Final 2007 OPPS rule has some good news for EDs

Payments higher, 5-level E&M model adopted

The Centers for Medicare & Medicaid Services' (CMS) final rule for Medicare payment for hospital outpatient services in calendar year 2007 contains several new wrinkles that will benefit EDs, say observers. Among them is a significant boost in ambulatory payment classification (APC) rates.

"The APC rates went up considerably once you get past Level I," says Barbara Marone, federal affairs director for the American College of Emergency Physicians (ACEP) in Washington, DC. "The high end of ED rates is up to about $325, as opposed to $236 in 2006."

This increase is the result of CMS' decision to pay for five levels of services — instead of the current three levels — for evaluation and management (E&M) services performed in EDs and clinics — a move long advocated by groups such as ACEP and the American Hospital Association (AHA). Michael A. Ross, MD, FACEP, director of the Emergency Observation Unit at William Beaumont Hospital in Royal Oak, MI, helped negotiate the APC rate for observation with CMS. "This better captures the work performed in the ED," Ross says. Marone adds, "If you combine levels II and III and average them, you are also way above the mid-level for last year. We're just not exactly sure how CMS actually cross-walked the five CPT [Current Procedure Terminology] codes into the APC codes."

Overall, the new rule includes a 3.4% market basket update to Medicare payment rates for services paid under the hospital outpatient prospective payment system (OPPS) for 2007, as dictated by statute. However, after taking into account other factors that affect the level of payments, CMS estimates that hospitals will receive an overall average increase of 3%.

New rules for DEDs

The final rule also creates five new HCPCS (Healthcare Common Procedure Coding System) codes to describe hospital emergency visits provided in part-time dedicated emergency departments (DEDs) that are subject to the requirements of the Emergency Medical Treatment and Labor Act (EMTALA) but do not meet the more prescriptive requirements consistent with the CPT definition of an emergency department.

The new codes would enable CMS to gather data to determine the relative resource costs of the services provided in these entities, as distinct from emergent care furnished in a facility that is accessible 24 hours per day, seven days per week. While gathering hospital cost data, CMS will pay for the new DED visit codes at the payment levels set for clinic visits.

"We are pleased with CMS deciding to just limit the new G codes," which are the temporary codes for data collection purposes, says Marone, noting that "we do not want the payment system to encourage a proliferation of less than 24/7 emergency facilities."

The G codes will be a financial burden for some hospitals, however. Marone gives the hypothetical example of a downtown hospital with a full-service ED that also has a suburban facility with no night shift. "Most hospitals have been billing them together," she notes. "Financially, they will take a big hit since ED payments have been pulled away from clinic payments, and the less than 24/7 facilities being paid at the clinic rate will make a pretty big difference."

Nevertheless, she emphasizes, "Despite the fact that some of our members work in these facilities, we are glad to see that the 'status quo' EDs will not have to go through burdensome changes." In the original proposed rule, there would have been new CPT coding for both types of facilities.

Change made to CAHs

The final rule also revises the critical access hospital (CAH) conditions of participation to allow CAHs to include a registered nurse that is on site as one of the qualified medical personnel available to perform an emergency medical screening. For this provision to apply, the nature of the patient's request for medical care must be within the scope of practice of a registered nurse as defined in applicable state laws. This revision conforms to the changes made to EMTALA regulations in 2003 and will align the emergency medical screening requirements in CAHs with those applicable to acute care hospitals.

"We're OK with that, given it is in line with the state's scope of work for nurses," says Marone. "There are probably those in our membership who are a bit concerned, but staffing is what it is, and you have to have somebody be that dedicated person."

Observation underpaid?

One area where CMS falls short is in payment for observation services, notes Ross.

"It is good to see that CMS is providing fair hospital compensation for the observation of three conditions [chest pain, asthma, and congestive heart failure]," he says. "However,a it would be much better to see them expand the list of conditions eligible for observation, as has been recommended by their own observation subcommittee."

For those three conditions — and only these three — CMS offers separate APC payment for observation over and above the basic payment for the ED, which covers only use of space and nurses' time. The APC payment for observation of those conditions is $442.16.

Ross notes that the recommendation to remove the current restrictions on medical conditions that are eligible for separate clinical decision unit (CDU) payment also was made in the 2006 Institute of Medicine Report, "Future of emergency care services: Hospital-based emergency care: At the breaking point." "I don't know what else it takes for CMS to see the light on this issue," he concludes.


For more information on the 2007 hospital final payment rule, contact:

  • Barbara Marone, Federal Affairs Director, American College of Emergency Physicians, 2121 K Street N.W., Suite 325, Washington, DC 20037-1801. Phone: (202) 728-0610.
  • Michael A. Ross, MD, FACEP, Director, Emergency Observation Unit, William Beaumont Hospital, 3601 W. Thirteen Mile Road, Royal Oak, MI 48073-6769. Phone: (248) 898-3080.