Emergency department payments cut by CMS in final outpatient rule
If the final outpatient prospective payment system (OPPS) rule on hospital outpatient payment services for 2006 is any indication, the coming year will be an extremely tight one economically for the nation’s EDs.
The rule, as announced by the Centers for Medicare & Medicaid Services (CMS), will cut two of three ED ambulatory payment classification (APC) rates, while promising a higher overall inflation update for outpatient services than it approved in fiscal year 2005.
The final rule, which will be effective Jan. 1, 2006, gives acute care hospitals a 3.7% inflation update in Medicare payment rates in 2006 for outpatient services, compared with an overall increase of 3.3% for 2005. However, while the current APC rate for low-level emergency visits is $77.18, the APC rate under the 2006 rule is just $76.83, or a decrease of 0.05%. The APC rate for midlevel visits, $136.34 in 2005, drops to $134.82 in 2006, or a cut of 0.1%. For high-level visits, there is a negligible increase from $234.42 to $236.50, or 0.02%. In the final rule for 2005, the nation’s EDs saw payment rate increases of between 3.3% and 4.3%.
"I don’t understand why these are down when the overall is up," says Barbara Marone, federal affairs director in Washington, DC, for the American College of Emergency Physicians (ACEP). It is definitely a concern, she points out. "This, of course, is the hospital’s schedule, and not the physician’s fee schedule, but that is also taking a beating."
Marone notes that the payment for ED physicians is being cut by 4.5% in 2006. "I don’t know where [the 3.7% increase] is going, but it’s clearly not going to hospital outpatient payments for emergency visits. It’s a concern that payments to the facilities for emergency visits go down, when the overall outpatient system is up."
These numbers take on greater weight in light of the steady increase in ED visits. According to AHA Hospital Statistics-2006 Edition, the nation’s EDs averaged 309,000 visits per day in 2005, 9.2% more than five years ago. "This means revenue per visit will go down," warns Marone.
At the same time that APC rates are being cut, EDs are being asked to "take care of more patients who are older and sicker, with fewer beds, and now less money," asserts Mike Ross, MD, a practicing emergency physician with William Beaumont Hospital in Royal Oak, MI, who helped negotiate the APC rate for observation with CMS. Ross cites the following statistics from the CDC’s National Hospital Ambulatory Medical Care Survey:
- Between 1993 and 2003, the number of ED visits increased by 26%, from 90.3 million to 113.9 million.
- Between 1993 and 2003, the average age of ED patients increased by 9% to 35.9, and patients older than age 65 had the highest ED visit rate, up 26%.
- The highest utilization rates were among patients with Medicaid; the lowest, among patients with private insurance.1
"Their 2001 data showed the number of EDs decreased by 15%," Ross says. "I know CMS is working in a zero-sum game,’ so they don’t have a lot of wiggle room, but this is a very unfortunate decrease for EDs."
The progressive increase in ED visits and decrease in hospitals with EDs aren’t the only challenges that hospitals face, Ross asserts. "At the same time, average patient age is up, and acuity is, too." If you add on top of that the fact that imaging in EDs has been increasing, he says, it’s a recipe for disaster."
Ross posits that if we do get hit with a bird flu crisis, EDs will be overwhelmed, and there won’t be adequate revenue to support your staff. "This means inadequate nursing staff, and EDs diverting and closing," he warns.
With EDs doing so much more imaging, you would think the silver lining in this year’s "cloud" would be the boost in the APC payment rate for observation from $408 to $425, but even that increase is not necessarily good news for EDs, warns Ross.
"My concern is that when hospitals receive the APC payment for imaging, while a lot that imaging involves the use of space in the ED, hospitals don’t portion that out for the ED’s room and board,’" he says.
The use of imaging has grown in emergency medicine; many cases that formerly were managed clinically are now imaged, Ross says. "So the reality is, they are actually decreasing our payment."
As of the publishing of the 2006 OPPS rule, CMS still had not made a final decision on evaluation and management (E&M) facility coding, notes Marone. "We’re not all that supportive of the AHA and AHIMA [American Health Information Management Association] proposal anyway."
That proposal, she points out, calls for three new E&M codes to match three ED APC codes. "We’d like to see five levels of codes and APCs as well," Marone says. "They would correspond more closely to the five levels of CPT codes that physicians use — codes 99281-99285 — which are the five levels for emergency physicians."
Marone says ACEP has sent CMS tables and bar graphs to show the frequency of the different level visits and to demonstrate that it is well distributed across the five levels. "If there were only three levels, it would make things less accurate in terms of understanding what was happening in the ED," she explains.
Reference
- McCaig LF, Burt CW. National hospital ambulatory medical care survey; 2003 emergency department summary. Advance Data from Vital Statistics 2005; 335:1-40.
Sources
For more information on the proposed rule, contact:
- Barbara Marone, Federal Affairs Director, American College of Emergency Physicians, 2121 K Street N.W., Suite 325, Washington, DC 20037-1801. Phone: (202) 728-0610.
- Mike Ross, MD, William Beaumont Hospital, Royal Oak, MI. Phone: (248) 898-3080.
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