Medicare proposes 3.5% increase for OPPS

Some day-surgery procedures could jump 10-27%

Although a 3.5% increase has been proposed for 2003 hospital payment rates under the outpatient prospective payment system (OPPS), this amount falls short of compensating hospitals for the costs of providing outpatient care, according to the Chicago-based American Hospital Association (AHA). The increase would total $530 million more than 2002 payment rates. OPPS payments to rural hospitals would increase 7.6%. The payment rates were based on actual data from OPPS claims, instead of 1996 cost information, as in the past.

For outpatient surgery services, there is some good news, says Eric Zimmerman, JD, MBA, attorney with McDermott, Will, & Emery in Washington, DC. The reimbursement for many high-volume procedures would increase 10% to 27%, he says. Zimmerman offers these examples:

• The national unadjusted payment rate for a cataract extraction, intraocular lens (IOL) insertion procedure (CPT 66984) would increase from $1,055 to $1,226.89, a 16% increase.

• The national unadjusted payment rate for a colonoscopy procedure (CPT 45384) would increase from $372 to $435, a 17% increase.

• The national unadjusted payment rate for a cystoscopy procedure (CPT 52000) would increase from $202 to $334, a 27% increase.

• The national unadjusted payment rate for a knee arthroscopy procedure (CPT 29881) would increase from $1,208 to $1,424 for 2003, an 18% increase.

The Centers for Medicare & Medicaid Services (CMS) also plans to cut 95 categories of devices and about 240 drugs from the pass-through payment system. Under the proposal, these items would be included in their associated ambulatory payment classifications (APCs), and separate APCs would be created for the higher-cost drugs.

At this time, a pro-rata reduction is not included for new technology. However, a pro-rata reduction may be included in the final rule due to drugs awaiting Food and Drug Administration approval that are expected to be costly. Outliers were maintained at the same amount, but the threshold was decreased to allow for more outlier payments.

The AHA supports the Medicare Hospital Out-patient Fair Payment Act of 2002 (H.R. 5234/ S. 2547), which is co-sponsored by Sen. Jeff Bingaman (D-NM) and Sen. Olympia Snowe (R-ME).

The bill would require an increase in overall outpatient department payments to be adjusted to 90% of overall costs, from the current 84%, according to the AHA. It also would extend transitional corridor or "hold harmless’" payments to rural, cancer, and children’s hospitals, the association says. (Editor’s note: For the current status of this bill, go to Search for HR 5234.)

In the meantime, comments are due on the proposed OPPS rule by Oct. 7. Send written comments (one original and two copies) to: The Centers for Medicare & Medicaid Services, Department of Health and Human Services, ATTN: CMS-1206-P, PO Box 8018, Baltimore, MD 21244-8018. A final rule will be published later in the fall.


For more information on the proposal, contact: Eric Zimmerman, JD, MBA, Attorney, McDermott, Will, & Emery, 600 13th St. N.W., Washington, DC 20005-3096. Telephone: (202) 756-8148. Fax: (202) 756-8087. E-mail: