These statutory payment increases are projected to continue a trend of rapid growth in hospital outpatient expenditures. CMS projects that the expenditures under the OPPS in CY 2008 will be approximately 10.5 percent higher than the estimated CY 2007 expenditures. The current rate of growth in expenditures is of great concern to CMS because of its impact not only on taxpayers, but also on beneficiaries whose monthly premiums must pay for 25 percent of Part B expenditures.

While payments to hospitals under the OPPS have increased over the years, these payment increases have not been specifically tied to quality improvements. The statute now requires that the annual payment update factor in CY 2009 and subsequent years be reduced by 2.0 percentage points for hospitals that do not report quality measures. This proposed rule proposes 10 hospital outpatient quality measures for purposes of the quality reporting requirement.


The proposed quality measures include five emergency department acute myocardial infarction transfer measures, two surgical care improvement measures, and one measure each for the treatment of heart failure, community-acquired pneumonia, and diabetes. CMS is also seeking public comment on 30 additional measures that are under consideration for reporting in future years.

CMS is also proposing to increase the size of the OPPS payment bundles as recommended by the Medicare Payment Advisory Commission (MedPAC). This proposal would provide greater flexibility to hospitals in implementing efficient care. Currently, certain items and services, including low cost drugs, anesthesia services, operating and recovery room use, implantable devices, and medical supplies are packaged in the payment for the associated APCs. CMS is proposing to package payment for seven additional categories of supportive and ancillary services in order to encourage hospital efficiencies in selecting the most clinically appropriate diagnostic and treatment approaches.

In addition, CMS is proposing to establish a new type of APC, called a composite APC, through which a single payment would be made for multiple major procedures performed in a single hospital encounter. CMS is proposing to establish two composite APCs for 2008, one for low dose rate prostate brachytherapy and one for cardiac electrophysiological evaluation and ablation. These composite APCs allow CMS to use the most complete data for rate setting when procedures are commonly provided in combination with one another.

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