Understanding 2015 Medicare hospital outpatient payment rates

On Nov. 10, 2014, the Centers for Medicare & Medicaid Services published its final rule to update the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year 2015.

Here are the highlights of this major rulemaking:

• The final OPPS fee schedule increase factor is 2.2 percent. This update reflects a hospital market basket increase of 2.9 percent, which is offset by two Affordable Care Act (ACA) provisions: a 0.2 percent reduction and a 0.5 percent “multi-factor productivity” (MFP) adjustment. The update for individual procedures can vary, and hospitals that do not meet Hospital Outpatient Quality Reporting (OQR) Program requirements are subject to a 2.0 percent reduction. CMS projects a 2.3 percent increase in total OPPS payments (about $900 million) for 2015, considering all policies in the rule.
• CMS is adopting its proposal to conditionally package ancillary services when they are integral, ancillary, supportive, dependent, or adjunctive to a primary service (except for preventive, psychiatry, and drug administration services). These ancillary services will be paid separately when they are furnished by themselves. In 2015, packaged ancillary services are limited to services assigned to Ambulatory Payment Classifications (APCs) with a geometric mean cost of $100 or less (prior to applying the conditional packaging status indicator). CMS expects to expand this policy in the future. CMS also will package prosthetic supplies payment in 2015.
• The final rule implements, with revisions, a policy discussed in the final 2014 rule to replace device-dependent APCs with comprehensive APCs (or “C-APCs”) in CY 2015. CMS will make a single payment for all related or adjunctive hospital services provided to a patient in the furnishing of certain device dependent services, with certain exceptions. The C-APC payment will include: all outpatient services, including diagnostic procedures, laboratory and other diagnostic tests, and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; 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 other outpatient components provided during the comprehensive service (with limited exceptions, such as mammography and ambulance services, brachytherapy seeds, and pass-through drugs and devices). CMS is establishing 25 C-APCs for 2015, which are assigned to one of 12 clinical families.
• CMS will package all add-on codes, but it will allow certain costly, complex combinations of primary service codes and add-on codes to trigger a complexity adjustment that elevates the procedure to a higher paying C-APC in the same clinical family of comprehensive APCs.
• CMS is increasing the threshold for separate payment for outpatient drugs from $90 in 2014 to $95 in 2015.
• CMS is adopting revisions to the OQR measures and modifying OQR Program validation, review, and corrections provisions.
• CMS is requiring hospitals, physicians, and other billing practitioners to report when services are furnished in an off-campus provider-based department of a hospital.
• CMS will temporarily permit physician-owned hospitals to use additional data sources to demonstrate eligibility for an expansion exception as a “high Medicaid facility” under the rural provider and hospital ownership exceptions to the physician self-referral law.
• For CY 2015, CMS is adopting an ASC PPS update of 1.4 percent, which reflects a CPI-U increase of 1.9 percent, offset by a 0.5 percent MFP adjustment. Payment updates for individual procedures vary. ASCs that do not meet quality reporting requirements are subject to a 2 percent payment reduction.
• CMS adopted its proposal to require a physician certification only for long-stay cases (20 days or more) and outlier cases. An admission order continues to be required for all admissions.
• CMS finalized a process to recover overpayments that result from the submission of erroneous payment data by a Medicare Advantage (MA) organization or Part D prescription drug plan sponsor if the plan fails to correct the data upon CMS request. The rule also establishes an appeals process for MA organizations and Part D sponsors.

CMS will accept comments on a limited number of issues in the final rule, including payment classifications assigned to certain new or replacement codes, until December 30, 2014.

Click here to read details about the CY2015 OPPS and ASC payment rates.