Today, CMS issued proposed changes to the Hospital Outpatient Prospective Payment System and CY 2008 rates, as well as proposed changes to the ASC payment system and CY 2008 rates

Peruse the text of the 2008 HOPPS regulations and ASC regulations, HOPPS fact sheet, and the ASC fact sheet.  Here are just a few highlights to whet your appetite.

Regarding hospital outpatient PPS, CMS says:

The proposed reforms in this rule address . . . growth [in hospital outpatient costs and volume] by focusing the OPPS on value-based purchasing, proposing incentives to improve quality and promote efficiency. Specifically, this rule includes an expansion of CMS’ efforts to measure and reward quality through the adoption of quality measures specific to the HOPD.  This rule also encourages efficiencies by focusing provider attention on how hospital outpatient services are provided, proposing larger payment bundles that would give hospitals greater flexibility in managing their resources.  Both efforts focus on value, working to contain growth in OPPS expenditures, to improve quality, and ultimately, to make health care more affordable and accessible for Medicare beneficiaries.

. . .

In this rule, CMS is proposing new measures that are specific to hospital outpatient services.  Hospitals that fail to report data for these outpatient-specific measures would incur a reduction in their annual OPPS payment update factor in CY 2009 by 2.0 percentage points. This proposal encourages value by tying the payment incentives to participation in quality reporting.  A similar quality reporting program for hospital inpatient services, implemented in fiscal year (FY) 2005 has been overwhelmingly successful.  Fewer than four percent of hospitals did not receive the full IPPS update amount for FY 2007 because they failed to report quality measures.

There will be ten measures initially; additional measures to be rolled out in the future, as is happening now in the wonderful world of PQRI.  CMS is seeking comments on the next 30 measures. 

The first ten proposed quality measures include five ED acute MI transfer measures, two surgical care improvement measures, and one measure each for the treatment of heart failure, community-acquired pneumonia, and diabetes.

Here is the ASC overview per the fact sheet:

The final and proposed rules are intended to encourage quality and efficient care in the most appropriate outpatient setting given the rapid spending growth for services and the large variations in the use of services.

Translation from CMS-speak:  Generally speaking, ASC reimbursement is being cut by about 1/3; cuts to be phased in over four years. 

Other ASC highlights include a tweak to the Stark rules:

The final rule provides for Medicare to pay ASCs separately for covered ancillary services that are provided in an ASC to beneficiaries. To be eligible for payment, the services must be integral to covered surgical procedures and must be provided immediately before, during or immediately after a covered procedure. Covered ancillary services that are eligible for separate payment include: radiology services, drugs and biologicals that are separately payable under the OPPS, devices that are eligible for pass-through payments under the OPPS, brachytherapy sources, and corneal tissue acquisition.

CMS is not proposing to change these policies in the OPPS/ASC proposed rule for CY 2008, but is proposing to revise the Stark Law definitions of “radiology and certain other imaging services” and “outpatient prescription drugs” to exclude those radiology services, and imaging services, and drugs that are covered ancillary services. Therefore, physicians would be permitted to refer these services to ASCs in which they had a financial interest, and the ASCs would be permitted to bill Medicare for these services, without violating the self-referral prohibitions.

Under the final rule, payment for a covered ancillary radiology service is made to ASCs at the lesser of the ASC rate or the amount of the nonfacility PE under the MPFS. To ensure that no duplicate payment is made, only ASCs may receive separate payment for the facility resources required for the covered ancillary radiology services provided in ASCs. This policy will ensure that payment for all ancillary radiology services, whether packaged or separate, is made to the ASC, thereby providing appropriate payment to the ASC for those radiology services that are essential to the delivery of safe, high quality surgical care.

Under the applicable statute, ASC payment rates will be inflation-indexed beginning in 2010.

David Harlow