WASHINGTON – Most hospitals will receive in 2010 an inflation update of 2.1 percent in their payment rates for services furnished to Medicare beneficiaries in outpatient departments, according to the Centers for Medicare and Medicaid Services.

However, as required by Medicare law, CMS will reduce the update by 2 percent for hospitals that didn't participate in quality data reporting for outpatient services or didn't report it successfully, resulting in a 0.1 percent update for those hospitals.

Ambulatory surgical centers will also receive a 1.2 percent inflation update beginning Jan. 1, 2010.

“The payment rates we are announcing for 2010 are intended to ensure that Medicare beneficiaries continue to receive high quality and efficient care in the most appropriate setting,” said Jonathan Blum, director of the CMS Center for Medicare Management.

CMS projects that the Medicare payments to more than 4,000 hospitals and community mental health centers in CY 2010 will be approximately $32.2 billion, while Medicare payments to approximately 5,000 ASCs will total $3.4 billion.

The payment updates are included in a final rule that revises payment policies and updates the payment rates for services furnished to beneficiaries during CY 2010 in hospital outpatient departments under the outpatient prospective payment system (OPPS) and in ASCs under a revised rate-setting methodology that was implemented Jan. 1, 2008.

Hospitals will also be able to bill Medicare for new pulmonary and intensive cardiac rehabilitation services delivered in hospital outpatient departments to Medicare beneficiaries. The rule provides payments to rural hospitals for kidney disease education services provided in outpatient departments to Medicare beneficiaries with Stage IV chronic kidney disease.

An adjustment for the hospital pharmacy overhead costs of separately payable drugs and biologicals is also included in the final rule. This adjustment recognizes the overhead costs for these drugs and biologicals relative to those that are packaged into Medicare’s payment for the associated ambulatory payment classification. As a result, CMS will pay hospitals for most separately payable drugs and biologicals administered in outpatient departments at the manufacturer’s average sales price plus 4 percent.

The final rule seeks to ensure that beneficiaries have access to outpatient services in all appropriate settings, while improving the quality and efficiency of service delivery, said officials. It will appear in the Nov. 20 Federal Register, and comments on designated provisions are due by Dec. 29. CMS will respond to comments in the CY 2011 OPPS/ASC final rule.