August 30, 2010

Outpatient Prospective Payment

Proposed Rule
Summary

Score: 24 / 60

Key materials
Additional details
Agency
Department of Health and Human Services
Regulatory Identification Number
0938-AP41
Agency Name
Department of Health and Human Services
Rule Publication Date
07/20/2009
Comment Closing Date
08/31/2009

RULE SUMMARY

This proposed rule would revise the Medicare hospital outpatient prospective payment system (OPPS) to implement applicable statutory requirements and changes arising from our continuing experience with this system. In this proposed rule, we describe the proposed changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes would be applicable to services furnished on or after January 1, 2010. In addition, this proposed rule would update the revised Medicare ambulatory surgical center (ASC) payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system. In this proposed rule, we set forth the applicable relative payment weights and amounts for services furnished in ASCs, specific HCPCS codes to which these proposed changes would apply, and other pertinent ratesetting information for the CY 2010 ASC payment system. These proposed changes would be applicable to services furnished on or after January 1, 2010.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
0938-AP41 can be found on regulations.gov using the RIN and a keyword search, as well as on the Department of Health and Human Service's website. A link can be found five clicks from the home page by clicking on regulations, regulations and guidance under medicare, then on Quarterly provider updates-regulations. Here, search under QPU July-August 2009. The Department offers a list of proposed rules. The reader has to know what the "quarterly provider update" is in order to find the regulation and RIA on the website.
4/5
2. How verifiable are the data used in the analysis?
The data used to calculate payments to hospitals are available for purchase from HHS: "In addition, below in this section we discuss the file of claims that comprise the data set that is available for purchase under a CMS data use agreement" (p. 24). Links to the HHS website provide additional information about the data. Many other data are reproduced in appendices and available on the HHS website free of charge.
4/5
3. How verifiable are the models and assumptions used in the analysis?
Calculations are explained in detail, and links are provided to some supporting info on the HHS website. Many decisions changing the way services will be coded are justified based on some logic, references to an advisory panel, or HHS's judgment. Some studies by outside contractors that supported these decisions are cited and sometimes linked.
3/5
4. Was the analysis comprehensible to an informed layperson?
The text includes a huge number of acronyms, abbreviations, and jargon. Exposition of the calculations is very turgid, though all the relevant explanations are there. Full understanding requires patience, persistence, and some specialized knowledge of the program, not just graduate training in economics.
2/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
1/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
A perfunctory sentence says the goal of the prospective payment system is to ensure that the government pays appropriately and to encourage efficiency in treatment. "In this proposed rule, we set forth proposed changes to the Medicare hospital OPPS for CY 2010 to implement statutory requirements and changes arising from our continuing experience with the system."
1/5
Does the analysis identify how these outcomes are to be measured?
The analysis does not measure these outcomes. It just calculates payment rates. Payments are measured in dollars.
2/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
No theory is presented.
0/5
Does the analysis present credible empirical support for the theory?
The is no emprical support that would justify the claim that these payment rates are appropriate and lead to efficient care.
0/5
Does the analysis adequately assess uncertainty about the outcomes?
The closest the analysis comes to dealing with uncertainty is an acknowledgement that it does not try to project behavioral responses or adjust for other factors that might change in the future. For example, ""While we recognize the concerns the APC Panel expressed with regards to cost variability in the system, we already engage in a standard review process for all APCs that experience significant changes in median costs." (p. 36)
1/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
1/5
Does the analysis identify a market failure or other systemic problem?
The analysis offers no explicit discussion of why HHS needs to do this beyond saying it must comply with the law: "We are required under section 1833(t)(3)(C)(ii) of the Act to update annually…" The general problem is ensuring adequate but not excessive payment for quality care when the government is a large purchaser, but HHS does not explicitly analyze this. The "systemic problem" this regulation deals with is that Medicare has to figure out how much to pay for various procedures.
1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
Problem not clearly explained in the first place. However, given the size of the payments, then one can infer that they should be updated to reflect changing costs.
1/5
Does the analysis present credible empirical support for the theory?
No relevant discussion.
0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
No relevant discussion.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
2/5
Does the analysis enumerate other alternatives to address the problem?
Alternative ways of setting payments are considered for several types of procedures. Alternatives also considered for dealing with supervision fo certain provisions by non-physician medical professionals.
2/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
The alternatives are small tweaks on a large system for which no alternatives were considered. Given the statutory guidelines, they honestly didn't have much flexibility to consider significant alternatives. (This is an explanation for the low score, not a reason for a higher score.)
2/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The analysis does not directly evaluate how the alternatives would affect the amount of outcome. Alternatives are rejected after some summary argument of pros and cons that does not always implicate outcomes.
2/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The baseline is based on a past year's data; the analysis does not try to project changes in case mix or other factors: "To illustrate the impact of the proposed CY 2010 changes, our analysis begins with a baseline simulation model that uses the final CY 2009 weights" (p. 184).
3/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
The cost of the only alternative considered is calculated in great detail. A table shows the incremental effects of each adjustment.
3/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
Only federal expenditures are identified.
4/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The analysis notes that these changes in payments will also lead to changes in patients' copayments; some will rise and some will fall. These are not presented in depth and are not in the accounting statement.
2/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
The analysis acknowledges the possibility of behavioral changes but explicitly declines to estimate them: "We use the best data available, but do not attempt to predict behavioral responses to our proposed policy changes. In addition, we do not make adjustments for future changes in variables such as service volume, service-mix, or number of encounters" (p. 183).
1/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
There are one or two brief acknowledgements of uncertainty, but no attempts to deal with it: "We note that there are a number of factors that cause APC median costs to change from one year to the next. Some of these are a reflection of hospital behavior, and some of them are a reflection of fundamental characteristics of the OPPS as defined in the statute" (p 36).
1/5
Does the analysis identify the alternative that maximizes net benefits?
Since benefits are not calculated, this is not possible.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
Since benefits are not calculated, this is not possible.
0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
Estimates of hospital-specific payments are available online. A table shows effects on hospitals of various sizes, locations, ownership, and other characteristics. The analysis considered effects on small rural hospitals.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
Some impacts on beneficiaries via copayments are discussed briefly with a couple examples (p. 188), but no calculation of how these changes would affect ultimate beneficiaries.
2/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
The analysis was used only in the sense that the calculations determine how much the government will pay for various procedures.
3/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
Benefits are not estimated, so net benefits could not be calculated. It is not clear whether net benefits were even considered.
0/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
Providers must report process-oriented (not outcome-oriented) quality measures, which could be used to analyze effects of payments on outcomes. However, HHS articulates no plan to use them specifically to evaluate the effects of this regulation.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
Outcome data could perhaps be used to measure effects of this regulation.
1/5
 
Total 24 / 60