Latest CMS transmittal changes OPPS rates – again

Last week, we talked about the changes that CMS announced under the Patient Protection and Affordable Care Act (coined ACA) and released in One Time Notification Transmittal 726. Among those, including some wage indices changes, CMS announced that the Outpatient Prospective Payment System (OPPS) market basket update was reduced by the required 0.25 percentage points. This changed the OPPS conversion factor (CF) announced in the OPPS Final Rule, which is used for the full market basket update, from $67.406 to the ACA rate of $67.362. This is for dates of service furnished on or after January 1, 2010.

CMS has since released One Time Notification Transmittal 728 to correct the OPPS conversion factor and the Inpatient Rehabilitation Facility (IRF) outlier threshold. The revised CY2010 conversion factor to be used for the full market basket update is now $67.241. The full market basket update is used by those facilities that meet the requirements of the Hospital Quality Data Reporting Program (HQDRP).  Those that do not meet the reporting requirements will receive a reduced market basket update conversion factor that reduces their payment rates by 2.0%.  Although the recently announced revision may seem minimal, it affects all of the OPPS payments for hospitals during the entire calendar year.

To understand the impact of the revisions, let’s take a look at how the conversion factor is used for OPPS payment calculations.  The national unadjusted payment rate for each HCPCS code published in Addendum B is equal to the relative weight for the code multiplied by the national OPPS conversion factor.  Each facility must then adjust a portion of the national unadjusted payment rate by their specific wage index to calculate their hospital-specific payment rate.

To provide you with some examples, let’s look at a common orthopedic procedure, a diagnostic shoulder arthroscopy, HCPCS code 29805.

Pre-ACA example using January 2010 Addendum B:                
Relative Weight = 29.9198
Conversion Factor (CF) = $67.406
National Unadjusted Payment Rate = $2,016.77

ACA example using April 2010 Addendum B:
Relative Weight = same
Conversion Factor (CF) = $67.362
National Unadjusted Payment Rate = $2,015.46

ACA example under the current revised CF using July 2010 Addendum B:
Relative Weight = same
Conversion Factor (CF) = $67.241
National Unadjusted Payment Rate = $2,011.84

The difference in the national unadjusted payment rate from the pre-ACA calculation to the current revision is $4.93. If this is a procedure that a hospital performs relatively often, the difference in payment could be substantial over the course of the entire calendar year.  Also, remember that any calculations using the revised payment rates will also change the patient’s co-pay amounts.

Instructions about how to handle past claims under pre-ACA requirements are forthcoming from CMS, so facilities are encouraged to monitor all transmittals for how claims may be reprocessed using the corrected rates and any other changes.