CMS Changes Physician Supervision Rule, Maintains Drug Payment Formula

CMS finalized its proposal to permit physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives, and clinical psychologists to provide direct supervision for hospital outpatient therapeutic services when their license allows them to do so. One change from the proposed rule is the addition of licensed clinical social workers. CMS agreed with commenters that licensed clinical social workers should also be included in the list of non-physician practitioners allowed to provide direct supervision.

These changes come, in part, as a response to commenters, including the American Hospital Association, who complained to CMS that the rules were confusing and unclear. In the 2009 proposed rule, CMS discussed physician supervision requirements and finalized some changes for 2009, but still received considerable comments to their proposed changes in 2010.

The fact that CMS has finally conceded that it can see how there was confusion on physician supervision requirements prior to 2009 should come as a huge relief to hospitals who have been concerned that audits may occur going back many years that could result in financial take-backs, says Shah. Hospital administrators have been worried that the OIG, recovery audit contractors, Medicare administrative contractors, and other auditors would use the fact that hospitals have raised questions on this topic as a reason to begin investigations and potentially take back large amounts of money.

Because CMS agrees that, perhaps, things were confusing in the past, it stated it will not sanction audits or reviews of the supervision requirements for 2000-2008, but also stated enforcement action would be appropriate for 2009. "I think that makes an even stronger case for concern about enforcement in 2009 and providers should take a close look at their risk for that year in light of the clarifications published in the 2009 rule," says Hoy.

The final rule does make clear that non-physician practitioners will not be able to supervise cardiac, intensive cardiac, and pulmonary rehabilitation services. A physician must still be present to provide supervision.

"I think that is something people are going to have to pay close attention to as they implement new policies allowing non-physician practitioner supervision because we have always lumped those services together with all of the other outpatient services," says Hoy.

Reimbursement for separately payable drugs
CMS finalized its new payment calculation method for the hospital pharmacy overhead costs of separately payable drugs and biologicals. In the final rule, CMS discusses payment calculations at length, yet ends up with the same reimbursement for 2010 as hospitals have today for separately payable drugs—average sales price (APS) plus 4%.

"This is deeply frustrating because the industry has worked diligently to help Medicare to understand that that ASP plus 4% is simply insufficient to cover drug acquisition costs and pharmacy handling," Shah says.

Hospital administrators generally believe they are underpaid for drugs, but CMS seems unwilling to change its position, Hoy says.

"I think it's interesting that the two sides are so far apart on such a vital reimbursement issue," Hoy says.

In addition to CMS' discussion of separately payable drug reimbursement, hospitals should be aware that CMS has changed the packaging threshold from $60 to $65 and will no longer provide separate reimbursement for 5-HT3 antiemectics. Also, current cost-based reimbursement for therapeutic radiopharmaceuticals and brachytherapy sources will migrate over to regular APC payment rates.

"Taken in sum total, these drug reimbursement changes are likely to have an impact on a hospital's bottom line," says Shah.