CMS Issues Medicare Outpatient PPS Final Rule for 2015

Janet Hodgdon, Healthcare Consulting Director
November 2014

On October 31, 2014, the Centers for Medicare and Medicaid Services (CMS) issued the final 2015 rule for Medicare outpatient prospective payment services (OPPS) and ambulatory surgical centers. The rule, which goes into effect on January 1, 2015, finalizes many of the changes outlined in the proposed rule issued earlier this year.

Some of the more significant issues are outlined below:

  • The market basket update used in the final rule is 2.9%, reduced by a .5% multi-factor productivity adjustment as well as a .2% decrease mandated by the Affordable Care Act, leaving an overall market basket increase of 2.2%. Additionally, due to budget neutrality factors, the OPPS national conversion factor is set at $74.144, slightly less than the overall increase.
  • The final 2015 inpatient PPS wage index will be used for the 2015 OPPS.
  • The sole community hospital add-on amount of 7.1% is continued for rural SCHs for all services paid under the OPPS.
  • CMS is continuing to package the cost of ancillary services for APCs with a mean geometric cost of less than or equal to $100. If the services are provided by themselves, CMS will continue to make separate payment. Excluded from this packaging are preventive services, psychiatry and related counseling and certain drug administration services. Additionally, CMS plans to package prosthetics currently paid under the DMEPOS fee schedule into the surgical APC with which they are billed.
  • CMS has modified its proposal of 28 comprehensive APCs and limited it to 25 comprehensive APCs for 2015. A C-APC is an APC with a high cost primary service, generally including device implantation that accounts for a higher percentage of the total cost of the APC.
  • CMS has finalized its proposal to collect data on services furnished in off-campus provider-based departments by requiring hospitals to report a modifier for those services. For hospital claims, the HCPCs modifier to be used is “PO.” CMS is also requiring physicians and other eligible practitioners to report a new place of service code. The current POS code “22” will be deleted, with two new codes replacing it. These are scheduled for development by July 1, 2015. Compliance with reporting these is voluntary in 2015 but required beginning January 1, 2016.
  • To receive an outlier payment for hospital outpatient services, CMS has finalized that the cost of a service must exceed the multiple threshold of 1.75 times the APC payment rate AND exceed the CY 2015 fixed dollar threshold of the APC payment plus $2,775.
  • CMS didn’t forget inpatient services in this final outpatient rule and has revised the requirements for physician certification of hospital inpatient services. CMS currently requires a physician certification, together with certain additional elements, for all inpatient admissions. CMS is finalizing its proposal to require physician certification only for outlier cases and long-stay cases of 20 days or more. An admission order will continue to be required for all inpatient admissions when a patient has been formally admitted.
  • The ASC payment update, which is tied to the consumer price index for urban consumers (CPI-U) is projected at 1.9%, less an MFP adjustment of .5, for an overall ASC increase of 1.4%.
  • Partial hospitalization rates have also been updated. For CMHCs, the geometric mean per diem will be $100.15 for Level I (three services) and $118.54 for Level II (four or more services). If the partial hospitalization program is hospital-based, the update is $185.87 for Level I and $203.01 for Level II.

This OPPS/ASC final rule continues to reflect a move to payment based on quality and better health outcomes as well as the move to payments for more packaged services. The topics outlined here are only a portion of those laid out in more than a thousand pages of text. This rule is complex and should be carefully scrutinized to determine the full impact on providers.

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