July 20, 2022

On July 15, 2022, the Centers for Medicare & Medicaid Services (CMS) issued its 2023 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule (PR).  There will be a 60-day comment period, ending on September 13.  A final rule is expected to be issued in early November and will ultimately impact 3,411 hospitals across the country.  CMS also issued a fact sheet that outlines the major items found in the PR.  Our summary below is largely based on data gleaned from that publication.  

OPPS Payment Rates

The PR calls for a 2.7 percent increase in the OPPS payment rate for hospitals that meet applicable quality reporting requirements.  While this does represent a higher rate than currently provided, not all are happy with the particulars of this proposal.  In a statement released by the American Hospital Association (AHA), Executive Vice President Stacey Hughes stated the following:

We are deeply concerned about CMS’ proposed payment update of only 2.7 percent, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face . . . A much higher update is warranted, and we will be closely analyzing CMS’ proposed market basket, as well as its proposed productivity offset.

The PR notes that CMS proposes to use 2021 claims data with cost report data through 2019 [prior to the public health emergency (PHE)] to set 2023 OPPS payment system rates.  Again, this is a proposed rate, and interested parties have until September 13 to post their views with CMS.

340B Drug 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.  The OPPS 340B policy has been the subject of recent litigation, culminating in the U.S. Supreme Court’s decision in American Hospital Association v. Becerra (No. 20-1114, 2022 WL 2135490).  On June 15, 2022, the high court held that HHS may not vary payment rates for drugs and biologicals among groups of hospitals in the absence of having conducted a survey of hospitals’ acquisition costs. 

Given the timing of the Supreme Court’s decision, CMS was unable to adjust the proposed payment rates and budget neutrality calculations to account for that decision before issuing this proposed rule.  For 2023, CMS is proposing a payment rate of ASP minus 22.5 percent for drugs and biologicals acquired through the 340B Program, consistent with their previous policy.  The agency anticipates applying a rate of ASP plus 6 percent to such drugs and biologicals in the final rule for CY 2023, in light of the aforementioned court decision.

Inpatient Only List

Since the beginning of the OPPS, the Inpatient Only (IPO) list has defined the list of services that, due to their medical complexity, Medicare will only pay for when performed in the inpatient setting.  For 2023, CMS is proposing to remove ten services from the IPO list after determining that these codes meet the current criteria to remove services from the IPO list. 

On the ambulatory surgical center (ASC) side, CMS is proposing to add one procedure.  Specifically, a lymph node biopsy or excision will now be allowed in the ASC setting.  This, of course, means that hospitals may see a decline in case volume relative to this procedure at their locations.

N95 Respirators

CMS recognizes that hospitals may incur additional costs when purchasing domestic NIOSH-approved surgical N95 respirators.  Therefore, CMS is proposing payment adjustments under the IPPS and OPPS that would reflect, and offset, the additional marginal resource costs that hospitals face in procuring domestically made NIOSH-approved surgical N95 respirators.  Under this proposal, these payments would be provided biweekly as interim lump-sum payments to the hospital and would be reconciled at cost report settlement.  The rule also outlines the information that would be collected on the cost report to determine payments under this proposal, which would apply to cost reporting periods beginning on or after January 1, 2023.

Prior Authorization

CMS is proposing to require prior authorization for an additional service category: Facet Joint Injections and Nerve Destruction. This proposal would ensure Medicare beneficiaries receive medically necessary care while protecting the Medicare Trust Funds from unnecessary increases in volume by virtue of improper payments without adding new documentation requirements for providers.

The CMS fact sheet that addresses the major provisions of the PR can be downloaded at: https://www.federalregister.gov/documents/current.  We will have more details from the PR in future alerts.  If you wish to reach us, please go to info@miramedgs.com.