AAO-HNS Summary of CY 2013 Outpatient Prospective Payment System and Ambulatory Surgical Center Payment Proposed Rule
On July 6, the Centers for Medicare and Medicaid Services (CMS) released its proposed rule for Medicare’s hospital outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) payment system. The Academy submitted comments to CMS on the OPPS and ASC proposed rule on August 29. Academy staff summarized the sections of the rule we believe are most relevant to members in response to an increased number of members who indicate they practice in hospital outpatient or ASC setting. Below, in summary, are the key provisions from the rule that we believe Academy members should consider. Hospital Outpatient Prospective Payment System (OPPS) Key Provisions Background on the OPPS 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 technical and are classified into groups called Ambulatory Payment Classifications (APCs). Services in each APC are grouped by clinically similar services that require the use of similar resources. A payment rate is established for each APC using two-year-old hospital claims data adjusted by individual hospitals cost to charge ratios. The APC national payment rates are adjusted for geographic cost differences, and payment rates and policies are updated annually through rulemaking. OPPS 2013 Proposed Payment Rates For CY 2013, CMS proposed a hospital outpatient department (HOPD) conversion factor to calculate the increase of 2.1 percent. CMS has also proposed to continue implementing the statutory two percent reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting (OQR) requirements. Updates Affecting OPPS Payments In CY 2013, CMS also proposed using the geometric mean to calculate the cost of services within an APC to determine relative payment weights for services. This is a drastic change from the former methodology, used since the inception of the OPPS in 2000, which relied on the median costs of services to establish relative weights for services. CMS states this change is in response to commenters’ persistent concerns regarding the degree to which payment rates reflect the costs associated with providing a service, year-to-year variation, and whether packaged items are appropriately reflected in payment weights. In addition, the Agency felt that the mean better encompasses the variation in costs and the range of costs associated with providing services. It also will allow earlier detection of changes in the cost of services and may promote better stability in the payment system. Further, this brings the OPPS in line with the inpatient methodology, which uses mean costs to calculate the diagnosis related group (DRG) weights. Lastly, CMS believes this will improve its ability to identify resource distinctions between previously homogeneous services. Observation Status Under current policy, when a Medicare beneficiary presents to the hospital for care the physician must decide whether to admit them as an inpatient or treat them as an outpatient. Inpatient services are paid under Medicare Part A, while outpatient services are paid under Medicare Part B. Occasionally, when a physician admits the patient for hospital care, a reviewing body such as a MAC, RAC, or CERT will review the claim and deny it as not reasonable and necessary under the Social Security Act (SSA). In these cases, hospitals may rebill a new inpatient claim for a limited set of Part B services that were furnished to the patient and refer to it as “Inpatient Part B” or “Part B Only” services. Once the patient is discharged, however, the hospital cannot change their status to outpatient in order to submit an outpatient claim. If the hospital wishes to change the status, it must be done prior to discharge and the patient, provider, and utilization review committee must agree with the status change decision. The reason for this restriction is due to potential liability for the beneficiary. Specifically, beneficiaries that are admitted as inpatients pay a onetime deductible for all services provided during their first 60 days in the hospital. They are not asked to pay for self-administered drugs and post-acute skilled nursing facility (SNF) care that may be required by Medicare, so long as the beneficiary was in the hospital as an inpatient for three days. Outpatients, however, are required to pay a copayment for each outpatient service, and self-administered drugs and SNF care are not covered by Medicare Part B. In its proposed rule, CMS requested public comment on ways to address areas of concern regarding these policies. In response, the Academy provided specific feedback to the following CMS inquiries: How CMS might improve current instructions on when a patient should be admitted as an inpatient; Whether it is permissible for CMS to redefine “inpatient” using length of stay or other variables as the parameters in conjunction with medical necessity; Whether it is appropriate or useful to establish a point in time after which an encounter becomes an inpatient stay; Whether CMS should cap the amount of time a beneficiary can receive observation services as an outpatient; and Whether the use of clinical measures or prior authorization would be useful requirements for payment of an admission. Conditions of Payment for Therapy Services in Hospitals and CAHs In response to concerns expressed in past years’ Medicare Physician Fee Schedule (MPFS) public comments, CMS clarifies that it does not intend to establish different supervision requirements for hospitals and critical access hospitals (CAHs) under §410.27 of the regulations for physical therapy, speech language pathology, and occupational therapy services provided in the outpatient setting when furnished under a certified therapy plan of care. CMS notes that if the services are billed by the hospital or CAH as therapy services, the supervision requirements do not apply. However, CMS notes that policies, covered by §410.27 of the Medicare coverage manual, regarding supervision and other requirements do apply to physical therapy (PT), speech-language pathology (SLP), and occupational therapy (OT) services when those services are not furnished under a certified therapy plan of care (referred to as “sometimes therapy” services). Hospital Outpatient Quality Reporting (OQR) Program As established in previous rules, hospitals will continue to face a 2 percentage point reduction to their OPD fee schedule update for failure to report on quality measures in the OQR Program. Program measures can be accessed at www.QualityNet.org. Ambulatory Surgical Center (ASC) Key Provisions Background on ASCs Covered surgical procedures in the ASC setting are defined as procedures that would not be expected to pose a significant risk to beneficiaries safety when performed in an ASC and that would not be expected to require active medical monitoring and care at midnight following the procedure. CMS reviews the ASC payment system to implement applicable statutory requirements and changes arising from continuing experience with this system on an annual basis. In the proposed rule, CMS proposes relative payment weights and payment amounts for services furnished in ASCs, and other rate setting information for the CY 2012 ASC payment system. ASC 2013 Proposed Payment Rates For CY 2013, CMS proposes a 1.3 percent increase to the ASC conversion factor in CY 2013. This results in a proposed increase in the conversion factor from $42.627 in 2012 to $43.190 in 2013. Surgical Procedures Designated as Office-Based Annually, CMS proposes to update payments for office-based procedures and device-intensive procedures using its previously established methodology. Office-based procedures are defined as surgical procedures, which are utilized more than 50 percent in the physicians’ office. For CY 2013, CMS is proposing, based on their review of CY 2011 utilization data, to permanently designate six covered surgical procedures as “office-based” within the ASC setting. Most notably, three of those codes are nasal/sinus endoscopy procedures (CPT codes 31295, 31296, and 31297). This means that CMS will pay for these procedures at the lesser of the proposed 2013 MPFS nonfacility Practice Expense (PE) RVU amount, or the proposed 2013 ASC payment amount. ASC Quality Reporting Program In 2012, CMS finalized the implementation of an ASC quality-reporting program (ASCQR), which will begin October 2012. Quality measures have been adopted for the calendar years (2014-2016) and payment penalties will take effect in 2014, using 2012 data. ASCs must submit data on the claims-based quality measures by including the appropriate Quality Data Code (QDC) on their Medicare claims. ASC’s that fail to properly report their data will receive a two percent payment penalty. Quality measures can be found at www.Qualitynet.org. To access the Academy’s full summary of the proposed requirements for the programs highlighted above, visit the Academy’s CMS Regulations and Comment letter page at http://www.entnet.org/Practice/Summaries-of-Regulations-and-Comment-Letters.cfm#CL or email Academy staff at HealthPolicy@entnet.org.
On July 6, the Centers for Medicare and Medicaid Services (CMS) released its proposed rule for Medicare’s hospital outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) payment system. The Academy submitted comments to CMS on the OPPS and ASC proposed rule on August 29.
Academy staff summarized the sections of the rule we believe are most relevant to members in response to an increased number of members who indicate they practice in hospital outpatient or ASC setting. Below, in summary, are the key provisions from the rule that we believe Academy members should consider.
Hospital Outpatient Prospective Payment System (OPPS) Key Provisions
Background on the OPPS
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 technical and are classified into groups called Ambulatory Payment Classifications (APCs). Services in each APC are grouped by clinically similar services that require the use of similar resources. A payment rate is established for each APC using two-year-old hospital claims data adjusted by individual hospitals cost to charge ratios. The APC national payment rates are adjusted for geographic cost differences, and payment rates and policies are updated annually through rulemaking.
OPPS 2013 Proposed Payment Rates
For CY 2013, CMS proposed a hospital outpatient department (HOPD) conversion factor to calculate the increase of 2.1 percent. CMS has also proposed to continue implementing the statutory two percent reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting (OQR) requirements.
Updates Affecting OPPS Payments
In CY 2013, CMS also proposed using the geometric mean to calculate the cost of services within an APC to determine relative payment weights for services. This is a drastic change from the former methodology, used since the inception of the OPPS in 2000, which relied on the median costs of services to establish relative weights for services. CMS states this change is in response to commenters’ persistent concerns regarding the degree to which payment rates reflect the costs associated with providing a service, year-to-year variation, and whether packaged items are appropriately reflected in payment weights. In addition, the Agency felt that the mean better encompasses the variation in costs and the range of costs associated with providing services. It also will allow earlier detection of changes in the cost of services and may promote better stability in the payment system. Further, this brings the OPPS in line with the inpatient methodology, which uses mean costs to calculate the diagnosis related group (DRG) weights. Lastly, CMS believes this will improve its ability to identify resource distinctions between previously homogeneous services.
Observation Status
Under current policy, when a Medicare beneficiary presents to the hospital for care the physician must decide whether to admit them as an inpatient or treat them as an outpatient. Inpatient services are paid under Medicare Part A, while outpatient services are paid under Medicare Part B. Occasionally, when a physician admits the patient for hospital care, a reviewing body such as a MAC, RAC, or CERT will review the claim and deny it as not reasonable and necessary under the Social Security Act (SSA). In these cases, hospitals may rebill a new inpatient claim for a limited set of Part B services that were furnished to the patient and refer to it as “Inpatient Part B” or “Part B Only” services.
Once the patient is discharged, however, the hospital cannot change their status to outpatient in order to submit an outpatient claim. If the hospital wishes to change the status, it must be done prior to discharge and the patient, provider, and utilization review committee must agree with the status change decision. The reason for this restriction is due to potential liability for the beneficiary. Specifically, beneficiaries that are admitted as inpatients pay a onetime deductible for all services provided during their first 60 days in the hospital. They are not asked to pay for self-administered drugs and post-acute skilled nursing facility (SNF) care that may be required by Medicare, so long as the beneficiary was in the hospital as an inpatient for three days. Outpatients, however, are required to pay a copayment for each outpatient service, and self-administered drugs and SNF care are not covered by Medicare Part B.
In its proposed rule, CMS requested public comment on ways to address areas of concern regarding these policies. In response, the Academy provided specific feedback to the following CMS inquiries:
- How CMS might improve current instructions on when a patient should be admitted as an inpatient;
- Whether it is permissible for CMS to redefine “inpatient” using length of stay or other variables as the parameters in conjunction with medical necessity;
- Whether it is appropriate or useful to establish a point in time after which an encounter becomes an inpatient stay;
- Whether CMS should cap the amount of time a beneficiary can receive observation services as an outpatient; and
- Whether the use of clinical measures or prior authorization would be useful requirements for payment of an admission.
Conditions of Payment for Therapy Services in Hospitals and CAHs
In response to concerns expressed in past years’ Medicare Physician Fee Schedule (MPFS) public comments, CMS clarifies that it does not intend to establish different supervision requirements for hospitals and critical access hospitals (CAHs) under §410.27 of the regulations for physical therapy, speech language pathology, and occupational therapy services provided in the outpatient setting when furnished under a certified therapy plan of care. CMS notes that if the services are billed by the hospital or CAH as therapy services, the supervision requirements do not apply. However, CMS notes that policies, covered by §410.27 of the Medicare coverage manual, regarding supervision and other requirements do apply to physical therapy (PT), speech-language pathology (SLP), and occupational therapy (OT) services when those services are not furnished under a certified therapy plan of care (referred to as “sometimes therapy” services).
Hospital Outpatient Quality Reporting (OQR) Program
As established in previous rules, hospitals will continue to face a 2 percentage point reduction to their OPD fee schedule update for failure to report on quality measures in the OQR Program. Program measures can be accessed at www.QualityNet.org.
Ambulatory Surgical Center (ASC) Key Provisions
Background on ASCs
Covered surgical procedures in the ASC setting are defined as procedures that would not be expected to pose a significant risk to beneficiaries safety when performed in an ASC and that would not be expected to require active medical monitoring and care at midnight following the procedure. CMS reviews the ASC payment system to implement applicable statutory requirements and changes arising from continuing experience with this system on an annual basis. In the proposed rule, CMS proposes relative payment weights and payment amounts for services furnished in ASCs, and other rate setting information for the CY 2012 ASC payment system.
ASC 2013 Proposed Payment Rates
For CY 2013, CMS proposes a 1.3 percent increase to the ASC conversion factor in CY 2013. This results in a proposed increase in the conversion factor from $42.627 in 2012 to $43.190 in 2013.
Surgical Procedures Designated as Office-Based
Annually, CMS proposes to update payments for office-based procedures and device-intensive procedures using its previously established methodology. Office-based procedures are defined as surgical procedures, which are utilized more than 50 percent in the physicians’ office. For CY 2013, CMS is proposing, based on their review of CY 2011 utilization data, to permanently designate six covered surgical procedures as “office-based” within the ASC setting. Most notably, three of those codes are nasal/sinus endoscopy procedures (CPT codes 31295, 31296, and 31297). This means that CMS will pay for these procedures at the lesser of the proposed 2013 MPFS nonfacility Practice Expense (PE) RVU amount, or the proposed 2013 ASC payment amount.
ASC Quality Reporting Program
In 2012, CMS finalized the implementation of an ASC quality-reporting program (ASCQR), which will begin October 2012. Quality measures have been adopted for the calendar years (2014-2016) and payment penalties will take effect in 2014, using 2012 data. ASCs must submit data on the claims-based quality measures by including the appropriate Quality Data Code (QDC) on their Medicare claims. ASC’s that fail to properly report their data will receive a two percent payment penalty. Quality measures can be found at www.Qualitynet.org.
To access the Academy’s full summary of the proposed requirements for the programs highlighted above, visit the Academy’s CMS Regulations and Comment letter page at http://www.entnet.org/Practice/Summaries-of-Regulations-and-Comment-Letters.cfm#CL or email Academy staff at HealthPolicy@entnet.org.