Medicare Compliance & Reimbursement

CMS is concerned about the 12-percent jump in hospital outpatient expenditures.

Although you may get excited about the overall average 3-percent increase in Medicare payments for outpatient services in calendar year (CY) 2007, you may not like some of the hoops that the Centers for Medicare & Medicaid Services (CMS) will make you jump through to get that reimbursement boost.

In the agency's final rule for Medicare hospital-outpatient payments in CY 2007, CMS has laid out some substantial changes for general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, cancer hospitals and critical access hospitals. Among those changes is a 3.4-percent market basket update to payments that Medicare pays out under the hospital outpatient prospective payment system (OPPS), CMS announced on Nov. 1.

And CMS is boosting your payments under the OPPS despite the 12-percent increase in hospital outpatient expenditures between 2005 and 2006, which the agency attributes to increased utilization and complexity of outpatient services. CMS is estimating a 9.2-percent increase in expenditures between CY 2006 and 2007, according to the announcement. "That rate of growth in expenditures is of great concern to CMS, not only because of its impact on all taxpayers, but especially on beneficiaries whose monthly premiums cover 25 percent of Part B expenditures," the agency notes.

Get Ready: Quality Reporting Takes Over Hospital OPPS, IPPS

In an effort to wrangle soaring hospital expenditures, CMS says that it will tie CY 2009 OPPS payments to quality reporting. CMS plans to develop additional quality measures that are specific to outpatient care and have hospitals report on those measures beginning in CY 2009, the final rule states.

Further, the final rule includes expanded quality measures under the hospital inpatient prospective payment system (IPPS) for CY 2008. "Under the final rule, hospitals would, for the first time, be required to report consistent measures on patient satisfaction with hospital care to receive a full IPPS payment update," CMS says.

Other big changes under the final rule for hospitals' OPPS in CY 2007 include:

• Five new HCPCS codes are now available for hospital emergency visits in part-time dedicated emergency departments (DEDs) that are subject to the Emergency Medical Treatment and Labor Act but don't meet CPT's definition of an emergency department. "The new codes would enable CMS to gather data to determine the relative resource costs of the services provided in these entities," the agency explains. "While gathering hospital cost data, CMS will pay for the new DED visit codes at the payment levels set for clinic visits."

• Under the Ambulatory Payment Classification system, CMS will allow hospitals to report the same CPT codes for drug administration that physicians and other payers use. The agency will also pay hospitals separately for infusion hours that are in addition to the initial hour of infusion. "As a result, hospitals will be paid more accurately for complex and lengthy drug administration services, while also receiving more appropriate payments for individual services when provided alone," CMS points out.

• CMS will reduce per-diem payment for partial hospitalization services in hospitals' and Community Mental Health Centers' outpatient departments by 5 percent. The agency had originally planned to reduce per-diem payments by 15 percent, "to reflect decreases in costs reported by these programs" in the proposed rule, but it then reduced the percentage based on public comments.

• The final rule changes the conditions of participation for critical access hospitals (CAHs) to "allow CAHs to include a registered nurse that is on site at the CAH as one of the qualified medical personnel available to perform an emergency medical screening," CMS notes. But the patient's request for medical care must be within the RN's scope of practice, applicable to state laws, the agency adds.

• Hospitals will begin transitioning their claims submissions for outpatient services from fiscal intermediaries and carriers to the new Medicare Administrative Contractors.

• Ambulatory surgical centers (ASCs) will have 19 new procedures on the ASC list in CY 2007.

• Medicare won't pay more for surgical procedures performed in ASCs versus the same procedures performed in hospital outpatient departments, effective for CY 2007.

"This provision will result in decreased payment for approximately 280 procedures on the ASC list," CMS says.

The final OPPS rule is on display on the Federal Register, and CMS posted the final rule on its Web site at: www.cms.hhs.gov/HospitalOutpatientPPS/01_overview.asp. The rule is effective for ASC and outpatient services on or after Jan. 1, 2007.