On November 2, 2010, the Centers for Medicare and Medicaid Services (“CMS”) released its final rule on the Hospital Outpatient Prospective Payment System (the “Final Rule”) for calendar year 2011. The Final Rule updates payment rates and policies for services furnished in hospital outpatient departments and ambulatory surgery centers, and implements changes required by the Affordable Care Act of 2011. The Final Rule also includes a number of provisions that will have an impact on CMS’ supervision policy for hospital outpatient therapeutic and diagnostic services and is good news for providers, especially critical access hospitals (“CAHs”) and small rural hospitals.
I. Background
As a condition of payment for therapeutic and diagnostic services provided to hospital outpatients incident to a physician’s service, CMS has long required direct supervision by a physician. Over the past two years, CMS has implemented significant “clarifications” of, and changes to, its policies regarding supervision of diagnostic and therapeutic services furnished in hospital outpatient departments. In response to widespread criticism from representatives of CAHs and rural hospitals, as well as members of Congress, CMS has finalized an additional five significant changes to its supervision policy for hospital outpatient therapeutic and diagnostic services.
II. Changes to Supervision Requirements
A. Delayed Enforcement of Supervision Requirements
On March 15, 2010, CMS issued a notice that instructed its contractors not to evaluate or enforce the supervision requirements for therapeutic services provided to outpatients in CAHs for the duration of calendar year 2010. In the Final Rule, CMS has elected to extend its decision not to enforce the requirement for direct supervision of therapeutic services provided to CAH outpatients for the 2011 calendar year.
In addition to extending the non-enforcement policy for CAHs, CMS has decided not to enforce the direct supervision requirement for outpatient therapeutic services provided by small rural hospitals that have 100 or fewer beds. CMS will consider a hospital to be rural if it is geographically located in a rural area or paid through the outpatient prospective payment system with a wage index for a rural area.
B. Establishment of Independent Review Process
CMS plans to establish an independent review process during the 2012 outpatient prospective payment system rulemaking cycle that will allow for an assessment of the appropriate supervision levels for individual hospital outpatient therapeutic services. As part of the process, CMS will convene a technical committee of industry representatives that will be tasked with assessing whether specific outpatient therapeutic services should require general, direct or personal supervision.
In order to allow for greater flexibility in providing for direct supervision from a location other than the hospital campus or provider-based department, CMS is amending the definition of direct supervision to remove all references to “on the same campus” or “in the off-campus provider-based department” of the hospital. The new definition, which is effective on January 1, 2011, focuses strictly on the requirement that the supervising physician or non-physician practitioners (“NPP”) be immediately available, meaning physically present, interruptible, and able to furnish assistance and direction through the performance of the procedure but without reference to any particular boundary.
CMS has adopted the same new definition of direct supervision and immediate availability for outpatient diagnostic services as well, except for diagnostic services performed “under arrangement in non-hospital locations.” For such services, CMS still requires the supervisor to be physically present in the office suite at the non-hospital location and immediately available.
D. Non-Surgical Extended Duration Therapeutic Services.
CMS has established a category of “nonsurgical extended duration therapeutic services” for which direct supervision is required during the initial stage of the service/procedure, followed by minimum level of general supervision for the duration of the service. CMS has defined “nonsurgical extended duration therapeutic services” as services that can last a significant period of time, have a substantial monitoring component that is typically performed by auxiliary personnel, have a low risk of requiring the physician’s or appropriate NPPs immediate availability after the initiation of the service, and are not primarily surgical in nature. This category includes 16 services, including observation services. CMS declined, however, to include blood transfusion or chemotherapy in this category. Chemotherapy and blood transfusion services must still be provided under direct supervision during the duration of the treatment.
E. Transition from Direct to General Supervision
CMS has finalized a requirement that the transition from direct to general supervision for non-surgical extended duration therapeutic services be documented in the progress notes or in the medical record of the patient. CMS is leaving the manner of documentation to the discretion of each supervising practitioner.
Judd Harwood is an associate in Balch & Bingham, LLP’s Health Care Law Practice Group.
