CMS Sets 2011 Hospital Outpatient, Ambulatory Surgical Center Rates

Medicare beneficiaries will see a decline in their out-of-pocket costs for services they receive in hospital outpatient departments (HOPDs) in calendar year (CY) 2011 under provisions in a final rule with comment period issued by the Centers for Medicare & Medicaid Services (CMS). The final rule with comment period updates payment rates and policies for services furnished in HOPDs and ambulatory surgical centers (ASCs), and implements changes required by the Affordable Care Act of 2010.

The Affordable Care Act – which was enacted as the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 – waives beneficiary cost-sharing for most Medicare-covered preventive services, such as screening mammograms and screening colonoscopies. This means that, for most preventive services, beneficiaries will not have to satisfy their Part B deductible before Medicare will pay. In addition, for these services, beneficiaries will not have to pay their co-payment (typically 20% of the Medicare payment amount) for the physician’s or the facility’s portion of the service.

“We hope that by eliminating these out-of-pocket costs, more beneficiaries will make full use of their Medicare preventive benefits,” said CMS administrator Donald Berwick, M.D. “We know that prevention, early detection and early treatment of diseases can promote better outcomes for patients and lower long-term health spending.”

The changes are included in a final rule with comment period which applies updates to the policies and payment rates for covered outpatient department services furnished on or after Jan. 1, 2011, by HOPDs in more than 4,000 hospitals that are paid under the Outpatient Prospective Payment System (OPPS). The final rule with comment period also updates policies and payment rates for services in approximately 5,000 Medicare-participating ASCs, under a payment system that aligns ASC payments with payments for the corresponding services in

HOPDs. CY 2011 is the first year the revised ASC payment system rates will be fully implemented based on the ASC standard ratesetting methodology. CMS projects total Medicare payments of approximately $39 billion to HOPDs and $4 billion to ASCs for CY 2011.

The final rule with comment period also implements the direct and indirect graduate medical education (GME/IME) provisions of the Affordable Care Act. The law requires CMS to identify unused residency slots and redistribute them to certain hospitals with qualified residency programs, with a special emphasis on increasing the number of primary care physicians. The law also requires CMS to redistribute residency slots from certain closed hospitals and hospitals that close down to other teaching hospitals, giving preference to hospitals in the same or a contiguous area as the closed hospital. In addition, the law specifies how hospitals should count hours a resident spends in certain training and research activities, and in patient care activities in a nonhospital setting, such as a physician’s office.

This rule also implements a provision in the Affordable Care Act prohibiting the development of new physician-owned hospitals and the expansion of existing physician-owned hospitals.

The final rule with comment period will make several other significant changes in addition to those required by the Affordable Care Act. These changes include:

– Modifying a number of the supervision requirements for outpatient therapeutic services by:

– Requiring direct physician supervision for only the initiation of certain services and allowing general supervision once the treating practitioner deems the patient medically stable. This two-tiered approach to supervision applies to a limited set of non-surgical extended duration services, including observation services.

– Extending through CY 2011 the notice of non-enforcement regarding the direct supervision requirements for outpatient therapeutic services furnished in critical access hospitals (CAHs) and expanding the scope of the notice to include small rural hospitals with 100 or fewer beds.

– Redefining direct supervision for all hospital outpatient services to require “immediate availability” without reference to the boundaries of a physical location.

– Committing to establish through future rulemaking an independent committee to consider on an annual basis industry requests for the assignment of supervision levels other than direct supervision for certain individual services and to make recommendations to the agency.

– Establishing four separate ambulatory payment classifications (APCs) for partial hospitalization programs (PHPs), two for community mental health center (CMHC) PHPs and two for hospital-based PHPs, while continuing to pay different per diem rates within each provider type depending on the number of PHP services provided each day; that is, one APC for three services and a separate one for four or more services.

– Paying for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status furnished in HOPDs at 105 percent of the manufacturers’ average sales prices.

– Expanding the set of quality measures that must be reported by HOPDs to qualify for the full annual payment update factor. The final rule with comment period lists the measure set that will apply to the CY 2012, CY 2013, and CY 2014 payment updates. This new focus on a three year time period should assist hospitals in preparing for the changing reporting requirements and targeting their quality improvement efforts.

The CY 2011 OPPS/ASC final rule with comment period will appear in the Nov. 24, 2010 Federal Register. Comments on designated provisions are due by 5:00 p.m. EST on Jan. 3, 2011. CMS will respond to comments in the CY 2012 OPPS/ASC final rule.

For more information on the final CY 2011 policies for the OPPS and ASC payment system, please see the CMS Web site.


Centers for Medicare & Medicaid Services

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