The CMS has issued final 2005 Medicare payment rules for physicians, as well as for hospital outpatient and psychiatric facilities. The CMS late yesterday finalized the regulations, which will become effective Jan. 1.
The CMS will implement a new payment system for cancer drugs as part of a physician payment increase beginning Jan. 1. Under the final physician payment rule, doctors' office staffs will be paid for time spent preparing the drugs, and doctors will be paid for supervising the preparation. Physicians also will be paid for infusion of a second drug.
The rule also changes the way the CMS will pay for drugs administered in doctors' offices, setting the payment rates for these drugs at 106% of the prices paid by the doctors. The rule gives physicians an across-the-board 1.5% increase in Medicare payments for physician services and establishes new benefits for new Medicare members including expanded preventive services. Doctors will be paid additionally for these services.
In total, the CMS estimates it will pay $55.3 billion to physicians under the new rule, a 4% increase from $53.1 billion in 2004.
Hospital outpatient departments will receive a 3.3% inflationary increase in their Medicare payment rates in 2005, as well as new payment perks from the Medicare Modernization Act.
Under the payment rule, CMS will implement a new policy for outpatient outlier payments, which compensate hospitals for the highest-cost cases. As proposed in August, CMS will require hospitals to meet two criteria to qualify for outlier payments. Under the regulation, the cost of providing a service must be 1.75 times the ambulatory patient classification rate for that service and in actual dollars must be at least $1,175 over the APC rate. In August CMS proposed a threshold of 2.6 times the APC and a fixed dollar threshold of $625. "Our goal here is to target the outlier payments as effectively as possible to truly high-cost cases," CMS Administrator Mark McClellan, M.D., told reporters.
The outpatient regulation also will compensate hospital outpatient facilities that provide seniors with their "welcome to Medicare" physicals, a provision of last year's Medicare reform law. Starting in January, such facilities will receive $78 for each physical performed in the hospital. Total outpatient spending under Medicare in 2005 will total $24.6 billion, compared with projected payments of $23.1 billion in 2004.
The CMS also announced it will begin implementing a per diem prospective payment system for inpatient psychiatric facilities beginning on Jan. 1, replacing the current cost-based payment system. The CMS is phasing the new PPS over a three-year period, with full payments under the PPS system beginning in the fourth year. The CMS estimates about 1,800 facilities nationwide will be affected by the changes.