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CMS Issues CY 2023 Hospital Outpatient Prospective Payment System Final Rule

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Final Rule Highlights and Potential Implications

  • Issued on November 1, 2022, the CY 2023 final rule updates OPPS payment rates by 3.8%. Of note, this represents an increase from the proposed payment rate update of 2.7%.
  • CMS has finalized a change in the OPPS payment rates for drugs acquired through the 340B program, from ASP minus 22.5% to ASP plus 6%. To offset the associated increase in drug reimbursement, CMS is finalizing a rate reduction of 3.09% for non-drug services.
  • In summary, the finalized payment update represents an overall increase from the proposed rule and will result in higher hospital outpatient department (HOPD) payments when compared to 2022 rates. This comes after many industry stakeholders raised concerns that the initially proposed 2.7% payment update was insufficient to cover continued pressure on supply and labor costs in addition to rising inflation rates. Also of note, hospitals that are participating in the 340B program will see rates return to ASP plus 6% for drugs acquired through the program, but the return to these rates will be funded through a reduction to reimbursement for non-drug services across all hospitals.

Additional Details

Payment Updates

  • OPPS Rate: CMS is finalizing an update to the OPPS payment rate of 3.8%, corresponding to a 4.1% market basket percentage increase and a reduction of 0.3 percentage points for the productivity adjustment. CMS estimates that this will result in an increase in payment to OPPS providers of approximately $6.5 billion compared to CY 2022 OPPS payments.
  • Rural Hospitals: Beginning January 1, 2023, CMS will recognize a new Medicare provider type called Rural Emergency Hospital (REH). CMS is finalizing its proposal to define REH services to include all covered outpatient department services when furnished by an REH. These facilities will be paid at a rate equal to the OPPS payment rate plus 5%. Beneficiaries cannot be charged coinsurance on the additional 5% payment. Any services rendered that are not covered outpatient services will not receive the additional 5% payment increase.
  • 340B Drugs: Since 2018, CMS established a policy to pay an adjusted rate of ASP minus 22.5% for certain separately payable drugs or biologics within the 340B program. However, in June 2022, the Supreme Court ruled that HHS may not vary such payment rates for drugs and biologics among groups of hospitals without having conducted a survey of hospital acquisition costs. As such, CMS is finalizing a general payment rate of ASP plus 6% for drugs and biologics acquired through the 340B program. As required by statute, CMS is implementing a 3.09% reduction to rates for non-drug services to achieve budget neutrality in CY 2023. CMS notes it will continue to reevaluate budget neutrality remedies in future rule-making cycles.

Coding and Coverage Changes

  • CMS is finalizing its proposal, with modification, to remove procedure codes from the IPO list beginning in CY 2023. CMS is not finalizing its proposal to remove CTP 16036 from the IPO list. However, CMS is removing 2 additional CPT codes that had not been included in the proposed rule: CPT 47550 and 21255. The 11 codes finalized for removal include mostly maxillofacial procedures and are listed below.
  1. CPT 21141
  2. CPT 21142
  3. CPT 21143
  4. CPT 21194
  5. CPT 21196
  6. CPT 21347
  7. CPT 21366
  8. CPT 21422
  9. CPT 22632
  10. CPT 21255
  11. CPT 47550
  • CMS finalized its proposal to consider behavioral health services performed remotely by clinical staff of hospital outpatient departments to beneficiaries in their homes a covered outpatient service payable under OPPS. This formalizes a flexibility granted during the COVID-19 pandemic through the Hospitals Without Walls (HWW) policy.
    • CMS is also finalizing its requirement that the beneficiary must receive in-person services within 6 months prior to the first remote visit and that there must be an in-person service within the 12 months following every remote visit, unless the beneficiary meets exception guidelines.

Quality Programs

  • CMS will continue to apply a payment reduction of 2.0% for providers that do not satisfy quality reporting requirements.
  • CMS will maintain voluntary reporting to the Hospital Outpatient Quality Report Program (OQR) and Ambulatory Surgical Center Quality Reporting Program (ASCQR) for the “Update Cataracts: Improvement in Patient’s Visual Function Within 90 Days Following Cataract Surgery” measure (OP-31 and ASC-11, respectively).
  • CMS is still developing its Rural Emergency Hospital Quality Reporting Program (REHQR), which would establish reporting requirements for REHs. As such, CMS is still seeking comment on measures and considerations to be included in future rulemaking for REHQR.

Other Updates

  • CMS is finalizing its proposal to exempt Rural Sole Community Hospitals (SCHs) from the policy requiring use of the physician fee schedule (PFS) rate for clinic visits provided at off-campus provider-based departments (PBDs). SCHs will now receive the full OPPS rate for clinic visits at excepted off-campus PBDs.
  • In an effort to reduce unnecessary increases in the volume of covered outpatient department services by requiring prior authorization for services, CMS is finalizing the addition of Facet Joint Interventions to the list of services that require prior authorization.

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Editor: Matt Maslin