On July 1, the Centers for Medicare and Medicaid Services (CMS) released the 2016 Hospital Outpatient Prospective Payment System (HOPPS) proposed rule, covering payments and related policies for services provided in the hospital outpatient and ambulatory surgical center settings. CMS proposes to update payment rates by -0.1 percent. There is also a proposed -2 percent adjustment to correct payments made in error to hospitals for packaged laboratory tests that continued to be separately paid. Based on this adjustment and all other policies proposed, CMS estimates that hospitals will experience a net -0.2 adjustment on HOPPS payments in 2016. The ACC is currently reviewing the rule in preparation to submit comments at the end of the summer.

Some of the key provisions include:

Short Hospital Inpatient Stays

CMS outlines proposed changes to the “two-midnight” rule used to determine the appropriateness of inpatient admissions and payment under Part A. For stays expected to last less than two midnights, physicians will permitted to admit patients as inpatients on a case-by-case basis. Medical necessity for the short stay must be documented in the patient’s record. CMS will monitor the rate of short stay admissions. For cases expected to last beyond two midnights, the policy remains that these are appropriate for inpatient admission unless a “rare and unusual” circumstance occurs.

Additionally, CMS proposes to limit Recovery Audit Contractor review only to hospitals with consistently high short stay denial rates. CMS proposes to use Quality Improvement Organizations to oversee the majority of short stay audits and to educate doctors and hospitals on the Part A policy for inpatient admissions.

Packaging Policies

CMS continues to expand its policy to package payments for items and services that are integral, ancillary, supportive or adjunctive to another service into the Ambulatory Payment Classification (APC) payment for the primary service. For 2016, CMS proposes to package payment for two drugs (bivalirudin and abiciximab) into the payment for percutaneous coronary intervention procedures.

Comprehensive Ambulatory Payment Classifications

For 2016, CMS proposes to implement nine new comprehensive APCs (C-APCs), including one new C-APC for comprehensive observation services. This would provide a single payment for all services received during a non-surgical encounter with a high level outpatient hospital visit and eight or more hours of observation.

Structural Changes to Imaging Service Ambulatory Payment Classifications

CMS proposes to restructure and consolidate the radiology and nuclear medicine APCs. CMS believes that the current APC structure for imaging services is based on clinical categories that do not necessarily reflect significant differences in the delivery of these services in the hospital outpatient setting, resulting in excessive granularity and classifications that do not necessarily reflect differences in utilized resources. The new APC groupings would be based on modality (i.e. ultrasound, echocardiogram, CT, MRI, nuclear medicine) rather than the current groupings based on organ or physiologic systems.

Hospital Outpatient Quality Reporting Program

For 2017 and subsequent years, hospitals that fail to meet the requirements of the Hospital Outpatient Quality Reporting Program (OQR) will receive a 2 percent reduction to their annual fee schedule update factor. CMS also proposes to align the OQR with the Ambulatory Surgical Center Quality Reporting Program.

Keywords: Centers for Medicare and Medicaid Services, U.S., Fee Schedules, Inpatients, Medicaid, Medicare, Nuclear Medicine, Outpatients, Percutaneous Coronary Intervention, Pharmaceutical Preparations, Quality Improvement

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