Health Information Management

OPPS final rule: CMS finalizes changes for drug payment formula, physician supervision

HCPRO Website, November 3, 2009

The 2010 OPPS final rule released on October 30 contains few surprises, but does finalize two changes that received considerable attention when CMS proposed them.
“The information CMS has finalized for physician supervision and drug reimbursement are two key areas for hospital review, though for slightly different reasons,” says Jugna Shah, MPH, president of Nimitt Consulting in Washington, DC.
Physician supervision
First, CMS adopted a new standard for supervision in the hospital and for on-campus outpatient departments. The physician must be present on the same campus and “immediately available,” rather than in the department. CMS defines “in the hospital” in the new regulations and discusses “immediately available” extensively.
“APC coordinators, your revenue cycle team, and compliance officers need to carefully review this and other discussion items from the final rule,” says Shah.
CMS made some important distinctions in the preamble that people will need to pay attention to, says Kimberly Anderwood Hoy, Esq., CPC, director of Medicare and compliance at HCPro, Inc., in Marblehead, MA. CMS specifies that the person must be “immediately available” to step in and take over the procedure. CMS also specified that the person must be close enough to be able to step in, not simply anywhere on the campus.
“They have to be immediately able to drop what they are doing and step and take over the procedure if necessary,” Hoy says. “And they have to be close enough that they would be immediately available. They can’t be two blocks away.”
For example, if the physician is in the hospital cafeteria, he or she would be considered “immediately available”, but if the physician is in the middle of providing a procedure to a patient, he or she is unable to stop to provide direct supervision to another patient—so is not immediately available, explains Shah.
CMS also clarified that the person providing supervision would have to be able to perform the procedure under his or her license and within the scope of his or her privileges at the hospital.
CMS made clear through a regulatory change that the direct supervision requirement for off-campus provider based departments did not change, and still requires the practitioner to be present in the off-campus department, as discussed in the 2009 final rule.
CMS finalized its proposal to permit physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives, and clinical psychologists to provide direct supervision for hospital outpatient therapeutic services when their license allows them to do so. One change from the proposed rule is the addition of licensed clinical social workers. CMS agreed with commenters that licensed clinical social workers should also be included in the list of non-physician practitioners allowed to provide direct supervision.
These changes come, in part, as a response to commenters, including the American Hospital Association, who complained to CMS that the rules were confusing and unclear. In the 2009 proposed rule, CMS discussed physician supervision requirements and finalized some changes for 2009, but still received considerable comments to their proposed changes in 2010.
The fact that CMS has finally conceded that it can see how there was confusion on physician supervision requirements prior to 2009 should come as a huge relief to hospitals who have been concerned that audits may occur going back many years that could result in financial take-backs, says Shah. Hospital administrators have been worried that the OIG, recovery audit contractors, Medicare administrative contractors, and other auditors would use the fact that hospitals have raised questions on this topic as a reason to begin investigations and potentially take back large amounts of money.
Because CMS agrees that, perhaps, things were confusing in the past, it stated it will not sanction audits or reviews of the supervision requirements for 2000-2008, but also stated enforcement action would be appropriate for 2009. “I think that makes an even stronger case for concern about enforcement in 2009 and providers should take a close look at their risk for that year in light of the clarifications published in the 2009 rule,” says Hoy.
The final rule does make clear that non-physician practitioners will not be able to supervise cardiac, intensive cardiac, and pulmonary rehabilitation services. A physician must still be present to provide supervision.
“I think that is something people are going to have to pay close attention to as they implement new policies allowing non-physician practitioner supervision because we have always lumped those services together with all of the other outpatient services,” says Hoy.
Reimbursement for separately payable drugs
CMS finalized its new payment calculation method for the hospital pharmacy overhead costs of separately payable drugs and biologicals. In the final rule, CMS discusses payment calculations at length, yet ends up with the same reimbursement for 2010 as hospitals have today for separately payable drugs -- average sales price (APS) plus 4%.
“This is deeply frustrating because the industry has worked diligently to help Medicare to understand that that ASP plus 4% is simply insufficient to cover drug acquisition costs and pharmacy handling,” Shah says.
Hospital administrators generally believe they are underpaid for drugs, but CMS seems unwilling to change its position, Hoy says.
“I think it’s interesting that the two sides are so far apart on such a vital reimbursement issue,” Hoy says.
In addition to CMS’ discussion of separately payable drug reimbursement, hospitals should be aware that CMS has changed the packaging threshold from $60 to $65 and will no longer provide separate reimbursement for 5-HT3 antiemectics. Also, current cost-based reimbursement for therapeutic radiopharmaceuticals and brachytherapy sources will migrate over to regular APC payment rates.
“Taken in sum total, these drug reimbursement changes are likely to have an impact on a hospital’s bottom line,” says Shah.
Stem cell transplants
One proposal CMS chose not to finalize involves outpatient stem cell transplants. For years, CMS has recognized separate payment for allogeneic stem cell transplants in the outpatient setting, and has assigned the CPT codes in question status indicator S (significant procedure, not discounted when multiple). In the proposed rule, CMS discussed changing the status indicators for for these services to “C,” inpatient only.
Commenters pointed out these services are clinically appropriate and can be safely provided in limited circumstances in the outpatient setting, Shah says. Medicare agreed with the commenters and will permit allogeneic transplants for outpatients.
“This was the right call on CMS’ part as it shows that the agency is willing to let clinical practice drive payment policy rather than the other way around,” Shah says.
The OPPS final rule includes other changes as well. Download a display copy of the final rule to review the additional changes.

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