HOPPS Final Rule Effective January 1, 2008

On Thursday November 1, 2007, CMS posted an advanced copy of the Hospital Outpatient Final 2008 Rule.  This final rule implements significant policy changes affecting hospital outpatient services paid under the HOPPS system effective January 1, 2008.

·       CMS finalized most of the packaging policies that were introduced in the proposed rules released this past summer.  This means that MPI wall motion and MPI ejection fraction are now paid as part of the procedure payment.  This also means that CMS has bundled the diagnostic Radiopharmaceutical payment in with the Nuclear Medicine Procedure payment.  TIP: Hospitals are no longer paid separately for many of these bundled CPT codes.  We STRONGLY urge Hospitals to continue to code any bundled (packaged) CPT code, as well as, setting appropriate changes for each code.  It is these charges reduced to cost that contribute to the final procedure rates each year.  If hospitals stop billing, your procedure rates will likely spiral down over time.

·       CMS also implemented new Radiopharmaceutical (RP) billing requirements (OCE edits) for hospital Nuclear Medicine claims as well as tweaking their methodology for calculating the CY 2008 payment rates effective January 1, 2008.  Tip: Effective January 1, 2007 Hospitals must have at least one RP code on the claim with a nuclear medicine procedure or CMS will return the claim to provider.  It is very important that hospitals DO NOT apply token charges when submitting the HCPCS RP code and charge on the claim to get your procedure paid.  Be sure to set charges appropriately per CMS guidance.  CMS states in the November 10, 2005 Federal Register Vol. 70 No 217 page 68654, "We believe that hospitals can appropriately adjust their charges for radiopharmaceuticals so that the calculated costs properly reflect their actual costs.  Specifically, it is appropriate for hospitals to set charges for these agents in CY 2006 based on all costs associated with the acquisition, preparation, and handling of these products so that their payments under the OPPS can accurately reflect all of the actual costs associated with providing these products to hospital outpatients."  CMS will use this charge data in future rate setting so setting appropriate charges is critical.

·       CMS reconfigured several APC categories and collapsed a number of CPT codes based on cost data derived from claims, ignoring clinical coherence and actual resource differences.  This increased averaging resulted in decreases for more expensive procedures and in some cases slight increases to lower resource intensive procedures.

·       CMS created new HCPCS codes for some echocardiography procedures and moved forward with a new grouping called "Composite" APCs.  The new composite APCs are very much like the in-patient DRGs one payment rate for several major procedures.

The full final rule with comment period can be found at: www.cms.hhs.gov/HospitalOutpatientPPS/HORD/list.asp. 

It will be published in the Federal Register on November 27, 2007.

The enclosed tables summarize the impact of these new policies compared to CY2007.

MPFS Final Rule Effective January 1, 2008

On November 2, 2007, the Centers for Medicare & Medicaid Services (CMS) posted a final notice for Medicare payments in the physician fee schedule for calendar year (CY) 2008.  CMS will publish this information in the November 27, 2007 federal register.

·       The Conversion Factor (CF) for 2008 will be set at $34.0682 and is a -10.1% reduction from the 2007 frozen CF.  Similar to last years final rule CMS will implement a budget neutrality (BN) adjustor (0.8806), which is applied only to the physician work relative value units (RVUs) for all CPT codes.

·       The final rule continues its second year, with a 50% phase in of a new methodology for determining practice expense (PE) (such as office overhead) RVUs, with the phase in over a total of four years.  Two other important notes regarding the PE methodology calculations; (1) CMS has not changed the equipment usage percentage assumption of 50%, (2) CMS will NOT change the equipment interest rate assumption and maintains it at 11%.

·       Drugs, contrast agents and biologicals will continue to be paid separately at 106 percent of the average sales price (ASP+6).

·       There are NO changes for Radiopharmaceutical payment methodology in the physician office or IDTF setting for 2008.

·       Consistent with requirements of the DRA, this final rule caps payment rates for imaging services under the physician fee schedule at the amount paid for the same services when performed in hospital outpatient departments.  CMS has posted a file with the HOPPS CAP RVUs. TIP:  A word of caution, the DRA HOPPS CAP rate is not exactly equal to the Final Rule Published HOPPS national rate, due to variances in the CMS creation of HOPPS CAP RVUs to use in the MPFS formula.  CMS has posted on their web site the local HOPPS CAP 2008 rates, listed by CPT code, contractor and locality.

·       CMS is also Imposing an anti-markup restriction on the technical component (TC) or professional component (PC) of diagnostic tests (other than clinical lab tests) that are ordered by the billing supplier, if the TC or PC is purchased by the billing supplier, or the TC or PC is performed outside of the office of the billing supplier.

Details of the final rule are now posted on the CMS website at: http://www.cms.hhs.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage

The final rule went on display at the Federal Register November 2, 2007, and will be published on November 27, 2007.  The information from this final notice will be effective for services on or after January 1, 2008.