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CMS Releases CY 2014 OPPS Proposed Rule to Influence Hospitals and Outpatient Providers

On July 9, 2013, the Centers for Medicare and Medicaid Services (CMS) issued the 2014 Hospital Outpatient Prospective Payment System (OPPS) proposed rule (CMS -1601-P). This 718 page document advocates for a shift in the Medicare OPPS and Medicare ambulatory surgical center (ASC) payment system to foster payment efficiency. In the United States, over 4,000 hospitals are paid through the OPPS and close to 5,000 Medicare-participating ASCs are paid though the ASC payment system.

According to the proposed rule, the statutorily mandated proposition (by Section 1833(t) of the Social Security Act) aims “to implement applicable statutory requirements and changes arising from… continuing experience with these systems.” Policies, provisions, and program requirements CMS wishes to update and refine include:

• Payment weights and conversion factors for services payable under OPPS • ASC payment rates • Hospital Outpatient Quality Reporting (OQR) Program • ASC Quality Reporting (ASCQR) Program • Hospital Value-Based Purchasing (VBP) Program • Conditions for coverage (CfCs) for organ procurement organizations (OPOs)
• Quality Improvement Organization (QIO) regulation revisions • Medicare fee-for-service Electronic Health Record (HER) Incentive Program • Provider reimbursement determinations and appeals changes

Key provisions include replacing 29 existing device-dependent ambulatory payment classification (APC) codes with 29 “comprehensive APCs” for costly device-dependent services, streamlining the current five outpatient visit code levels to a single code level (thus removing payment differentials), and applying the physician supervision requirement to critical-access hospitals (CAHs) for patients under outpatient therapeutic care (which had previously been waived for CAHs).

CMS’s proposed rule will affect a wide range of providers and ways in which the proposed bill changes hospital billing is multi-faceted. A comprehensive APC system would provide all-inclusive payments by bundling the different device installation services. CMS is proposing that comprehensive APCs would “improve the accuracy and transparency of our payments for these services where the cost of the device is large compared to the other costs that contribute to the cost of service.” CMS believes that this proposed system would support their goal of increasing flexibility and efficiencies.

In addition, the proposed rule would change hospital billing for outpatient services. If finalized in its current form, the proposed rule will change how hospitals document outpatient visits. Rather than recognizing five levels of Evaluation and Management (E/M) of clinic and emergency department (ED) visits, CMS proposes to create three new Level II HCPCS codes to describe all levels of each type of clinic, Type A ED visit and Type B ED visit. In documenting all clinic and ED departments with single G codes, effectively removing the payment differentials in hospital billing for outpatient services, simple issues and complex issues will be equally reimbursed. This proposed change may benefit clinics treating healthier populations, but may disadvantage ERs treating an older or sicker population or regularly treating serious trauma.

The proposed rule addresses the physician supervision requirement for CAHs. CMS’s proposed policy change in CAH physician supervision revisits CMS’s non-enforcement of a final rule mandating supervision requirements for therapeutic services provided to outpatients in CAHs. After giving CAHs 2 years of “adequate opportunity to become familiar with the new independent review process and submit evaluation requests, and to meet the required supervision levels for all hospital outpatient therapeutic services,” CMS proposes CY 2013 to be the last year of non-enforcement of the supervision requirement.

Comments on the proposed rule are due by September 6, 2013 and may be submitted to the Federal Register here. CMS will respond to comments and release the final rule by November 1, 2013, 60 days prior to its implementation on January 1, 2014. If you have any questions regarding CMS’s proposed rule, how it may affect your practice, or questions regarding the OPPS or ACS payment system, please contact an experienced healthcare attorney at Wachler & Associates, P.C. at 248-544-9888.

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