CY 2024 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule (CMS 1786-FC)
On November 2, 2023, the Centers for Medicare & Medicaid Services (CMS) finalized Medicare payment rates for hospital outpatient and Ambulatory Surgical Center (ASC) services for calendar year (CY) 2024. The Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System final rule is published annually.
In addition to finalizing payment rates, this year’s rule includes policies that align with several key goals of the Biden-Harris Administration, including promoting health equity, expanding access to behavioral health care, improving transparency in the health system, and promoting safe, effective, and patient-centered care. The final rule advances the Agency’s commitment to strengthening Medicare. It uses the lessons learned from the COVID-19 PHE to inform the approach to quality measurement, focusing on changes that will help address health inequities.
These payment policies will affect approximately 3,500 hospitals and approximately 6,000 ASCs. The hospital price transparency policies impact over 7,000 institutions licensed as hospitals. As with other rules, CMS is publishing this final rule to meet the legal requirements to update annual Medicare payment policies under the OPPS hospitals and ASC payment system. This fact sheet discusses the major provisions of the final rule (CMS-1786-FC), which can be downloaded at: https://www.federalregister.gov/public-inspection/2023-14768/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment
In accordance with Medicare law, CMS is finalizing OPPS payment rates for hospitals and ASCs that meet applicable quality reporting requirements by 3.1%. This update is based on the projected hospital market basket percentage increase of 3.3%, reduced by a 0.2 percentage point for the productivity adjustment.
ASC Rate Update Based on the Hospital Market Basket
In the CY 2019 OPPS/ASC final rule with comment period, we finalized a policy to apply the productivity-adjusted hospital market basket update to ASC payment system rates for an interim period of five years (CY 2019 through CY 2023), during which time we would assess whether there is a migration of the performance of procedures from the hospital setting to the ASC setting as a result of the use of a productivity‑adjusted hospital market basket update. However, the impact of the COVID-19 PHE on health care utilization, particularly in CY 2020, was tremendously profound, particularly for elective surgeries, because many beneficiaries avoided health care settings, when possible, to avoid possible infection from the SARS-CoV-2 virus.
Therefore, for this CY 2024 OPPS/ASC final rule with comment period, we are finalizing extending the five-year interim period an additional two years — through CY 2024 and CY 2025. This will enable us to gather additional claims data further removed from the COVID-19 PHE to more accurately analyze whether the application of the hospital market basket update to the ASC payment system affects the migration of services from the hospital setting to the ASC setting.
Intensive Outpatient Program
Medicare continues to cover inpatient psychiatric admissions, partial hospitalization programs (PHP), and outpatient therapy for behavioral health conditions. However, there has been a coverage gap when patients require more intense services than traditional outpatient therapy but less than inpatient-level care that a partial hospitalization or hospitalization would provide. In the CY 2024 OPPS/ASC final rule with comment period, CMS closes this coverage gap for behavioral health by establishing payment for intensive outpatient program (IOP) services under Medicare. The final rule includes the scope of benefits, physician certification requirements, coding and billing, and payment rates under the IOP benefit. IOP services may be furnished in hospital outpatient departments, Community Mental Health Centers (CMHCs), Federally Qualified Health Centers (FQHCs), and Rural Health Clinics (RHCs). IOP services may also be furnished in Opioid Treatment Programs (OTPs) for the treatment of opioid use disorder (OUD). These policies are expected to promote access to needed behavioral health care significantly.
Scope of Benefits for IOP
CMS is setting forth the scope of benefits for IOP services as mandated by section 4124 of The Consolidated Appropriations Act (CAA), 2023. An IOP is a distinct and organized outpatient program of psychiatric services provided for individuals who have an acute mental illness or substance use disorder, consisting of a specified group of behavioral health services paid on a per diem basis under the OPPS or other applicable payment system when furnished in hospital outpatient departments, CMHCs, FQHCs, and RHCs. CMS is finalizing a consolidated list of service codes to be included in IOP that have been and are paid for by Medicare either as part of the PHP benefit or under the OPPS, more generally. In addition, we are adding service codes to recognize activities related to care coordination and discharge planning, as well as to recognize the role of caregivers and peer support specialists in PHPs and IOPs.
Physician Certification and Plan of Treatment Requirements for IOP
As amended by section 4124(a) of the CAA, 2023, section 1861(ff)(1) of the Social Security Act (the Act) requires that a physician determine that each patient needs a minimum of nine hours of IOP services per week. This determination must occur no less frequently than every other month. CMS is codifying this requirement in regulation for IOP provided in all settings.
IOP Payment Rates and Policy in Hospital Outpatient Departments and CMHCs
CMS is establishing two IOP Ambulatory Payment Classifications (APCs) for each provider type; one for days with three services per day and one for days with four or more services per day.
For CY 2024, CMS is finalizing hospital-based and CMHC IOP payment rates for three services per day and four or more services per day based on cost per day using a broad set of OPPS data that includes PHP days and non-PHP days for the same services we are recognizing for PHP and IOP. While no Medicare IOP benefit currently exists, CMS believes using the OPPS data set will allow us to capture data from hospital claims that are not identified as IOP but that include the service codes and intensity required for an IOP day.
RHCs and FQHCs
For CY 2024, CMS is finalizing conforming regulatory text changes to applicable RHC and FQHC regulations related to the scope of IOP benefits and services, certification and plan of care requirements, and special payment rules for IOP services as mandated by section 4124 of the CAA, 2023. The scope of IOP benefits and certification and plan of care requirements will be the same for RHCs and FQHCs as described above for hospitals. CMS is finalizing payment for three IOP services/day, and according to the statute, payment is based on the hospital rate. That is, RHCs will be paid the 3-services per day payment amount for hospital outpatient departments. For FQHCs, payment will be the lesser of a FQHC’s actual charges or the 3- services per day payment amount for hospital outpatient departments. For grandfathered Tribal FQHCs, payment will be the Medicare outpatient per visit rate as established by the IHS when furnishing IOP services, and payment is based on the lesser of a grandfathered Tribal FQHC’s actual charges or the Medicare outpatient per visit rate.
Opioid Treatment Program (OTP) Settings
In the CY 2024 Medicare OPPS/ASC Final Rule, CMS is finalizing its proposal to extend IOP coverage to OTPs. CMS is establishing a weekly payment adjustment via an add-on code for IOP services furnished by OTPs for the treatment of opioid use disorder (OUD) and revising the regulatory definition of opioid use disorder treatment services to include IOP services. The payment adjustment will also be updated annually based on the Medicare Economic Index and adjusted by the Geographic Adjustment Factor. CMS is finalizing that Medicare will pay for IOP services provided by OTPs as long as each service is medically reasonable and necessary and not duplicative of any service paid for under any bundled payments billed for an episode of care in a given week. We are finalizing that for an OTP to receive the additional payment adjustment for IOP services, a physician or non-physician practitioner must certify that the beneficiary requires a higher level of care intensity compared to existing OTP services, and the certification, plan of care, and all other applicable requirements are met. Additionally, in response to the public comments, we are finalizing a rate that is based on the payment rates being finalized for hospitals, RHCs, and FQHCs, and we are not finalizing our proposal to deduct the payment rates for individual and group therapy services that are included in the existing OTP bundled payment. We believe that payment for IOP services provided by OTPs will improve continuity of care between different treatment settings and levels of care, expand access to treatment for Medicare beneficiaries with OUD, and further promote health equity for racial/ethnic populations and older beneficiaries.
Partial Hospitalization Program (PHP) Rate Setting
The CY 2024 OPPS/ASC final rule with comment period includes updates to Medicare payment rates for partial hospitalization program services furnished in hospital outpatient departments and CMHCs. The PHP is an intensive, structured outpatient program provided as an alternative to psychiatric hospitalization, consisting of a specified group of mental health services paid on a per diem basis for a minimum of 20 hours of PHP services per week under the OPPS, based on PHP per diem costs.
Update to PHP Per Diem Rates
CMS is expanding the existing rate structure to include two PHP APCs for each provider type; one for days with three services per day and one for days with four or more services per day. As a result, CMS is appropriately increasing payment rates for higher-intensity days in all settings.
For CY 2024, CMS is calculating hospital-based and CMHC PHP payment rates for three services per day and four or more services per day based on cost per day using OPPS data that includes PHP and non-PHP days, which is a change from the current methodology of using only PHP data. CMS believes using the OPPS data set will allow CMS to capture data from hospital claims that are not identified as PHP but that include the service codes and intensity required for a PHP day.
Clarification about Substance Use Disorder (SUD) Treatment under PHP
CMS is clarifying in the CY 2024 final rule that Medicare covers PHP for the treatment of substance use disorders (SUD). Specifically, CMS is clarifying that, in general, notwithstanding the requirement that PHP services are provided in lieu of inpatient hospitalization, Medicare covers PHP for the treatment of SUD, and CMS considers services that are for the treatment of SUD and behavioral health generally to be consistent with the statutory and regulatory definitions of PHP services.
Changes to Community Mental Health Centers Conditions of Participation (CoPs)
The CAA, 2023 established coverage of IOP in CMHCs. The legislation extended Medicare coverage and payment of IOP services furnished by a CMHC beginning January 1, 2024, allowing coverage of both PHP and IOP services. Additionally, the CAA, 2023 established a new Medicare benefit category for Marriage and Family Therapists (MFT) services and Mental Health Counselor (MHC) services.
To implement these provisions of the CAA, 2023, CMS is finalizing, as proposed, to modify the requirements for the CMHC to include IOP services throughout the CoPs. CMS is also finalizing our proposal to modify the CMHC CoPs for personnel qualifications to add a definition of marriage and family therapists and revise the current definition of mental health counselors. CMS is also finalizing the addition of MFTs and MHCs to the list of practitioners who can lead interdisciplinary team meetings when deemed necessary. Lastly, CMS solicited comments on how the provision of the IOP services may impact the populations CMHCs serve as well as the potential impact on meeting the 40% requirement. We appreciate the commenters’ feedback and will consider responses for future rulemaking.
OPPS Payment for Remote Mental Health Services
CMS is finalizing technical changes to reflect additional information provided by interested parties regarding how these services are furnished, including creating a new untimed code describing group psychotherapy intended to reduce administrative burden and increase access to group psychotherapy.
OPPS and ASC Payment for Dental Services
For CY 2024, CMS is finalizing Medicare payment rates under the OPPS for over 240 dental codes to align with the dental payment provisions in the CY 2023 Physician Fee Schedule final rule by assigning them to clinical APCs. Assigning additional dental codes to clinical APCs will result in greater consistency in Medicare payment for different sites of service and help ensure patient access to dental services performed in the hospital outpatient setting when payment and coverage requirements are met. Additionally, based on public comments received regarding the proposed payment rate associated with HCPCS code G0330, which is used to describe facility services for dental rehabilitation procedures performed on a patient who requires monitored anesthesia (e.g., general, intravenous sedation (monitored anesthesia care)) and use of an operating room), CMS is reassigning HCPCS code G0330 from the Dental Procedures APC (APC 5871) to Level 4 ENT Procedures (APC 5164) for CY 2024, which we believe would more appropriately reflect the costs to furnish these services. The final APC assignments and status indicators for the dental codes can be found in the CY 2024 OPPS Addendum B.
For CY 2024, to address patient access issues for dental services under anesthesia in the ASC setting, CMS is finalizing adding 26 separately payable dental surgical procedures to the ASC Covered Procedures List (CPL) and 78 ancillary dental services to the list of covered ancillary services. The complete list of procedures included in this policy can be found in the CY 2024 ASC Addendum AA and BB.
Hospital Price Transparency
CMS’ hospital price transparency regulations lay the foundation for a patient-driven health care system by making hospital standard charges’ data available to the public and supporting President Biden’s historic Competition Council and July 2021 Executive Order on Promoting Competition.
To strengthen compliance and improve the public’s understanding and automated use of hospital information, CMS is finalizing modifications to the standard charge display requirements at 45 CFR 180180.50. Additionally, CMS is finalizing updates to the enforcement provisions at 45 CFR 180.70 to streamline and improve the transparency of the enforcement process.
The finalized policies will further advance the agency’s commitment to increasing price transparency and enforcing hospital compliance with these requirements. A separate fact sheet discusses the hospital price transparency provisions of the CY 2024 Hospital OPPS and ASC PPS final rule.
Rural Emergency Hospitals (REH) — Payment for Indian Health Service (IHS) Facilities and Tribal Facilities
Improving access to health in rural, Tribal, and geographically isolated areas is an integral part of the overarching equity goals of CMS. Consistent with the CMS Framework for Advancing Health Care in Rural, Tribal, and Geographically Isolated Communities, in the CY 2023 OPPS/ASC final rule with comment period, CMS finalized regulations establishing the Rural Emergency Hospital (REH) provider type. A hospital is eligible to convert to an REH if it is a critical access hospital or rural hospital with no more than 50 beds, participating in Medicare as of the date of enactment of the Consolidated Appropriations Act (CAA), 2021. Eligible hospitals that convert to an REH receive an enhanced rate for REH services and a fixed monthly facility payment.
While some Tribal and IHS hospitals have expressed interest in converting to an REH, they have expressed significant reservations about transitioning from their existing payment methodology under the All-Inclusive-Rate (AIR), published annually by the IHS in the Federal Register, to the REH payment methodology. In the CY 2024 OPPS and ASC PPS Final Rule, CMS is implementing a policy where IHS and Tribal facilities that convert to REHs will be paid for hospital outpatient services under the same AIR that would otherwise apply if these services were performed by an IHS or Tribal hospital that is not an REH. The existing beneficiary coinsurance policies applicable to such services under the AIR would remain the same. CMS is also finalizing a policy where IHS and Tribal facilities that convert to REHs would receive the REH monthly facility payment consistent with how this payment is applied to REHs that are not tribally or IHS operated. CMS expects this approach to bring further stability to IHS and Tribal facilities that convert to REHs and better promote access to Tribal and IHS hospitals.
Request for Comments on Potential Hospital Inpatient Prospective Payment System (IPPS) and OPPS Payment Adjustments for the Additional Costs of Establishing and Maintaining a Buffer Stock of Essential Medicines
Even before the COVID-19 pandemic, many hospitals reported drug shortages — from antibiotics used to treat severe bacterial infections to crash cart drugs necessary to stabilize and resuscitate critically ill adults. The frequency and severity of these supply disruptions have only been exacerbated over the last few years. CMS believes it is necessary to support practices that can help curtail shortages of essential medicines to help safeguard and improve the care hospitals are able to provide to patients.
In the proposed rule, CMS sought comment on separate payment under the IPPS for establishing and maintaining access to a buffer stock of one or more of 86 essential medicines to foster a more reliable, resilient supply of these medicines. CMS appreciates the broad consensus among commenters regarding the need to curtail pharmaceutical shortages of essential medicines and promote resiliency. Although in this final rule, we are not adopting a policy regarding payment, we agree with commenters that a multifaceted approach is necessary and intend to propose new Conditions of Participation in forthcoming notice and comment rulemaking addressing hospital processes for pharmaceutical supply. We look forward to continuing to engage with the public on this critical issue, including potential payment policies.
Seeking Comment on Payment for High-Cost Drugs and Services outside of the IHS AIR
Under current regulations, IHS hospitals are excluded from payment under the OPPS. Instead, IHS and Tribal outpatient departments are paid the all-inclusive rate (AIR) for each encounter that provides outpatient hospital services. On an annual basis, IHS calculates and publishes, in the Federal Register, calendar year reimbursement rates. These rates are often referred to as the AIR, Office of Management and Budget (OMB) rates, or encounter rates. The AIR is updated annually based on a review of yearly cost reports. For CY 2023, the outpatient AIR is $620 in the lower 48 states.
IHS and Tribal facilities have continued to expand the breadth of services that they provide to their communities. Increasingly, this has meant providing higher-cost drugs along with more complex and expensive services. There are specialty facilities where the AIR might not be an adequate representation of the facility’s costs to provide services to Medicare beneficiaries. We received considerable interest in this comment solicitation, with commenters providing various insights and potential policy changes. We appreciate the suggestions and feedback from the interested parties who participated in this comment solicitation. We will review the comments submitted to assist us with developing policies to pay for high-cost drugs and services in future rulemaking.
For CY 2024, CMS received six complete applications for device pass-through payments by March 1, 2023, the last quarterly deadline for applications to be received in time to be included in the CY 2024 OPPS/ASC proposed rule with comment period. Discussions of these six applications were included in the proposed rule. In the final rule, we are denying two applications and approving four applications for device pass-through payments.
OPPS Payment for Drugs Acquired Through the 340B Program
Section 340B of the Public Health Service Act (340B) allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices. For CY 2024, consistent with our policy finalized for CY 2023, we are finalizing our proposal without modification to continue to pay for 340B acquired drugs and biologicals at the statutory default rate, which is generally ASP plus 6%. The payment for 340B-acquired drugs and biologicals will not differ from the payment rate for drugs and biologicals not acquired through the 340B program. CMS issued a final rule prior to the release of this CY 2024 OPPS/ASC final rule with comment period on November 2, 2023, discussing the remedy for payment for 340B acquired drugs for CYs 2018 to 2022 — including how those payments will impact OPPS payment policy in future calendar years. This separate final rule is available here: https://www.federalregister.gov/public-inspection/2023-24407/medicare-program-hospital-outpatient-prospective-payment-system-remedy-for-the-340b-acquired-drug
OPPS Comment Solicitation on Packaging Policy for Diagnostic Radiopharmaceuticals
CMS continues to believe that diagnostic radiopharmaceuticals are an integral component of many nuclear medicine and imaging procedures, and payment associated with diagnostic radiopharmaceuticals should be packaged into the payment for the imaging procedure in which they are used. However, in the proposed rule, we solicited comment on how the OPPS packaging policy for diagnostic radiopharmaceuticals may have impacted beneficiary access, including whether there are specific patient populations or clinical disease states for whom this issue is especially critical. CMS also solicited comment in the proposed rule on five potential approaches for payment of diagnostic radiopharmaceuticals that would allow for enhanced beneficiary access while maintaining the principles of the outpatient prospective payment system.
CMS received considerable interest in this comment solicitation, with commenters providing various insights and potential policy changes. We believe this is a complex and vital issue, and given the vast array of information presented through the public comment process, we intend to further consider these points for future notice and comment rulemaking. We welcome ongoing dialogue and engagement from stakeholders regarding suggestions for potential future payment changes, including on any of the five potential solutions included in the original comment solicitation, as well as any other potential solutions.
Hospital Outpatient/ASC/REH Quality Reporting Programs
CMS is finalizing changes to the Hospital Outpatient Quality Reporting (OQR), Ambulatory Surgical Center Quality Reporting (ASCQR), and Rural Emergency Hospital Quality Reporting (REHQR) Programs to further meaningful measurement and reporting of quality of care in the outpatient setting.
Hospital Outpatient Quality Reporting (OQR) and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs
The Hospital OQR and ASCQR Programs are pay-for-reporting quality programs for the hospital outpatient department and ASC settings, respectively, that require hospitals and ASCs to meet quality reporting requirements or receive a reduction of 2.0 percentage points in their annual payment or fee schedule update if these requirements are not met.
In the CY 2024 OPPS/ASC final rule with comment period, CMS is finalizing modifications of three measures in both of these programs: (1) the COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP) measure to align with the updated Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network measure specifications; (2) the Cataracts: Improvement in Patient’s Visual Function Within 90 Days Following Cataract Surgery measure, to require use of one of three specific survey instruments to measure change in visual function pre-and post-operatively to further standardize data collection and reduce facility burden; and (3) the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients measure, to align with updated clinical guidelines.
In addition, CMS is finalizing, with modification, the adoption of a new measure in these programs: the Risk-Standardized Patient-Reported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty measure. This measure will provide specific insight into the quality of care of a common procedure. CMS is finalizing this measure with modification to extend the voluntary reporting period to a total of three years prior to requiring mandatory reporting beginning with the CY 2028 reporting period for the CY 2031 payment determination.
CMS is not finalizing its proposal to re-adopt the Hospital Outpatient/ASC Facility Volume Data on Selected Outpatient Surgical Procedures measure after consideration of commenter feedback. Commenters requested that CMS reconsider what data is collected for this measure to provide a complete picture of procedural volume that is meaningful to both patients and providers. We are also reassessing how the volume data is publicly displayed to ensure meaningfulness and relevance to providers, consumers, and other interested parties.
Further, CMS is finalizing, with modification, the adoption of an additional measure in the Hospital OQR Program—the adoption of the Excessive Radiation Dose or Inadequate Image Quality for Diagnostic Computed Tomography (CT) in Adults electronic clinical quality measure (eCQM) to promote patient safety. CMS is finalizing this measure with modification to extend the voluntary reporting period to a total of two years prior to requiring mandatory reporting beginning with the CY 2027 reporting period for the CY 2029 payment determination. CMS is not finalizing its proposal to remove the Left Without Being Seen measure due to a recent increase (worsening) of LWBS rates in our routine monitoring and evaluation that warrants further investigation. We also solicited requests for comments in the measure topic areas of patient safety and sepsis, behavioral health (including mental health and suicide risk), as well as telehealth in the hospital outpatient setting. A summary of the comments received is included in the final rule.
Rural Emergency Hospital Quality Reporting (REHQR) Program
The REHQR Program is a new quality reporting program for specially designated rural emergency hospitals (REHs) that must provide emergency department (ED) services and observation care and may also opt to provide additional outpatient services. REHs are required by statute to submit quality measure data.
In the CY 2024 OPPS/ASC final rule with comment period, CMS is finalizing the adoption and codification of several standard quality program reporting policies, as well as the adoption of four initial measures for the REHQR Program. The four initial measures, consisting of three claims-based measures and one chart-abstracted measure, are: (1) Abdomen Computed Tomography ‑ Use of Contrast Material; (2) Median Time from Emergency Department (ED) Arrival to ED Departure for Discharged ED Patients; (3) Facility Seven Day Risk‑Standardized Hospital Visit Rate after Outpatient Colonoscopy; and (4) Risk-Standardized Hospital Visits Within Seven Days After Hospital Outpatient Surgery. In addition, CMS summarized comments received on the use of eCQMs, care coordination measures, and a tiered approach for quality measures and reporting requirements to incentivize REH reporting. Additional quality measures for the REHQR Program would be proposed through future notice and comment rulemaking.