United States: CMS Issues Final Medicare OPPS, ASC Policies For 2014

Last Updated: December 11 2013
Article by Debra A. McCurdy

On December 10, 2013, CMS published a final rule that updates Medicare payment and other policies under the hospital outpatient prospective payment system (OPPS) and the ambulatory surgical center (ASC) prospective payment system (PPS) for calendar year (CY) 2014. Key provisions of the final rule include the following:

  • CMS is increasing OPPS rates by 1.7% for 2014, which reflects a 2.5% hospital market basket increase, minus a 0.5% multifactor productivity (MFP) adjustment and an additional 0.3% reduction (both mandated by the Affordable Care Act, or ACA). The OPPS update is subject to other adjustments, including a 2% reduction for hospitals that do not meet quality reporting requirements.
  • CMS is adopting a revised version of its proposal to establish larger payment bundles to maximize hospitals' incentives to provide care in an efficient manner. Specifically, CMS will package the following five new categories of supporting items and services into the procedural ambulatory payment classification (APC) payment: (1) drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; (2) drugs and biologicals that function as supplies or devices when used in a surgical procedure; (3) certain clinical diagnostic laboratory tests; (4) procedures described by add-on codes (except for add-on codes for drug administration services and, for CY 2014 only, add-on codes assigned to device-dependent APCs); and (5) device removal procedures. Note that in some cases separate payment is permitted if these services are reported alone on a claim. CMS is not finalizing its proposed policy to include two other categories of items in its expanded packaging policy: ancillary services with a CY 2013 status indicator of "X," and diagnostic tests on the bypass list.
  • CMS has adopted its proposal to create 29 all-inclusive, "comprehensive APCs" to replace 39 existing device-dependent APCs, but CMS is delaying implementation until 2015. Under this policy, CMS will package into the comprehensive APCs all "adjunctive services" provided during the delivery of the comprehensive service, which results in a single prospective payment for all charges on the claim, excluding only charges for services that cannot be covered by Medicare Part B or that are not payable under the OPPS. Under this policy, the comprehensive APC payment will include all outpatient services, including: diagnostic procedures, laboratory tests and other diagnostic tests, and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; coded and uncoded services and supplies used during the service; outpatient department services delivered by therapists as part of the comprehensive service; durable medical equipment (DME), as well as prosthetic and orthotic items and supplies when provided as part of the outpatient service; and any other outpatient components reported by HCPCS codes that are provided during the comprehensive service (except for certain services including mammography services, ambulance services, brachytherapy seeds, and pass-through drugs and devices). Because CMS has delayed implementation until 2015, CMS will accept comments on this policy to be considered in next year's rulemaking.
  • CMS has adopted its plan to collapse the current five levels of outpatient clinic visit codes into a single code for each unique type of outpatient hospital visit. CMS is not finalizing its proposal to replace the current five levels of codes for each type of emergency department visits, however; CMS will reassess this policy issue and consider revisions in a future rulemaking.
  • For 2014, CMS is calculating OPPS relative payment weights using distinct cost-to-charge ratios for cardiac catheterization, CT scan, and MRI, and implantable medical devices. To address commenters' concerns about the impact of this change on rates for MRI and CT procedures, CMS has adopted a temporary policy that accommodates variations in hospital cost allocation methods, which has the effect of mitigating the rate reductions for these procedures compared to the proposed rule. CMS will allow four years for hospitals to transition to the cost allocation methods identified in the final rule.
  • CMS will continue a policy adopted last year setting OPPS payment for separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6% (which it calls the "statutory default" rate), without an adjustment for pharmacy overhead costs. The 2014 threshold for separate payment for outpatient drugs is a cost per day that exceeds $90, compared to $80 in 2013.
  •  With regard to ASC policy, the final rule increases ASC rates by 1.2% compared to 2013 levels. ASCs that do not meet quality reporting requirements are subject to a 2% payment reduction. As proposed, ancillary services that are packaged under the OPPS also will be packaged under the ASC payment system for CY 2014.
  • In addition, the final rule addresses, among many other things: refinements to the Hospital Outpatient Quality Reporting Program, the ASC Quality Reporting Program, and the Hospital Value-Based Purchasing Program; payment for partial hospitalization services; a requirement that individuals furnish "incident to" hospital or critical access hospital outpatient services in compliance with state law; and changes to Quality Improvement Organization eligibility and contracting rules.

Comments on limited provisions of the rule will be accepted until January 27, 2014.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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