Regulatory Advocacy

2010 Inpatient PPS Final Rule

On July 31, CMS issued its 2010 inpatient PPS final rule. The rule cuts payments to certain CAHs by reducing Medicare reimbursement for certain outpatient services from 101 percent of reasonable costs to 100 percent of reasonable costs. The rule addresses four policies related to CAHs.

1.      It implements Section 148 of the Medicare Improvements for Patients and Providers Act of 2008, which provided that clinical laboratory services furnished by a CAH be reimbursed 101 percent of costs, regardless of whether the patient is physically present in the CAH at the time the specimen is collected. Specifically, CAHs will receive 101 percent of costs for clinical laboratory services if the individual receives outpatient services in the CAH (or in a facility that is provider-based to the CAH) on the same day the specimen is collected or if the specimen is collected by an employee of the CAH (or of a provider-based department of the CAH). In either case, the individual does not need to be physically present in the CAH at the time the specimen is collected. If the individual is physically present in the CAH, or a department that is provider-based to the CAH when the specimen is collected, the CAH will continue to receive cost-based reimbursement. Under law, this policy is retroactively effective to July 1.

2.      It requires facilities furnishing only clinical diagnostic laboratory tests that operate as part of a CAH to meet provider-based criteria in order for the CAH to be paid for the services furnished at those facilities at 101 percent of reasonable costs. This policy is effective October 1, 2010.

3.       It changes the manner in which “Method 2” payments to CAHs are made. The statute that provides for Method 2 payments states that, under this method, CAHs will be reimbursed their reasonable costs for outpatient services; the statute does not specify that, under this method, CAHs will be reimbursed 101 percent of their reasonable costs for outpatient services. The rule adopts CMS’ proposal to reimburse CAHs electing Method 2 at 100 percent of their reasonable costs for Method 2 outpatient services instead of at 101 percent of their reasonable costs for Method 2 outpatient services. Payments for CAHs that do not elect Method 2 and payments for professional services under Method 2 are not affected. This policy becomes effective for cost reporting periods beginning on or after October 1st.

4.       In the proposed rule, CMS solicited public comments on whether an ambulance service owned and operated by a CAH, and is eligible to receive reasonable cost-based payment, should be required to meet the provider-based status rules. In its final rule, CMS reiterates that it may be appropriate to require any part of a CAH to meet the provider-based rules in order to be paid at reasonable cost, but is not at this time proposing or adopting any changes to the regulations at §413.65 to require CAH-owned and operated ambulance services that are eligible to be paid at reasonable cost to meet the provider-based status rules.

 

CY 2010 Outpatient PPS Proposed Rule

On July 1, CMS issued its CY 2010 outpatient PPS proposed rule. Of interest to CAHs is the language on physician supervision.

In the proposed rule CMS says it has eliminated the requirement for therapeutic outpatient services furnished in a hospital, CAH or their on-campus outpatient departments that a supervising physician (or certain non-physician practitioners who would now be permitted to provide supervision as part of the proposed rule change) must be present in the department when the procedure is performed. Instead, as the proposed rule reads, “direct supervision” for such services requires that the supervising practitioner must be present “on the same campus, in the hospital or CAH or on-campus provider-based departments of the hospital or CAH” and “immediately available to furnish assistance and direction while the procedure is being performed.” Thus, the proposed change may not offer hospitals any greater compliance flexibility than the current requirement because CMS’ preamble discussion suggests that the “general definition of immediate” means “without interval of time.”

The AHA recommends that CMS define “direct supervision” to mean that the physician or non-physician practitioners (NPP) must be present on the same campus or in a location in close proximity to the campus and able to respond in a timely manner, in accordance with the hospital’s or CAH’s policies, procedures, guidelines and/or bylaws, so as to be able to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician or NPP must be present in the same room where the procedure is performed.

 

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