CMS officials hope a new policy to compensate hospitals for high-cost outpatient cases will direct resources to where they are most needed and prevent money from being wasted.
In its final outpatient payment regulation for 2005, which becomes effective Jan. 1, the CMS revised its treatment of high-cost cases known as outliers. Under the final regulations, the costs of an outlier case must be at least 1.75 times the ambulatory payment classification rate, instead of 2.6 times the rate, as proposed in August. The cost must also amount to at least $1,175 above the rate, up from the proposed threshold of $625.
"Our goal here is to target the outlier payments as effectively as possible to the truly high-cost cases," CMS Administrator Mark McClellan told reporters last week. The payments, he added, "should be spread more broadly across types of treatments." Another CMS official said data from the Medicare Payment Advisory Commission show that outlier payments have often been applied to low-cost cases and that the new policy is "really focused on cases that hospitals have a hard time absorbing in the averages of the (prospective payment) system."
As proposed in August, hospital outpatient departments will receive a 3.3% rate increase for inflation in 2005. They will also receive $78 for each "Welcome to Medicare" physical performed, a benefit established under the Medicare Modernization Act of 2003.
Also as proposed, physicians will receive a 1.5% Medicare payment update in 2005 and new reimbursement for providing Medicare beneficiaries with preventive care, another mandate of the Medicare law. The CMS' most controversial proposals, which change how physicians are reimbursed for providing cancer drugs, were softened over the past months in negotiations with the industry. The final regulations allow payments for drug preparation, physician supervision of drug preparation and infusion of a second drug.
"For the first time we're going to pay accurately for drugs and pay accurately for their administration," McClellan said.
The 2005 regulations mark the start of the CMS' long-planned conversion of inpatient psychiatric facilities to a per-diem prospective payment system from the current cost-based reimbursement. To help facilities adjust to the new system, the CMS will phase it in over a three-year period, with full payment under the PPS to begin in the fourth year.
-with Tony Fong