The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that will update payment rates for calendar year (CY) 2009 and improve quality of services provided in hospital outpatient departments and ambulatory surgical centers (ASCs). The proposed rule builds on efforts across Medicare to transform the program into a prudent purchaser of health care services, paying based on quality of care, not just quantity of services.

"As more and more health care services shift from the inpatient to the outpatient setting, we are committed to working with hospitals to ensure that people with Medicare have access to high quality care in an appropriate setting," said CMS Acting Administrator, Kerry Weems. "The changes proposed for 2009 are intended to give hospitals greater flexibility to manage their resources and give them incentives to improve efficiency so that both beneficiaries and taxpayers get the most value for their health care dollar."

The proposed rule will update rates paid under both the Outpatient Prospective Payment System (OPPS) and the ASC Prospective Payment System (ASC PPS), which will be in the second year of a four-year transition that aligns ASC rates with the ambulatory payment classification (APC) groups that are used to pay for services in hospital outpatient departments.
The proposed rule includes a 3.0 percent annual inflation update to Medicare payment rates for most services that would be paid under the OPPS to more than 4,000 hospitals and community mental health centers in CY 2009. The proposed changes would affect outpatient services furnished by general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, community mental health centers, children's hospitals, and cancer hospitals. CMS projects that hospitals would receive $28.7 billion in CY 2009 for outpatient services furnished to Medicare beneficiaries. Furthermore, CMS expects to make payments of almost $3.9 billion in CY 2009 to the approximately 5,300 ASCs that participate in Medicare.

In the past, the increase in Medicare's payment for outpatient services has not been specifically tied to the quality of health care. The law now requires that the annual OPPS payment inflation update be reduced by 2.0 percentage points for hospitals that do not meet quality reporting requirements. In order to receive the full OPPS payment update for services furnished in CY 2009, hospitals must report data in CY 2008 on seven quality measures of emergency department and perioperative surgical care. CMS is proposing to add four new measures of imaging efficiency to the seven existing quality measures for purposes of the CY 2010 update. CMS is also seeking public comment on eighteen additional potential quality measures in areas ranging from screening for fall risk to cancer care that are under consideration for future years.

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