Medicare:  Outpatient surgery should be performed in a setting that works best for the patient, rather than because of payment incentives.

To that end, hospitals would be able to bill Medicare for pulmonary and intensive cardiac rehabilitation services furnished in outpatient departments beginning January 1, 2010, under a proposed rule by the Centers for Medicare & Medicaid Services (CMS). 

Charlene Frizzera, Acting Administrator of CMS, said, "The payment proposals are designed to ensure that when services can be performed in a variety of settings, such as a physician's office, a hospital outpatient department, or an ambulatory surgical center, the choice of setting is based on the patient's needs, rather than payment incentives."

The proposed rule would also provide for payments to rural hospitals for kidney disease education services furnished in their outpatient departments for Medicare beneficiaries with Stage IV chronic kidney disease. 

In addition, the regulation would incorporate an adjustment for hospital pharmacy costs that would result in payment at the average sale price plus 4% for most separately payable drugs and biologicals.

The proposed rule also includes policy changes and payment rates for services in ambulatory surgical centers (ASC), which would continue the expansion of surgical procedures that Medicare would cover.  The proposed rule seeks to make sure beneficiaries have access to outpatient services in all appropriate settings, while improving the quality and efficiency of service delivery.

There are approximately 5,000 Medicare-participating ASCs.  Total 2010 payments to ASCs are estimated to be $3.4 billion.

Since January 1, 2008, ASCs have been paid under a revised payment system that not only aligns ASC payment rates with the rates paid for similar services when furnished in hospital outpatient departments, but also greatly expands the number and types of surgical services that are covered by Medicare when performed in ASCs. 

Medicare currently pays more than 4,000 hospitals--including general acute care hospitals, inpatient rehabilitationfacilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, and cancer hospitals--for outpatient services under the Outpatient Prospective Payment System (OPPS).  

OPPS also sets payment policies and payment rates for partial hospitalization services furnished by community mental health centers.  CMS estimates total payments of $31.5 billion under the OPPS in 2010.

CMS is proposing to continue to require hospitals to report the existing seven emergency department and preoperative care measures, as well as the four existing claims-based imaging efficiency measures for payment determination. 

CMS is seeking public comment on potential additional quality measures for consideration for future OPPS updates. 

The potential measures relate to a number of areas including cancer care, emergency department throughput, diabetes, stroke and rehabilitation, osteoporosis, medication reconciliation, respiratory, immunization, health information technology, cataract surgery, overuse/appropriate use, imaging efficiency, and surgical care.

CMS will accept comments on the proposed rule until August 31, 2009, and will respond to comments in a final rule to be issued by November 1, 2009.

A fact sheet on the proposal is online at http://www.cms.hhs.gov/apps/media/press/factsheet.asp?Counter=3472&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date

The complete proposed regulation is online at http://www.federalregister.gov/OFRUpload/OFRData/2009-15882_PI.pdf