On November 2, 2023, the Centers for Medicare & Medicaid Services (“CMS”) released the calendar year (“CY”) 2024 Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems Final Rule (“CY 2024 OPPS/ASC Final Rule”). The final rule with comment period finalizes payment rates and policy changes affecting Medicare services furnished in hospital outpatient and ambulatory surgical center (“ASC”) settings for CY 2024.

Key Takeaways

  • In the CY 2024 OPPS/ASC Final Rule, CMS increased payment rates under the Hospital Outpatient Prospective Payment System and the ASC Payment System by a productivity-adjusted market basket factor of 3.1 percent.
  • CMS finalized changes to several hospital price transparency requirements, including requiring hospitals to use a template to submit charge information and requiring hospitals to affirm the accuracy of that information. CMS also finalized its implementation of the intensive outpatient program benefit, expanding federal support for behavioral health services.
  • The provisions of the CY 2024 OPPS/ASC Final Rule are effective January 1, 2024. Below we provide an overview of key provisions included in the CY 2024 OPPS/ASC Final Rule.

The CY 2024 OPPS/ASC Final Rule includes the following provisions.

Updates to OPPS and ASC payment rates: CMS finalized OPPS payment rates for hospitals and ASCs that meet applicable quality reporting requirements by 3.1 percent. This increase factor is based on the final inpatient hospital market basket percentage increase of 3.3 percent for inpatient services paid under the hospital inpatient prospective payment system (“IPPS”) reduced by a final productivity adjustment of 0.2 percentage point. This increase is 0.3 percent higher than the 2.8 percent increase outlined in the CY 2024 OPPS/ASC Proposed Rule.

ASC Rate Update Based on the Hospital Market Basket: CMS finalized extending the five-year interim period an additional two years, through CY 2024 and CY 2025. In the CY 2019 OPPS/ASC final rule, CMS 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 2019-2023) in order to 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. CMS extended the time period in the OPPS Final Rule to gather additional claims data further removed from the COVID-19 public health emergency (“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: CMS established payment for intensive outpatient program (“IOP”) services under Medicare, thereby addressing a coverage gap when patients require more intense behavioral health services than traditional outpatient therapy but less than inpatient-level care provided by a partial hospitalization or hospitalization. The CY 2024 OPPS/ASC Final Rule includes the scope of benefits, physician certification requirements, coding and billing, and payment rates under the IOP benefit.

As mandated by section 4124 of The Consolidated Appropriations Act (“CAA”), 2023, CMS outlined the scope of benefits for IOP services. 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, 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.

OPPS Payment for Remote Mental Health Services: CMS finalized 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: CMS finalized 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 Ambulatory Payment Classifications. In addition, CMS finalized 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 to address patient access issues for dental services under anesthesia in the ASC setting.

Hospital Price Transparency: CMS finalized a number of requirements under the hospital price transparency regulations.

  • Standardization of Data Elements in Machine Readable Files (“MRF”): Beginning July 1, 2024, CMS is requiring hospitals to display their standard charge information and an expanded list of data elements within a CMS template layout, and according to CMS data specifications and dictionary.
  • Accessibility: CMS finalized two changes that would enable access to the files and standard charges data, including: 1) requiring hospitals to place a ‘footer’ at the bottom of the hospital’s homepage that links to the webpage that includes the MRF; and 2) requiring 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 MRF.
  • Required Affirmation Statement: Beginning January 1, 2024, CMS is requiring that each hospital affirm that the data in the MRF is true, accurate, and complete to the best of the hospital’s knowledge and belief.
  • Enforcement: CMS finalized various updates to its assessment, monitoring, and enforcement mechanisms for hospital price transparency. For example, hospitals must submit acknowledgement of receipt of a CMS warning notice. The updates also provide that CMS may require an authorized hospital official to submit certification as to the accuracy and completeness of the data in the MRF. In addition, for hospitals that are part of a health system, CMS may also notify not just the hospital but also health system leadership of the noncompliance and corrective action to address deficiencies across the health system.

Rural Emergency Hospitals— Payment for Indian Health Service \ Facilities and Tribal Facilities: As mandated by the Consolidated Appropriations Act, 2021, 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 statute. According to CMS, some Tribal and Indian Health Service (“IHS”) hospitals have expressed interest in converting to an REH but have expressed significant concerns about transitioning from their existing payment methodology under the All-Inclusive-Rate (“AIR”) the REH payment methodology.

In the CY 2024 OPPS/ASC Final Rule, CMS finalized 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 also finalized 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.

Additional Costs of Establishing and Maintaining a Buffer Stock of Essential Medicines: 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. While CMS is not adopting a policy regarding payment, the agency agrees 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.

OPPS Payment for Drugs Acquired Through the 340B Program: For CY 2024, consistent with the policy finalized for CY 2023, CMS finalized its proposal without modification to continue to pay for 340B acquired drugs and biologicals at the statutory default rate, which is generally average sales price (“ASP”) plus 6%.

In CYs 2018 and 2019 OPPS/ASC Final Rules, CMS finalized a policy that Medicare would reimburse hospital outpatient drugs purchased with a 340B discount at ASP minus 22.5 percent for physician-administered drugs, a departure from previous payment policy of ASP plus 6 percent. The CMS policy prompted litigation, which was the subject of a recent U.S. Supreme Court decision. Under the CY 2023 OPPS Final Rule, CMS restored payments for 340B drugs under OPPS to the total ASP plus 6 percent rate. The Supreme Court left open the question of the appropriate remedy for repayment.

In a separate final rule, CMS is repaying 340B hospitals underpaid from 2018 to 2022 in a single lump sum payment to each affected hospital. CMS estimates these repayments will total $10.6 billion in the aggregate and be made to 1,686 340B hospitals.

Hospital Outpatient/ASC/REH Quality Reporting Programs: CMS finalized a number of 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.

Conclusion

The CY 2024 OPPS/ASC Final Rule can be viewed on the Federal Register here. CMS also released a fact sheet on the final rule in addition to one specifically on the rule’s hospital price transparency provisions.

For more information or additional analysis on the CY 2024 OPPS/ASC Final Rule’s provisions, please contact the professionals listed below, or your regular Crowell contact.

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Photo of Troy A. Barsky Troy A. Barsky

Troy Barsky is a partner in Crowell & Moring’s Washington, D.C. office, and serves as a member of the firm’s Health Care Group Steering Committee where he focuses on health care fraud and abuse, and Medicare and Medicaid law and policy. Troy counsels…

Troy Barsky is a partner in Crowell & Moring’s Washington, D.C. office, and serves as a member of the firm’s Health Care Group Steering Committee where he focuses on health care fraud and abuse, and Medicare and Medicaid law and policy. Troy counsels all types of health care entities, including hospitals, group practices, and health plans on the physician self-referral law (Stark Law) and the Anti-Kickback Statute, innovative healthcare delivery models, such as Accountable Care Organizations (ACOs), and Medicare & Medicaid payment and coverage policy. He also defends clients seeking resolution of government health care program overpayment issues or fraud and abuse matters through self-disclosures and negotiated settlements with the U.S. Department of Justice, U.S. Health & Human Services Office of the Inspector General and the Centers for Medicare & Medicaid Services (CMS).

Photo of Jodi G. Daniel Jodi G. Daniel

Jodi Daniel is a partner in Crowell & Moring’s Health Care Group and a member of the group’s Steering Committee. She is also a director at C&M International (CMI), an international policy and regulatory affairs consulting firm affiliated with Crowell & Moring. She…

Jodi Daniel is a partner in Crowell & Moring’s Health Care Group and a member of the group’s Steering Committee. She is also a director at C&M International (CMI), an international policy and regulatory affairs consulting firm affiliated with Crowell & Moring. She leads the firm’s Digital Health Practice and provides strategic, legal, and policy advice to all types of health care and technology clients navigating the dynamic regulatory environment related to technology in the health care sector to help them achieve their business goals. Jodi is a contributor to the Uniform Law Commission Telehealth Committee, which drafts and proposes uniform state laws related to telehealth services, including the definition of telehealth, formation of the doctor-patient relationship via telehealth, creation of a registry for out-of-state physicians, insurance coverage and payment parity, and administrative barriers to entity formation.

Photo of Allison Kwon Allison Kwon

Allison Kwon supports Crowell Health Solutions, a strategic consulting firm affiliated with Crowell & Moring, to help clients pursue and deliver innovative alternatives to the traditional approaches of providing and paying for health care, including through digital health, health equity, and value-based health…

Allison Kwon supports Crowell Health Solutions, a strategic consulting firm affiliated with Crowell & Moring, to help clients pursue and deliver innovative alternatives to the traditional approaches of providing and paying for health care, including through digital health, health equity, and value-based health care. She is a health care policy consultant in the Washington, D.C. office.