CMS Releases Proposed Payment Rule for Hospital Outpatient Payment Systems and Ambulatory Surgery Centers

On July 6, CMS released its proposed rule (the “Rule”) for Hospital Outpatient Prospective Payment Systems (“HOPS”) and Ambulatory Surgery Center Payment Systems (“ASC Payments”) which was published in the Federal Register on July 30, 2012.  The final rule is expected to be published on November 30, 2012.  The Rule would increase reimbursement for HOPS by 2.1%, and by 1.3% for ASC Payments.

The 2.1% increase for HOPS and 1.3% for ASC Payments reflect a composite of factors, but the base difference between the two arises from a difference between the measures of inflation used for the two. HOPS rates were updated using the Hospital Market Basket measure to account for inflation.  The Hospital Market Basket is a “fixed-weight” index, which means it examines the same set of goods (the “basket”) over time to predict how much the basket will cost in the future.  This measurement yielded a 3% increase, with productivity reduction variables reducing the rate to the 2.1%. Conversely, ASC Payments were adjusted based on the Consumer Price Index for All Urban Consumers (“CPI-U”).  This broader measurement is calculated by weighing price changes of products in urban areas (areas of 2,500 inhabitants or more and non-farm consumers in rural areas) against the share of income that consumers spend to purchase those products.  This method yielded an inflation adjustment for ACS Payments of 2.2% (with similar productivity reduction variables lowering the adjustment to 1.3%).

Notably, the Ambulatory Surgery Center Association (the “ASCA”) has spoken out against the payment adjustments, by saying that “[it was] disappointed that the agency chose to continue to use an inappropriate measure of inflation . . . to update the ASC rates.”  ASCA believes that the HOPS rate calculation is the more accurate cost measure for surgical procedures.

However, the proposed rule also added five new CPT codes to Medicare’s ASC list to be effective retroactive to July 1, 2012.  The codes can be viewed at page 222 of the proposed rule, and focus largely on the placement, programming, and removal of an intracardic ischemia monitoring system.  In addition to the new codes, effective January 1, 2013, there will also be 16 new procedures added to the ASC list of payable procedures if the proposed rule remains unchanged.  The list of these procedures can be seen on page 396 of the proposed rule, and includes placement of an intravascular stent, femoral/popliteal artery revascularization with transluminal angioplasty, tibial/peroneal artery revascularization with transluminal angioplasty, and extracorporeal shock wave for integumentary wound healing.

Finally, in the proposed rule, CMS has declined to add any additional quality measures on top of the already-existing eight measurements.  CMS stated that considering “the time and effort required on the part of ASCs to plan and prepare for quality reporting” in addition to the time and effort for CMS to develop the measures, “we are not proposing to delete or add any quality measures for the ASCQR Program for the [calendar year] 2014, CY 2015, and CY 2016 payment determination years or to adopt quality measures for subsequent payment determination years.”  For the foreseeable future at least, the ASC Quality Reporting Program will retain the same criteria for reporting.

 For the complete proposed rule, please visit https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-16813.pdf. For the ASCA’s immediate response, please visit http://www.ascassociation.org/ASCA/AboutUs/LatestNews/July2012/2013ProposedMedicarePaymentRatesReleased/.

*This article is co-authored with Gregory Mitchell, a Summer Law Clerk in Rivkin Radler LLP’s Health Services Practice Group.  Mr. Mitchell is a third year law student at Emory University.