CMS finalizes outpatient payment system
The Centers for Medicare and Medicaid Services (CMS) published the 2023 Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System Final Rule, which impacts approximately 3,500 hospitals and 6,000 ASCs.
The final rule updates the OPPS payment rate by 3.8% for calendar year 2023, which CMS based on the 4.1% projected hospital market basket percentage increase and adjusted for 0.3 percentage points for productivity.
The payment increase was applauded by industry groups, though some critics stated the adjustment is not enough to combat tough economic conditions. Hospitals and health systems are facing billions in losses this year thanks to negative operating margins. Lingering impacts from the COVID-19 pandemic, record inflation rates, higher costs, constrained supply chains and a tight labor market are all contributing to challenging financial
“While the AHA is pleased that CMS will provide hospitals and health systems with an improved update to outpatient payments next year compared to the agency’s proposal in July, the increase is still insufficient given the extraordinary cost pressures hospitals face from labor, supplies, equipment, drugs and other expenses,” Stacy Hughes, executive vice president of the American Hospital Association (AHA), said in a statement.
The final rule also addresses 340B hospitals, which recently gained a huge victory when the U.S. District Court for the District of Columbia ruled in September that the Department of Health and Human Services (HHS) must immediately halt payment cuts to the 340B Drug Pricing Program. The program requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs to healthcare organizations at discounted prices for uninsured and low-income patients. However, HHS had been varying payments based on groups of hospitals and CMS cut payments to the program. The ruling overturned those cuts for the rest of the year, and HHS was told it could not vary the payments by hospital groups.
In the OPPS, CMS said it is finalizing the general payment rate of ASP plus 6% for drugs and biologicals acquired through the 340B program. CMS is also implementing a –3.09% reduction to the payment rates for non-drug services to achieve budget neutrality for the 340B drug payment rate change for 2023.
The agency nor the courts have addressed how past payments, from 2018 to 2022 during which payment cuts were active, will be resolved.
“CMS will address the remedy for 340B drug payments from 2018-2022 in future rulemaking prior to the CY 2024 OPPS/ASC proposed rule,” CMS said in a fact sheet about the OPPS final rule. “We note that claims for 340B-acquired drugs paid after the district court’s September 28, 2022 ruling are paid at the default rate (generally ASP plus 6%).”
AHA argued in its statement that CMS should not issue a separate rule to remedy the past payment cuts, but should act swiftly instead.
“We appreciate that after the unanimous favorable ruling in our 340B Supreme Court case, CMS is ending its unlawful cuts to 340B hospitals,” Hughes said. “This will help 340B hospitals provide important comprehensive health services to their patients and communities. However, we continue to urge the Administration to promptly reimburse those hospitals that were harmed by their unlawful cuts in previous years. In addition, we continue to call on the agency to ensure the remainder of the hospital field is not penalized for the prior unlawful policy, especially as hospitals and health systems continue to face immense financial pressures and workforce shortages. We do not believe the agency needs more time to put forth a separate rule on a remedy as it has had more than adequate time to correct its mistakes.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."