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CMS Issues Final Hospital OPPS Payment Changes for 2012, Delays VBP Requirements

November 4, 2011—The Centers for Medicare and Medicaid Services (CMS) Nov. 1 released a final rule with comment period that contains changes to the calendar year (CY) 2012 outpatient prospective payment system (OPPS) and proposed payment rates for Ambulatory Surgical Centers (ASCs).  The rule also makes changes to the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the Hospital Inpatient Value-Based Purchasing (VBP) Program.   The final rule is scheduled to be published in the Nov. 30 Federal Register and will go into effect Jan. 1, 2012.  Comments on specific issues identified by CMS are due Jan. 3, 2012.

In the final rule, CMS updates hospital base payments by an increase factor of 1.9 percent.  This update reflects an inflationary increase of 3.0 percent minus a 1.0 percentage point multifactor productivity adjustment and a 0.1 percentage point adjustment.  Both reductions are required by the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152).

Under the VBP program, CMS has delayed the inclusion of the Hospital Acquired Conditions (HAC), Patient Safety Composites, and Medicare Spending per Beneficiary measures for FY 2014, as these measures have not been publicly reported on CMS’s Hospital Compare website for a year prior to inclusion as required by the ACA.  The final rule also expands the OQR program by requiring an additional three quality measures for CY 2014.

Additionally, under the final rule, CMS will pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status at the average sales price (ASP) plus 4 percent in CY 2012.  This payment rate represents a decrease of 1 percentage point from the rate these products currently receive. 

Under the final rule’s provisions relating to the cancer hospital adjustment required by the ACA, CMS reduces the budget neutrality adjustment from 0.7 percent to 0.2 percent.  This adjustment decreases the amount hospital payments will be reduced to offset the increased cancer hospital payments.  CMS also finalizes the agency’s proposals to establish a two-tiered payment system for partial hospitalization services provided by hospitals and to establish an independent advisory review process to allow for consideration of supervision levels other than direct supervision for specific outpatient hospital therapeutic services.

Finally, although CMS proposed to increase the fixed-dollar outlier threshold from $2,025 in CY 2011 to $2,100 in CY 2012, the final rule decreases the outlier threshold to $1,900 for CY 2012.


Jennifer Faerberg, MHSA
Director, Clinical Transformation Unit
Telephone: 202-862-6221


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806