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CMS Releases Proposed Outpatient Payment System Rule for 2017, Leaving Hospitals Unhappy

Last week, the Centers for Medicare and Medicaid Services (CMS) released its proposed rule for the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System for 2017. CMS proposed several new policies in the rule, including the implementation of Section 603 of the Bipartisan Budget Act of 2015 (BBA). Section 603 requires certain items or services provided by off-campus outpatient departments or “provider-based departments” (PBDs) to no longer be paid under OPPS but rather under the “applicable payment system." The proposed rule provides only limited exceptions to this requirement, much to hospitals' dismay.

In implementing Section 603 of the BBA, the proposed rule allows certain types of off-campus PBDs to continue billing for services and items under OPPS in 2017. These excepted items or services include those furnished by a dedicated emergency department, by an off-campus PBD before November 2, 2015, or by a hospital department within 250 yards of a remote location of a hospital. However, CMS would end payments under OPPS for all other items and services provided at an off-campus PBD in 2017. CMS proposed that the “applicable payment system” for these non-excepted items and services would be the Medicare Physician Fee Schedule (MPFS). Instead of hospitals being paid directly, CMS proposed that physicians at the off-campus PBDs would be paid at the professional nonfacility rate under the MPFS.

Additionally, CMS proposed an increase in the OPPS rates by 1.55% and several changes to the Hospital Value-Based Purchasing (VBP) Program, the Hospital Outpatient Quality Reporting (OQR) Program, and the Electronic Health Records (EHR) Incentive Program.  For the VBP Program, CMS proposed to remove the pain management dimension of the survey used for the program after hearing concerns that it could encourage hospital staff to over-prescribe opioids. CMS also proposed adding seven measures to the Hospital OQR Program for payment determination in 2020 and beyond, which would include two claims-based measures and five survey-based measures. The two claims-based measures focus on (1) reducing the number of unplanned inpatient admissions and emergency department visits from cancer patients, and (2) assessing patient outcomes after outpatient surgery. The five survey-based measures will be collected from patient experience surveys to determine patients’ access to care, staff interactions, and overall experience. Finally, CMS proposed easing certain requirements for the EHR Incentive Program.  Among other changes, the proposed rule would establish a continuous 90-day reporting period in 2016 for all eligible professionals, eligible hospitals, and critical access hospitals, and eliminate the computerized provider order entry and clinical decision support measures for all eligible hospitals and critical access hospitals.

Hospitals and hospital groups have expressed concern and disappointment over the proposed rule. In particular, CMS’s proposal to end payments under OPPS to certain off-campus outpatient departments is viewed as impeding hospital-based care. Congress remains very interested in revisiting the issue, though action will not occur prior to the end of the comment period. CMS is accepting comments on the proposed rule until September 6, 2016. A fact sheet on the proposed rule released by CMS can be found here, and the full text of the proposed rule can be found here.

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