Final Rule on the 2011 Hospital Outpatient Prospective Payment System

Conversion Factor

The 2011 conversion factor for hospital outpatient services will be $68.876 which includes a 2.6 market basket increase minus a .25 percentage point reduction as required under the Affordable Care Act — which was enacted as the Patient Protection and, as amended by the Health Care and Education Reconciliation Act of 2010. For those hospitals that do not meet the requirements to report quality measures, their reduced conversion factor will be $67.530.

Myocardial Positron Emission Tomography (PET) Imaging (APC 0307)

The payment rates myocardial positron emission tomography (PET) will change from the 2010 rate $1,433 to $1,096 in 2011. This affects CPT codes 78459 (Myocardial imaging, positron emission tomography (PET), metabolic evaluation), 78491 (Myocardial imaging, positron emission tomography (PET), perfusion; single study at rest or stress), and 78492 (Myocardial imaging, positron emission tomography (PET), perfusion; multiple studies at rest and/or stress) under Ambulatory Payment Category (APC) of 0307 (Myocardial Position Emission Tomography (PET) Imaging). The ACR expressed their concern in their comments on the proposed rule that hospital costs for PET should not have dropped by almost 25% in one year. CMS responded that they did look at the hospital cost data and that costs for bundled radiopharmaceuticals and other reported costs did show a decrease and therefore they are standing behind the data being used. Because of the Deficit Reduction Act which mandates that CMS pay the hospital outpatient rate or the Medicare physician fee schedule rate, whichever is the lowest, this payment rate reduction will affect payments for the technical component of myocardial PET in the office setting.

Changes Relating to Payments to Hospitals for Direct Graduate Medical Education and Indirect Medical Education Costs

The final rule with comment period also implements the direct and indirect graduate medical education (GME/IME) provisions of the Affordable Care Act. The law requires CMS to:

• http://www.acr.org/images/bullet-categories.gif); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; background-position: 0px 5px; background-repeat: no-repeat no-repeat; ">Identify unused residency slots and redistribute them to certain hospitals with qualified residency programs, with a special emphasis on increasing the number of primary care physicians.
  
• http://www.acr.org/images/bullet-categories.gif); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; background-position: 0px 5px; background-repeat: no-repeat no-repeat; ">Redistribute residency slots from certain closed hospitals and hospitals that close down to other teaching hospitals, giving preference to hospitals in the same or a contiguous area as the closed hospital.
• http://www.acr.org/images/bullet-categories.gif); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; background-position: 0px 5px; background-repeat: no-repeat no-repeat; ">Specify how hospitals should count hours a resident spends in certain training and research activities, and in patient care activities in a nonhospital setting, such as a physician’s office.

Physician-Owned Hospitals

The final rule implements a provision in the Affordable Care Act prohibiting the development of new physician-owned hospitals and the expansion of existing physician-owned hospitals.

Supervision Rules

CMS makes further modifications to the requirements for supervision which provide more flexibility for hospitals and physicians. These include:

For outpatient therapeutic services the final rule:

• http://www.acr.org/images/bullet-categories.gif); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; background-position: 0px 5px; background-repeat: no-repeat no-repeat; ">Requires direct physician supervision for only the initiation of certain services and allowing general supervision once the treating practitioner deems the patient medically stable. This two-tiered approach to supervision applies to a limited set of non-surgical extended duration services, including observation services.
• http://www.acr.org/images/bullet-categories.gif); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; background-position: 0px 5px; background-repeat: no-repeat no-repeat; ">Extends through CY 2011 the notice of non-enforcement regarding the direct supervision requirements for outpatient therapeutic services furnished in critical access hospitals (CAHs) and expanding the scope of the notice to include small rural hospitals with 100 or fewer beds.
• http://www.acr.org/images/bullet-categories.gif); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; background-position: 0px 5px; background-repeat: no-repeat no-repeat; ">Redefines direct supervision for all hospital outpatient services to require “immediate availability” without reference to the boundaries of a physical location.

In addition, Medicare will establish an independent committee to consider on an annual basis industry requests for the assignment of supervision levels other than direct supervision for certain individual services and to make recommendations to the agency. These requests will be open to the public for comment through future rulemaking.

Savings for Beneficiaries

The Affordable Care Act waives beneficiary cost-sharing for most Medicare-covered preventive services, such as screening mammograms and screening colonoscopies. This means that, for most preventive services, beneficiaries will not have to satisfy their Part B deductible before Medicare will pay. In addition, for these services, beneficiaries will not have to pay their co-payment (typically 20 percent of the Medicare payment amount) for the physician’s or the facility’s portion of the service.

Payment Rates for Separately Payable Drugs

Medicare will provide a single payment of ASP+6 percent for the hospital’s acquisition cost for the drug or biological and all associated pharmacy overhead and handling costs.

Hospital Outpatient Quality Data Reporting Program

Medicare expanded the set of quality measures that must be reported by hospital outpatient departments to qualify for the full annual payment update factor for the next few years. The final rule with comment period lists the measure set that will apply to the CY 2012, CY 2013, and CY 2014 payment updates. Medicare says that this new focus on a three year time period should assist hospitals in preparing for the changing reporting requirements and targeting their quality improvement efforts.

RTI Cost Compression Study

Medicare finalized their policy of establishing standard cost centers for CT scanning, MRI scans, and cardiac catheterization in the 2011 inpatient prospective payment system (IPPS) final rule (75 FR 50080). Therefore they also finalized this effort for the hospital outpatient prospective system. This policy requires hospitals that furnish these services and maintain distinct departments or accounts in their internal accounting systems for CT, MRs and cardiac caths and to report the costs and charges under the new cost centers on the revised Medicare cost report form CMS 2552-10 for cost report periods beginning on or after May 1, 2010. Medicare established these standard cost centers because they believe that they should collect cost and charge data for these areas, and use the data to assess the resulting CCRs specific to CT scanning and MRI services as a possible means of eliminating aggregation bias for these and other radiology services in the IPPS and the HOPPS.

The ACR submitted extensive comments and analysis of the RTI cost compression study, which is the basis on how the CT and MR cost centers were developed. The ACR is very concerned that flawed hospital cost data and allocation will severely flaw the cost-to-charge ratios generated from this effort and have a devastating effect on the HOPPS payment rates for CT and MR, and thus because of DRA, on the technical component payments in the hospital setting.

Medicare acknowledges that the decision to finalize their proposal regarding cost centers for these services is only the first step to a longer process during which they will continue to consider public comment. CMS says that they understand the commenters’ statements regarding the challenges and difficulties in appropriately reporting the cost and charge data accurately for these standard cost centers. CMS clarifies that the application of these standard cost centers will apply only for those hospitals who maintain distinct departments or accounts in their internal accounting systems for CT scanning, MRI or cardiac catheterization. CMS notes that hospitals have been responsible for properly reporting the cost of the equipment and facilities that are necessary to furnish services for the many years since the inception of the Medicare program and that the creation of cost centers for CT, MRI, and cardiac rehabilitation does not alter the fundamental principles of cost reporting to which hospitals have been and remain bound and for which they should follow the instructions in the Medicare Provider Reimbursement Manual.

CMS also noted that there is typically a 3-year lag between the availability of the cost report data that they use to calculate the relative weights both under the IPPS and the HOPPS and a given fiscal or calendar year, and therefore the data from the standard cost centers for CT scans, MRI, and cardiac catheterization respectively, should they be finalized, would not be available for possible use in calculating the relative weights earlier than 3 years after Form CMS-2552-10 becomes available. At that time, CMS will analyze the data and determine if it is appropriate to use the data to create distinct CCRs from these cost centers for use in the relative weights for the respective payment systems. CMS is trying to reassure the commenters that there is no need for immediate concern regarding possible negative payment impacts on MRI and CT scans under the IPPS and the HOPPS. CMS says they will first thoroughly analyze and run impacts on the data and provide the public with the opportunity to comment, as usual, before distinct CCRs for MRI and CT scans would be finalized for use in the calculation of the relative weights.