CMS RELEASES FINAL RULE FOR 2007

CMS RELEASES FINAL RULE FOR 2007

Last November, Centers for Medicare & Medicaid Services (CMS) issued a final rule for Medicare payment for hospital outpatient services for 2007. The fi nal outpatient prospective payment system (OPPS) rule expanded the list of services for which Medicare will pay ambulatory surgical centers (ASCs) in 2007.

Hospitals would receive an estimated $32.5 billion in CY 2007 under the final rule that revises policies and payment rates under the OPPS for outpatient services provided to Medicare beneficiaries, according to a CMS press release. As provided by statute, the rule includes a 3.4 percent market basket update to Medicare payment rates for services paid under the hospital OPPS for 2007, and CMS estimates hospitals will receive an overall average increase of 3.0 percent in Medicare payments for outpatient department services in 2007 due to the changes in the final rule.

CMS is revising the Ambulatory Payment Classifi cation (APC) payment and coding structure for drug administration services, allowing hospitals to report the same CPT codes for drug administration used by physicians and other payors, and to be paid separately for additional hours of infusion, in addition to their payment for the initial hour of infusion.

Currently, the Medicare statute requires CMS to pay separately for drugs and biologicals that cost $50 or more per administration and to bundle those costing less than $50 per administration into payments for the procedures with which they are associated. In the final rule, CMS finalizes its proposed policy to pay separately for drugs, biologicals, radiopharmaceuticals and the anti-nausea drugs costing $55 or more per day, consistent with the previous $50 threshold but updated for inflation. Drugs and biologicals will be paid at 106 percent of the average sales price (ASP+6), rather than the proposed rate of 105 percent of ASP. Radiopharmaceuticals will continue to be paid at charges adjusted to cost using hospital-specifi c cost-to-charge ratios. Payments for other drugs will continue to be bundled into payments for their associated procedures.

Other provisions affecting payment for outpatient services paid under the OPPS include:

• Continuing to pay separately for brachytherapy sources, but basing payment on the source-specific median costs for brachytherapy sources, as reflected in hospital outpatient claims data 
• Payment would be on a per-unit source basis rather than on a per-day basis, to recognize the high variability of individual treatment costs 
• Reducing the payment rate for APCs with significant costs for implanted devices when a device is replaced without cost under warranty or recall and reducing the beneficiary coinsurance proportionately 

Finally, the rule makes final two statutory mandates that will affect ambulatory surgical centers (ASCs) in CY 2007. First, in response to public comments, CMS is adding 19 procedures to the ASC list. The law requires that the ASC list be updated at least every two years; the last update through notice and comment rulemaking was implemented in July 2005. Two of the procedures for which Medicare will allow payment to ASCs beginning in CY 2007 are for surgical services furnished to maintain vascular access stulas and grafts for hemodialysis patients. The procedures are consistent with the CMS “Fistula First” initiative and adding them to the ASC list of Medicare-approved procedures will provide expanded access to these services, which can be of critical importance to patients receiving dialysis treatment.

In addition, CMS is implementing in CY 2007 a provision of the Deficit Reduction Act (DRA) which requires that Medicare payment for surgical procedures performed in ASCs not exceed the Medicare payment for the same procedures when they are performed in a hospital outpatient department (HOPD) subject to the OPPS. This provision will result in decreased payment for approximately 280 procedures on the ASC list beginning January 1, 2007.

The final rule is available on the CMS Web site at: www.cms.hhs.gov/HospitalOutpatientPPS/ 01_overview.asp 

It will be effective for outpatient and ASC services furnished to Medicare benefi ciaries on or after Jan. 1, 2007.