CMS Releases OPPS and ASC Payment System Final Rule

CMS Releases OPPS and ASC Payment System Final Rule

The Centers for Medicare & Medicaid Services (CMS) on November 1, 2022, released the calendar year 2023 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule. The Final Rule includes proposals to update payment rates, policies and regulations affecting Medicare services furnished in hospital outpatient and ASC settings beginning on January 1, 2023. The rule increases OPPS rates by a net 3.8% in CY 2023 compared to 2022. It also includes final policies related to the 340B Drug Pricing Program, Rural Emergency Hospital (REH) model, site-neutral clinic visit payment policy, payment for remote behavioral health services, prior authorization, the inpatient only (IPO) list and the ASC Covered Procedures List (CPL).

Key Updates

In the Rule, CMS finalized an increase of 3.8 percent for OPPS payment rates in CY 2023, which is based on a market basket update of 4.1 percent reduced by a productivity adjustment of 0.3 percentage points. This is an increase from the 2.7 percent update originally proposed for CY 2023. The agency estimates this will result in a total of approximately $86.5 billion in payments to OPPS providers ($6.5 billion more than CY 2022). However, CMS applied several budget neutrality and other adjustments, including a significant 3.09 percentage point reduction to account for changes to its 340B drug purchasing policy.

CMS also finalized an increase of 3.8 percent for ASC payment rates in CY 2023, which is consistent with CMS’ policy for CYs 2019 through 2023 to update the ASC payment system using the hospital market basket update. CMS estimates this will result in a total of approximately $5.3 billion in payments to ASC providers ($230 million more than CY 2022).

Furthermore, because of impacts of the COVID-19 pandemic, CMS finalized its proposal to use CY 2021 claims data and cost report data (CY 2019) prior to the pandemic to set OPPS and ASC CY 2023 payment rates. Ordinarily, CMS would use the most recently available claims and cost report data for OPPS and ASC rate-setting, which includes cost report data during the pandemic. Additionally, CMS will continue to provide additional payments to cancer hospitals so that a cancer hospital’s payment-to-cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data.

CMS also continued regulating on the 340B front. As you may recall, in the 2018 and 2019 OPPS/ASC Final Rules, CMS finalized a policy that Medicare would reimburse hospital outpatient drugs purchased with a 340B discount at average sales price (ASP) minus 22.5 percent for physician-administered drugs, a departure from previous payment policy of ASP plus 6 percent. That policy prompted litigation, which was the subject of a recent U.S. Supreme Court decision.

On June 15, 2022, the Supreme Court held, among other things, that absent a survey of hospitals’ drug acquisition costs, the U.S. Department of Health and Human Services (HHS) may not vary the reimbursement rates only for 340B hospitals. Therefore, the court determined that CMS’ 2018 and 2019 reimbursement rates for 340B hospitals were unlawful because CMS did not conduct a survey for more than a decade after statutory provisions went into effect in 2006.

While the focus of this decision was on the 2018 and 2019 payment rates, the decision impacts CY 2023 rates. For CY 2023, CMS did not finalize a payment rate of ASP minus 22.5 percent for drugs and biologicals acquired through the 340B program. Instead, CMS is applying the default rate, generally ASP plus 6 percent, to 340B-acquired drugs and biologicals in this final rule for CY 2023.

Regarding the inpatient only list (IPO), CMS removed 11 services from the list based on the determination that they meet criteria to be safely furnished in outpatient settings and for removal from the IPO list. CMS also finalized adding eight services to the IPO list recently created by the American Medical Association (AMA) CPT Editorial Panel for CY 2023.

On prior authorization, CMS will require this utilization management approach for a new service, facet joint interventions, effective for dates of services on or after July 1, 2023. The service category would consist of facet joint injections, medial branch blocks and facet joint nerve destruction. CMS is likely to include additional types of services in future rulemaking.

Finally, CMS announced its standards for Rural Emergency Hospitals (REHs), a new Medicare provider type established by Section 125 of the Consolidated Appropriations Act of 2021. Hospitals may convert to REHs if they were critical access hospitals (CAHs) or rural hospitals with not more than 50 beds participating in Medicare as of Dec. 27, 2020. CMS established Conditions of Participation (CoPs) that include a full range of health and safety standards specific to governance, services offered, staffing, physical environment and emergency preparedness.

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