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Proposed Medicare OPPS Rule Draws Fire for Its 'Inadequate Reimbursement'

Proposed Medicare OPPS Rule Draws Fire for Its 'Inadequate Reimbursement'

WASHINGTON—Under a proposed rule covering Medicare payments for outpatient services, hospitals would receive $32.5 billion in calendar year 2007, which includes a 3.4% inflation update over the 2006 payment rates of the Outpatient Prospective Payment System (OPPS), according to the Centers for Medicare & Medicaid Services (CMS).

After accounting for other factors that affect the OPPS payment levels, CMS projected that the average overall increase in Medicare payments to hospital outpatient departments would be 3.0% in 2007. However, because of the anticipated growth in volume and the intensity of services, CMS said OPPS's total expenditures next year would be about 9.2% higher than those estimated for 2006.

The end result of instituting the proposed rule would be hospital outpatient rates that "are significantly reduced from the current rates," according to the Association of Community Cancer Centers (ACCC). It cited as one example a proposed change in the payment rate for the acquisition and overhead costs of certain separately payable drugs and biologicals. The current rate is the manufacturer's average sales price (ASP) plus 6%. The proposed rule would reduce that rate to ASP plus 5%.

Reporting Quality Measures

The proposed rule would tie payment rate increases to the reporting of quality measures, beginning in 2007. Currently, OPPS payments increase with the number and intensity of services without regard to the quality of care or patient health. Hospitals that report quality measures for purposes of the update in the inpatient prospective payment system (IPPS) would receive the full 3.4% inflation update on the outpatient payments as well, CMS explained. "Those hospitals required to report quality measures for inpatient services in order to receive the full IPPS update, but fail to do so, would receive the OPPS update minus 2.0 percentage points," CMS said.

If the reporting portion of the proposed rule becomes part of the final version, hospitals would be required, for the first time, to report consistent measures of patients' satisfaction with their care to receive a full IPPS updated payment. Hospitals would use a survey instrument, developed jointly by CMS and the Agency for Healthcare Research and Quality, which is designed to collect patients' perspectives on the care they receive while hospitalized. "Also for the first time, hospitals would report risk-adjusted outcome measures to receive the full update," CMS said.

The proposed rule also includes procedures aimed at improving the accuracy of payments to hospital outpatient clinics, emergency departments, and critical care services. It would increase the number of payment levels from three to five. CMS would set payment rates on the basis of historical claims data. Under this plan, the maximum payment for clinic visits would rise from $92 to $133 and that for emergency department visits would increase from $244 to $345.

Drug Administration

The proposed rule would enable the CMS to increase payments to hospitals to cover the costs associated with administering drugs to Medicare recipients in an outpatient setting.

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