Understanding the 2015 Medicare outpatient proposed rule

Last month the Centers for Medicare & Medicaid Services (CMS) published its proposed 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 (CY) 2015. Here are some of the highlights.

Outpatient rate increase
OPPS rates would increase by 2.1 percent compared to 2014 levels, although rate changes for individual Ambulatory Payment Classifications (APCs) vary. This update reflects a 2.7 percent market basket increase, which is partially offset by a 0.4 percent multifactor productivity (MFP) adjustment and an additional 0.2 percent reduction, both of which were mandated by the Affordable Care Act (ACA). Hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements are subject to an additional reduction of 2.0 percent.

The actual update for individual procedures can vary based on changes in relative weights and other policies in the proposed rule. Overall, CMS expects to make $800 million in additional payments for OPPS services furnished in CY 2015 under the rule.

Smaller ASC rate boost
For CY 2015, CMS proposes an ASC prospective payment system update of 1.2 percent, reflecting a CPI-U update of 1.7 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 proposes adding 10 procedures to the ASC list of covered surgical procedures and refining the ASC quality program.

Packaging policy
CMS proposes expanding its packaging policy adopted in the 2014 final rule. Beginning in CY 2015, CMS proposes conditional packaging of all ancillary services when they are integral, ancillary, supportive, dependent, or adjunctive to a primary service (except for preventive, psychiatry, and drug administration services).

The services proposed to be packaged under this policy are services assigned to APCs with a geometric mean cost of $100 or less. CMS proposes to make separate payment for these ancillary services when they are furnished by themselves, and expects to update and expand this policy in future years. CMS also proposes packaging all add-on codes, but it would allow certain combinations of primary service codes and especially costly add-on codes representing a more costly, complex variation of a procedure to trigger a complexity adjustment.

Comprehensive APC revisions
The proposed rule would implement, with revisions, a policy discussed in the final 2014 rule to replace existing device-dependent APCs in CY 2015. In short, CMS would 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.

Under this policy, the comprehensive APC payment would 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; 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).

CMS proposes refining its 2014 policy to establish a total of 28 comprehensive-APCs for 2015 versus the 29 comprehensive APCs described in the 2014 final rule.

Data collection
CMS proposes collecting data on services furnished in off-campus provider-based departments beginning in 2015. Hospitals and physicians would report a modifier for services furnished in an off-campus provider-based department on both hospital and physician claims. This information ultimately is intended to be used to improve the accuracy of Medicare physician fee schedule (MPFS) practice expense payments for services furnished in off-campus provider-based departments.

Other key points

• The proposed rule would revise the expansion exception process for physician-owned hospitals under the rural provider and hospital ownership exceptions to the physician self-referral law. Specifically, CMS proposes to permit physician-owned hospitals to use additional data sources to demonstrate eligibility for an expansion exception as a “high Medicaid facility.”
• CMS proposes to require a physician certification only for long-stay cases (defined as 20 days or more) and outlier cases. An admission order would continue to be required for all admissions.
• CMS proposes establishing 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, with an appeals process for MA organizations and Part D sponsors.
• Under the proposed rule, the threshold for separate payment for outpatient drugs in 2015 would be a cost per day that exceeds $90, the same threshold as in 2014.

CMS will accept comments on the proposed rule until September 2, 2014.