On November 1, the Centers for Medicare and Medicaid Services (CMS) issued its Calendar Year (CY) 2013 final rule for the outpatient prospective payment system (OPPS). In the rule, CMS clarifies that it was not the intent of the agency in the CY 2012 OPPS final rule to establish different requirements for critical access hospitals (CAHs) and for OPPS hospitals for the same services. Therefore, physical therapy, speech therapy, and occupational therapy services that are paid under the OPPS are subject to the direct supervision requirements in 42 CFR § 410.27, whether they are furnished in OPPS hospitals or CAHs. The physical therapy, speech therapy, and occupational therapy services that are not paid under the OPPS and are paid instead under the Medicare Physician Fee Schedule are not subject to the direct supervision requirements in § 410.27, whether they are furnished in OPPS hospitals or in CAHs.

As previously discussed in the proposed rule CMS has implemented the Medicare Part A to Part B Rebilling (AB Rebilling) Demonstration, which allows participating hospitals to receive 90% of the allowable Part B payment for Part A short-stay claims that are denied on the basis that the inpatient admission was not reasonable and necessary. Participating hospitals can rebill these denied Part A claims under Part B and be paid for additional Part B services that would usually be payable when an inpatient admission is deemed not reasonable and necessary. This demonstration is slated to last for 3 years, from CY 2012 through CY 2014.

In the proposed rule, CMS discussed that when a Medicare beneficiary arrives at a hospital in need of medical or surgical care, the physician or other qualified practitioner must decide whether to admit the beneficiary for inpatient care or treat him or her as an outpatient. In some cases, when the physician admits the beneficiary and the hospital provides inpatient care, a Medicare claims review contractor, such as the Medicare Administrative Contractor (MAC), the Recovery Audit Contractor (RAC), or the Comprehensive Error Rate Testing (CERT) Contractor, determines that inpatient care was not reasonable and necessary and denies the hospital inpatient claim for payment. In these cases, Medicare allows hospitals to rebill a separate inpatient claim for only a limited set of Part B services, referred to as "Inpatient Part B" or "Part B Only" services. The hospital also may bill Medicare Part B for any outpatient services that were provided in the 3-day payment window prior to the admission.

Hospitals have expressed concern that this policy provides inadequate payment for resources that they have expended to take care of the beneficiary in need of medically necessary hospital care, although not necessarily at the level of inpatient care. Hospitals have indicated that often they do not have the necessary staff (for example, utilization review staff or case managers) on hand after normal business hours to confirm the physician's decision to admit the beneficiary. Thus, for a short-stay admission, the hospital may be unable to complete a timely review and change a beneficiary's patient status from inpatient to outpatient prior to discharge.

In the proposed rule, CMS indicates that hospitals appear to be responding to the financial risk of admitting Medicare beneficiaries for inpatient stays that may later be denied upon contractor review by electing to treat beneficiaries as outpatients receiving observation services, often for longer periods of time, rather than admitting them as inpatients.

CMS received approximately 350 public comments, including those from APTA, in response to its solicitation in the proposed rule regarding possible policy alternatives to remedy the issue of Medicare Part A inpatient admissions and observation stays paid under Medicare Part B. Stakeholders urged CMS not to adopt a final policy regarding patient status in this final rule but instead develop an informed course of action in the upcoming months through a formal, ongoing dialogue with all interested stakeholders. A few stakeholders recommended immediate action to limit beneficiary liability for SNF care when the 3-day qualifying hospital stay is subsequently denied and for the difference in beneficiary cost-sharing between hospital inpatient and outpatient services.

In the final rule, CMS summarizes the feedback received in response to the solicitation in the proposed rule but does not provide responses to the public comments. CMS states that it strictly solicited public comments, and did not propose any changes in policy. CMS states that it will consider the feedback received from the public in its future policymaking.

APTA will post a summary of the final rule on its website shortly.