CMS Releases CY 2015 OPPS and ASC Proposed Rule

by King & Spalding

On July 3, 2014, CMS released the CY 2015 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule. In its proposal, CMS seeks, among other things, to increase OPPS payment rates by a factor of 2.1 percent, and CMS estimates a 1.2 percent net market basket update to ASC payments. Comments on the Proposed Rule must be received by 5:00 p.m. on Tuesday, September 2, 2014.

OPPS Payment Updates

CMS is proposing to increase OPPS payment rates by a factor of 2.1 percent. This figure represents a market basket increase of 2.7 percent, minus a multifactor productivity adjustment of 0.4 percent, and a 0.2 percent downward adjustment required by the Affordable Care Act. CMS estimates that the proposed changes would result in CY 2015 OPPS payments of approximately $56.5 billion, an increase of $5.2 billion compared to CY 2014 OPPS payments.

For outlier payments, CMS proposes that in order to be eligible for outlier payments, the cost of a service must exceed both the multiple threshold of 1.75 times the APC payment rate and the proposed fixed-dollar threshold of $3,100 over the APC payment rate. CMS proposes to continue to pay Part B drugs provided in outpatient departments at Average Sales Price (ASP) plus 6 percent for non-pass-through drugs and biologicals.

Comprehensive APCs

According to CMS, the Proposed Rule would continue the progress in transitioning the OPPS from what currently resembles a hybrid of a prospective payment system and a fee schedule to a more complete prospective payment system. CMS began this process in the CY 2014 OPPS/ASC Final Rule when it adopted a Comprehensive APC policy which expanded the categories of related items and services package into a single payment for a comprehensive primary service. In the CY 2014 Final Rule, CMS created 29 Comprehensive APCs to pay for high cost devices with a single payment. CMS delayed implementation of the policy until CY 2015. In the CY 2015 Proposed Rule, CMS is proposing several additional Comprehensive APCs, including some lower cost, device dependent APCs that were not proposed in CY 2014. Due to restructuring and consolidating some of the current device dependent APCs, CMS's Proposed Rule describes a total of 28 Comprehensive APCs for CY 2015 (compared to the 29 described in the CY 2014 OPPS/ASC Final Rule).

Conditional Packaging of Ancillary Services

CMS proposes changes to its current OPPS policy of paying separately for ancillary services that are supportive of a primary service. For CY 2015, CMS proposes the conditional packaging of all ancillary services assigned to APCs with a geometric mean cost of $100 or less. Proposed exceptions to the ancillary services packaging policy include preventive services, psychiatry-related services, and drug administration services. Ancillary services furnished by themselves would continue to be paid separately.

CMS Proposes to Abandon Two Midnight Physician Certification Requirement

One of the major changes developed in the FY 2014 Inpatient Prospective Payment System (IPPS) rulemaking cycle was a requirement that, as a condition of Medicare payment, physicians must certify to the medical necessity of inpatient services for all inpatient admissions. Although unrelated to outpatient hospital or ASC payments, the CY 2015 OPPS/ASC Proposed Rule proposes to revise the language in 42 C.F.R. § 424.13 to eliminate the physician certification requirement for inpatient stays except in the case of long stays (defined in the proposed rule as 20 days or longer) or cost outlier cases. Accordingly, a physician certification would not be required for all other inpatient stays. The CY 2015 OPPS/ASC Proposed Rule states that CMS will continue to require a written inpatient order as a condition of Medicare payment.

ASC Payment Update

For CY 2015, CMS proposes to increase payment rates under the ASC payment system by 1.2 percent. This proposal is based on projected Consumer Price Index-Urban Consumers (CPI-U) update of 1.7 percent minus the multi-factor productivity adjustment required by the Affordable Care Act that is projected to be 0.5 percent. CMS estimates that total payments to ASCs for CY 2015 will be approximately $4.1 billion, which represents an increase of $243 million over estimated CY 2014 payments.

Proposed Overpayment Recovery and Appeals Processes for Medicare Parts C and D

The Proposed Rule contains provisions establishing a formal process that would allow CMS to recoup overpayments that result from the submission of erroneous payment data by a Medicare Advantage (MA) organization or Part D sponsor when the organization or sponsor fails to correct those data voluntarily before payment reconciliation. In addition to the recoupment process, CMS is proposing a three-level appeals process for MA organizations and Part D sponsors to seek review of CMS's determination that the payment data submitted by the organization or sponsor was erroneous.

Data Collection Regarding Services Furnished in Off-Campus Provider-Based Departments

On January 1, 2015, CMS proposes to begin collecting information on the types and frequency of services furnished in off-campus provider-based departments. In order to track this data, CMS proposes to create a HCPCS modifier that would be reported with every code for physicians' services and outpatient hospital services furnished in an off-campus provider-based department of a hospital.

Quality Reporting Changes

CMS is seeking to remove a cardiac measure (OP-4: Aspirin at Arrival) and two prophylactic antibiotic measures (OP-6: Timing of Prophylaxis Antibiotics and OP-7: Prophylactic Antibiotic Selection for Surgical Patients) from the Hospital Outpatient Quality Reporting (OQR) Program. It also proposes adding one claims-based measure (OP-32: Facility 7-Day Risk Standardized Hospital Visit Rate after Outpatient Colonoscopy) for CY 2017 payment determination and subsequent years. CMS further proposes changing from required to voluntary reporting one chart-abstracted measure (OP-31: Cataracts – Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery). The latter two proposed changes would also be made to the ASC Quality Reporting Program (ASCQR), as CMS continues to propose measure alignment across the OQR and ASCQR programs.

CMS expects that the CY 2015 OPPS/ASC Final Rule will be issued around November 1, 2014.

To view the Proposed Rule, click here. To view CMS's Fact Sheet on the proposed policy and payment changes for OPPS and ASCs, click here.

Isabella Edmundson, Atlanta, +1 404 572 3527,


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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