On November 1, 2012, CMS issued the final outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) system rules to implement rate and policy updates for hospital outpatient departments (HOPDs) and ASCs for calendar year (CY) 2013.  Under the OPPS final rule, Medicare payments to HOPDs will increase 1.8 percent, which includes a 2.6 percent market basket increase minus statutory reductions totaling 0.8 percent.  The statutorily mandated minus 2.0 percent payment penalty will be applied to hospitals that fail to comply with hospital outpatient quality reporting requirements.  ASC payment rates, on the other hand, will increase by 0.6 percent—which includes a 1.4 percent increase based on updates to the consumer price index for urban consumers (CPI-U) minus a 0.8 productivity bonus adjustment required by law.  Significant changes and updates under the OPPS final rules for HOPDs, ASCs, quality improvement organizations (QIOs), and inpatient rehabilitation facilities (IRFs) are set forth below. 

OPPS Proposed Rule Changes Affecting HOPDs

• Shift from Median Costs to Geometric Mean Costs. As proposed, CMS will use the geometric mean costs of services within each Ambulatory Payment Classification (APC) to determine the services’ relative payment weights instead of median costs, as has been used since the inception of the OPPS.  According to CMS, geometric mean costs are a better reflection of the average costs of services than the median of costs, and they align the OPPS rate-setting metric with the inpatient prospective payment system. 
• Hospital Outpatient Quality Reporting Program.  The OPPS final rule does not add any new quality reporting measures to the 22 previously adopted for CY 2014 payment determinations.  However, CMS confirmed the removal of one measure (OP-16: Troponin results for Emergency Department acute myocardial infarction (AMI) patients or chest pain patients (with Probable Cardiac Chest Pain) Received Within 60 minutes of arrival), confirmed the suspension of another measure (OP-19 Transition Record with Specified Elements Received by Discharged ED Patients), and deferred data collection for a third measure (OP-24 Cardiac Rehabilitation Patient Referral). 
• Drugs and Pharmacy Overhead.  For CY 2013, CMS will pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status at the statutory default of average sales price (ASP) plus 6.0 percent. 
• Supervision of Hospital Outpatient Therapeutic Services.  CMS clarified the application of the supervision regulations to physical therapy, speech-language pathology, and occupational therapy services that are furnished in HOPDs and critical access hospitals (CAHs).  CMS also stated that it would extend the enforcement instruction one final year through CY 2013. This additional year, which CMS expects will be the final year of the extension, will provide additional opportunities for HOPDS to bring issues to the Hospital Outpatient Payment Panel.
• Partial Hospitalization Services.  CMS finalized its proposal to update four separate partial hospitalization program (PHP) APC per diem rates based on geometric mean cost levels.

OPPS Final Rule Changes Affecting ASCs

• New Intraocular Lenses Technology.  CMS finalized proposed changes to its new technology for intraocular lens (NTIOLs) regulations.  Under the final rule, FDA-approved labeling for NTIOLs must contain a claim of a specific clinical benefit on new lens characteristic relative to currently available IOLs.  The clinical benefit identified in the labeling must be supported by evidence demonstrating that the NTIOL results in a measurable, clinically meaningful, improved outcome. 
• Proposed ASC Quality Reporting Measures.  CMS finalized its proposal regarding the process for reducing ASC payment rates for ASCs that fail to meet the ASC Quality Reporting program requirements for CY 2014 and subsequent payment determinations.  

OPPS Proposed Rule Changes Affecting Other Providers and Organizations
The OPPS final rule also makes certain changes to the IRF Quality Reporting Program, and the Quality Improvement Organization (QIO) regulations. 

• With respect to the IRF Quality Reporting Program, CMS finalized proposals for (1) an application of the National Quality Forum (NQF)-endorsed catheter-associated urinary tract infection (CAUTI) measure for the FY 2014 annual payment update determination, and (2) the actual NQF-updated CAUTI measure for the FY 2015 and subsequent payment determinations.  A non-risk adjusted version of a NQF-endorsed pressure ulcer measure was also adopted. 
• Changes were made to QIO regulations to improve QIO operations, transparency, and responsiveness to beneficiary complaints regarding quality of care.  These changes include providing beneficiaries with more information about QIO review processes, establishing a new alternative dispute resolution process to resolve beneficiary complaints, allowing QIOs to send and receive secure electronic health information, and giving beneficiaries the right to authorize the QIOs’ use and disclosure of confidential information.

The OPPS final rule is scheduled to be published in the November 16, 2012 edition of the Federal Register.  The OPPS final rule is available here and the Fact Sheet is available here. 

Reporter, Adam Robison, Houston, +1 713 276 7306, arobison@kslaw.com.