Hospital Outpatient PPS

Changes to Wage Indices and Hospital Reclassifications Impacting Certain OPPS Hospitals

Changes to wage indices and hospital reclassifications for two provider systems are being implemented in accordance with section 302 of the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) as amended by section 3001 of the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA). The TPTCCA and MCTRJCA extend the expiration date for certain geographic reclassifications and special exception wage indices from October 1, 2011, through March 31, 2012 for both the hospital inpatient prospective payment systems for acute care hospitals (IPPS) and the hospital outpatient prospective payment system (OPPS).

Beyond the general adoption of IPPS fiscal year wages on a calendar year basis under the OPPS, there will be a few additional changes. A small subset of section 508 OPPS providers will receive different wages between the last three months of CY 2011 and the first three months of CY 2012, even though the full section 508 extension would normally apply for six months. For these providers, the final wage in each of the three months may change depending on whether the CY 2011 OPPS final wage or CY 2012 OPPS final wage (as adopted under the IPPS) would be more appropriate. These differences occur because section 508 wages are implemented on the same fiscal year calendar as under the IPPS. The tables reflecting accurate wages for the two three month periods (for the section 508 hospitals) are located in the "Downloads" section below.

A hyperlink to the Federal Register Notice (CMS-1442-N) describing the provisions effecting hospitals is posted in the "Related Links" section below.

CMS Final Decisions on the Recommendations of the Hospital Outpatient Payment Panel on Supervision Levels for Select Services: Based on the recommendations of the Hospital Outpatient Payment Panel at its meeting on February 27-28, 2012, CMS is changing the required level of supervision for select services effective July 1, 2012. The reference document is located in the "downloads" section below.

Affordable Care Act – Provisions Impacting Outpatient Prospective Payment System (OPPS) Hospitals

On March 23, 2010, President Obama signed into law the Affordable Care Act (ACA). Section 3401(i) of the ACA imposes a 0.25 percentage point reduction to the OPPS market basket for Calendar Year (CY) 2010, effective for services furnished on or after January 1, 2010.

The Centers for Medicare & Medicaid Services is working to expeditiously implement Section 3401(i) of ACA. Providers will begin seeing payments under this provision in the late May/early June time frame. Be on the alert for more information about this provision and its impact on past and future claims.

CMS Will Not Enforce Supervision Requirements for Outpatient Therapeutic Services in Critical Access Hospitals and Small Rural Hospitals for CY 2012 (see downloads below)

Centers for Medicare & Medicaid Services August 24, 2010 Listening Session: Hospital Observation Care; View transcript of the public Listening session held by CMS on August 24, 2010 on the increasing use of extended observation care in the hospital outpatient department. CMS held this session to gain a better understanding of beneficiary and provider experiences with observation care (see downloads below).

CMS has posted guidance for manufacturers who will be submitting ASP for radiopharmaceuticals in CY 2010. These instructions can be viewed by clicking on the document (see Downloads section below). Please note that in light of the imminent deadline for submitting ASP data for OPPS payment beginning on January 1, 2010, we encourage manufacturers wishing to submit ASP data for the January 2010 OPPS update to contact us immediately through the OPPS mailbox at OutpatientPPS@cms.hhs.gov (see Related Links Inside CMS below) so we can facilitate the submission process.

Section 4523 of the Balanced Budget Act of 1997 (BBA) provides authority for CMS to implement a prospective payment system (PPS) under Medicare for hospital outpatient services, certain Part B services furnished to hospital inpatients who have no Part A coverage, and partial hospitalization services furnished by community mental health centers. The provisions of this section were further modified by sections 201 and 202 of the Balanced Budget Refinement Act of 1999 (BBRA).

All services paid under the new PPS are classified into groups called Ambulatory Payment Classifications or APCs. Services in each APC are similar clinically and in terms of the resources they require. A payment rate is established for each APC. Depending on the services provided, hospitals may be paid for more than one APC for an encounter.

Section 4523 of the BBA also changed the way beneficiary coinsurance is determined for the services included under the PPS. A coinsurance amount will initially be calculated for each APC based on 20 percent of the national median charge for services in the APC. The coinsurance amount for an APC will not change until such time as the amount becomes 20 percent of the total APC payment. In addition, Section 204 of the BBRA provides that no coinsurance amount can be greater than the hospital inpatient deductible in a given year.

Both the total APC payment and the portion paid as coinsurance amounts will be adjusted to reflect geographic wage variations using the hospital wage index and assuming that the portion of the payment/coinsurance that is attributable to labor is 60 percent.

CMS's final rule for the new system was published in the Federal Register on April 7, 2000 (65 FR 18434). The new system went into effect on August 1, 2000.

HOSPITAL CENTER
For a one-stop resource web page focused on the informational needs and interests of Medicare Fee-for-Service (FFS) hospitals, go to the Hospital Center (see under "Related Links Inside CMS" below). Mailbox: OutpatientPPS@cms.hhs.gov.

For files to order, see Limited Data Set Files - Hospital Outpatient Prospective Payment System and the Identifiable Data Files - Hospital Outpatient Prospective Payment System.