CMS has issued its final rule updating the Medicare hospital outpatient prospective payment system (HOPPS) and ambulatory surgical center (ASC) payment system for 2010.  The official version of the rule is scheduled to be published in the Federal Register on November 20, 2009. With regard to the HOPPS update, CMS estimates that the rule will increase HOPPS rates by 1.9% compared to total spending in CY 2009.  This reflects a 2.1% market basket increase (reduced by 2.0 percentage points for hospitals that do not report quality data), adjusted for changes in the pass-through estimate, outlier payments, and wage index payments. Other major HOPPS and ASC provisions are outlined after the jump.

Other major provisions of the HOPPS final rule include the following:

• CMS adopted its proposal to increase the threshold for separate payment for outpatient drugs to drugs with a cost per day that exceeds $65, up from $60 in 2009.  CMS will continue making payment for separately-payable drugs and biologicals at average sales price (ASP) plus 4%, representing a combined payment for both the acquisition and pharmacy overhead costs of separately payable drugs and biologicals. CMS uses a new methodology to arrive at this rate for CY 2010. In short, CMS is basing payments on estimated costs of separately-payable drugs and biologicals for 2010 (estimated to be ASP minus 3%), with an adjustment for pharmacy overhead cost. Through the pharmacy overhead adjustment, CMS is redistributing $200 million (rather than $150 million in the proposed rule) from the cost of packaged drugs and biologicals to separately payable drugs and biologicals.
• CMS is maintaining its policy of beginning the pass-through payment eligibility period for a new drug or nonimplantable biological on the date that the first HOPPS pass-through payment is made (rather than it the date of first U.S. sale of the product following FDA approval as the agency had proposed). CMS did adopt its proposal to establish a payment offset for pass-through contrast agents in accordance with its standard offset methodology, and the agency modified the payment methodology for pass-through implantable biologicals.
• CMS adopted its proposal to provide payment for separately-payable therapeutic radiopharmaceuticals and pass-through radiopharmaceuticals using ASP data, if data is submitted by manufacturers for a given calendar quarter (CMS has posted subregulatory guidance on submitting radiopharmaceutical ASP data).
• CMS adopted significant revisions and clarifications its rules regarding physician supervision of outpatient services. Among other things, CMS is requiring all hospital outpatient diagnostic services furnished directly or under arrangement — in a hospital, provider-based department, or nonhospital location — to follow the same physician supervision requirements for individual tests that apply under the Medicare physician fee schedule. Diagnostic tests can be supervised only by physicians. CMS will allow physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, and licensed clinical social workers to directly supervise all hospital outpatient therapeutic services that they may personally perform under their state scope of practice rules and hospital-granted privileges. CMS also is clarifying that, for purposes of on-campus hospital outpatient services, “direct supervision” means that the physician (for diagnostic tests) or the physician or nonphysician practitioner (for therapeutic services) need not be in the department, but must be present anywhere on the hospital campus and immediately available to furnish assistance and direction throughout the performance of the procedure. For outpatient services furnished in an off-campus provider-based department, “direct supervision” would continue to require the physician (for diagnostic tests) or the physician or nonphysician practitioner (for therapeutic services) to be present in the off-campus provider-based department and immediately available to furnish assistance and direction throughout the performance of the procedure.

With regard to ASC services, the final rule provides a 1.2% inflation update to the conversion factor.  CMS also is adding 26 surgical procedures to the list of procedures covered when performed in an ASC. In addition, the rule: designates six procedures as office-based procedures (subject to payment at the lesser of the national office practice expense payment to the physician or the national standard ASC rate); temporarily designates an additional 16 procedures as office-based for 2010; and updates the list of device-intensive procedures and covered ancillary services.

CMS is accepting comments on limited provisions of the rule until December 29, 2009. These provisions pertain to: payment classifications for certain HCPCS codes; treatment of plasma protein fraction for HOPPS payment purposes; alternative coding for hospital clinic visits for new and established patients; potentially extending the direct supervision requirements for hospital-based partial hospitalization program services to such services in community mental health centers; and potentially establishing direct physician supervision requirements for ASC services.