Providers Win Delay in Hospital Outpatient PPS
In an apparent response to protests from outpatient providers and their political allies, the Centers for Medicare and Medicaid Services (CMS) is delaying its proposed 2002 hospital outpatient payment rates (PPS) for at least three months. Until the agency completes its review, providers will be paid at the 2001 Medicare rates.

Late in December, CMS announced that it discovered a number of technical miscalculations in the assignment of the cost of "certain new technology devices to related procedure codes." There are 53 ambulatory payment classification codes that involve new technology devices.

After correcting those miscalculations, CMS Administrator Thomas Scully promised the agency would thoroughly review all outpatient codes with medical experts and review the data again to make sure there are no additional calculation mistakes.

Late last fall, members of Congress sought to delay the PPS until more information was available about the impact of proposed cutbacks for some procedures. A strongly-worded letter from two Republicans and a Democrat (Reps. William M. Thomas, Nancy L. Johnson, Pete Stark) to Mr. Scully stated they were committed to "prevent any train wreck in hospital outpatient payments for services using drugs or devices."

The 2002 PPS would decrease reimbursement for some common surgical procedures, but increase others. Cataract surgery would be affected the most, with a proposed 15 percent cut in reimbursement. The American Academy of Ophthalmology was one of the strongest critics of the PPS, challenging the proposed $170 cut to cataract surgery payments.

"This delay is good news for ophthalmology, given the problems with the proposed rule," said Catherine Cohen, Academy Vice President of Governmental Affairs.

Managers of hospital day surgery units, where cataract surgery is sometimes a mainstay, agree. Anate Grener, nurse manager at the Bryn Mawr Hospital in Bryn Mawr, Pa., says that a 15 percent decrease in cataract revenue would definitely impact the bottom line.

"We do something like 80 or 90 cataract cases a month. It's not unusual for us to have one ophthalmologist using two ORs three days a week. This definitely would have an impact," Ms. Grener observed.

The American Association of Ambulatory Surgery Centers (AAASC), which represents hospital day surgery units as well as freestanding ASCs (the latter are paid according to different rates and are not affected by this delay) opposed the cuts to cataract, but favored proposed increases for other procedures. Eric Zimmerman, AAASC's attorney, said some increases are generous, such as 100 percent for an endoscopy procedure, and a 50 percent increase for cystourethroscopy. And the news isn't all bad for eye procedures. A posterior segment eye procedure would receive a 170 percent increase, and glaucoma screening, not currently covered by Medicare, would be covered.

Along with the proposed cuts for cataract, some other proposed decreases affect reimbursement for 1,100 high-tech procedures and devices. These cuts are being strongly opposed by the American Hospital Association, which contends that some hospitals may admit patients who had previously been treated on an outpatient procedure, rather than accept reduced reimursement.

But CMS is squeezed by Congress, which in 1999 limited Medicare spending on high-tech devices to 2.5 percent of all outpatient spending. As spending is now breaking through that limit, regulators are attempting to decrease reimbursements.

CMS may have fanned the flames with health care lobbyists by shortening the usual 60-day public comment period to 40 days, in order to achieve a Jan. 1, 2002 implementation. The current three-month delay seems designed to appease critics from Congress and the health care industry ? and it just might be working.

"CMS has shown a willingness to work with the hospital and physician communities, and we are hopeful that the review will lead to proper rates," Ms. Cohen said.