CMS Publishes CY 2013 OPPS/ASC Proposed Rule - Summary of Key Provisions

On July 30, 2012, the Centers for Medicare and Medicaid Services (“CMS”) released the CY 2013 hospital outpatient prospective payment system (“OPPS”) and ambulatory surgical center (“ASC”) proposed rule (“Proposed Rule”). This article summarizes key provisions.

OPPS and ASC Payment Updates

CMS proposes to increase OPPS payment rates by a net 2.1% and also to maintain a previously implemented 2.0 percentage point reduction in payments for hospitals failing to comply with hospital outpatient quality reporting requirements. ASC payment rates would be increased by an update factor of 1.3%. CMS anticipates that ASC payment rates for CY 2013 will remain stable at 57% of payment rates for the same services paid at the proposed OPPS CY 2013 rates.

Adjustment for Rural Facilities and Cancer Hospitals

CMS proposes to continue a 7.1% adjustment to the OPPS payments to certain rural sole community hospitals including essential access community hospitals. A few service exclusions apply. CMS would continue to provide additional payments to cancer hospitals.

Change in OPPS Payment Methodology

CMS proposes to use the “geometric mean costs of services” within a given ambulatory payment classification (“APC”) to determine the relative payment weights of services instead of the “median costs” used since the beginning of the OPPS. The geometric mean costs methodology is believed to more accurately represent the average costs of services as compared to the median costs methodology. CMS believes the payment impact on most providers will be limited but that a few providers may be reimbursed more or less based on their service mix.

Supervision Issues

Background – Supervision of Therapeutic Services. Since 2001, CMS has required direct supervision of outpatient therapeutic services furnished in hospitals and CAHs. This policy posed access to care-related concerns among hospitals and physicians, particularly small, rural facilities. In the ensuing years, CMS softened the requirements by, for example, allowing non-physician practitioners to provide the required supervision within their scope of practice, by establishing a special Advisory Panel on Hospital Outpatient Payment (“Panel”) to consider requests for changing the minimum required supervision level for specific therapeutic services rendered in outpatient departments of hospitals and by establishing a set of nonsurgical extended therapeutic services for which direct supervision is required at the initiation of treatment but general supervision is permitted once the patient is considered to be medically stable. CMS also applied a moratorium on enforcement of the direct supervision policy through FY 2012 for CAHs and small rural hospitals with fewer than 100 beds.
Moratorium on Enforcement of Supervision Requirements for Therapeutic Services Likely Extended Through FY 2013. Supervision issues once again are revisited in the Proposed Rule. CMS has stated that it “anticipate[s] extending the nonenforcement instruction [pertaining to direct supervision requirements for outpatient therapeutic services in CAHs and small rural hospitals ] one additional year through CY 2013. The continued moratorium on enforcement would give CAHs and small rural hospitals additional time to meet the direct supervision requirements, as well as an opportunity to submit to CMS, for consideration by the Panel, requests for a change in the minimum required supervision level for individual hospital outpatient therapeutic services for the CY 2013 payment year.
Conditions of Payment for PT, SLP and OT in Hospitals and CAHs – A Clarification. CMS clarified that the outpatient hospital and CAH “incident to” services and supplies conditions for payment at 42 CFR 410.27 (“CfCs”) apply to facility services charges that are paid to hospitals under the OPPS and to the same services furnished in CAHs and paid on a reasonable cost basis. However, the CfCs do not apply to professional services separately billed under the Medicare Physician Fee Schedule (“MPFS”) or to physical therapy (“PT”), speech and language pathology (“SLP”) and occupational therapy (“OT”) services that are billed by the hospital as therapy services and paid under the MPFS, or to these same services furnished in CAHs. A small subset of services referred to as “sometimes therapy,” PT, SLP and OT services are subject to the supervision and other requirements of the CfCs when furnished in OPPS hospitals and CAHs if such “sometimes therapy” services are NOT furnished under a certified plan of care by a qualified therapist. The procedures that qualify as “sometimes therapy” services are classified by HCPCS Codes: 97597, 97598, 97602, 97605, 97606 and 0183T.

Additional Pharmaceutical-Related Payments

CMS proposes to pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals that do not have “pass-through” status, at a rate of average sales price plus 6%.

Quality Reporting Program Updates

CMS proposes no new measures for the hospital outpatient quality reporting program (“QRP”) for 2013.

CMS seeks public comment on possible approaches for future quality measure selection and development for the ASC QRP. For CY 2015 and beyond, CMS proposes requirements with respect to dates for submission, payment and completeness for claims-based measures in the ASC QRP. CMS also will be exploring instituting payment rate reductions for ASCs failing to meet program requirements beginning in CY 2014.

As to the inpatient rehabilitation facility (“IRF”) QRP, CMS proposes to: a) adopt updates to a previously adopted QRP measure that will affect prospective payment in FY 2014; b) adopt a policy to keep effective any previously adopted measure until such measure is eliminated; and c) adopt policies addressing when notice and comment rulemaking will be used to update existing IRF QRP measures.

QIO Regulations Revisions

CMS proposes to revise the quality improvement organization (“QIO”) regulations to achieve certain goals, including giving beneficiaries and their caregivers the ability to participate more actively in the review process. The changes include: a) give QIOs authority to send and receive secure electronic health information; b) provide improved procedures for QIOs performing quality of care reviews and Medicare beneficiary complaint reviews, including procedures tied to a new alternative dispute resolution program called “Immediate Advocacy”; c) expand on the information Medicare beneficiaries receive in response to QIO review activities; and d) communicate to Medicare beneficiaries their right to consent to the release of confidential information by the QIO.

Pilot Programs and Demonstration Projects

CMS proposes to extend the 2012 Medicare Electronic Health Record Incentive Program Electronic Reporting Pilot for Eligible Hospitals and CAHs (“Program”) through CY 2013. The Program would be unchanged from the Program in CY 2012. CMS also proposes to update the Medicare Part A to Part B Rebilling Demonstration in effect from CY 2012 through CY 2014.

Inpatient Versus Outpatient – Solicitation of Public Comments

CMS has requested comments addressing how to improve current instructions regarding the determination of inpatient versus outpatient status. A patient’s status is generally determined upon admission, can be changed only if specific conditions apply and cannot be changed after discharge. These admission decisions are subject to review by governmental contractors, including RACs and CERTs, and in some cases can result in an entire claim being denied merely because the Medicare contractor disagrees with the patient status designation. At times, even Medicare beneficiaries question their admission status in circumstances, for example, where they have experienced extended outpatient stays. The admission status has implications for skilled nursing coverage and patient liability amounts. Accordingly, developing improved admission determination instructions would be beneficial for multiple purposes.

Some suggestions that have been proposed include the following:

Establishing a point in time after which the outpatient encounter becomes an inpatient stay if the beneficiary is still receiving medically necessary care;
Establishing more specific clinical criteria for admission;
Requiring prior authorization for payment of an admission; and
Aligning payment rates more closely with the resources expended by a hospital when providing outpatient care versus inpatient care of short duration to reduce payment disparities and to neutralize financial incentives and disincentives to admit.

Finally, CMS also is asking for comments regarding the responsibility of hospitals to use all of the tools necessary to make appropriate initial admission decisions (e.g., having case management and utilization review staff available to assist in decision making).

Practical Considerations

In anticipation of the proposed change in OPPS payment methodology to “geometric mean costs of services,” hospitals may wish to examine the outpatient services they provide on an APC/CPT code level to begin to determine how reimbursement will be affected if the change is implemented. CMS has posted on its website a spreadsheet comparing CY2013 proposed geometric mean versus median based payments. It can be found at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1589-P.html.
Likely, CAHs and small rural hospitals will benefit from a continued reprieve on enforcement of the supervision requirements for outpatient therapeutic services through FY 2013. Notwithstanding, CMS has requested these providers to submit to CMS for potential evaluation by the Panel at this summer’s meeting any services for which they anticipate difficulty complying with the direct supervision standard in CY 2013. CAHs and small rural hospitals wishing to prepare a submission can consult the evaluation criteria set forth in the CY 2012 OPPS/ASC final rule with comment period set forth at: http://www.gpo.gov/fdsys/pkg/FR-2011-11-30/pdf/2011-28612.pdf.
Interested parties wishing to submit comments on the Proposed Rule should do so no later than 5 PM EST on September 4, 2012 referencing file code CMS-1589-P. Instructions for submitting comments are included in the Proposed Rule which may be found at: http://www.gpo.gov/fdsys/pkg/FR-2012-07-30/pdf/2012-16813.pdf.

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