Hospitals would be able to bill Medicare for pulmonary and intensive cardiac rehabilitation services furnished in outpatient departments beginning January 1, 2010 under a proposed rule issued by the Centers for Medicare & Medicaid Services (CMS ). The proposed rule would also provide for payments to rural hospitals for kidney disease education services furnished in their outpatient departments for Medicare beneficiaries with Stage IV chronic kidney disease.

The proposals, which would implement provisions of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), were contained in a notice of proposed rulemaking (NPRM) that would revise payment policies and update the payment rates for services furnished to beneficiaries during calendar year (CY) 2010 in hospital outpatient departments under the Outpatient Prospective Payment System (OPPS). Additional proposals to incorporate an adjustment for hospital pharmacy costs that would result in OPPS payment at the Average Sale Price (ASP) plus four percent for most separately payable drugs and biologicals and to adapt current requirements for physician supervision of hospital outpatient services to the changing health care environment would help ensure beneficiary access to safe, cost-effective health care at all hospital outpatient sites.

The NPRM also includes proposals for policy changes and payment rates for services in ambulatory surgical centers (ASCs), which would continue the expansion of surgical procedures Medicare would cover when performed in ASCs. The proposed rule seeks to ensure that beneficiaries have access to outpatient services in all appropriate settings, while improving the quality and efficiency of service delivery.
"In this proposed rule, CMS is continuing to strengthen the connection between Medicare payment and efficient, high quality care," said CMS Acting Administrator Charlene Frizzera. "The payment proposals are also designed to ensure that when services can be performed in a variety of settings, such as a physician's office, a hospital outpatient department, or an ambulatory surgical center, the choice of setting is based on the patient's needs, rather than payment incentives."

Medicare currently pays more than 4,000 hospitals -- including general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, and cancer hospitals -- for outpatient services under the OPPS, which also sets payment policies and payment rates for partial hospitalization services furnished by community mental health centers. CMS is projecting a market basket update for CY 2010 of 2.1 percent for outpatient departments, and estimates total payments of $31.5 billion under the OPPS in CY 2010.

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