Bundling payments will challenge hospitals

Medicare proposes 3.3% increase for '08 OPPS

Hospital-based outpatient departments (HOPDs) providers faces changes in the proposed 2008 outpatient prospective payment system (OPPS) that include bundling intraoperative services, among other services, into the payment for the associated ambulatory payment classification (APC).

"In general, the OPPS rule, especially the part that changes to packaging provision, always presents a challenge for providers," says Marian Lowe, vice president of federal health policy for Strategic Health Care, a government relations firm in Washington, DC. "A hospital that is doing a lot of ancillary services with procedures is likely to be underpaid, vs. billing for every time you use them."

The seven additional services that will be bundled include intraoperative services, imaging supervision and interpretation services, diagnostic radiopharmaceuticals, contrast media, observation services, and guidance services.

The Centers for Medicare & Medicaid Services (CMS) has proposed making the change to give providers incentives for efficiency, Lowe says.

In another proposed change, CMS would increase the OPPS rates by a 3.3% inflation update.

Get ready to collect quality data measures

CMS also is proposing that hospital outpatient departments submit quality data on 10 measures, including timing of antibiotic prophylaxis, and selection of prophylactic antibiotic.

The annual payment update factor in calendar year 2009 and subsequent years will be reduced by 2 percentage points for hospitals that don't report quality measures.

CMS also is seeking comment on 30 additional measures that are under consideration for reporting in future years. They include the following:

  • screening for fall risk — percentage of patients ages 65 years and older who were screened for fall risk (two or more falls in the past year, or any fall with injury in the past year) at least once within 12 months;
  • needle biopsy to establish diagnosis of cancer precedes surgical excision/resection;
  • colonoscopy for polyp surveillance — description of polyp characteristics.

"In the short run, what you get paid for surgical services won't be tied to clinical measures," Lowe says. "This is a dry run with measure development."

CMS is finalizing the details for the 10 measures, and the agency expects that the details will be released this fall.

HOPDs, ASCs moving toward same coinsurance

In the 2008 proposed rule, beneficiary liability under the OPPS would continue to be reduced under a formula that is designed to provide a gradual transition to 20% coinsurance.

That 20% coinsurance will make hospitals equal to freestanding surgery centers, says Caryl A. Serbin, RN, BSN, LHRM, president of Surgery Consultants of America and Serbin Surgery Center Billing in Fort Myers, FL. "Now there will be more competition that we didn't want," she says.

Also as part of the proposed OPPS rule, 13 procedures are being moved off the inpatient-only list, according to Kathy Bryant, president of the Federated Ambulatory Surgery Association (FASA). (See list.) Only three of those procedures are proposed to be added to the ambulatory surgery center (ASC) list, she says. They are:

  • transmetacarpal amputation, re-amputation (CPT 25931);
  • renal endoscopy through nephrostomy or pyelotomy, with or without irrigation, instillation or ureteropyelography, exclusive of radiologic service, with removal of foreign body or calculus (CPT 50580)
  • drainage of ovarian cyst(s), unilateral or bilateral, (separate procedure), abdominal approach (CPT 58805).

FASA plans to assess the other 10 to see if they should be added as well, Bryant says. "We want to make sure CMS is correct and they don't meet the criteria," she says. 'There's a good chance we'll find they should be reimbursed in an ASC."

A final OPPS/ASC payment rule will be published later this fall.


For more information on hospital outpatient payment issues, contact:

  • Alberta Dwivedi, Centers for Medicare & Medicaid Services (CMS). Phone: (410) 786-0378.

For more information on reporting of quality data issues, contact:

  • Sheila Blackstock, CMS. Phone: (410) 786-3502.

For the text of the combined outpatient prospective payment system (OPPS) and ambulatory surgery center (ASC) proposed rule, go to www.cms.hhs.gov.

Comments on the proposed rule will be accepted until Sept. 14, 2007. You may submit comments electronically at www.cms.hhs.gov/eRulemaking. Click on “submit electronic comments on CMS regulations with an open comment period.”