Proposal Released to Update Medicare Outpatient Prospective Payment System

The Centers for Medicare and Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service outpatient prospective payment system (OPPS) effective Jan. 1, 2023.

The CMS notes that the agency did not rework the proposed rule to incorporate the recent Supreme Court decision to restore payments for 340B drugs. While the rule proposes to continue paying average sales price (ASP) minus 22.5% for 340B drugs, the CMS notes that the agency expects to revert to the previous policy of paying ASP plus 6%. The CMS anticipates offsetting the 340B payment increase estimated at $1.96 billion nationally by reducing the proposed conversion factor. The CMS indicated the reduced conversion factor would be $83.28, which is 1.1% lower than the current factor of $84.18.

Other provisions of the proposal include:

  • Establishing the new rural emergency hospitals (REH) model with proposals regarding payment policy, quality measures and enrollment policies
  • Exempting rural sole community hospitals (SCHs) from the site neutral clinic visit cuts and instead paying the full OPPS rate for visits provided at grandfathered off-campus hospital outpatient departments
  • Increasing the cost outlier threshold by 35% from the current $6,175 to $8,350 to maintain outlier payments at the targeted 1% of total OPPS payments, resulting in fewer cases qualifying for an outlier payment.
  • Updating the inpatient only list to remove 10 services and add eight services.
  • Implementing a permanent 5% cap on wage index decreases.
  • Adding one procedure, a lymph node biopsy or excision, to the Ambulatory Surgical Center (ASC) Covered Procedures List.
  • Requiring prior authorization for an additional service category,­ facet joint interventions, beginning dates of service on or after March 1, 2023.
  • Proposing separate payment in the ASC setting for four non-opioid pain management drugs that function as surgical supplies.
  • Continuing payment for remote behavioral health services beyond the end of the public health emergency.
  • Implementing a payment adjustment for additional costs incurred for domestically manufactured National Institute for Occupational Safety and Health (NIOSH)-approved surgical N95 respirators with payments provided biweekly as interim lump-sum payments to the hospitals and reconciled at cost report settlement.
  • Changes to the hospital outpatient quality reporting (OQR) program including:
  • Making the Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery (OP-31) measure voluntary rather than mandatory beginning with the 2025 reporting period and 2027 payment determination.
  • Aligning the hospital OQR program patient encounter quarters for chart-abstracted measures to the calendar year for annual payment update determinations.
  • Seeking comment on the future reimplementation of the Hospital Outpatient Volume on Selected Outpatient Surgical Procedures (OP-26) measure or the future adoption of another volume indicator as a quality measure.
  • A request for information on improving health equity.

The MHA will provide hospitals with an estimated impact analysis in the coming weeks. Comments are due to the CMS Sept. 13. The MHA will release its draft comment letter prior to the due date and encourages members to review the proposed rule and contact Vickie Kunz regarding issues identified by Sept. 2. The CMS is expected to release a final rule around Nov. 1.