The Centers for Medicare and Medicaid Services (CMS) has proposed a 2.1 percent market basket update for services paid under the hospital Outpatient Prospective Payment System (OPPS) in 2015 and to update Ambulatory Surgery Center (ASC) payments by 1.2 percent next year.

However, hospitals would only receive the 2.1 percent increase in OPPS payments if they reported quality measures. If they didn’t, the increase would be just a tenth of one percent.

In the proposed rule, CMS also signaled an interest in what may happen to payment rates when hospitals purchase physician practices and convert those facilities into outpatient departments that bill under the hospital OPPS rate. The OPPS rate generally is higher than payments physician practices receive under the Medicare Physician Fee Schedule (MPFS) reflecting the higher operating costs of hospitals. However, if nothing changed other than the ownership structure when the physician practice was taken over by the hospital, Medicare may suspect there is a payment loophole it needs to close.

To get a better sense of issue, CMS proposed that hospitals and physicians be required to add a special modifier to each procedure code billed under the physician fee schedule and in the OPPS when the health care service or procedure was furnished in a provider-based department that is not located on the hospital campus itself (i.e., off campus).

CMS also proposed bundling all ancillary services assigned to an ambulatory payment classification (APC) with a mean cost of $100 or less into the payment for the service they are provided with, except in those instances when the ancillary service is truly provided on its own. Other exceptions would include preventive services, psychiatry-related services and drug administration services.

Under the proposed rule, some APCs would be consolidated and some added for a total of 28 APCs next year. Currently, there are 29.

Finally, hospital operators and physicians who had complained about the requirement that physicians certify all admissions, even regular short-stay ones, get some relief in the proposed rule. CMS suggests dropping the physician certification requirement for shorter stays and non-outlier stays because it has found that the admission order is a sufficient safeguard to prevent inappropriate admissions in these cases and the physician certification was not really necessary. Going forward, physician certification would only be required for outlier cases and long-stay cases of 20 days or more. 

CMS will accept comments on the proposed rule until September 2, 2014 and will respond to comments in a final rule to be issued on or around November 1, 2014. The proposed rule will appear in the July 14, 2014 Federal Register and can be downloaded from the Federal Register.