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  • Washington Highlights

    AAMC Comments on CY 2016 OPPS Proposed Rule

    Ivy Baer, Senior Director and Regulatory Counsel

    The AAMC Aug. 31 submitted a comment letter on the Centers for Medicare and Medicaid Services’ (CMS) Outpatient Prospective Payment System (OPPS) proposed rule, which would update payment policies and rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPD) and ambulatory surgical centers (ASCs) beginning Jan. 1, 2016.

    AAMC’s comments focus on critical issues regarding: the Two-Midnight Policy, Recovery Audit Contractor (RAC) reform, the reduction in the conversion factor, ambulatory payment classifications (APCs), and changes to the hospital Outpatient Quality Reporting (OQR) program.


    The AAMC supports CMS' proposal to change the Two-Midnight policy so that a short inpatient admission relies on the physician’s judgment and documentation in the medical record. Stays longer than two midnights will continue to be considered as an inpatient admission.

    The letter also supports the shift of medical short inpatient stay review to quality improvement organizations (QIOs), but with some need for revisions and careful monitoring. CMS anticipates that QIOs will begin their reviews by Oct. 1, 2015 when the current rules on Two-Midnights remain in effect. The letter states that at a minimum, CMS should delay QIO review until Jan. 1, 2016.

    The letter also urges CMS to ensure that QIOs have adequate resources to perform their new medical review responsibilities. CMS proposes that RACs will conduct patient status reviews of hospitals that have consistently high denial rates based on QIO reviews. The AAMC believes it is essential that the methodology used to categorize a hospital as having a high denial rate is based on the proportion of denials relative to the number of both inpatient and outpatient procedures. Without this type of methodology, institutions that care for complex patients are likely to have much higher referral rates.

    Additionally, the association recommends that CMS repeal the 0.2 percent reduction to the standardized amount that was implemented in fiscal year (FY) 2014. The reduction was a result of assumptions from the Office of the Actuary that the Two-Midnight rule would cause a net increase in inpatient cases. However, analysis of the claims data by the AAMC and other hospital associations shows a decrease in inpatient volume. The letter encourages CMS to revisit its original assumptions and restore the offsets taken in FYs 2014 and 2015.

    RAC Reform

    The AAMC supports the RAC reforms proposed by CMS. However, the agency should move to implement these changes quickly rather than waiting for the next contract period.

    2 Percent Reduction of Conversion Factor

    CMS proposes a 2.0 percent reduction to the conversion factor that is an offset to “payment inflation” resulting from the implementation of the lab packing policy in 2014. When CMS reviewed data for 2014, the agency found $1 billion more in spending on lab tests than had been expected. The AAMC believes it is premature to make this reduction. The letter states that CMS should review the data and examine whether its assumptions about the changes in laboratory billing are correct. Also, due to confusion about how to bill for lab tests in 2014, claims data from that year should not be used to support a payment offset for 2016. 

    Finally, the AAMC relayed its concerns regarding the rapid pace of changes exceeding both hospitals’ adaptive capacity and the agency’s ability to accurately model and sufficiently explain the impact of either past or current proposals. The AAMC encourages CMS to delay finalizing the calendar year (CY) 2016 proposals, thereby allowing time to address identified issues since the implemented changes in 2014.

    The final rule will be released later this year.