CMS Issues CY 2014 Outpatient Prospective Payment System and Ambulatory Surgical Center Payment Final Rule: What Academy Members Need to Know
OPPS 2014 Final Payment Rates For Calendar Year (CY) 2014, CMS finalizes a hospital outpatient department conversion factor of $71.219. This is based on a hospital inpatient market basket rate increase of 2.5 percent, minus the proposed multifactor productivity (MFP) adjustment of -.5 percent, and the -.3 percent adjustment, which are both required under the Affordable Care Act (ACA). CMS has also proposed to continue implementing the statutory 2 percent reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting (OQR) requirements. Updates Affecting OPPS Payments In CY 2014, CMS has continued the changes made in 2013 to base the relative weights on geometric mean costs rather than previously utilized median costs. It will continue to use these weights to set a cost to charge ratio within an APC to determine payment for services within an APC. In CY 2014, CMS finalizes several significant changes to their methodology to calculate APC payments, including: Greatly expanding the types of services that are packaged and not paid separately; Replacing the current five levels of visit codes for clinic visits with a single new alphanumeric Level II HCPCS code representing one level of payment for all clinic visits; the final rule maintains current codes for Type A emergency department (ED) and Type B ED visits; Using distinct cost-to-charge ratios (CCRs) for cardiac catheterization, CT scan, and MRI to calculate the relative payment weights; and Effective January 1, 2015, establishing comprehensive APCs for 29 device-dependent services and make a single payment for the comprehensive service based on all OPPS-payable charges on the claim. To see a complete list of APCs and the influence on their payment rates, see Addendum B: http://www.entnet.org/Practice/loader.cfm?csModule=security/getfile&pageid=180429 Changes to APC Assignments Affecting Head and Neck Surgery Within the final rule, CMS makes several changes to APC assignments for otolaryngology services, including assigning new CPT code 64617 Chemodenervation of Larynx to APC 0206 with a 2014 APC payment rate of $353.99. Further, CMS modifies the APC assignment of CPT 31571 Direct Laryngoscopy from APC 0075 to 0074, representing a change in reimbursement from $2,026.82 in 2013 to $1,880.43 in 2014. Similarly, CMS modified APC assignments for Balloon Sinus Codes CPT 31295 and 31296 to assign them to APC 0075 in CY 2014 and for 31297 and 31541 from APC 0075 to 0074 for 2014. This results in a change in payment for 31295 and 31296 from $2,026.82 in 2013 to $3,051.76 in 2014 and from $2,026.82 in 2013 for CPT 31297 and 31541 to $1,880.43 in CY 2014. OPPS Payment for Hospital Outpatient Visits For CY 2014, CMS establishes a single visit code for hospital clinics, replacing the five visit levels used in the OPPS since 2007. The mid-level clinic visit, APC 606, has been the most frequently used outpatient hospital visit code. Under the final rule, the new single level clinic visit, APC 0634, would have a base payment rate of $92.53 in 2014, a reduction of about 4.6 percent compared to the current payment rate of $96.96 for the mid-level clinic visit (APC 606). They believe a policy that recognizes a single visit level for clinic visits under the OPPS is appropriate for several reasons, including: The policy is in line with their goal of using larger payment bundles to maximize hospitals’ incentives to provide care in the most efficient manner. The policy will remove any incentives hospitals may have to provide medically unnecessary services or expend additional, unnecessary resources to achieve a higher level of visit payment under the OPPS. The policy will reduce hospitals’ administrative burden by eliminating the need for them to develop and apply their own internal guidelines to differentiate among five levels of resource use for every clinic visit they provide, and by eliminating the need to distinguish between new and established patients. Lastly, they believe that removing the differentiation among five levels of intensity for each visit will eliminate any incentive for hospitals to “upcode” patients whose visits do not fall clearly into one category or another. Supervision of Outpatient Therapeutic Services in CAHs and Small Rural Hospitals CMS ends its non-enforcement policy requiring direct supervision of outpatient therapeutic services in CAHs and small rural hospitals; thus, for years beginning with 2014, CAHs and small rural hospitals have to comply with the CMS supervision policy which requires direct supervision of therapeutic services, except for those that CMS identifies as appropriate for general supervision. CMS believes that it is appropriate to let this grace period expire to ensure the quality and safety of hospital and CAH outpatient therapeutic services provided by Medicare. Supervision for Observation Services In addition, CMS clarified that for observation services, if the supervising physician or appropriate non-physician practitioner determines and documents in the medical record that the beneficiary is stable and may be transitioned to general supervision, general supervision may be furnished for the duration of the service. Medicare does not require an additional initiation period(s) of direct supervision during the service. CMS believes that this clarification will assist hospitals in furnishing the required supervision of observation services without undue burden on their staff. Hospital Outpatient Quality Reporting (OQR) Program As established in previous rules, hospitals will continue to face a 2 percent reduction to their OPD fee schedule update for failure to report on quality measures in the OQR Program in CY 2014. Program measures can be accessed at www.QualityNet.org. In its final rule, CMS reiterates its intention that the hospital OQR program will transition to the use of certified EHR technology for submission of data on those measures that require information from the clinical record. CMS estimates this transition will occur sometime after 2015, and notes much work remains to reach this point, including developing electronic specifications, pilot testing, reliability and validity testing, etc. ASC 2014 Final Payment Rates: For CY 2014, the ASC conversion factor will increase 1.2 percent—this reflects the updated consumer price index (CPI-U) (a consumer price index for all urban consumers) of 1.7 percent, minus the projected multifactor productivity adjustment of -0.5 percent required by the ACA, and results in a proposed increase in the conversion factor from $42.917 in 2013 to $43.471 in 2014. New ASC Covered Surgical Procedures for 2014 CMS approves four new procedures for coverage in the ASC setting in CY 2014. Notably, two of these procedures are commonly performed by ENTs: CPT 60240 thyroidectomy, total or complete and 60500 Parathyroidectomy or exploration of parathyroid(s). Both codes were assigned an ASC payment indicator of G2, meaning: Non office-based surgical procedure added to ASC list in CY 2008 or later; payment based on OPPS relative payment weight. CMS also flags new CPT code 64617 Chemodenervation of larynx as temporarily office-based for CY 2014 and assigns it a payment indicator of P3, meaning the payment rate is capped at the MPFS practice expense rate. 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 used more than 50 percent in the physicians’ offices. For CY 2014, CMS permanently identified three additional procedures as office-based and has reviewed information for the eight procedures finalized for temporary office-based status last year. None of the services discussed relate to our specialty. The Academy, however, continues to track policy change in this area as several ENT services were added to this list in 2013 rulemaking. ASC Quality Reporting Program: In 2012, CMS finalized the implementation of an ASC quality-reporting program (ASCQR), which will begin with 2014 payment determination. Quality measures have been adopted for the calendar years 2014-2016. Payment penalties for ASCs who do not adequately report will remain at 2 percent. Penalties will be applied in CY 2016 payments based on 2014 reporting. Quality measures can be found at www.Qualitynet.org. For more information on the final rule access the Academy’s full summaries of OPPS and ASC finalized requirements at http://www.entnet.org/Practice/Summaries-of-Regulations-and-Comment-Letters.cfm#CMSRegs or email questions to Academy health policy staff at HealthPolicy@entnet.org.
OPPS 2014 Final Payment Rates
For Calendar Year (CY) 2014, CMS finalizes a hospital outpatient department conversion factor of $71.219. This is based on a hospital inpatient market basket rate increase of 2.5 percent, minus the proposed multifactor productivity (MFP) adjustment of -.5 percent, and the -.3 percent adjustment, which are both required under the Affordable Care Act (ACA). CMS has also proposed to continue implementing the statutory 2 percent reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting (OQR) requirements.
Updates Affecting OPPS Payments
In CY 2014, CMS has continued the changes made in 2013 to base the relative weights on geometric mean costs rather than previously utilized median costs. It will continue to use these weights to set a cost to charge ratio within an APC to determine payment for services within an APC. In CY 2014, CMS finalizes several significant changes to their methodology to calculate APC payments, including:
- Greatly expanding the types of services that are packaged and not paid separately;
- Replacing the current five levels of visit codes for clinic visits with a single new alphanumeric Level II HCPCS code representing one level of payment for all clinic visits; the final rule maintains current codes for Type A emergency department (ED) and Type B ED visits;
- Using distinct cost-to-charge ratios (CCRs) for cardiac catheterization, CT scan, and MRI to calculate the relative payment weights; and
- Effective January 1, 2015, establishing comprehensive APCs for 29 device-dependent services and make a single payment for the comprehensive service based on all OPPS-payable charges on the claim.
To see a complete list of APCs and the influence on their payment rates, see Addendum B: http://www.entnet.org/Practice/loader.cfm?csModule=security/getfile&pageid=180429
Changes to APC Assignments Affecting Head and Neck Surgery
Within the final rule, CMS makes several changes to APC assignments for otolaryngology services, including assigning new CPT code 64617 Chemodenervation of Larynx to APC 0206 with a 2014 APC payment rate of $353.99. Further, CMS modifies the APC assignment of CPT 31571 Direct Laryngoscopy from APC 0075 to 0074, representing a change in reimbursement from $2,026.82 in 2013 to $1,880.43 in 2014. Similarly, CMS modified APC assignments for Balloon Sinus Codes CPT 31295 and 31296 to assign them to APC 0075 in CY 2014 and for 31297 and 31541 from APC 0075 to 0074 for 2014. This results in a change in payment for 31295 and 31296 from $2,026.82 in 2013 to $3,051.76 in 2014 and from $2,026.82 in 2013 for CPT 31297 and 31541 to $1,880.43 in CY 2014.
OPPS Payment for Hospital Outpatient Visits
For CY 2014, CMS establishes a single visit code for hospital clinics, replacing the five visit levels used in the OPPS since 2007. The mid-level clinic visit, APC 606, has been the most frequently used outpatient hospital visit code. Under the final rule, the new single level clinic visit, APC 0634, would have a base payment rate of $92.53 in 2014, a reduction of about 4.6 percent compared to the current payment rate of $96.96 for the mid-level clinic visit (APC 606). They believe a policy that recognizes a single visit level for clinic visits under the OPPS is appropriate for several reasons, including:
- The policy is in line with their goal of using larger payment bundles to maximize hospitals’ incentives to provide care in the most efficient manner.
- The policy will remove any incentives hospitals may have to provide medically unnecessary services or expend additional, unnecessary resources to achieve a higher level of visit payment under the OPPS.
- The policy will reduce hospitals’ administrative burden by eliminating the need for them to develop and apply their own internal guidelines to differentiate among five levels of resource use for every clinic visit they provide, and by eliminating the need to distinguish between new and established patients.
- Lastly, they believe that removing the differentiation among five levels of intensity for each visit will eliminate any incentive for hospitals to “upcode” patients whose visits do not fall clearly into one category or another.
Supervision of Outpatient Therapeutic Services in CAHs and Small Rural Hospitals
CMS ends its non-enforcement policy requiring direct supervision of outpatient therapeutic services in CAHs and small rural hospitals; thus, for years beginning with 2014, CAHs and small rural hospitals have to comply with the CMS supervision policy which requires direct supervision of therapeutic services, except for those that CMS identifies as appropriate for general supervision. CMS believes that it is appropriate to let this grace period expire to ensure the quality and safety of hospital and CAH outpatient therapeutic services provided by Medicare.
Supervision for Observation Services
In addition, CMS clarified that for observation services, if the supervising physician or appropriate non-physician practitioner determines and documents in the medical record that the beneficiary is stable and may be transitioned to general supervision, general supervision may be furnished for the duration of the service. Medicare does not require an additional initiation period(s) of direct supervision during the service. CMS believes that this clarification will assist hospitals in furnishing the required supervision of observation services without undue burden on their staff.
Hospital Outpatient Quality Reporting (OQR) Program
As established in previous rules, hospitals will continue to face a 2 percent reduction to their OPD fee schedule update for failure to report on quality measures in the OQR Program in CY 2014. Program measures can be accessed at www.QualityNet.org. In its final rule, CMS reiterates its intention that the hospital OQR program will transition to the use of certified EHR technology for submission of data on those measures that require information from the clinical record. CMS estimates this transition will occur sometime after 2015, and notes much work remains to reach this point, including developing electronic specifications, pilot testing, reliability and validity testing, etc.
ASC 2014 Final Payment Rates:
For CY 2014, the ASC conversion factor will increase 1.2 percent—this reflects the updated consumer price index (CPI-U) (a consumer price index for all urban consumers) of 1.7 percent, minus the projected multifactor productivity adjustment of -0.5 percent required by the ACA, and results in a proposed increase in the conversion factor from $42.917 in 2013 to $43.471 in 2014.
New ASC Covered Surgical Procedures for 2014
CMS approves four new procedures for coverage in the ASC setting in CY 2014. Notably, two of these procedures are commonly performed by ENTs: CPT 60240 thyroidectomy, total or complete and 60500 Parathyroidectomy or exploration of parathyroid(s). Both codes were assigned an ASC payment indicator of G2, meaning: Non office-based surgical procedure added to ASC list in CY 2008 or later; payment based on OPPS relative payment weight. CMS also flags new CPT code 64617 Chemodenervation of larynx as temporarily office-based for CY 2014 and assigns it a payment indicator of P3, meaning the payment rate is capped at the MPFS practice expense rate.
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 used more than 50 percent in the physicians’ offices. For CY 2014, CMS permanently identified three additional procedures as office-based and has reviewed information for the eight procedures finalized for temporary office-based status last year. None of the services discussed relate to our specialty. The Academy, however, continues to track policy change in this area as several ENT services were added to this list in 2013 rulemaking.
ASC Quality Reporting Program:
In 2012, CMS finalized the implementation of an ASC quality-reporting program (ASCQR), which will begin with 2014 payment determination. Quality measures have been adopted for the calendar years 2014-2016. Payment penalties for ASCs who do not adequately report will remain at 2 percent. Penalties will be applied in CY 2016 payments based on 2014 reporting. Quality measures can be found at www.Qualitynet.org.
For more information on the final rule access the Academy’s full summaries of OPPS and ASC finalized requirements at http://www.entnet.org/Practice/Summaries-of-Regulations-and-Comment-Letters.cfm#CMSRegs or email questions to Academy health policy staff at HealthPolicy@entnet.org.