2014 OPPS Final Rule Impacts Payments for Hospital Outpatient Services

The CMS released the 2014 Outpatient Prospective Payment Systems (OPPS) final rule on November 27, 2013, which states that OPPS payments are projected to increase by $4.4 billion (9.5%) while payments to ambulatory surgical centers (ASCs) are to increase by approximately $143 million (5.3%), compared to CY2013.

This was much anticipated news as the government shut down had delayed the final rule. Clinic and Emergency Department (ED) visits were affected significantly.

Below are some of highlights:

CPT Code Changes: Five E/M Levels for Facilities Eliminated and Replaced with One Code

Typically, hospitals have assigned codes for outpatient facility visits using CPT codes that the American Medical Association (AMA) created specifically to show physician work. Each facility was to develop their own "template" to choose an Evaluation and Management (E/M) level. There was much confusion as E/M code assignment has traditionally been based on a history, exam and medical decision making that the physician collected and reviewed and not on any specific facility requirements. The 2014 OPPS final rule will eliminate the five E/M levels for facilities and replace them with a single G code (G0463 "hospital outpatient clinic visit for assessment and management of a patient").

The assigned APC 0634 has a payment rate of $92.53 and a national copayment of $37.01. In 2013, payment varied from $56.77 to $175.79 based on the E/M level assigned. Therefore, this will negatively impact hospitals that reported more level four and five visits for sicker patients, while hospitals that treat the less sick will see an increase in payments. Updating internal processes to handle these changes could require significant resources. ED visits will continue to have five levels based on each facilities internal point system.

Extended Assessment and Management Codes Revamped

Extended Assessment and Management (EAM) codes were revamped for 2014 also. A new APC will replace two older APC's that paid for EAM. APC 8009, which pays roughly $1200, replaces APC's 8002 (Level 1 $440) and 8003 (Level 2 $800). When there were five levels to choose from in 2013, only the Level 5 clinic visit would trigger the Level 1 EAM; but in 2014, with only a single code for visits any clinic visit will receive the EAM reimbursement. Level 4 Type A ED visits and Level 5 Type B ED visits will continue to trigger a level 2 EAM in 2014. Critical Care and direct admit to observation were not mentioned in the final rule, but it is believed that they will continue to trigger the EAM in 2014.

Visits that would have not qualified for the EAM in 2013 (low level visits) have the potential to earn an EAM payment in 2014 IF billed with eight hours of observation. For example: a patient seen at a provider-based clinic and placed directly to observation for at least 8 hours would qualify for EAM. However, a patient seen in the ED and then placed in observation for at least 8 hours will only be paid for the ED visit. With the implementation of the "two midnight rule," the thought is there will be an increased number of patients in outpatient status and longer length of stays which CMS has expressed concern about.

Five New Categories of Supporting Items to be "Packaged"

Five new categories of supporting items were finalized in 2014, as items to be "packaged" or included in payment for a primary service and are as follows: 

1. Drugs, biological and radiopharmaceuticals that function as  supplies when used in a diagnostic test
2. Drugs and biological that function as supplies when used as a surgical procedure including skin substitutes
3. Certain clinical diagnostic lab tests
4. Certain procedures described by add-on codes
5. Device removal procedures

For certain cases a separate payment would be made if the item is furnished on a different date than the primary service. In addition to packaging the above five categories, a final proposal has been sent to CMS to create 29 comprehensive APC's to replace the 29 existing device-dependent APCs, but the proposal contains a modification to apply a complexity adjustment for the more complex multiple device claims.

The final rule also addresses changes to the Medicare Electronic Health Record (EHR) Incentive Program that will affect Method II Critical Access Hospitals (CAH).

These are just a few highlights of the final rule. We recommend that you thoroughly review it to be sure all applicable changes are made at your facility. If you have questions, please contact Susan Rohde or your Eide Bailly representative.