Tag: OPPS

CMS Releases Medicare 2026 Outpatient Prospective Payment System Proposed Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service outpatient prospective payment system (OPPS) effective Jan. 1, 2026.

The proposed rule:

  • Provides a net 0.9% increase to the OPPS conversion factor from $89.17 to $89.96 for hospitals enrolled in Medicare before Jan. 1, 2018. The update includes a 3.2% market basket update, mandated 0.8 percentage point productivity adjustment, other budget neutrality adjustments and a 2% reduction for the 340B remedy offset (described below). Hospitals that fail to meet outpatient quality reporting program requirements are subject to an additional two-percentage point reduction.
  • Shortens the timeline for OPPS hospitals to repay the $7.8 billion received through higher payments for non-drug services in 2018-2022 due to the CMS’ budget-neutral policy that cut payments to 340B hospitals. The CMS proposes a 2% annual reduction to the OPPS conversion factor to repay the full $7.8 billion by 2031, up from the initially proposed 0.5% annual reduction over 16 years.
  • Implements a site neutral payment policy for drug administration services provided in grandfathered off-campus hospital outpatient departments. The CMS proposed to pay a physician fee schedule equivalent rate for 61 HCPCS codes assigned to drug administration ambulatory payment classifications, which equates to roughly 40% of the OPPS rate. Rural sole community hospitals are exempt from this cut.
  • Includes a new drug acquisition cost survey for all OPPS hospitals in late 2025 or early 2026 for separately payable drugs, with survey results to be used to set 2027 rates for separately payable drugs.
  • Eliminates the inpatient only (IPO) list over three years, beginning with the removal of 285 mostly musculoskeletal services in 2026, making these procedures payable in outpatient settings.
  • Decreases the outlier fixed-dollar threshold by 11.2% from the current $7,175 to $6,450.
  • Updates the Outpatient, Rural Emergency Hospital (REH) and Ambulatory Surgical Center (ASC) Quality Reporting Programs, including removing four measures related to COVID-19 vaccination of health care personnel and health equity. For the Outpatient and REH programs, the CMS proposes a new e-measure on timeliness of emergency department care and establishing requirements for REHs to report e-measures. The CMS also proposes updates to the methodology used to calculate the Overall Hospital Star Ratings that would limit any hospital in the bottom safety quartile to a maximum of four stars and in 2027, drop such hospitals one full star.
  • Updates the ASC covered procedures list to add 276 procedures plus an additional 271 procedures proposed for removal from the 2026 IPO list.
  • Requires hospitals to report payer-specific Medicare Advantage payment rates on their Medicare cost report for periods ending on or after Jan. 1, 2026. The CMS plans to use this data for a proposed fiscal year 2029 methodology change in calculating inpatient Medicare severity diagnosis related group (MS-DRG) relative weights to reflect relative market-based pricing.
  • Requires hospital to disclose detailed ranges of rates negotiated with health insurance plans (known as allowed amounts) by updating hospital price transparency regulations beginning Jan. 1, 2026, to require four new data elements. Hospitals must publish 10th-percentile, median and 90th-percentile allowed amounts (plus counts) instead of a single estimated allowed amount.
  • Revises the definition of direct supervision for cardiac rehabilitation, intensive cardiac rehabilitation and pulmonary rehabilitation services and diagnostic services (excluding service with a global surgery indicator of 010 or 090) provided to hospital outpatients to permanently allow virtual direct supervision.

The MHA will provide a hospital-specific impact analysis within the next few weeks and encourages hospitals to contact Vickie Kunz by Sept. 2, regarding issues identified. Hospitals are encouraged to review the proposed rule and its impact on operations and submit comments to the CMS by Sept. 15. The CMS is expected to release a final rule in early November for the Jan. 1, 2026 effective date. Members with questions may contact Vickie Kunz at the MHA.

CMS Releases Medicare 2025 Outpatient Prospective Payment System Final Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service outpatient prospective payment system (OPPS) effective Jan. 1,  2025.

The final rule:

  • Provides a net 2% increase to the OPPS conversion factor from $87.38 to $89.17 for hospitals that report quality measure data.
  • Increases the outlier fixed-dollar threshold by 3.2% from the current $7,750 to $8,000, as proposed.
  • Requires an in-person visit by the beneficiary within six months prior to the provision of remote mental health services and then annually, beginning Jan. 1, 2025. Congress would need to extend previous statutory waivers to continue to waive the in-person visit requirements beyond Jan. 1, 2025.
  • Reduces the review timeframe for standard prior authorization requests for covered hospital outpatient department services from 10 business days to seven calendar days.
  • Uses 2023 claims data and the most updated cost report data from the Healthcare Cost Report Information System, primarily from 2022, to set payment rates.
  • Adds three services (CPT codes 0894T, 0895T and 0896T) for liver allograft-related procedures to the Inpatient-Only List and removes a pelvic fixation code (CPT code 22848) for 2025.
  • Updates the core based statistical areas used to determine a hospital’s wage index, consistent with other 2025 final rules. The CMS will use the FY 2025 wage index values from the IPPS correction notice.
  • Adds two new status indicators (H1 and K1) to identify Healthcare Common Procedure Coding System/Current Procedural Terminology (HCPCS/CPT) codes representing separately payable, non-opioid post-surgical pain management products, as authorized by the Consolidated Appropriations Act of 2023. The CMS finalized six drugs and five devices that qualify for these payments.
  • Establishes separate payment for diagnostic radiopharmaceuticals with a per-day cost exceeding $630, as proposed, with updates in 2026 and subsequent years based on the Producer Price Index for Pharmaceutical Preparations. All qualifying products will be paid separately at their mean unit cost.
  • Excludes qualifying cell and gene therapies from comprehensive ambulatory payment classification packaging.
  • Adopts three measures related to health equity for the Outpatient, Ambulatory Surgical Center (ASC) and Rural Emergency Hospital Quality Reporting Programs and extending voluntary data reporting for two hybrid measures in the Inpatient Quality Reporting Program.
  • Establishes a new condition of participation for hospitals and critical access hospitals that provide obstetrical services including new requirements for maternal quality assessment and performance improvement, and baseline standards for the organization, staffing and delivery of care within obstetrical units, and staff training on evidence-based best practices every two years.
  • Extends the virtual direct supervision of therapeutic and diagnostic services under the physician fee schedule (PFS) through Dec. 31, 2025. The CMS also finalized the proposal to extend virtual direct supervision under the OPPS through Dec. 31, 2025, to maintain alignment between the PFS and OPPS.
  • Adds 21 medical and dental procedures to the ASC covered procedures list.

The MHA will provide an updated hospital-specific impact analysis within the next few weeks and encourages hospitals to contact Vickie Kunz with questions regarding the final rule.

Outpatient Prospective Payment System Final Rule Includes Behavioral Health Additions

Member News

The Centers for Medicare & Medicaid Services (CMS) recently finalized several policies in the 2024 Medicare fee-for-service final rules for the outpatient prospective payment system (OPPS) and physician fee schedule final rule. These provisions, effective Jan. 1, 2024, will expand and improve access to behavioral health services.

Highlights include:

  • Establishing coverage for Intensive Outpatient Program services provided by hospital outpatient departments, community mental health centers and federally qualified health centers (FQHCs) and rural health clinics (RHCs) for beneficiaries who have an acute mental illness and meet certain criteria.
  • Covering services provided by marriage and family therapists and mental health counselors at RHCs and FQHCs.
  • Allowing required certifications for opioid treatment programs to be performed by non-physician practitioners.
  • Establishing three new HCPCS codes in the OPPS final rule for diagnosis, evaluation or treatment of a mental health or substance use disorder performed by hospital clinical staff for patients in their homes.
  • Delaying the in-person service requirements for mental health services provided remotely until Jan. 1, 2025.

Members can review additional information in the detailed summary.

Members with questions on the OPPS rule should contact Vickie Kunz at the MHA. Questions regarding the MHA’s behavioral health strategy should be directed to Lauren LaPine at the MHA.