CMS Updates Rule for Hospital Outpatients and Guidelines for SGR

The Centers for Medicare & Medicaid Services (CMS) issued a final rule with comment period (final rule) that will update payment policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) beginning Jan. 1, 2012.  In addition to establishing payment rates for calendar year (CY) 2012, the final rule: 

• Expands the measures to be reported under the Hospital Outpatient Quality Reporting Program
• Creates a new quality reporting program for ASCs, and
• Strengthens the Hospital Value-based Purchasing (Hospital VBP) program that will affect payments to hospitals for inpatient stays beginning Oct. 1 2012 

CMS will accept comments on issues open for comment by Jan. 3, 2012, and will respond to them in the CY 2013 rule.  Click here for the CMS fact sheet. 

The final rule also establishes an electronic reporting pilot that will allow additional hospitals, including critical access hospitals (CAHs), to report clinical quality measures in CY 2012 for purposes of participating in the Medicare Electronic Health Record Incentive Program. 

The hospital outpatient prospective payment system (OPPS) will increase payment rates by 1.9 percent, effective Jan. 1, 2012.  CMS estimates that payments will total $41.1 billion for 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 under the OPPS rule. 

Cancer hospitals specifically will see increased payments of 11.3 percent (approximately $71 million), according to a CMS press release.  CMS also estimates that 5,000 ASCs will see a 1.6 percent increase (total of $3.5 billion) in payments.   

The final rule also establishes a quality reporting program for ASCs and adopts five quality measures, including four outcome measures and one surgical infection control measure beginning in CY 2012 for the CY 2014 payment determination.  The final rule adds two structural measures for reporting beginning in CY 2013 for the CY 2015 and CY 2016 payment determinations – one for safe surgery checklist use, and one for ASC facility volume data on selected ASC surgical procedures. 

“The CMS is committed to the goal of improving the quality and safety of care in all settings for all patients,” said CMS Administrator Donald M. Berwick, M.D.  “Using the tools made available under the Affordable Care Act, CMS is moving aggressively to reform the payment and health care delivery systems to provide better care at lower costs through improvement.” 

“This is marginally good news, but it is certainly not a game changer by any stretch of the imagination,” said Arthur Henderson, an analyst at Jefferies & Co. Inc. in Nashville, Tenn., according to Bloomberg.  

In addition, under the final rule, CMS announced revised program requirements for the hospital value-based purchasing program that will affect inpatient payments, effective Oct. 1, 2012. CMS added one clinical process measure to guard against infections due to urinary catheters and established the weighting, performance periods, and performance standards for the clinical process, patient experience, and outcomes measures for fiscal year 2014. 

Notably absent from the program requirements were hospital-acquired condition measures, Agency for Healthcare Research and Quality composite measures, or the efficiency measure.

American Hospital Association Executive Vice President Rick Pollack responded, “We are pleased that CMS responded to the concerns of hospitals. Congress had established a specific process for CMS to follow for the VBP program. … We commend CMS for recognizing that this process is important to protect hospitals and their patients from flawed measures.” 

In response to concerns that Medicare’s requirement for direct physician supervision of outpatient hospital therapeutic services could hinder access for beneficiaries specifically in rural areas, the final rule establishes an independent advisory review process to consider requests that specific outpatient services be subject to a level of supervision other than direct supervision. 

Under this process, CMS will seek recommendations from Ambulatory Payment Classification (APC) Advisory Panel about appropriate supervision requirements.  This panel was created to provide technical advice and recommendations to CMS about assigning items and services furnished in hospital outpatient departments to appropriate payment classifications.  

CMS will add two small rural PPS hospital members and two CAH members to represent their interests to the Panel so that all hospitals subject to the supervision rules for payment of outpatient therapeutic services will be represented.  Since CAHs are not paid under the OPPS, CAH representatives would not participate in deliberations about APC assignments.  Other provisions of the final rule will: 

• Pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals, other than new drugs and biologicals that have pass-through status, at the average sales price (ASP) plus 4 percent.

• Pay for partial hospitalization (PHP) services in hospital-based PHPs and community mental health centers (CMHCs) based on the unique cost-structures of each type of program.  For both types of providers, CMS is proposing to finalize the proposal to update the 4 PHP per diem payment rates based on median costs calculated using most recent claims data for each provider type.

• Increase the number of measures for reporting in CY 2012 and CY 2013 for purposes of the CY 2014 and CY 2015 payment determinations, and would modify the process for selecting hospitals for validating reported chart-abstracted measures that was adopted for CY 2012 in the CY 2011 OPPS rule. 

CMS SGR Formula 

Last week, it was also announced that the final physician payment rule for 2012 will cut Medicare payments to doctors by 27.4% starting Jan. 1, 2012.  The agency acknowledged, however, that the cut likely would not go into effect. 

“This is the eleventh time the SGR formula has resulted in a payment cut, although the cuts have been averted through legislation in all but CY 2002,” the statement said, acknowledging, however, that the agency is “required to issue a final rule that reflects current law.” 

Medpage today noted that, “CMS had previously projected the 2012 rates would be cut nearly 30%, so the reduction announced Tuesday is lower than expected, largely because Medicare spending has been slower than expected.” 

The Obama administration said it won’t allow the cuts to happen.  “We have not and will not let deep cuts to doctors’ payments occur,” Health and Human Services Secretary Kathleen Sebelius said in a statement. “The Obama administration is 100 percent committed to fixing the flawed Medicare payment system and protecting Medicare beneficiaries’ access to doctors.”  She urged Congress to pass another so-called “doc fix” bill to avert the cuts. 

“The release of the Medicare physician fee schedule rule serves as a reminder to Congress that there is a looming crisis in the Medicare program only they can stop, and the clock is ticking,” Peter Carmel, MD, president of the American Medical Association, said in a press release. “Many physicians are already struggling with inadequate Medicare payment rates and the ongoing threat of future cuts from this broken physician payment formula.” 

The American College of Physicians urged Congress to “go big” and permanently end the SGR, reforming how doctors are paid under Medicare. The cut would create “devastating access problems for patients” ACP president Virginia Hood, MBBS, said in a statement. 

Medpage today noted that, “CMS projected that total payments under the physician fee schedule in 2012 will be approximately $80 billion.  The total cost of repealing the SGR has been estimated at $300 billion over 10 years.”