CMS final OPPS rule doesn't link inpatient quality, outpatient updates

Medicare additions, deletions to ASC list announced

In the final 2007 rule for the hospital outpatient prospective payment system (OPPS), officials with the Centers for Medicare & Medicaid Services (CMS) decided against linking inpatient quality reporting to the outpatient payment update. Instead, CMS officials will develop outpatient quality measures and require hospitals to report them starting in 2009.

Rick Pollack, executive vice president of the American Hospital Association (AHA), said in a prepared statement that the AHA is pleased that CMS will develop quality measures specifically for the outpatient setting and has given hospitals enough time to implement a reporting system for hospital outpatient services. "We had concerns with CMS' earlier proposal because connecting outpatient payments to inpatient measures is an 'apples to oranges' comparison that would undermine hospitals' efforts to make useful and reliable quality data available to the public," he said.

CMS is adding 21 procedures to the list of those that are reimbursed in ambulatory surgery centers (ASCs) for 2007. Two of the procedures are for surgical services furnished to maintain vascular access fistulas and grafts for hemodialysis patients. (See additions.) Additionally, CMS is adjusting the payment group for 10 CPT codes. (See changes.) Also, due to revisions by the American Medical Association to the 2007 CPT codes, CMS is adding an additional 25 codes to the ASC list and deleting 22 codes. (See deletions.)

In addition, beginning Jan. 1, Medicare beneficiaries will be required to pay a 25% copayment for screening colonoscopies (CPT G0105 and G0121), according to the Federated Ambulatory Surgery Association (FASA). Previously, beneficiaries paid a 20% copayment, FASA says. Only the copayment is increased, the organization says.

In other parts of the final rule:

• CMS is implementing in a provision of the Deficit Reduction Act that requires that Medicare payment for surgical procedures performed in ASCs not exceed the Medicare payment for the same procedures when they are performed in a hospital outpatient department. This change means that the payments for 275 procedures will be capped at the hospital outpatient department (HOPD) rates, which cuts the rates of 269 procedures on the ASC list beginning Jan. 1, 2007, according to FASA. These reductions can be viewed at

CMS reports that adding the procedures to the ASC list and capping payment for 275 procedures on the ASC list will result in savings of about $15 million to the Medicare program in 2007.

• The rule contains a 3.4% payment rate update for hospitals. After taking into account other factors that affect the level of payments, CMS officials estimate that hospitals will receive an overall average increase of 3%.

• CMS will continue to pay separately for brachytherapy sources, but it will base payment on the source-specific median costs for brachytherapy sources, as seen in hospital outpatient claims data. Payment will be on a per-unit source basis rather than on a per-day basis.

• CMS will reduce the payment for ambulatory payment classifications (APCs) with significant costs for implanted devices when a device is replaced without cost under warranty or recall. CMS will reduce the beneficiary coinsurance proportionately.

• The rule will begin the transition from the current policies for administering hospital outpatient claims using fiscal intermediaries and carriers to the new Medicare Administrative Contractors (MACs). Under the rule, hospitals will file their claims with the intermediary with jurisdiction over the hospital's geographic location until a MAC replaces the intermediary. CMS is adopting a policy that all providers and suppliers generally be assigned to a MAC based on geographic location. However, a large qualified provider chain will be allowed to file all claims with the MAC that has jurisdiction over the chain's home office.

The final OPPS rule does not affect changes to the ASC payment system that will take effect on Jan. 1, 2008. The ASC payment system final rule is expected to be published in spring 2007, CMS says.


  • For information on ambulatory surgery center payment issues, contact Dana Burley at the Centers for Medicare & Medicaid Services (CMS). Phone: (410) 786-0378.
  • For information on hospital outpatient payment issues, contact Alberta Dwivedi at CMS. Phone: (410) 786-0378.
  • To access the final payment rule for the 2007 hospital outpatient prospective payment system, go to and click on "CMS-1506-FC."