2012 OPPS: Hospitals See Payment Ups and Downs

Overall CMS estimates an increase with an emphasis on quality reporting.

By Denise Williams, RN, CPC-H

In the 2012 Outpatient Prospective Payment System (OPPS) final rule, the Centers for Medicare & Medicaid Services (CMS) bases payments on claims data submitted by hospital providers during 2010. CMS estimates that payments under the OPPS will increase overall by 1.9 percent; however, there are other factors at play.

Although the rural adjustment (7.1 percent) will continue for rural sole community hospitals (SCHs), which includes essential access community hospitals (EACHs), the transitional outpatient payments (TOPs) will expire for services provided on or after Jan. 1, 2012 for both rural hospitals with 100 or fewer beds that are not an SCH, and SCHs (including EACHs) in accordance with section 108 of the Medicare and Medicaid Extenders Act of 2010 (MMEA).

Dedicated cancer centers can expect an estimated 9 percent reimbursement increase this year; the money for this adjustment will come from OPPS payment to other facilities due to the budget neutrality requirement under the OPPS. Overall, some hospitals will realize a modest increase in payment while others will experience a modest decrease in payment.

You can download the CMS display copy of the rule and all preamble tables and addenda on the CMS website. Select CMS-1525-FC to download the “Final Changes to the Hospital Outpatient Prospective Payment System and CY 2012 Payment Rates” final rule.

Composite APCs Remain the Same

No changes were made to existing composite ambulatory payment classifications (APCs), nor were any new composite APCs created for 2012.

In the proposed rule, CMS considered a new composite for cardiac resynchronization therapy-defibrillator (CRT-D) when CPT® codes +33225 Insertion of pacing electrode, cardiac venous system, for left ventricular pacing, at time of insertion of pacing cardioverter-defibrillator or pacemaker pulse generator (including upgrade to dual chamber system) (List separately in addition to code for primary procedure) and 33249 Insertion or repositioning of electrode lead(s) for single or dual chamber pacing cardioverter-defibrillator and insertion of pulse generator were performed on the same day. CMS also proposed to provide payment for this composite at either the APC payment or the payment for Medicare severity diagnosis-related group (MS-DRG) 227, whichever was lower. CMS stated that reimbursement for this service under an APC composite payment should not be more than was paid under the Inpatient Prospective Payment System (IPPS) because the outpatient procedure would “by definition, include fewer items and services than the corresponding MS-DRG payment.” Although this proposal was not finalized, the status indicator for CPT® +33225 was changed from T to Q3 in the final rule. This means that when +33225 and 33249 are reported on the same claim in 2012, the I/OCE will composite the payment for both +33225 and 33249 into a single payment under APC 0108.

CMS notes that they plan to continue down the path of creating larger payment bundles and expanding the number of composite APCs, and reiterates, “we will continue our efforts to model other composite structures for a possible new extended assessment and management composite structure for CY 2013.”

Outlier Fixed-dollar Thresholds Updated

CMS annually updates the formula for calculating outlier payments. Consistent with prior years, for 2012 an outlier payment will be triggered when costs for providing a service or procedure exceed both:

  • 1.75 times the APC payment amount; and
  • the APC payment plus the $1,900 fixed-dollar threshold (decreased $125 from 2011).

No changes were made to the outlier reconciliation policy for outpatient services provided, based on cost reporting periods beginning in 2009.

Pass-through Payment Changes

Three devices are eligible for pass-through payment in 2012. HCPCS Level II code C1749 Endoscope, retrograde imaging/illumination colonoscope device (implantable) will continue with pass-through status for 2012. The two additional devices are C1830 Powered bone marrow biopsy needle and C1840 Lens, intraocular (telescopic). Edits will continue for device/procedure reporting and radiopharmaceutical/nuclear medicine procedures.

Reporting of modifiers FB Item provided without cost to provider, supplier or practitioner, or full credit received for replaced device (examples, but not limited to, covered under warranty, replaced due to defect, free samples) and FC Partial credit received for replaced device continues to be mandated by CMS, and the appropriate reporting is being reviewed by the Office of Inspector General (OIG). These modifiers indicate that a device was received at no cost or at a discounted cost from the manufacturer and triggers a reduced APC payment. The APCs for which these modifiers apply are listed in Tables 30 and 31 of the OPPS final rule.

Pass-through status for 19 drugs and biologicals expired Dec. 31, 2011. These are listed in Table 32 of the final rule. The cost of 14 of these drugs is above the packaging threshold, which is $75 for 2012, and separate payment will continue. Payment for separately-payable drugs without pass-through status will decrease for 2012 to average sale price (ASP) plus 4 percent.

For the 38 drugs and biologicals with pass-through status for 2012, payment is ASP plus 6 percent. These drugs are listed in Table 33. There are HCPCS Level II code changes for several of these drugs; for example, C9270 is replaced by J1557 Injection, immune globulin (Gammaplex), intravenous, non-lyophilized (e.g. liquid), 500 mg beginning Jan. 1, 2012.

Number of Inpatient-only Procedures Continues to Shrink

For 2012, CMS removed 10 procedures from the inpatient-only list, which allows hospitals to be reimbursed when these procedures are performed on an outpatient basis. The “Inpatient Only” list specifies procedures not reimbursable under the OPPS because they are typically provided in an inpatient setting due to the invasive nature of the procedure; the need for at least 24 hours of post-procedure monitoring before the patient can be safely discharged; or the underlying physical condition of the beneficiary. These procedures, their corresponding CPT® codes, and APC assignments are listed in Table 46.

Direct Supervision for Outpatient Therapeutic Services

In 2011, CMS delayed enforcement of direct supervision for therapeutic services provided in critical access hospitals (CAHs) and small rural hospitals with 100 beds or fewer. In the 2012 OPPS final rule, CMS extended this non-enforcement period through 2012.

In the 2011 final rule, CMS proposed to create a committee that would consider changing the level of supervision required for therapeutic procedures performed in a hospital outpatient department. The APC Advisory Panel has been given the accountability to independently review and assess the appropriate supervision level for hospital outpatient therapeutic procedures. For the supervision level to be changed, a therapeutic service must be presented to the panel for review and consideration. Because these decisions impact CAHs and rural hospitals, CMS will add four representatives (two for CAHs and two for rural) to the panel to represent these entities during the supervision consideration and decision process. The following criteria will be used to evaluate whether a change in supervision level is warranted:

1.  The complexity of the service

2.  The acuity of the patients receiving the service

3.  The probability of an adverse or unexpected event occurring

4.  The expectation of rapid clinical changes occurring during the therapeutic service

CMS will solicit comments via a 30-day sub-regulatory process. CMS states, “We believe that it would be out of the APC Panel’s scope of activities for it to deliberate on the underlying definitions of direct, general or personal supervision, or for it to consider recommending yet another type of supervision based on a supervisory practitioner’s location.”

Hospital Quality Reporting Program

CMS policy of reducing payment to hospitals that fail to meet quality reporting requirements continues at 2 percent for 2012. This reduction extends to the beneficiary and secondary payer payments, as well. CMS will again use a separate conversion factor to apply these reduced payments. Details regarding revisions to proposed measures, measures not finalized, changes in dates for data collection and submission, and other details related to reporting of quality data are noted in section XIV – Hospital Outpatient Quality Reporting Program Updates and ASC Quality Reporting Program, beginning on page 1,069 in the final rule.

Additional Notable Changes

In the 2012 Medicare Physician Fee Schedule final rule, CMS reversed its 2011 decision requiring physician or non-physician authentication on requisitions for clinical diagnostic laboratory tests paid under the lab fee schedule, but noted that independent laboratory service providers may develop their own compliance procedures, requiring a physician’s or non-physician practitioner’s (NPP’s) signature on the requisition to be certain that a service is provided in response to a valid order. CMS stated:

“The requirement that the treating physician or NPP must document the ordering of the test remains, as does our longstanding policy that requires orders, including those for clinical diagnostic laboratory tests, to be signed by the ordering physician or NPP. We believe that all parties share in the responsibility of ensuring that Medicare services are provided only in accordance with all applicable statutes and regulations, such as the requirement for a physician or NPP order.”

In 2011, CMS initiated an End-Stage Renal Disease (ESRD) Prospective Payment System and related consolidated billing edits. Under the ESRD PPS, certain laboratory tests related to ESRD management are included in the payment to the ESRD facility and are not reimbursable to other providers. Edits were created to insure that payment for these tests was not made to providers other than the ESRD facility. CMS created modifier AY Item or service furnished to an ESRD patient that is not for the treatment of ESRD to indicate tests were not related to management of ESRD; however, CMS did not anticipate the operational burden related to application of this modifier for services provided in the emergency department (ED). In the 2012 update, CMS notes that lab tests performed in the ED will be excluded from the consolidated billing edits beginning in January 2012. Implementation details can be found in CMS Transmittal 2281.

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Denise Williams, RN, CPC-H, is the vice president of revenue integrity services for Health Revenue Assurance Associates, Inc. She has been involved with APCs since their initiation. She has worked as corporate chargemaster manager for two health care systems and is heavily involved in compliance and coding/billing edits and issues.

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