Medicare To Pay Flat Rate For Clinic Visits

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Despite criticism from hospitals and doctors, the CMS intends to pay flat rates for Medicare visits to outpatient clinics instead of payments that vary with the severity of the patient’s condition. However, the agency decided not to enact a similar policy for emergency-room visits—at least for the time being.
The 1,200-page outpatient prospective payment system rule for 2014, posted the Wednesday afternoon before Thanksgiving, says the agency is changing its longstanding approach to paying for clinic visits because of a widespread concern that the old system encourages upcoding.

By Joe Carlson and Beth Kutscher

Posted: November 27, 2013 – 6:45 pm ET
Centers for Medicare & Medicaid Services (CMS), Medicare, Outpatient Care, Reimbursement
(Story updated at 7:20 p.m. ET.)
Despite criticism from hospitals and doctors, the CMS intends to pay flat rates for Medicare visits to outpatient clinics instead of payments that vary with the severity of the patient’s condition. However, the agency decided not to enact a similar policy for emergency-room visits—at least for the time being.
The 1,200-page outpatient prospective payment system rule for 2014, posted the Wednesday afternoon before Thanksgiving, says the agency is changing its longstanding approach to paying for clinic visits because of a widespread concern that the old system encourages upcoding.

The rule means that the 10 procedure codes for outpatient clinic visits will all fall under a single code. “A single code and payment for clinic visits is more administratively simple for hospitals and better reflects hospital resources involved in supporting an outpatient visit,” an agency press release said.
The new payment rates will be calculated based on statistical averages in 2012 claims data for the five levels of severity.
Critics argue that moving away from the five-level system contradicts the central notion of Medicare’s severity-based payment system, but CMS officials said the variation in costs between high- and low-complexity patients in clinics wasn’t significant enough to justify the payment differences.
However, the CMS did step back from its proposal to flatten the payment rates for emergency room treatments, noting in the rule that more study is needed to make sure the payment structure “would not underrepresent resources required to treat the most complex patients, such as trauma patients.”
The American Hospital Association said the move to a flat system of outpatient clinic payments will hurt hospitals’ ability to provide outpatient care. “Hospitals that provide care for large numbers of complex patients will receive payment well below the cost of treating these patients,” the AHA said in a statement.
Medicare payments for hospital outpatient services, under the final rule, will increase 1.7% in 2014 under a final rule.
The rate reflects a 2.5% marketbasket update offset by a 0.5% productivity adjustment and a 0.3% adjustment mandated under the healthcare reform law. The productivity adjustment is 0.1% higher than what was proposed in July.
Ambulatory surgery centers will also see a 1.2% payment increase, reflecting an inflation update of 1.7% offset by the 0.5% productivity adjustment. ASCs that do not meet quality requirements could face a 2% payment cut, according to the rule.
The CMS will begin data collection next year for four quality reporting programs that will affect payment rates in 2016. The programs include the level of flu vaccination coverage for healthcare personnel, the follow-up interval for colonoscopy patients with both average risk and a history of polyps, and the visual function of patients 90 days after cataract surgery.
But the rule also removes two quality determination measures: providing a transition record to discharged emergency department patients and providing a patient referral for cardiac rehabilitation.
The wide-ranging rule also reduces the number of quality outcomes measures that organ procurement organizations have to meet from three to two.
In addition, it sets the performance and baselines periods for reducing hospital-acquired infections under the value-based purchasing program, and creates a second, independent review process for hospitals that are dissatisfied with the outcome of an administrative appeal.
Comments on the rule are due Jan. 27.
Follow Joe Carlson on Twitter: @MHJCarlson
Follow Beth Kutscher on Twitter: @MHbkutscher

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