Note from Hugh

The big news last week was the publication of the display copy of the 2009 Hospital Outpatient Prospective Payment System (OPPS)/Ambulatory Surgery Center proposed rule. CMS is accepting comments on the proposed rule until September 2, 2008, and has indicated that the final rule will be issued by November 1, 2008.

In general, the OPPS changes proposed for 2009 tend to be more financial than operational, which should make it a little easier for hospitals to operationalize the final rule. However, hospitals will want to closely review CMS’s proposed changes to the OPPS payment rates and OPPS payment policies so that they can start analyzing the potential financial impact of the proposed 2009 changes. CMS’s web page for the proposed rule provides various supporting files that hospitals may find helpful in conducting their analyses.

Not surprisingly, the proposed rule emphasizes policy changes designed to promote quality improvement. In addition to implementing (as planned) the payment reduction for hospitals that do not meet CMS’s quality reporting requirements, CMS is considering implementing a policy that would result in an OPPS payment reduction when patients are treated for preventable conditions that arose in connection with an outpatient encounter. CMS refers to these conditions as “healthcare-associated conditions.” This is similar to the payment reduction under the inpatient prospective payment system for “hospital acquired conditions.”

In last week’s issue of the Medicare Weekly Update, I discussed the continuing confusion over the physician supervision requirement for “incident to” services furnished on a hospital campus. CMS addressed this issue in the proposed rule (see pp. 401—406 of the display copy of the proposed rule). CMS is now taking the position that direct supervision, including the immediate availability of a physician, is required for “incident to” services furnished on a hospital campus (it was already clear that direct physician supervision is required for off-campus provider-based facilities). Of particular note, CMS stated in the proposed rule that “the lack of timely physician response to a problem in the HOPD would represent a quality concern from [CMS’s] perspective that hospitals should consider in structuring their provision of services in ways that meet the direct physician supervision requirement for HOPD services.”

CMS’s position in the proposed rule on the “incident to” physician supervision requirement is arguably more restrictive than prior CMS guidance which indicated that physician supervision is “assumed” when “incident to” services are furnished on the premises of a hospital. Furthermore, the proposed rule fails to clarify what is required in order for a physician to be considered “immediately available” in a hospital setting. I encourage hospitals to submit a comment requesting clarification on this issue.

I anticipate that CMS will be discussing the proposed rule on next week’s Hospital Open Door Forum conference call. For those who are interesting in participating in the call (as always, there is no charge), the dial-in information is as follows: