supplies — 8 years ago, it used the Hospital Outpatient Prospective
Payment System (OPPS) as a basis. The OPPS is linked primarily to
the hospital outpatient department (HOPD) payment system, but not
all policies are aligned. This sometimes leads to significant disparity in
rates and coverage.
• CPI-U. CMS uses different update factors to anticipate annual cost
changes. To update HOPD payments, CMS uses the hospital market
basket, which considers the costs of medical equipment, supplies, per-
sonnel and other overhead affiliated with running an outpatient surgical
facility. To update ASC payments, CMS uses the Consumer Price Index
for All Urban Consumers (CPI-U), which is based on what consumers
spend on such goods as milk, bread and gasoline. Guess what. Medical
equipment and supply cost increases are consistently higher than
increases in consumer good prices. ASCs are the only facility type that
are still updated on the CPI-U. Why won't CMS align the update factors
by using the hospital market basket to update ASC payments?
Why did the reimbursement rate for a code drop?
Rate setting is sophisticated, but at a very basic level starts with
hospital cost reporting. Hospitals supply CMS with outpatient hospital
cost data that it then uses to set both the OPPS and the ASC payment
rates. CMS compiles the cost data and tries to take out anomalies to
derive accurate average costs in the HOPD setting. If hospitals report
lower costs for certain codes, those payment rates will then drop for
both HOPDs and ASCs. In 2017, facility fee rates for many spine and
orthopedic codes will drop significantly.
Another reason a code's reimbursement can drop is if it is reas-
signed to a new ambulatory payment classification (APC) group. CMS
puts codes they view as clinically similar into the same group, and all
codes within an APC are reimbursed the same amount. Sometimes
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