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New OPPS proposed rule pushes wholesale packaging

Healthcare Auditing Weekly, July 24, 2007

The outpatient prospective payment system (OPPS) has seen its fair share of changes every year since its inception in 2000. But for 2008, CMS is proposing perhaps its most drastic change yet: Wholesale packaging.

CMS is "proposing to view a service, in some cases, as not just the diagnostic or treatment modality identified by one individual HCPCS code but as the totality of care provided in a hospital outpatient encounter that would be reported with two or more HCPCS codes for component services," according to the 2008 OPPS proposed rule, released Monday.

This means that many services for which hospitals currently receive separate payment--e.g., observation, many imaging supervision and interpretation services, and diagnostic radiopharmaceuticals, among others--will no longer receive separate payment in 2008, according to CMS' proposal.

Specifically, CMS proposed to package the payment for HCPCS codes that describe the dependent items and services in the following seven categories into the payment for the independent services with which they are furnished:

• Guidance services
• Image processing services
• Intraoperative services
• Imaging supervision and interpretation services
• Diagnostic radiopharmaceuticals
• Contrast media
• Observation services

CMS is proposing to roll the payment for these services into the main procedure/visit code associated with the patient's visit. For example, rather than paying observation code G0378 separately (APC 0339, national average payment of $442.31) in addition to level five emergency department E/M code 99285 ($325.26), CMS will pay only for 99285, albeit at a slightly higher rate ($348.81) to reflect the packaging of G0378.

"I understand that the concept of packaging is central to a prospective payment system, but the fact that CMS would undo all of its work over the years to provide separate payment for observation when certain criteria is met seems really egregious to me," says Jugna Shah, MPH, president of Nimitt Consulting in Washington, DC.

Other highlights from the rule include the following:

E/M
For the first time in years, CMS states that it wants to hear from providers on whether there is a "pressing need" for national guidelines, or whether the current system in which hospitals create and apply their own internal guidelines to report emergency department and clinic visits is more practical and appropriately flexible for hospitals. "This is a first, and is a clear sign that CMS has some guiding principles in mind," Shah says. "At a minimum, hospitals should compare their existing guidelines against CMS' principles."

Drug administration
Shah says that no news regarding coding or billing changes for drug administration is "Great news-providers finally get a respite after two-plus years of coding and billing changes," she says. For 2008, CMS opted to stay with the current CPT codes and definitions hospitals must use to report these services.

Pharmacy handling/overhead costs
Although CMS' proposal for most separately payable drugs is to continue paying a single APC rate (based on the average sales price + 5%), which includes drug acquisition cost and pharmacy overhead/handing, CMS also proposed to have providers separate out the drug charge reported from the pharmacy overhead cost associated with the drug. It proposes to require hospitals to report the latter on a separate line item with a revenue code only.

Quality measures
In order for hospitals to receive the full OPPS payment update for services furnished in CY 2009, CMS proposed that hospitals must submit data on 10 measures.

The OPPS proposed rule contains much more. You can read it on the CMS Web site.

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