On November 30, 2011, CMS is publishing its final rule updating the Medicare hospital outpatient prospective payment system (OPPS) and the ASC payment system rates and policies for CY 2012. The following are highlights of the lengthy rule:

  • The final OPPS update for 2012 is 1.9%, which reflects a 3.0% market basket update reduced by two adjustments mandated by the ACA: (1) a 0.1 percentage point reduction for 2012, and (2) a “multi-factor productivity” (MFP) adjustment of 1% for 2012. The impact of the rule on individual procedures varies, however. There also are special payment adjustments for cancer hospital OPPS payments and for partial hospitalization services provided in hospital-based programs and freestanding community mental health centers.
  • The OPPS update is reduced by 2.0 percentage points for certain hospitals that do not meet quality reporting requirements. CMS is expanding the set of measures that must be reported by hospital outpatient departments in 2012 and 2013 to qualify for the full payment update in 2014 and 2015, respectively. CMS also has modified the process for validating hospital reporting of chart-abstracted measures. In addition, CMS is updating the measures and scoring methodology for the Hospital Value-Based Purchasing Program for inpatient stays.
  • CMS is increasing from $70 to $75 the cost-per-day threshold for separate payment of hospital outpatient drugs and biologicals (under the proposed rule, the threshold would have been $80). Payment for separately-payable drugs and biologicals without pass-through status will equal the ASP plus 4% (compared to the 2011 rate of ASP plus 5%). This amount reflects an adjustment under which CMS is redistributing $240.3 million of pharmacy overhead costs from packaged to separately-payable drugs and biologicals.
  • CMS is establishing an independent advisory review process for consideration of stakeholder requests for assignment of supervision levels other than direct supervision for specific outpatient hospital therapeutic services.  Under this process, CMS will seek recommendations from the Ambulatory Payment Classification (APC) Panel, which will be expanded to include representatives of critical access hospitals solely for deliberations relating to supervision levels.
  • The final rule updates the requirements under the ACA’s Hospital Value-Based Purchasing Program for fiscal year 2014, including measures, performance standards, and scoring methodology.
  • With regard to ASC services, CMS is increasing rates by 1.6 % in 2012, reflecting a 2.73% inflation update offset by a 1.1% productivity adjustment mandated by the ACA.  The rule also establishes a new quality reporting program for ASCs, which require reporting of five quality measures (down from 8 in the proposed rule) beginning in 2012 for the 2014 payment determination. The measures include four outcome measures and one surgical infection control measure. Two structural measures will be added for reporting beginning in 2013 (impacting payment in 2015 and 2016) pertaining to use of a safe surgery checklist and ASC facility volume data on selected surgical procedures.
  • The rule implements an ACA requirement that CMS develop an exceptions process related to the ACA’s prohibition on expanding an existing physician-owned hospital’s facility capacity.