Medicare Compliance & Reimbursement

Hospital payments under the outpatient prospective payment system would get a 3.8-percent increase under the proposed OPPS rule released the Aug. 6 by the Centers for Medicare and Medicaid Services. Aggregate outpatient payments to the nearly 4,400 OPPS hospitals would go up nearly 5.7 percent under the rule, from an estimated $21.6 billion in 2003 to about $22.8 billion in 2004. The proposed rule bases 2004 payment rates on actual hospital costs derived from 2002 claims for outpatient services, and it introduces several refinements "such as increasing the number of claims used to develop relative payment rates for ambulatory payment classifications," CMS said in a release accompanying the rule. CMS is projecting no across-the-board cutback in additional "pass-through" payments for new drugs and technologies because these payments are not predicted to exceed their statutory cap of 2 percent of all OPPS expenditures. Eight drugs and bio-logics and two device categories that qualified for transitional pass-through payments in 2002 and 2003 would come off the pass-through list in 2004.

"As in 2003, CMS is proposing to package the costs of drugs and biologics with median costs below $150, as well as the cost of implantable devices, into the payment rate for the primary procedure or treatment," the agency said. "CMS is also proposing to create separate ambulatory payment classifications for drugs and biologics with median costs at or above $150, and to set payment rates based on an analysis of hospital cost data."

The agency said this would result in a significant payment decrease for some products, including some drugs that are rarely used, and like last year the agency is proposing to mitigate reductions that would exceed 15 percent. The proposed rule would set the OPPS threshold for outlier payments at 2.75 times the APC payment rate, but would set a separate threshold for "community mental health centers that appear to have received disproportionately high outlier payments." The rule would increase the number of "orphan" drugs to 11 and pay for those drugs based on hospital claims data, rather than on a reasonable cost basis.