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AARC Will Fight Pulmonary Rehab Payment Reduction

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November 9, 2011

by Anne Marie Hummel
Director of Federal Regulatory Affairs

To say that the AARC was extremely upset and disappointed when CMS finalized the payment rate of $37 per session for pulmonary rehabilitation services beginning January 1, 2012 is an understatement. This dramatic reduction cannot be allowed to stand, and AARC, together with other pulmonary societies will collectively do everything we can to ensure that our pulmonary patients have access to these vital programs and that payment for the services that comprise this important benefit are reimbursed appropriately.

In late summer, AARC and our sister pulmonary societies met with CMS to oppose the payment reduction. At the time we believed the charges hospitals were reporting under the new pulmonary rehab code (G-0424) were undervalued, thus driving down the payment rate, and made recommendations on how CMS could make things right. Unfortunately, in the end, CMS rejected the multi-society arguments and recommendations and decided it had a “robust” amount of data from the new code to set next year’s rate.

We believe the crux of the problem lies in the fact that hospitals are not including charges for all of the ancillary services under the new single code that were previously billed separately before the benefit became effective. CMS alludes to this problem in the final rule as noted below.

In recent years, the CMS and the AMA’s CPT Editorial Panel have increasingly created new codes that use a single HCPCS code to report combinations of services that were previously reported by multiple HCPCS codes or multiple units of a single HCPS code. For example, effective January 1, 2010, CMS created HCPCS code G0424 (Pulmonary rehabilitation, including exercise (includes monitoring), per hour, per session) to represent a comprehensive program of pulmonary therapy…. As we have stated before, we expect hospitals to carefully review each new HCPCS code when setting charges for the forthcoming year. However, in particular, hospitals should be especially careful to thoughtfully establish charges for new codes that use a single code to report multiple services that were previously reported by multiple codes. It is vital in these cases that hospitals carefully establish charges that fully include all of the charges for all of the predecessor services that are reported by the new code. To fail to carefully construct the charge for a new code that reports a combination of services that were previously reported separately, particularly in the first year of the new code, under-represents the cost of providing the service describing by the new code and can have significant adverse impact on future payments under the OPPS for the individual service described by the new code.

The solution to the payment fix won’t be a quick one and we will not be able to do anything to change the rate for the coming year. But we are committed to doing whatever is necessary to reverse this downward trend.

AARC and the other pulmonary societies will be meeting shortly to develop long term strategies that can be presented to CMS early next year prior to the drafting of the proposed hospital outpatient prospective payment system updates for 2013. We will keep our members informed as further activities take place as we strive to correct this unfortunate situation.