Outpatient, ambulatory surgical centers get a 2.6% pay increase in proposed rule

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The Centers for Medicare and Medicaid Services has proposed updating the outpatient and ambulatory surgical center payment rates by 2.6%, in a proposed rule released on Wednesday.

The payment would affect approximately 3,500 hospitals and approximately 6,100 ASCs. 

This update is based on the projected hospital market basket percentage increase of 3%, reduced by a 0.4 percentage point productivity adjustment.

In the 2019 Outpatient Prospective Payment System and Ambulatory Surgical Center final rule, CMS finalized a proposal to apply the productivity-adjusted hospital market basket update to ASC payment system rates for an interim period of five years (2019 through 2023). 

The 2024 final rule extended the interim period for an additional two years, through 2024 and 2025. Accordingly, using the hospital market basket update, CMS proposes an update factor to the ASC rates for CY 2025 of 2.6%. 

The Calendar Year 2025 Hospital Outpatient Prospective Payment System and ASC Payment System Proposed Rule will have a 60-day comment period, which will end on September 9. 

The final rule will be issued in early November. 

Ashley Thompson, senior vice president, Public Policy Analysis and Development for the American Hospital Association, said, "CMS has yet again proposed an inadequate update to hospital payments. This proposed increase for outpatient hospital services of only 2.6% comes despite the fact that many hospitals across the country continue to operate on negative or very thin margins that make providing care and investing in their workforce very challenging. Hospitals' and health systems' ability to continue caring for patients and providing essential services for their communities may be in jeopardy, and we urge CMS to provide additional support in the final rule.
 
"The AHA fully shares CMS' goals of improving maternal health outcomes and reducing inequities in maternal care. However, we are deeply concerned by CMS' continued and excessive use of Conditions of Participation to drive its policy agenda. We believe a less punitive and more collaborative and flexible approach is far superior. We will carefully review CMS' proposals to determine whether they are feasible, sufficiently flexible for the wide variety of hospitals to which they would apply and do not inadvertently exacerbate maternal care access challenges."

Soumi Saha, senior vice president for government affairs at Premier, said "Premier is deeply disappointed that the Centers for Medicare and Medicaid Services is once again proposing an update for hospital outpatient services that will continue to widen the chasm between Medicare reimbursement and hospitals' actual operational costs. It is no secret that the financial pressures hospitals are facing are being compounded by inflation, stubborn labor shortages and an aging demographic."

Overall Hospital Quality Star Rating

Measures reported on the provider comparison tool on Medicare.gov that meet the criteria for inclusion in the Overall Hospital Quality Star Rating are organized into five conceptually coherent measure groups: Safety of Care, Mortality, Readmission, and Patient Experience (all of which include outcome measures) and Timely and Effective Care (which includes a selection of process measures).

CMS is seeking feedback on whether hospitals that perform in the bottom quartile (lowest-performing 25%) in the Safety of Care measure group should be eligible to receive the highest 5-star rating. CMS is considering modifying the Overall Hospital Quality Star Rating methodology, specifically the Safety of Care measure group, to reinforce its dedication to emphasizing patient safety across CMS.   

WHY THIS MATTERS: OTHER PAYMENT UPDATES

Intensive Outpatient Program

The proposed rule would also update Medicare payment rates for Intensive Outpatient Program (IOP) services furnished in hospital outpatient departments and community mental health centers. CMS said it is proposing to maintain the existing rate structure.

The IOP is a distinct and organized outpatient program of psychiatric services provided for individuals who have an acute mental illness or substance use disorder. The specified group of behavioral health services are paid on a per diem basis for a minimum of nine hours of IOP services per week under the Outpatient Prospective Payment System, or another applicable payment system when furnished in hospital outpatient departments, Community Mental Health Centers, Federally Qualified Health Centers and Rural Health Clinics.

Intensive Outpatient Program services may also be furnished in Opioid Treatment Programs.

CMS is proposing to maintain the existing rate structure, with two Intensive Outpatient Program Ambulatory Payment Classifications for each provider type: one for days with three services per day and one for days with four or more services per day. 

For 2025, CMS is proposing to use the CY 2023 claims data and the latest available cost information from cost reports beginning three fiscal years prior to the year that is the subject of the rulemaking.

CMS is proposing to maintain the calculation of both hospital outpatient and community mental health center intensive outpatient payment rates for three services per day and four or more services per day based on cost per day using data that includes Partial Hospitalization Program and non-PHP days. 

CMS believes continuing to use the outpatient payment data set will allow CMS to capture data from hospital claims that are not identified as partial hospitalization days but that include the service codes and intensity required for a PHP day.

Partial Hospitalization Program

The 2025 proposed rule would update Medicare payment rates for partial hospitalization program services furnished in hospital outpatient departments and Community Mental Health Centers.

The partial hospitalization program 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, based on per diem costs.

Update to PHP Per Diem Rates

CMS is proposing to maintain the existing rate structure, with two partial hospitalization program ambulatory payment classifications for each provider type: one for days with three services per day and one for days with four or more services per day. 

Consistent with this rate setting, CMS is proposing to use the 2023 claims data and the latest available cost information from cost reports beginning three fiscal years prior to the year that is the subject of the rulemaking.

For 2025, CMS is proposing to maintain the calculation of both hospital outpatient and community mental health center partial hospitalization 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.

CMS said it believes continuing to use 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.

Access to non-opioid treatments for pain relief

CMS is proposing to implement a section of the Consolidated Appropriations Act 2023, which provides temporary additional payments for certain non-opioid treatments for pain relief in the hospital outpatient department and ASC settings from January 1, 2025, through December 31, 2027. 

This proposal would implement several statutory provisions, including evidence requirements for medical devices and the FDA-approved indications that meet the statutory requirements. 

To implement the statutory payment limitation under which the additional payment must not exceed the estimated average of 18% of the OPPS payment for a service, or group of services, with which the non-opioid treatment for pain relief is furnished, CMS is proposing to use the top five OPPS procedures by volume for each non-opioid drug or device to calculate the payment limitation.

Finally, CMS is proposing to initially assign a payment offset of zero dollars for the qualifying non-opioid products, as maintaining the non-opioid portion of the procedure payment rate better aligns with the overall intent of the non-opioid policy to ensure access is not hindered by Medicare payment policies.

CMS is proposing that seven drugs and one device qualify as non-opioid treatments for pain relief, and we propose these products be paid separately in both the hospital outpatient and ASC settings starting in 2025. 

CMS is soliciting comments and supporting documentation from interested parties on additional products that may qualify for separate payment under this provision starting in 2025. 

OPPS payment for remote services

CMS is proposing to clarify that, for OPPS payment for services furnished remotely by hospital staff to individuals in their homes, including remotely furnished outpatient therapy services, Diabetes Self-Management Training and Medical Nutrition Therapy services, and mental health services, it would anticipate aligning its requirements with those associated with Medicare telehealth and billed under the physician fee schedule. 

For more information on payment updates and the quality reporting program, visit the CMS proposed rule fact sheet.

THE LARGER TREND

In addition to proposing payment rates, this year's rule includes proposed policies that align with several key goals of the administration, including addressing health disparities, expanding access to behavioral healthcare, improving transparency in the health system and promoting safe, effective and patient-centered care. 

The proposed rule advances the agency's commitment to strengthening Medicare and uses the lessons learned from the COVID-19 public health emergency to inform the approach to quality measurement, focusing on changes that would help address health inequities, CMS said. 

Email the writer: SMorse@himss.org