Medicare set to raise outpatient rates

Aug 9, 2004

The Centers for Medicare and Medicaid Services (CMS) is proposing a payment rate update and other policy changes in its annual Outpatient Prospective Payment System (OPPS) rule.

CMS said it will increase projected Medicare payments to hospitals for outpatient services to $24.2 billion, compared with projected payments of $22.7 billion in 2004, a 6.6% increase in total payments.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) authorized Medicare to pay, for the first time, for a "Welcome to Medicare Physical" for new beneficiaries. This 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 beneficiary's enrollment in the program, CMS said. 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.

The proposed rule would also 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%.
Barium enema to detect colorectal cancer, 4.25%.
Bone density studies, 4.25%.
Flexible sigmoidoscopy to detect colorectal cancer, 7.42%.
Screening colonoscopy, also for colorectal cancer, 9.9%.
Glaucoma screening, 10.4%.

The proposed rule will also implement significant increases in payments for mammograms, CMS said. 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 said that it expects that the payment for traditional diagnostic mammograms under the MPFS will increase by nearly 40% over current OPPS rates. Payment for digital diagnostic mammograms is expected to increase under the MPFS by about 60% over current rates under the OPPS, according to CMS.

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% of the total payment to the hospital in 2005, a 5% decrease from the 50% coinsurance rate this year.

As a result, the average coinsurance rate would drop from 34% in 2004 to 32% 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% of the total payment, CMS said.

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 ambulatory payment classifications (APC) advisory panel, the agency 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, it said.

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, CMS said.

The new policies will be part of a proposed rule to be published in the August 16 Federal Register. Comments will be accepted until October 8, and CMS said it plans to publish the final rule by November 1 for an effective date of January 1, 2005.

By AuntMinnie.com staff writers
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