On July 13, 2023, CMS published a proposed rule to update the payment policies, payment rates, and other provisions for services furnished under the Medicare Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgery Center (ASC) Payment System in calendar year (CY) 2024 (the Proposed Rule). In the Proposed Rule, CMS is requesting comment as to whether it should adopt a payment adjustment to the OPPS and the Inpatient Prospective Payment System (IPPS) to subsidize the cost of maintaining buffer stock of essential medicines. CMS also proposes to implement the Intensive Outpatient Program (IOP), update the rates for intensive outpatient services, and add new ASC codes for dental services that are inextricably intertwined with covered Medicare services. Finally, CMS proposes updates to the hospital price transparency regulations, which, since January 1, 2021, have required hospitals to make public the standard charges of the items and services they provide. This article provides an overview of CMS’s proposals in the Proposed Rule. Comments are due by September 11, 2023.

Payment Rate Updates

In the Proposed Rule, CMS proposes to update the OPPS conversion factor by 2.8 percent, which includes a market basket increase of 3.0 percent and a productivity adjustment of negative 0.2 percent. CMS also proposes applying the 2.8 percent update to ASC payments in CY 2024 as it did in the five preceding years in order to gather additional claims data to analyze whether this adjustment tends to influence migration of services from the hospital to the ASC setting.

CMS proposes adjusting the OPPS conversion factor by 0.9974 to account for wage index budget neutrality, 0.9975 to budget neutralize the 5 percent annual cap for individual wage index reductions, 1.0280 for the proposed Outpatient Department (OPD) fee schedule increase and 0.9874 to remove additional drug and device pass-through spending. After all adjustments, the OPPS conversion factor for CY 2024 would be $87.488 (the CY 2023 conversion factor from the Final Rule was $85.858). The agency estimates that these updates would increase OPPS payments by $6 billion compared to CY 2023.

CMS also proposes adjusting the ASC conversion factor by 1.0017 for wage index budget neutrality. After all adjustments, the ASC conversion factor for CY 2024 would be 53.397.

Request for Comment: IPPS and OPPS Payment Adjustment for Maintaining Buffer Stock

CMS is soliciting comments as to whether it should establish a payment adjustment under IPPS and OPPS for hospitals that maintain a buffer stock of essential medicines. The agency suggests that the IPPS adjustment could be based on the IPPS share of the additional reasonable costs a hospital incurs maintaining these supplies. In other words, hospitals would be paid on a reasonable cost basis. CMS also suggests that this payment would be made in interim installments throughout the year, subject to reconciliation at audit. The agency notes that if it were to finalize a rule based on the comments received, the rule could take effect as early as cost reporting periods beginning on or after January 1, 2024. The agency also implies that the adjustment would be made in a budget neutral manner, which means CMS would reduce the IPPS rates to subsidize this adjustment.

Proposed Payment for Intensive Outpatient Program

Section 4124(b) of the Consolidated Appropriations Act of 2024 established coverage for intensive outpatient services effective January 1, 2024. CMS proposes to implement this directive by establishing the IOP. CMS proposes to define IOP services as a distinct and organized intensive ambulatory treatment program that offers less than 24 hours of daily care other than in an individual’s home or in an inpatient or residential setting.

CMS proposes that the scope of benefits for the IOP would include individual and group therapy with physicians or psychologists, occupational therapy, services of social workers, trained psychiatric nurses, and other staff trained to work with psychiatric patients, drugs and biologicals, family counseling, patient training and education, and diagnostic services. These services would be reimbursed on a per diem basis under the OPPS and would also be covered in the Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) settings.

CMS further proposes that in order to qualify for IOP services, a physician must determine that each patient needs a minimum of nine hours of IOP services per week. This determination must be revisited on a monthly basis.

CMS also proposes extending coverage to the Opioid Treatment Program (OTP) by establishing a weekly payment adjustment for IOP services furnished by OTPs. If finalized, this adjustment would be updated based on the Medicare Economic Index and receive the Geographic Adjustment Factor.

Updates to Partial Hospitalization Program

CMS proposes to expand the rate structure of the Partial Hospitalization Program (PHP) to include an APC for three services a day and an APC for four services a day. In calculating these rates, CMS proposes to use the broader OPPS data set to capture claims not identified as PHP, but that include service codes and intensity required for a PHP day. According to CMS, this larger data set would expand the sample size to allow for more precise rate calculations.

OPPS Payment for Remote Mental Health Services

CMS is proposing to create a single, untimed HCPCS code that can be reported when a beneficiary receives multiple hours of group therapy per day. This proposal comes in response to stakeholders who have commented that the current HCPCS codes are administratively burdensome because providers are required to report and document each unit of time using multiple codes.

OPPS and ASC Payment for Dental Services

In the CY 2023 rule, CMS authorized Medicare coverage for dental procedures that are integral to other medically necessary services. In the CY 2024 Proposed Rule, CMS proposes to assign 229 dental codes to clinical APCs. The dental services that would be covered if this proposal is finalized are those services that are inextricably linked to other covered services, including but not limited to dental or oral examination as part of a comprehensive workup prior to organ transplant, and reconstruction of dental ridge following surgical removal of tumor.

OPPS Payment for Drugs Acquired Through the 340B Program

CMS proposes to continue to pay the statutory default rate for drugs acquired through the 340B program, which is ASP plus 6 percent. CMS applied this same rate in the CY 2023 final rule following the Supreme Court’s unanimous decision in American Hospital Association v. Becerra, in which the court held that CMS could not vary rates between different groups of hospitals without previously conducting a survey of hospital’s acquisition costs.

Hospital Price Transparency Updates

Machine-readable File Updates

Under the hospital price transparency regulations, a hospital must make public its standard charges for all items and services it provides in a comprehensive machine-readable file, among other requirements. Hospitals currently have discretion in how they choose to display the standard charges in the machine-readable file; however, CMS now proposes to require hospitals to display the required data using a CMS template, which would be offered as a CSV “wide” format, a CSV “tall” format, and a JSON schema. CMS also proposes that hospitals encode all standard charge information, as applicable, that corresponds to a set of required data elements, which would include (but are not limited to):

• Hospital name, license number, location name(s), and address(es) at which the public may obtain the items and services at the standard charge amount.
• A description of the item or service that corresponds to the standard charge established by the hospital, including a general description; whether the item or service is provided in connection with an inpatient admission or an outpatient department visit; and for drugs, the drug unit and type of measurement.
• Any codes used by the hospital for purposes of accounting or billing for the item or service, including modifier(s) and code type(s).
• For payer-specific negotiated charges: the payer and plan name (as specified in the contract); the type of contracting method used to establish the standard charge; whether the standard charge indicated should be interpreted by the user as a dollar amount, or if the standard charge is based on a percentage or algorithm, and what percentage or algorithm determines the dollar amount for the item or service. If the standard charge for an item or service is expressed as a percentage or algorithm, the hospital would be required to indicate a consumer-friendly expected allowed amount in dollars for the item or service.

Each hospital would also be required to affirm in its machine-readable file that the hospital, to the best of its knowledge and belief, has included all applicable standard charge information in accordance with the requirements of 45 C.F.R. Part 180 and that the information displayed is true, accurate, and complete as of the date indicated in the file. CMS also proposes hospitals

include a footer at the bottom of the hospital’s homepage that links to the webpage that includes the machine-readable file and requires hospitals to ensure that a .txt file is included in the root folder of the publicly available website chosen by the hospital for posting its machine-readable file.

Enforcement Updates

CMS proposes several updates to its enforcement capabilities including:

• CMS may require submission of certification by an authorized hospital official as to the accuracy and completeness of the data in the machine-readable file and submission of additional documentation as may be necessary to determine hospital compliance.
• If a hospital receives a warning notice for non-compliance, CMS proposes to require the hospital to submit an acknowledgement of receipt of the warning notice in the form and manner and by the deadline specified in the notice of violation issued by CMS to the hospital.
• In the event CMS takes an action to address hospital noncompliance and the hospital is determined by CMS to be part of a health system, CMS may notify health system leadership of the action and may work with health system leadership to address similar deficiencies for hospitals across the health system.
• CMS may publicize on the CMS website information related to: (1) CMS’s assessment of a hospital’s compliance; (2) any compliance action taken against a hospital, the status of such compliance action, and the outcome of such compliance action; and (3) notifications sent to health system leadership.

Request for Comments

Lastly, CMS is seeking public comment on the future evolution of the hospital price transparency regulations to better align the public disclosure regulations with the Transparency in Coverage Rule, which imposes disclosure requirements on issuers, and the No Surprises Act, which prohibits balance billing and provides a dispute resolution process for patients.

The proposed policies, if finalized, would be effective January 1, 2024. CMS proposes to give hospitals an enforcement grace period for adoption of the CMS template and other updates to the machine-readable file until March 1, 2024.

The Proposed Rule is available here, and a CMS fact sheet is available here. The Proposed Rule is scheduled to be published in the Federal Register on July 31, 2023.