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CMS releases 2012 OPPS proposed rule

HCPRO Website, July 6, 2011

by Michelle A. Leppert, CPC-A

CMS released the 2012 OPPS proposed rule late Friday afternoon, on the eve of the July 4th holiday weekend. The proposed rule does not contain many substantive operational changes. However, CMS does propose changes to some much discussed areas, including payment for combined CPT® codes for CT of the abdomen and pelvis and determining required levels of physician supervision.

“I was pleasantly surprised by several aspects of the rule,” says Jugna Shah, MPH, president of Nimitt Consulting Inc. based in Washington, DC. “First, I can’t recall the last time we had a file to read that was less than 1,000 pages. Second, CMS really listened to comments it received during the last year from many organizations on its rate-setting methodology for the ’new’ combined CT code for CT of the abdomen and CT of the pelvis.”

In 2011, the CPT editorial panel created three new codes for computed tomography (CT) of abdominal and pelvis:

  • Code 74176, Computed tomography, abdomen and pelvis; without contrast material
  • Code 74177, Computed tomography, abdomen and pelvis; with contrast material(s)
  • Code 74178, Computed tomography, abdomen and pelvis; without contrast material in one or both body regions, followed by contrast material(s) and further sections in one or both body regions

CMS assigned those new CPT codes to existing APCs with payment rates that many felt were far too low to cover the costs of providing combined (two services).

Many organizations have been working hard to convince CMS that these new codes are just that, new codes but not new services. They argued that CMS should use its historical claims data to set appropriate payment rates for the single and combined CT services, Shah says. “CMS has listened based on its proposal for 2012 and this is a huge win for the provider community given that we’ll see more appropriate payment, and significantly higher payment rates for these services if CMS’ proposal for 2012 is finalized. Moreover, since we expect to see more and more combination codes being released by the AMA, this change on CMS’ part is critical to ensure adequate future payments.”

CMS proposes to create two new APCs to assign the CPT codes for combined abdominal and pelvis CT services:

  • APC 0331 (combined abdominal and pelvis CT without contrast) for CPT code 74176
  • APC 0334 (combined abdominal and pelvis CT with contrast) for CPT codes 74177 and 74178

CMS proposed no changes to E/M visit coding guidelines nor did it discuss drug administration at all. This doesn’t mean that hospitals won’t see payment rates changes for these important and high volume services, says Shah. “That is the one thing we can count on every year – individual APC payment rate fluctuations so take a few minutes now to review the proposed payment rates compared to current rates for your most frequently billed services either by volume or percent of charges.”

Conversion factor update/ increase

Under the 2012 OPPS proposed rule, CMS is projecting a market basket update of 1.5%. However, that amount will likely decrease to 1.1% after CMS factors in all adjustments.

One such adjustment is related to a special payment provision proposed for 11 cancer hospitals. CMS proposed changes on how these cancer hospitals would be reimbursed due to the fact that its internal studies have shown that these hospitals have a much lower payment-to-cost ratio (PCR) compared to all other hospitals. CMS’ proposal is intended to create some payment parity between the hospitals.

CMS proposes that if the PCR for these cancer hospitals is below the weighted average PCR for all other OPPS hospitals, then it will increase the payment to these cancer hospitals on a hospital-specific basis. The increase would be equal to percentage difference between the cancer hospital’s individual PCR and the weighted average PCR of other OPPS hospitals. This must be done in a budget neutral manner according to the Affordable Care Act. Therefore CMS indicates in the proposed rule that this provision will cause a 0.6% reduction to the payment rates for non-cancer OPPS hospitals.

Another payment adjustment that will impact final payment rates is due to CMS’ proposal to complete its transition to using full community mental health centers (CMHC) data to set the CMHC partial hospitalization program (PHP) APC per diem payment rates. However, if finalized, this proposal will result in a 0.2% payment increase for all other hospitals. These are two examples of adjustments to the final conversion factor that impact it going up and down.

Payment for partial hospitalization services

CMS proposed to continue with its methodology for creating separate APCs for partial hospitalization when provided in the hospital setting vs. in a CMHC despite the lawsuit that was brought against the agency earlier this year. CMS has proposed to update the existing four CMHC PHP APC payment rates—two for freestanding community mental health center (CMHC) PHPs, and two for hospital-based PHPs. Under the proposal, CMS would pay:

  • $97.78 for APC 0172 (level 1 partial hospitalization for CMHC)
  • $113.62 for APC 0173 (level II partial hospitalization CMHC)
  • $162.34 for APC 0175 (level 1 partial hospitalization for hospital-based PHPs)
  • $189.87 for APC 0176 (level II Partial Hospitalization for hospital-based PHPs)

Drugs and pharmacy costs

CMS has proposed to increase the drug packaging threshold from $70 today to $80 for CY 2012, which means that more drugs are likely to be packaged. In addition, CMS has proposed to decrease the payment for all separately payable drugs and biologicals without pass-through status from the current average sales price (ASP)+5%,to ASP + 4%.

The payment reduction is bad enough, says Shah, and may be due in part to the proposal to increase the drug packaging threshold. It could get worse in the final rule as CMS clearly indicates that the final ASP plus percentage could drop by a percentage point when everything is factored in, she adds. “Therefore hospitals need to take a look at this in the proposed rule, provide comments to CMS, and begin preparing their facilities for this potential payment reduction.”

Supervision requirements for outpatient therapeutic services

For CY 2011, CMS finalized a number of changes to physician supervision requirements for hospitals. Most notably, CMS created a new category of nonsurgical extended duration therapeutic services, which require direct supervision at the initiation of the service but can then be followed by general supervision for the remainder of the service. Furthermore, CMS stated its plan to convene a panel to review the supervision level of additional services that might be added to this category of nonsurgical extended duration services as well as other services. Finally, CMS did not enforce the supervision requirements for CAHs in 2011 but indicated that it would do so in the near future.

In the 2012 OPPS proposed rule, CMS has a lengthy discussion about its proposal to use the existing APC Advisory Panel with some modifications, including the addition of panel members from the CAH and rural hospital community, to review the supervision levels of services brought to its attention. CMS outlines the process it proposes along with its plan on handling requests for services to review and other criteria it expects to use. As a result, CMS also proposes to extend its non-enforcement policy of supervision requirements to CAHs. This means CAHs will be exempt from these requirements for one more year, says Shah.

Hospital Outpatient Quality Reporting Program

CMS proposes adding nine quality measures to the current list of 23 measures that hospital outpatient departments must report. That will bring the total number of measures to be reported for 2013 payment determination to 32. The new measures include:

  • Six chart abstracted measures
  • One healthcare associated infection measure to be reported to the National Health Safety Network
  • One measure about the use of a safe surgery checklist
  • One measure collecting hospital outpatient department volume for selected surgical procedures

In addition, CMS proposes added one measure—influenza vaccination coverage among healthcare personnel— to the list for reporting for the CY 2015 payment determination.

Comment on the proposals

CMS will accept comments on the proposed rule through August 31, and will issue the final rule by November 1. Visit http://www.regulations.gov to submit electronic comments on this regulation. Follow the instructions under the “More Search Options” tab.

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