CMS releases 2009 OPPS and ASC proposed rule

Bryn Evans, for HCPro, Inc. , July 8, 2008

CMS released its Outpatient Prospective Payment System (OPPS) and ambulatory surgery center (ASC) proposed rule for fiscal year (FY) 2009 on July 3, some two weeks earlier than usual. The rule includes changes for Type B emergency departments (ED) and imaging services as well as expansions to quality measures. In addition, the rule addresses proposed 2009 changes for ASCs. The 2009 OPPS proposed rule is scheduled to be published in the July 18 Federal Register. Comments on the proposed rule will be accepted through September 2. CMS will respond to comments in a final rule that it expects to release on or before November 1. Should the changes become final, they will become effective as of January 1, 2009.

Jugna Shah, MPH, president of Nimitt Consulting in Washington, DC, notes that the comment due date is much earlier than ever, just a week after the meeting of the APC Advisory Panel (which provides comment on the rule to CMS). In addition, she says, the short schedule increases pressure on hospitals with many people out on vacation to read and comment on the rule. "It's really a short amount of time."

Payment reduction for failure to report quality measures
Hospitals reporting required outpatient quality measures in 2009 would receive a 2% inflation update. Hospitals that do not report these measures will not receive this update. CMS is also proposing to reduce the beneficiary co-payment amount for services in hospitals that have not met their reporting requirements.

CMS requests comment on 18 other quality measures for potential inclusion at a future date. Among the measures are emergency department processes, screening for fall risk, and management of such clinical conditions as depression, osteoporosis, asthma, and community-acquired pneumonia.

Under the proposed rule, CMS will put a data validation program into service for hospital quality data, effective January 2009. The proposed approach selects 800 reporting hospitals and validates reported data using 50 records per selected hospital annually.

New APCs for some Type B ED visits
Currently, CMS pays for emergency visits provided in Type B EDs, which offer emergency-level services but are not open 24 hours per day, 7 days per week, at the same rate as a non-emergency visit to an outpatient department. CMS data now shows that most Type B emergency visits are more expensive than clinic visits, but are less expensive than Type A ED visits. The proposed rule creates four new APCs for Type B ED visits, paid based on claims data from these providers.

CMS has also proposed to pay for the most intensive emergency visits using a single APC on the premise that costs for these are similar in both Type A and B emergency departments. These changes appear positive for hospitals, Shah says.

Changes in imaging services payments
The OPPS proposed rule proposes a single payment for certain multiple imaging services when provided in one session. These include:

  • Ultrasound
  • Computed tomography (CT) and computed tomographic angiography (CTA) without contrast
  • CT and CTA with contrast
  • Magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA) without contrast
  • MRI and MRA with contrast

"This is not good," says Glenn Krauss, RHIA, CCS, CCS-P, CPUR, an independent consultant in Milton, WI. "You used to get paid for two modalities [in multiple imaging services] and you got discounted on one, but now you're only going to get paid for one. [CMS] is telling us to be more efficient and think twice about ordering. What they're doing is practicing medicine."

CMS has proposed these changes in an effort to eliminate unnecessary tests, and while Krauss says that this problem exists, he asks "but what happens if it [a test] is necessary?" He also foresees the changes posing a lose-lose choice for radiology departments. To run efficiently under the new rule, radiology departments must change their ordering patterns—but doing so may catch CMS' attention, Krauss says.

Other changes
Other changes in the 2009 OPPS proposed rule include the following:

  • Partial Hospitalization Program (PHP) payments. Two separate PHP rates make their appearance under the proposed rule: one for days with three services ($140) and one for days with four or more services ($174).
  • Drug payments. CMS proposes paying for separately payable drugs and biologicals based on hospitals' reported costs at the average sales price (ASP) plus 4%, and plans changes to the hospital Medicare cost report for drugs and biologicals.

    Shah calls the decrease in drug payments (from ASP plus 5%) a huge development. "What [CMS] expected to do—and what they told us last year—with drug reimbursement was that it was going to continue to be ratcheted down. In the proposed rule, that's what we're seeing." Shah is encouraged to see that CMS seems to have recognized that cost data needs to be collected differently for high cost and low cost drugs. "This is something we've been trying to get CMS to understand over the years," she says. "While the current proposal falls short of what I'd hoped to see for improved drug reimbursement, it is heartening to see that CMS recognizes that drug charges, and hence cost data, need to be collected in a different manner going forward."

  • Therapeutic radiopharmaceuticals. Shah says that CMS is proposing to pay for therapeutic radiopharmaceuticals using ASP data if it is available. If it is not, then CMS will use claims data to set payment rates rather than continuing to pay hospital costs.
  • Drug administration. CMS has proposed a five-level APC structure for 2009 drug administration (e.g., injections/ infusions) services to more appropriately reflect their resource utilization in APCs that also group clinically similar services. Currently, CMS pays for drug administration under six APCs. You can find the newly proposed APCs in Table 30 of the proposed rule.

ASC payments still changing
In addition to its proposed coding, billing, and payment changes for hospital outpatient services, the proposed rule also includes the 2009 proposed changes for ASCs. The ASC proposed rule continues the move to the new ASC payment rates, with ASC services paid at a 50/50 blend of the 2007 ASC payment and the 2009 ASC payment (i.e., 65% of the hospital outpatient rate). The update to ASC rates is the second year of a four-year transition to align these rates with those paid to hospital outpatient departments and minimize the impact of financial incentives on decisions about treatment settings.

How beneficial are the changes for ASCs? "On a preliminary basis, the proposed rule could offer some partial offset to rising ASC expenses," says Justine B. Corday, Chief Development Officer at Physicians Health Resources in Chicago. "However, it's unclear whether it would allow the lowest rate procedure reimbursements any benefit."

The statutory co-payment (under Medicare law, not to exceed 40% of the total payment for the APC) is also still in transition. CMS is gradually replacing it with 20% coinsurance as payment rates for the APCs increase. CMS expects that the beneficiary share of the proposed total payments for Medicare covered outpatient services will be about 23% in CY 2009.

Editor's note: To view the OPPS/ASC proposed rule for 2009, visit

Bryn Evans is a Managing Editor with HCPro, Inc., and may be reached at

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