ASC payment system that aligns payment rates to those rates for similar services in the OPPS and extends payment to more surgical services in ASCs.  To minimize the impact of the revised payment system, the revised ASC payment rates are being phased in over four years.  CY 2009 is the second year of the transition.  In general, the revised ASC payment rate for services is set at a percentage of the payment rate for the same service under the OPPS; however, there are a few exceptions.  For device-intensive services (a subset of the OPPS device-dependent APCs where device costs account for more than 50 percent of the total cost of the service), ASCs receive the same payment rate for the device cost as under the OPPS.  For new ASC services that are predominantly performed in physicians’ offices, the ASC payment is capped at the amount the physician is paid under the MPFS for practice expenses for providing the same service in an office.

 

The prior ASC payment system was designed to pay for services based on the estimated costs incurred by the ASC to perform them.  Each procedure on the very limited list of services that were covered when performed in an ASC was assigned to one of nine payment groups.

 

In the final rule that revised the ASC payment system, CMS added approximately 800 procedures to the list of ASC procedures for which payment could be made.   Only those surgical procedures that would be expected to pose a significant safety risk to beneficiaries or that would be expected to require an overnight stay following the procedure are excluded from the ASC list.  These changes in payment policies for ASCs are giving patients broader access to surgical services in settings that are clinically appropriate.  

 

SIGNIFICANT CHANGES FOR CALENDAR YEAR 2009

 

Outpatient Prospective Payment System:

 

CMS projects that the final CY 2009 payment rates under the OPPS will result in a 3.9 percent increase in Medicare payments for providers paid under the OPPS.

 

Strengthening Ties between Payment and Quality:

• Payment reduction for failure to report quality measures – As required by the Medicare law,   CMS will reduce the CY 2009 payment update factor by two percentage points for most services for hospitals that were required to report quality measures but failed to meet the requirements of the HOP QDRP for CY 2009.  Beneficiary cost-sharing for these services will also be reduced.  The reduction will not apply to payments for separately payable pass-through drugs and devices, separately payable drugs and biologicals, separately payable therapeutic radiopharmaceuticals, brachytherapy sources that are paid at charges adjusted to cost, and services assigned to New Technology APCs. 

 

• New quality measures to be reported – CMS is finalizing its proposal to increase the number of measures that hospitals are required to report to receive the full CY 2010 market basket update from 7 measures in CY 2008 to 11 measures in CY 2009.  CMS added four imaging efficiency measures that will be calculated using Medicare claims data.  CMS sought public comment on 18 additional quality measures in areas including cancer care, emergency department throughput, screening for fall risk, and management of certain clinical conditions such as depression, stroke and rehabilitation, osteoporosis, asthma, and community-acquired pneumonia for possible consideration in future rulemaking proceedings.

 

• Validation of quality reporting – CMS also is implementing a voluntary test validation program, beginning with January 2009 encounters.   CMS will review the accuracy of hospital reported data by reviewing 50 or fewer randomly selected records from each of 800 randomly selected hospitals that voluntarily participate in this program.  The results of this program will not affect the CY 2010 payment update.  CMS expects to propose a validation program for the CY 2011 payment update in the CY 2010 rulemaking cycle.

 

• Healthcare-associated conditions – Through its Value-Based Purchasing (VBP) initiatives, CMS is looking at ways to align payment incentives for high quality of care across settings.  In this final rule, CMS describes a policy that it plans on proposing that would not pay for medical care in the HOPD that harms patients or leads to complications that could have been prevented.  A healthcare-associated conditions payment policy would be consistent with the current policy of not paying more for preventable hospital-acquired conditions during inpatient stays paid under the Inpatient Prospective Payment System (IPPS).  CMS intends to continue its dialogue with stakeholders regarding all issues relevant to the development of a healthcare-associated conditions policy for the OPPS, such as the selection of conditions, Medicare payment infrastructure challenges, and the payment reduction methodology for healthcare-associated conditions.

 

Changes to Ambulatory Payment Classifications (APCs):

• Composite APCs for multiple imaging services ‑ CMS is establishing five imaging composite APCs to encourage imaging efficiencies under the OPPS by providing a single APC payment when two or more imaging procedures using the same imaging modality are provided in a single session.  The new imaging composite APCs include:

 

• Ultrasound;
• Computed tomography (CT) and computed tomographic angiography (CTA) without contrast;
• CT and CTA with contrast;
• Magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA) without contrast; and
• MRI and MRA with contrast.

 

• New APCs for certain Type B emergency department visits – For some purposes, CMS policies distinguish between emergency departments that are open 24 hours per day, seven days per week, referred to as Type A emergency departments, and those that are not open around-the-clock, Type B emergency departments.   For CY 2009, CMS is adopting four new APCs to pay for visits to Type B emergency departments.  The payment rates for these APCs, which are based on claims data for emergency visits to Type B emergency departments, are generally higher than the payment rates for clinic visits to hospitals, but lower than the payment rates for emergency visits to Type A emergency departments.  CMS is using a single APC to pay for the most intensive emergency room visits in both Type A and Type B emergency departments because the costs of these visits are similar in both settings.

 

Other Payment Provisions:

• Drugs and pharmacy overhead – In CY 2009, CMS will pay for separately payable drugs and biologicals under the OPPS at the average sales price (ASP) plus 4 percent.  Based on hospitals’ claims and cost report data, CMS calculated hospitals’ average costs for drugs and biologicals (including both drug acquisition and pharmacy overhead costs) to be equivalent to ASP plus 2 percent.  However, similar to CY 2008, CMS is continuing the transition to a claims-based payment rate for separately payable drugs and biologicals.  For CY 2009, CMS will pay these drugs and biologicals at a transitional rate of ASP plus 4 percent determined by blending the CY 2008 payment rate of ASP plus 5 percent and the rate from claims data of ASP plus 2 percent.  In response to comments expressing concern that reporting overhead charges for drugs on Medicare cost reports would impose a high level of burden on hospitals, CMS is not adopting the proposed changes to the cost reports, but will instead continue to study alternative methodologies that may improve payment accuracy for drugs in the future.

 

• Therapeutic radiopharmaceuticals and brachytherapy sources – As required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), CMS is extending payment for therapeutic radiopharmaceuticals and brachytherapy sources provided in HOPDs based on individual hospital charges adjusted to cost until December 31, 2009.

 

• Charge compression – CMS is focusing on long-term approaches, including improved and more precise cost reporting, to improve the accuracy of OPPS cost-based payment weights.  CMS continues to seek informed analysis and public comment regarding potential changes to the revenue code-to-cost center crosswalk upon which OPPS cost estimation is based, to ensure that any changes for future OPPS updates are appropriate and likely to result in more accurate cost estimation. 

 

Change for Partial Hospitalization Services, including services provided by CMHCs:   CMS is adopting two separate Partial Hospitalization Program (PHP) rates calculated using cost data from hospitals:  (1) a rate of $157 one for days with three services, and (2) a rate of $200 for days with four or more services.  The CMHC multiple outlier threshold will continue to be set at 3.4 times the APC payment amount for CY 2009.

 

Changes Affecting Payments To Ambulatory Surgical Centers:

 

ASC Payment Rate Updates – The revised ASC payment rates were established to reflect the same relativity of resource use among services as under the OPPS, taking into consideration the lower costs of the services in an ASC and maintaining budget neutrality in the payment system.  Changes to the ASC payment system for CY 2009 will not increase or decrease aggregate Medicare spending.  The law does not allow an inflation update to the ASC payment system for CY 2009.

 

Changes to the ASC List of Covered Surgical Procedures – CMS is adding 30 surgical procedures to the list of procedures for which Medicare will pay when furnished in an ASC.  These include 16 procedures for which the American Medical Association’s Current Procedural Terminology (CPT) Editorial Panel has created new codes and descriptors, and 14 procedures that were previously excluded from payment under the ASC payment system. 

 

CMS is also adding eight procedures to the list of office-based procedures (subject to payment at the lesser of the amount paid to physicians under the MPFS office practice expense or the standard ASC rate), and updating the lists of device-intensive procedures and covered ancillary services and their rates, consistent with the final CY 2009 OPPS policies.

 

 

ASC CONDITIONS FOR COVERAGE (CFCS) FINALIZED IN OPPS/ASC RULE

 

The OPPS/ASC final rule also modernizes Medicare’s ASC Conditions for Coverage (CfC).  The rule, which responds to comments on provisions in an August 2007 proposed CfC rule, reflects current ASC practice by focusing on the care provided to patients and the impact of that care on patient outcomes.  Specifically, the new CfCs:

 

• Define an ASC as a distinct entity that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization and in which the expected duration of services would not exceed 24 hours following admission. 

 

• Strengthen Patients’ rights regarding disclosure of physician financial interests in the ASC; advance directives; the grievance process; and confidentiality of clinical records.

 

• Impose stronger obligations on the governing body of an ASC to oversee its quality assessment and performance improvement (QAPI) program, while allowing ASCs flexibility to use their own information to assess and improve patient services, outcomes, and satisfaction.

 

• Emphasize the importance of infection control practices.

 

• Strengthen the requirements for assessing the patient’s condition at admission to verify that the surgery is appropriate and safe for the patient in an ASC setting, and at discharge to ensure appropriate post-surgical care for the patient.

 

• Require the ASC to adopt a disaster preparedness plan.

 

 

The final rule with comment will appear in the November 18 Federal Register. Comments on designated provisions are due by 5:00 p.m. Eastern time on December 29, 2008, and a final rule responding to the comments will be published at a later date.

 

More information on the CY 2009 final rule with comment period for the OPPS and ASC payment system is available on the CMS Web site at:

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

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

 

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