FINAL 2011 HOSPITAL OUTPATIENT, AMBULATORY SURGICAL CENTER PAYMENT RULE

FINAL 2011 HOSPITAL OUTPATIENT, AMBULATORY SURGICAL CENTER PAYMENT RULE

Final 2011 Hospital Outpatient, Ambulatory Surgical Center Payment Rule

 

 

OVERVIEW

 

The Centers for Medicare & Medicaid Services (CMS) issued a final rule with comment period that will update payment policies and rates for both hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) for calendar year (CY) 2011.  For ASCs, CY 2011 is the first year of full payment rates under the revised ASC payment system methodology based on the ASC standard ratesetting methodology following a four-year transition.  The final rule with comment period also implements several provisions of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (together, the Affordable Care Act) that are effective in 2011.  In addition, the final rule with comment period seeks to promote higher quality, more efficient services for Medicare beneficiaries by adopting improvements to the Hospital Outpatient Quality Data Reporting Program (HOP QDRP), which makes data about the quality of outpatient hospital services publicly available. 

 

CMS projects that total payments for services furnished to Medicare beneficiaries in HOPDs during CY 2011 under the Outpatient Prospective Payment System (OPPS) will be approximately $39 billion, while total projected CY 2011 payments under the ASC payment system will be approximately $4 billion. 

 

OUTPATIENT PROSPECTIVE PAYMENT SYSTEM

 

Background

 

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 -- 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.  Medicare also pays community mental health centers (CMHCs) under the OPPS for partial hospitalization program (PHP) services.  The OPPS payments cover facility resources including 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 clinically similar and require the use of similar resources.  Generally, CMS establishes a payment rate for each APC based on hospital cost data submitted annually to CMS, although CMS uses primarily CMHC data to set the APC rate for PHP services furnished in a CMHC.  The APC payment rates are adjusted for geographic cost differences, and payment rates and policies are updated annually through rulemaking.  Unless otherwise specified, the policies and payment rates in the final rule become effective Jan. 1 of the subsequent year. 

 

Beneficiaries generally share in the cost of services under the OPPS by paying either a 20 percent coinsurance rate or, for certain services, a copayment required by 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 the composition of APC groups is updated in response to policy changes or new cost data.  CMS estimates that the overall beneficiary share of the total payments for Medicare covered outpatient services will be about 22.1 percent in CY 2011. 

 

Significant Changes for CY 2011

 

• Implementing The Affordable Care Act

 

• Waiver of beneficiary cost-sharing for preventive services – The Affordable Care Act waives the deductible and copayment for certain preventive services that are paid under the OPPS, including the initial preventive physical examination (IPPE) and preventive services that have been recommended by the United States Preventive Services Task Force with a grade of A or B for any indication or population.

 

• OPPS market basket update – The Affordable Care Act requires CMS to reduce the OPD fee schedule increase factor (commonly referred to as the hospital operating market basket increase factor) for CY 2011 OPPS payment by 0.25 percentage point.  Therefore, we have calculated the CY 2011 OPPS payment rates to reflect a hospital operating market basket increase factor of 2.35 percent (that is, the market basket of 2.6 percent less the 0.25 percentage point reduction). 

 

 

• Payment adjustment for certain cancer hospitals – The Affordable Care Act requires CMS to conduct a study to determine if outpatient costs incurred by cancer hospitals that meet the classification criteria set forth in the statute exceed outpatient costs incurred by other hospitals paid under the OPPS and to make an appropriate budget neutral payment adjustment if these cancer hospitals are found to be more costly.  CMS received many public comments on this issue that identify a broad range of important issues and concerns with the cancer hospital adjustment.  After consideration of these comments, CMS determined that further study and deliberation is required and therefore will not finalize a payment adjustment for cancer hospitals for CY 2011.

 

• Frontier state wage provisions – For services beginning in CY 2011, the wage adjustment factor applicable to any HOPD that is located in a state in which at least 50 percent of the counties have a population per square mile of less than 6 (excluding Alaska and Hawaii ) may not be less than 1.  This provision, which the law does not make subject to budget neutrality requirements, will benefit hospitals in the states of Montana, Wyoming, Nevada, North Dakota, and South Dakota without requiring reductions in payments to hospitals located in other states.

 

• Strengthening Ties Between Payment And Quality

 

• Quality measures to be reported – To allow CMS and hospitals to more effectively plan for future quality reporting requirements, CMS has included measures for three subsequent payment determinations in this year’s final rule.  CMS is adding four quality measures to the current list of 11 measures to be reported by HOPDs, bringing the total number of measures to 15 that are to be reported for purposes of the CY 2012 payment determination.  These new measures include one structural health information technology (HIT) measure and three claims-based imaging efficiency measures.

 

CMS is also adding eight new measures to the list for purposes of the CY 2013 payment determination (for a total of 23 measures).  Of these new measures, one is a structural measure on use of electronic health records, and six are chart-abstracted measures of timeliness and appropriate care in the emergency department.   CMS also plans to require the reporting of these 23 measures for the 2014 payment determination. The complete list of existing and future measures for reporting in CYs 2012 through 2014 is attached as an appendix.

 

• Validation of quality reporting – In CY 2011 payment determination, CMS implemented a HOP QDRP validation requirement to ensure that hospitals are accurately reporting measures using chart-abstracted data; however, the results of the validation will not affect the CY 2011 payment determination for any hospital.  For the CY 2012 payment determination, CMS will validate data from 800 randomly selected hospitals, and will randomly select up to 12 cases per quarter for each hospital.  CMS will request the corresponding medical records for the cases, perform its own abstraction of the HOP QDRP chart-abstracted measures for the cases, and compare the results with the measures reported by the hospital.  Hospitals will have to achieve a minimum 75 percent validation score based on this process to receive the full OPPS update in CY 2012.

 

• Finalizing Updates To The OPPS Payments And Policies

 

• Supervision requirements for outpatient therapeutic services – CMS is providing for a limited exception to its general policy which is to require direct supervision for the duration of all outpatient therapeutic services in both hospitals and critical access hospitals (CAHs).  CMS will require direct supervision for the initiation of a service followed by general supervision after the initiation period for a limited set of “non-surgical extended duration services,” including observation services, effective January 1, 2011.  CMS issued instructions to contractors to not enforce the direct supervision requirement in CAHs for CY 2010.  CMS is extending through CY 2011 the notice of non-enforcement for CAHs and expanding it to include small rural hospitals with 100 or fewer beds.  CMS also is modifying the definition of direct supervision for all hospital outpatient services to require “immediate availability” without reference to the boundaries of a physical location, and will be establishing through future rulemaking an independent committee and a process to consider on an annual basis industry requests for supervision levels other than direct supervision for certain individual services, and to make recommendations to the agency. 

 

• Partial hospitalization services, including services provided by CMHCs – CMS is establishing four separate PHP APC per diem payment rates, two for CMHC PHPs and two for hospital-based PHPs, which are based on each provider type’s data (see chart below for the final per diem payment costs).  The CMHC payment rates will be phased in over a two year period.  In addition, section 1301 of the Health Care and Education Reconciliation Act of 2010 (HCERA 2010) enacted on March 30, 2010, revised the definition of a CMHC by adding a requirement that the CMHC must provide at least 40 percent of its services to non-Medicare beneficiaries.  HCERA further revised the definition of a PHP (provided by either a CMHC or HOPD) to exclude services furnished in a beneficiary’s home or an inpatient or residential setting.  CMS is also finalizing its proposal to continue the CMHC outlier threshold at 3.4 times the APC payment amount for APC 173, the higher intensity APC, for CY 2011.

 

 

 

 

APC	Group Title	Final Median Per Diem Costs
0172	Level 1 Partial Hospitalization (3 services) for CMHCs	$128.25
0173	Level II Partial Hospitalization (4 or more services) for CMHCs	$162.67
0175	Level 1 Partial Hospitalization (3 services) for hospital-based PHPs	$202.71
0176	Level II Partial Hospitalization (4 or more services) for hospital-based PHPs	$235.79

 

 

• Drugs and pharmacy overhead – For CY 2011, CMS will pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status at the average sales price (ASP) plus 5 percent.  The payment rate of ASP plus 5 percent is based upon the cost of separately payable drugs and biologicals, calculated from hospital claims and cost reports, with an adjustment for pharmacy overhead costs.  This reflects the redistribution of $200 million of the pharmacy overhead cost currently attributed to packaged drugs and biologicals (both coded and noncoded) to separately payable drugs and biologicals without pass-through status.

 

AMBULATORY SURGICAL CENTERS

 

Background

 

There are approximately 5,000 Medicare-participating ASCs.  Since January 1, 2008, ASCs have been paid under a revised ASC payment system that both aligns payment in ASCs and hospital outpatient settings by basing ASC payment rates on the APC relative weights for similar services and extends payment to more surgical services in ASCs than under the prior payment system.  The revised ASC payment rates were established to reflect the same relativity of resource use among procedures as under the OPPS, taking into consideration the lower costs of surgical procedures performed in ASCs and maintaining budget neutrality in the payment system.  To minimize the impact of the revised payment system, the ASC payment rates calculated under the new rate-setting methodology were phased in over four years.  CY 2011 is the first year of the fully-implemented payment rates based on the ASC standard ratesetting methodology under the revised ASC payment system. 

 

In general, the revised ASC payment rate for a covered surgical procedure is based on the APC relative payment weights for the same procedure under the OPPS; however, there are a few

exceptions.  For example, for device-intensive procedures (assigned to 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 for the device cost as under the OPPS.  For ASC procedures that are predominantly performed in physicians’ offices, the ASC payment is capped at the lesser of the amount paid under the Medicare physician fee schedule for practice expenses for providing the same procedure in an office or the payment amount under the standard ASC rate-setting methodology. 

 

In the CY 2008 final rule that revised the ASC payment system, CMS added nearly 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 when performed in an ASC 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 give patients broader access to surgical services in settings that are clinically appropriate. 

 

Significant Changes for CY 2011

 

• ASC Payment Rate Updates– The percentage increase in the Consumer Price Index for All Urban Consumers that updates the ASC conversion factor for CY 2011 is 1.5 percent.  However, beginning in CY 2011, the Affordable Care Act requires the annual update factor for the ASC payment system be reduced by a productivity adjustment, which is 1.3 percent for CY 2011.  As a result, CMS is applying a 0.2 percent update to the ASC payment system for CY 2011.

 

• Changes To ASC Covered Surgical Procedures And Covered Ancillary Services – CMS is adding 6 surgical procedures to the list of procedures for which Medicare would pay when performed in an ASC.  CMS is also newly designating two procedures as office-based procedures (subject to payment lesser of the amount paid under the Medicare physician fee schedule practice expenses for providing the same procedure in an office or the payment amount under the standard ASC rate-setting methodology ) and updating the list of covered ancillary services to reflect the OPPS update.

 

• Waiver Of Beneficiary Cost-Sharing For Preventive Services– The Affordable Care Act waives the deductible and coinsurance for certain preventive services that are paid under the ASC payment system and have been recommended by the United States Preventive Services Task Force with a grade of A or B for any indication or population.

 

OTHER SIGNIFICANT PROVISIONS IN THE OPPS/ASC FINAL RULE

 

• Affordable Care Act Provisions Affecting Physician-Owned Hospitals    The physician self-referral law generally prohibits physicians from referring Medicare and Medicaid beneficiaries to entities with which they or an immediate family member have a financial relationship for certain designated health services, including inpatient and outpatient hospital services.  However, the law allows physicians to refer patients to hospitals in which they have an ownership or investment interest if the ownership or investment is in the whole hospital, rather than in a particular department.  An exception to the prohibition is also allowed for some rural providers.

 

Section 6001 of the Affordable Care Act narrows access to the “rural provider” and “whole hospital” exceptions to the physician self-referral law by prohibiting their use by new physician-owned hospitals, and limiting the ability of existing physician-owned hospitals to expand their capacity.  Under section 6001, physician-owned hospitals that were converted from ASCs on or after March 23, 2010 cannot qualify for the revised rural provider and whole hospital exceptions.  Additional provisions in section 6001 are aimed at preventing conflicts of interest, ensuring that all ownership and investment interests are bona fide, and promoting patient safety.  The final rule incorporates these provisions into CMS regulations. 

 

• Implementing The Affordable Care Act’s Graduate Medical Education Provisions:  The final rule with comment period also implements the direct and indirect graduate medical education (GME/IME) provisions of the Affordable Care Act.  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 certain closed hospitals and 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 hospitals should count hours a resident spends in certain training and research activities, and in patient care activities in a nonprovider setting, such as a physician’s office.

 

 

The CY 2011 OPPS/ASC final rule with comment period will appear in the Nov. 24, 2010, Federal Register.  Comments on designated provisions are due by 5:00 p.m.  Eastern Time on Jan. 3, 2011.  CMS will respond to comments in the CY 2012 OPPS/ASC final rule.

 

For more information on the CY 2011 final rule with comment period for the OPPS and ASC payment system, please see the CMS Web site at:

 

OPPS:  www.cms.gov/HospitalOutpatientPPS/  

 

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

 

 

 

 

APPENDIX

 

HOP QDRP PROGRAM QUALITY MEASURES FOR CY 2012 THROUGH CY 2014

 

Hospital Outpatient Department Quality Measure	Current HOP QDRP measure	Reporting to begin	1st Payment Determination
OP-1: Median Time to Fibrinolysis	Yes
OP-2: Fibrinolytic Therapy Received Within 30 Minutes	Yes
OP-3: Median Time to Transfer to Another Facility for Acute Coronary Intervention	Yes
OP-4: Aspirin at Arrival	Yes
OP-5: Median Time to ECG	Yes
OP-6: Timing of Antibiotic Prophylaxis	Yes
OP-7: Prophylactic Antibiotic Selection for Surgical Patients	Yes
OP-8: MRI Lumbar Spine for Low Back Pain	Yes
OP-9: Mammography Follow-up Rates	Yes
OP-10: Abdomen CT – Use of Contrast Material	Yes
OP-11: Thorax CT – Use of Contrast Material	Yes
OP-12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their Qualified/Certified EHR System as Discrete Searchable Data	No	CY 2011	CY 2012
OP-13: Cardiac Imaging for Preoperative  Risk Assessment for Non Cardiac Low Risk Surgery	No	CY 2011	CY 2012
OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT)	No	CY 2011	CY 2012
OP-15: Use of Brain Computed Tomography (CT) in the Emergency Department for Atraumatic Headache	No	CY 2011	CY 2012
OP-16: Troponin Results for Emergency Department acute myocardial infarction (AMI) patients or chest pain patients (with Probable Cardiac Chest Pain) Received Within 60 minutes of Arrival	No	CY 2012	CY 2013

 

 

Hospital Outpatient Department Quality Measure	Current HOP QDRP measure	Reporting to begin	1st Payment Determination
OP-17: Tracking Clinical Results between Visits	No	CY 2012	CY 2013
OP-18: Median Time from ED Arrival to ED Departure for Discharged ED Patients	No	CY 2012	CY 2013
OP-19: Transition Record with Specified Elements Received by Discharged Patients	No	CY 2012	CY 2013
OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional	No	CY 2012	CY 2013
OP-21: ED- Median Time to Pain Management for Long Bone Fracture	No	CY 2012	CY 2013
OP-22: ED- Patient Left Before Being Seen	No	CY 2012	CY 2013
OP-23: ED- Head CT Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT Scan Interpretation Within 45 minutes of Arrival	No	CY 2012	CY 2013

 

 

NOTE: The measures required for reporting for the CY 2014 payment determination will be the same measures required for the CY 2013 payment determination.