CMS to Pay 16 Percent More for Outpatient Services in 2013

The overall amount paid to hospital outpatient departments will increase by about 16 percent in 2013 and by about 17 percent to Ambulatory Surgical Centers (ASCs). 

CMS released an advance copy of proposed rule updating the Outpatient Prospective Payment System (OPPS) and the ASC payment system for 2013.  In a CMS press release associated with that advance document, CMS estimates that it will pay $48.1 billion for OPPS services in 2013.  This is an increase of $6.7 billion from the $41.4 billion CMS estimated it would pay for OPPS services in 2012.

For ASC services CMS is estimating it will pay $4.1 billion in 2013 which is an increase of $600 million from its 2012 projected spending of $3.5 billion.   On average CMS is projecting that individual payments for ASC service will increase by 1.3 percent. This 1.3 percent increase was calculated by increasing the 2012 payment rate for each service by 2.2 percent, which was the consumer price index increase for all consumers and subtracting a 0.9 percent productivity adjustment as required by the Patient Protection and Affordable Care Act (PPACA)(P.L. 111-148).

The OPPS payment rates were increased by 3.0 percent in accordance with the increase in the inpatient market basket percentage and reduced by the same 0.9 percent PPACA productivity adjustment to arrive at a 2.1 percent increase for each service.

CMS is proposing to change how it calculates the relative payment rates for the ambulatory payment classification (APC) codes.  An APC code is assigned to each service that has a Health Care Common Procedure Coding System (HCPCS) code and a reimbursement amount is assigned to each APC code.  Oftentimes several HCPCS codes will have the same APC code and reimbursement amount. Currently CMS uses the median cost of a service derived from cost reports to determine the reimbursement amount for each APC.  CMS is proposing to change from using the median cost  of a service to the geometric mean cost of the service to determine the reimbursement amount for each APC. 

Geometric means are used to determine reimbursement amounts under the inpatient prospective payment system.  This switch would bring the determination of OPPS payments in line with the determination fo the payment rates for inpatient services.

CMS analysis shows that the proposed change to geometric  mean costs would have a limited payment impact on most providers, with a small number experiencing payment gains or loses. CMS estimates that payments to low volume urban hospitals and to hospitals for which disproportionate share hospitals (DSH) data are not available will increase by an estimated 2.1 and 4.0 percent respectively.

CMS has the authority to switch the method used to determine payment rates from the median of the service’s cost, which CMS has used since the inception of OPPS to the geometric mean under Soc. Sec. Act §1833(t)(2)(C) as amended by §201(f) of the Balanced Budget Refinement Act of 1999.