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CMS Sets 2014 Pay Rates for Hospital Outpatient and Physician Services

 |  By cclark@healthleadersmedia.com  
   December 02, 2013

The new rules reflect changes in healthcare, says CMS, but hospital and medical groups express disappointment and call for attendant SGR reform.

The Obama Administration late Wednesday released two final rules dictating how doctors and outpatient hospital facilities will receive payment starting Jan. 1, 2014, and Jan. 1, 2015, with two key changes for physician fee schedules and outpatient payments.

Physician Fee Schedule Rule

In the first rule governing fees for physicians and other providers, primary care physicians and some non-physician providers will have a way to receive separate payments for care they provide to Medicare beneficiaries with two or more chronic conditions outside of the face-to-face visits—reimbursement for so-called chronic care management, starting Jan. 1, 2015.

"Health care is changing, and part of delivery system reform is recognizing this and making sure payment systems account for these changes," said Jonathan Blum, principal deputy administrator for the Centers for Medicare & Medicaid Services, in a news release announcing the new rule. The agency called the shift in payment philosophy "a milestone."

"We believe that successful efforts to improve chronic care management for these patients could improve the quality of care while simultaneously decreasing costs, through reductions in hospitalizations, use of post-acute care services, and emergency department visits."

According to a CMS fact sheet, the chronic care management fees will compensate providers for services that include "the development, revision, and implementation of a plan of care; communication with the patient, caregivers, and other treating health professionals; and medication management."

As previously indicated in the summer's proposed rule, CMS will, starting Jan. 1, 2014, allow physicians to receive a small pay upgrade for reporting quality measures if they participate in a qualifying clinical data registry. According to CMS, "physicians and other eligible professionals may report a measure once to receive credit in all quality reporting programs in which that measure is used."

The rule also specified that clinical quality data for physician groups who report certain quality data will be publicly reported on Physician Compare in 2014.

The new rule also reflects pay hikes for psychiatrists (6%) and non-physician psychologists and clinical social work providers (8% each), starting Jan. 1, 2014. Chiropractors are big winners in the new pay scale, with a pay increase of 12%.

Providers incurring pay cuts include pathologists (-6%), rheumatologists (-4%), interventional pain management specialists (-4%), and allergists/immunologists (-3%). Practitioners associated with diagnostic testing facilities also will receive a pay cut of 11%, while those affiliated with independent laboratories will receive a reduction of 5%.

The total amount estimated in payments under the new schedule is $87 billion for 2014.

The 2014 physician fee schedule rule prompted a renewed call from the American Medical Association urging Congress to repeal the Sustainable Growth Rate formula, which is poised to cut physicians' pay by 24%.

"The clock is ticking" for the SGR, AMA president Ardis Dee Hoven, MD, said in a statement. "At stake are innovations that would make Medicare more cost-effective for current and future generations of seniors. These innovations are not possible if physicians are worried about drastic cuts to Medicare rates that have remained almost flat since 2001, while the cost of caring for patients has gone up by 25%."

Hospital Outpatient Prospective Payment System Rule

In the second rule, the federal agency is proposing a dramatic shift in how outpatient facilities and ambulatory surgical centers are paid so that the five levels of clinic visit codes are replaced with a single code.

That simpler code, the agency said in a news release, is more efficient and will "strengthen the long-term financial stability of Medicare," by "packaging" outpatient services in a way similar to the DRG system that pays hospitals for inpatient care.

Such bundled services include drugs, biologicals, and radiopharmaceutical supplies used in diagnostic tests and procedures. They include skin substitutes, lab services, device removal procedures and certain add-on procedures.

"These changes are essential if we're going to create a healthcare system that delivers better care at lower cost," Blum said in a news release. "The final OPPS/ASC rule gives hospitals a stake in managing their resources to generate better coordinated and ultimately, more affordable outpatient care."

The American Hospital Association executive vice president Rick Pollack said in a statement that the AHA "is extremely disappointed" with some of these new provisions, specifically those that bundle clinic services, saying that they will "hurt hospitals' ability to provide outpatient care."

He added that he doesn't think CMS used correct information in coming to its decision to collapse the five outpatient codes.

"While we are pleased that CMS has decided not to collapse its codes for emergency room visits, we are very concerned that CMS is moving forward with consolidating all outpatient clinic visit codes into a single code representing a single level of payment," he said. "Hospitals that provide care for large numbers of complex patients will receive payment well below the cost of treating these patients.

"Hospitals will have neither the time nor the data to understand how these changes will affect their ability to provide patient services. In adopting these proposals, CMS has put hospitals in the difficult position of having only 35 days to implement significant changes in Medicare's policies, procedures, and payment formulas."

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