Prospective Payment System Final Rule Implementation Delayed

Shortly after the June 2000 issue of Update went to print, the Health Care Financing Administration (HCFA) announced that the effective date for the implementation of the hospital outpatient prospective payment system (PPS) was being delayed for one month, from July 1 to August 1, 2000. HCFA attributed the delay to its inability to meet several key internal deadlines and to vigorous concerns raised by the hospital community that hospitals would be unable to implement the PPS by July 1 because of HCFA's delays. HCFA has pledged to redouble its efforts to ensure that the PPS is effective on August 1.
The PPS final rule benefits the device, pharmaceutical, and biologics industries by providing hospitals with increased opportunities to receive additional payments for these industries' products. When the PPS is implemented, hospitals will be eligible to receive transitional pass-through payments for additional costs associated with certain new medical devices, drugs, and biologics. In addition, the PPS final rule created special ambulatory payment classification (APC) groups for certain new technology items and services that HCFA determines cannot be placed in existing APC groups and do not meet the pass-through requirements.
The PPS implementation delay provides device, pharmaceutical, and biologics companies with an extra window of opportunity to make sure they have obtained either "C" codes (HCFA Common Procedure Coding System (HCPCS) codes specifically for the PPS system) or their HCPCS numbers (national codes for use by providers), and that the codes for their respective products are associated with a payable revenue code in HCFA's code editor. These combinations of codes are necessary to receive PPS reimbursement. (For a more detailed explanation of the impact of the PPS, see "PPS Final Rule Benefits Device, Pharmaceutical, and Biological Industries" Update, Issue 3, June 2000, pp. 46-48. This article is also available online at www.fdli.org/pubs/updateonline.htm).
The hospital community continues to be concerned with the enormous challenges it faces in implementing the PPS, and contends that HCFA's decision to delay the implementation date to August 1 will still not give it, or HCFA, enough time to adequately resolve all of the outstanding issues. When the PPS is implemented, device, pharmaceutical, and biologics companies should be prepared to take advantage of the potential for additional payment.
This article is a follow-up to the article "PPS Final Rule Benefits Device, Pharmaceutical, and Biological Industries," also written by Mr. Reiss and Mr. Armon in the June 2000 issue of Update.

Mr. Armon is an Associate in Saul Ewing's Health Law Department and can be reached at barmon@saul.com. Dr. Reiss is a Partner and Chairman of Saul Ewing's Health Law Department. He can be reached at jreiss@saul.com.

Reprinted with the permission of FDLI, Bruce D. Armon and John B. Reiss, PPS Final Rule Implementation Delayed, FDLI UPDATE, Issue 4, 2000 at 15. Visit FDLI's Update magazine at www.fdli.org to download the entire issue or to access more articles by leaders in the food and drug law field.