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“MEDICARE
PROPOSES PAYMENT RATES AND POLICY CHANGES FOR HOSPITAL
OUTPATIENT SERVICE INCREASED PAYMENTS FOR PREVENTIVE
SERVICES AND LOWER BENEFICIARY COPAYMENTS”
Medicare beneficiaries will have
greater access to preventive benefits and lower copayments
for hospital outpatient services, while hospitals
will see a 3.3 percent inflation update in payment
rates for outpatient services under a proposed rule
announced today by the Centers for Medicare & Medicaid
Services.
The proposed payment rate update and other policy
changes in the annual Outpatient Prospective Payment
System (OPPS) rule will increase projected Medicare
payments to hospitals for outpatient services to
$24.2 billion compared to projected payments of $22.7
billion in 2004, a 6.6 percent increase in total
payments. Along with many other improvements in hospital
outpatient payments, we are moving Medicare toward
a greater focus on prevention and early detection
of diseases, said CMS Administrator Mark B. McClellan,
M.D., Ph.D.
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The proposed rule introduces proposed changes to payments
for outpatient services that were required by the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA), signed into
law by President Bush on December 8, 2003. The MMA authorized Medicare
to pay, for the first time, for a Welcome to Medicare Physical for new
beneficiaries.
This comprehensive examination will provide baseline
information on the health status of the beneficiary, allow for early detection
and treatment of disease states, and provide an opportunity for the physician
to refer beneficiaries to other Medicare-covered services. To be paid for
by Medicare, the physical must be performed within six months of the beneficiaries
enrollment in the program. When this examination is provided in a hospital
outpatient department, Medicare is proposing to pay the hospital $75 for
the use of the hospital facility.
A separate payment will be made for the physicians professional
services under the Medicare Physician Fee Schedule, as proposed on July
27, 2004. In addition to the new physical, the proposed rule would increase
payment rates to hospitals for screening examinations that are already
covered by Medicare. Proposed payment increases are as follows: •Pelvic
and breast exams to detect cervical and breast cancer, 3.24 percent •Barium
enema to detect colorectal cancer, 4.25 percent •Bone density studies,
4.25 percent •Flexible sigmoidoscopy to detect colorectal cancer,
7.42 percent •Screening colonoscopy, also for colorectal cancer,
9.9 percent •Glaucoma screening, 10.4 percent The proposed rule will
also implement significant increases in payments for mammograms.
It implements a provision of the MMA that requires diagnostic
mammograms to be removed from payment under the OPPS and paid, like screening
mammograms, under the Medicare Physician Fee Schedule (MPFS). Although
CMS has not finalized the payment rates for the MPFS for 2005, CMS expects
that the payment for traditional diagnostic mammograms under the MPFS will
increase by nearly 40 percent over current OPPS rates. Payment for digital
diagnostic mammograms is expected to increase under the MPFS by about 60
percent over current rates under the OPPS. In addition, the proposed rule
would decrease beneficiary liability for coinsurance for outpatient services.
The rule proposes to reduce the maximum coinsurance rate for any service to 45
percent of the total payment to the hospital in 2005, down from 50 percent this year.
As a result, the average coinsurance rate would drop from 34 percent in 2004 to
32 percent in 2005. Under the Medicare law the cap on coinsurance rates is to be
reduced gradually until all services have a coinsurance rate of 20 percent of the
total payment. "As more and more medical care is performed in the outpatient setting,
we are doing everything we can under the Medicare law to make sure beneficiaries
do not pay more than an appropriate share of the costs of outpatient services,"
said Dr. McClellan.
The proposed rule would also implement provisions of the MMA designed to speed beneficiary
access to state-of-the-art treatments and strengthen the financial viability of hospitals
in rural areas. For example, the rule proposes a way for hospitals to receive payment for
new drugs and biologicals as soon as they are approved by the FDA, rather than having to
wait several months until a code and payment rate are assigned.
In addition, the proposed rule would continue into 2005 the Medicare modernization law
provision that sets rates for brachytherapy sources on charges adjusted to cost, and would
create new definitions for new codes for high activity brachytherapy sources. Brachytherapy
is an advanced treatment for cancer that involves the placement of radioactive seeds near
the tumor site, thus reducing the exposure of non-cancerous tissue to radiation.
The proposed rule would continue the current drug packaging policy, providing for separate
payment for most drugs that cost more than $50 per administration, rather than packaging
them into the associated APCs. Also, as provided in the MMA, the proposed rule would continue
into 2005 the two-year extension of the "hold harmless" payments for small rural hospitals
having fewer than 100 beds, as well as for sole community hospitals in rural areas. These
payments, which were set to expire at the end of 2004, are intended to ensure that small rural
hospitals are paid at least as much under the outpatient prospective payment system as they
would have received under the cost-based payment methodology in effect before August 2000.
CMS is proposing to simplify how it pays for observation services for patients with asthma,
congestive heart failure, or chest pain. In accordance with recommendations of an APC advisory panel,
CMS is proposing to eliminate the current requirements specifying the diagnostic tests which must be
used in connection with each diagnosis, and to modify the rules for reporting the times for the
observation period to be more compatible with customary hospital practice.
CMS is also proposing to use a number of strategies to improve the accuracy for payments for blood
and blood products used in outpatient departments in 2005. For example, CMS proposes a new method for
calculating appropriate payment rates, and creating individual ambulatory payment classifications
(APCs) for all blood products. The proposed rule would also increase the number of claims used to
calculate payments for low volume products by analyzing two years of claims. The proposed rule would
target outlier spending to cases that have truly unexpected high costs. This would be achieved by
applying a fixed dollar threshold in addition to the current threshold based on a percentage
relationship between the cost of the service and the payment for the APC.
To be eligible for an outlier payment in the outpatient setting, the cost of furnishing a service
would have to exceed both thresholds. The proposed rule sets these thresholds at 1.5 times the payment
of the APC and $625 over the APC payment rate. The proposed rule will be published in the August 16
Federal Register. Comments will be accepted until October 8, 2004, and a final rule is scheduled to be
published by November 1, 2004. Note: For more information, visit the CMS Website at: www.cms.hhs.gov. |
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