Medicare Outpatient Payments for Hospitals to be Increased by 2.1%

by | Last updated Feb 9, 2024 | Published on Sep 5, 2014 | Healthcare News

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The Centers for Medicare and Medicaid Services (CMS) recently released a proposal to increase Medicare payments to hospitals for the care that they provide on an outpatient basis. The new proposal provides an increase in hospital outpatient payments by 2.1% in the year 2015, while ambulatory surgery centers would receive a 1.2% boost. Both the proposed increases are quite higher than what CMS had recommended and finalized for the year 2014.

Reports suggest that Medicare (the health program for the elderly and disabled) paid about $37 billion in 2013 for outpatient treatment in hospitals and $139 billion for admissions. The proposed increase for 2015 emphasizes a trend of discouraging unnecessary admissions.

Presently, hospitals are struggling with health insurance expansions under the Patient Protection and Affordable Care Act (ACA) or Obamacare. Insurers negotiate aggressively for plans that they sell in government-run exchanges serving about 8 million people.

The 2.1% increase for hospitals was arrived from a 2.7% increase in market base minus a 0.4% productivity adjustment along with 0.2% cut required by ACA. As per the new rule, those hospitals that fail to meet the outpatient quality reporting needs would continue to have their Medicare reimbursements reduced by 2%. It also suggested continuing increased payment rates for cancer hospitals and rural facilities.

CMS is proposing to add one claims-based quality measure and refine the norms for determining when a measure is “topped out”. Moreover, several previously adopted measures are to be updated.

The proposal included payment of a bundled rate for ancillary services with an average cost of $100 or less. The exceptions to this payment system consist of preventive services, psychiatric related services and drug-administration related services. CMS has been stressing the need for comprehensive ambulatory payment classifications (APCs) since 2014 which would lead to a single Medicare payment to providers instead of several separate charges. For the year 2015 about 28 comprehensive APCs have been included.

It is expected that the new rule would significantly affect more than 4,000 hospitals and 5,300 ambulatory surgery centers in the US. It is estimated that Medicare under the new policy in 2015 would pay hospitals $ 56.5 billion, a considerable increase of 5.2 billion from 2014. On the other hand, ambulatory surgery centers would receive $4.1 billion, an increase of $243 million compared to 2014.

Rajeev Rajagopal

Rajeev Rajagopal, the President of OSI, has a wealth of experience as a healthcare business consultant in the United States. He has a keen understanding of current medical billing and coding standards.

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