Press release



The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that would update payment policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) beginning Jan. 1, 2012.  The proposed rule would continue to emphasize the importance of ensuring that beneficiaries receive high quality care without regard to the setting in which that care is provided.

The proposed rule also contains proposals that would strengthen the Hospital Value-Based Purchasing (HVBP) Program.   The HVBP Program, which was required by the Affordable Care Act of 2010, will tie a portion of a hospital’s payment for inpatient stays under the Inpatient Prospective Payment System in fiscal year (FY) 2014 to its performance score on a set of quality measures.  CMS issued a final rule establishing this program in April of this year. 

CMS is also proposing changes to the Medicare Electronic Health Record Incentive Program that would allow eligible hospitals and critical access hospitals (CAHs) to report clinical quality measures for 2012 by participating in an electronic reporting pilot.

CMS projects that total payments to more than 4,000 hospitals – including general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children’s hospitals, and cancer hospitals -- under the Outpatient Prospective Payment System (OPPS) in calendar year (CY) 2012 will be approximately $41.9 billion.  CMS also projects that payments to approximately 5,000 Medicare-participating ASCs under the ASC Payment System will be approximately $3.61 billion.

The proposed rule would continue to strengthen the Hospital Outpatient Quality Reporting Program and for the first time establish a quality reporting program for ASCs.

“The CMS is committed to using every tool at its disposal to create incentives that will improve the quality and safety of care received by Medicare beneficiaries, wherever that care is provided,” said CMS Administrator Donald M. Berwick, M.D.

Finally, the proposed rule would implement certain provisions in the Affordable Care Act affecting the expansion of physician-owned hospitals.   The Affordable Care Act narrows access to the “rural provider” and “whole hospital” exceptions, in part by limiting the ability of existing physician-owned hospitals to expand their capacity.  However, the Affordable Care Act also requires CMS to create a process for certain physician-owned hospitals to apply for an exception to the prohibition on expansion of facility capacity.  The proposed exception process for expanding a physician-owned hospital’s facility capacity mirrors the statutory criteria.  


Proposals relating to Hospital Outpatient Departments

The proposed rule projects an outpatient department fee schedule increase factor – more commonly called the “market basket update” – for CY 2012 of 1.5 percent (2.8 percent, based on the projected hospital inpatient market basket percentage increase for inpatient services paid under the Inpatient Prospective Payment System (IPPS) minus an estimated 1.2 percentage points multifactor productivity adjustment minus a 0.1 percentage point adjustment).  We note that the proposed multifactor productivity adjustment and the 0.1 percentage point adjustment are necessary in order to comply with certain requirements set forth in the Affordable Care Act.

The proposed rule would also make the following changes to payments under the OPPS:


  • Apply an appropriate payment adjustment to each cancer hospital’s OPPS payments, consistent with the law, although under the proposed rule, some cancer hospitals could receive an adjustment of zero percent.   Most cancer hospitals would no longer qualify for Transitional Outpatient Payments (TOPs) as a result of the increased payments cancer hospitals would receive under the proposed cancer hospital payment adjustment.  The statute requires any cancer hospital payment adjustment to be budget neutral.  The resulting increase to cancer hospitals is projected to be approximately 9 percent.


  • Pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals, other than new drugs and biologicals that have pass-through status, at the manufacturers’ average sales price (ASP) plus 4 percent.



  • Pay for partial hospitalization services in hospital-based programs and freestanding community mental health centers (CMHCs) based on the unique cost-structures of each type of program.  For both types, CMS is proposing to establish two payment tiers – Level I for days with three services, and Level II for days with four or more services.


In response to concerns expressed by stakeholders during the CY 2011 OPPS rulemaking cycle regarding appropriate levels of supervision for therapeutic outpatient services, CMS is proposing to establish an independent advisory review process for consideration of stakeholder requests for assignment of supervision levels other than direct supervision for specific outpatient hospital therapeutic services.  In the CY 2012 OPPS proposed rule, CMS is proposing to refer questions about supervision of specific services to the Ambulatory Payment Classification (APC) Panel, a panel initially created under the Federal Advisory Committee Act to provide technical advice and recommendations to CMS about assigning items and services furnished in HOPDs to appropriate APCs.  CMS is also proposing to add representatives of Critical Access Hospitals (CAHs) to the Panel solely for deliberations relating to supervision levels.  Because CAHs are paid on a reasonable cost basis, rather than on APCs, CAH representatives would not participate in deliberations about APC assignments.


“The CMS is committed to addressing the concerns raised by small rural hospitals and other stakeholders about our physician supervision requirements.  We believe that our proposed process will ensure a more reliable and responsive policy,” said Jonathan Blum, deputy administrator Missing media item. and director for CMS’s Center for Medicare.


The proposed rule would increase the number of measures for reporting in either CY 2012 or CY 2013 for purposes of the CY 2014 payment determination, and would modify the process for validating hospital reporting of chart-abstracted measures that was adopted for CY 2012 in the CY 2011 OPPS rule.  Specifically, CMS is proposing to reduce the number of hospitals randomly selected for the validation from 800 to 450, but would establish criteria for selecting up to 50 additional hospitals for targeted validation of their reporting.


Proposals relating to Ambulatory Surgical Centers


Payments to ASCs are updated annually based on the consumer price index for all urban consumers (CPI-U).  CMS is projecting that the CPI-U for CY 2012 will be 2.3 percent.  As required by the Affordable Care Act, CMS is proposing to reduce the annual update by a productivity adjustment projected to be 1.4 percent in CY 2012.  Therefore, CMS is proposing to apply a 0.9 percent update for CY 2012.

CMS also is proposing to implement a quality reporting program for ASCs by proposing eight quality measures for reporting beginning in CY 2012 for the CY 2014 payment determination.  The proposed measures include seven outcome and surgical infection control measures and one healthcare associated infection measure reported through the National Healthcare Safety Network.  CMS also is proposing to add two structural measures for reporting in CY 2013 for the CY 2015 payment determination – one for safe surgery checklist use, and one for ASC facility volume data on selected ASC surgical procedures.  CMS also is proposing to add one measure on influenza vaccination coverage among healthcare personnel for reporting beginning in CY 2013 for the CY 2016 payment determination.


In April, CMS issued a final rule establishing the HVBP and designating a set of 12 clinical process of care measures that would be used in determining a hospital’s performance.   In this proposed rule, CMS is making additional proposals for the FY 2014 Hospital Value-Based Purchasing program.   Specifically, CMS is proposing to add one clinical process of care measure to guard against infections from urinary catheters.  CMS is also proposing to establish the performance periods, standards and a weighting scheme for the FY 2014 Hospital VBP program.

CMS will accept comments on the proposed rule until Aug. 30, 2011, and will respond to all comments in a final rule to be issued by Nov. 1, 2011.

For more information on the CY 2012 proposals for the OPPS and the ASC payment system, please see:


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