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CMS Issues CY 2024 OPPS Final Rule

Shahid Zaman
November 7, 2023

The Medicare Outpatient Prospective Payment System (OPPS) final rule for calendar year (CY) 2024 covers Part B payment to hospitals in the 340B Drug Pricing program, revises site-neutral payment policies, updates price transparency requirements, and changes outpatient quality reporting, among other provisions. The policies in the rule are effective Jan. 1, 2024.

Payment Update

The Centers for Medicare & Medicaid Services (CMS) will increase base payment rates under the OPPS by 3.1 percent for CY 2024, representing a market basket increase of 3.3 percent, less a productivity adjustment of 0.2 percentage points. This compares to a proposed net 2.8 percent payment update. For hospitals that fail to meet Hospital Outpatient Quality Reporting Program (OQR) requirements, the agency will reduce payment rates by an additional 2 percentage points.

Part B Drug Payment to 340B Hospitals

For a second straight year, in response to a unanimous June 2022 Supreme Court decision invalidating CMS’ 2018 and 2019 Part B reimbursement cuts to 340B hospitals, CMS plans to continue the full Part B reimbursement rate for 340B hospitals.

From 2018 to 2022, CMS reduced Part B reimbursement for separately payable drugs purchased through the 340B program to 77.5 percent of average sales price (ASP), instead of the statutory default payment rate of 106 percent. CMS finalized its proposal to pay 340B hospitals in 2024 at 106 percent of ASP, which is the same rate that non-340B hospitals are paid under the OPPS. CMS finalized its proposal that, for purposes of implementing provisions of the Inflation Reduction Act, 340B hospitals continue to identify 340B drugs using a claims-based modifier. Beginning in 2025, hospitals will use one modifier (“TB”) to report all 340B drugs instead of the two currently used modifiers (“JG” and “TB”).

In a separate rule, the agency finalized a remedy for cuts from 2018 to 2022.

Site-Neutral Payment Cuts

Under Section 603 of the Bipartisan Budget Act of 2015 (BBA), Congress instructed CMS to pay certain non-excepted, off-campus provider-based departments (PBDs) under a payment system other than the OPPS. CMS determined these facilities should be paid under the Medicare Physician Fee Schedule (PFS) at a percentage of the OPPS payment rate, set at 50 percent in 2018 and 40 percent since 2019.

However, CMS notes that, under the PFS, intensive cardiac rehabilitation (ICR) services are currently paid at 100 percent of the OPPS rate, and therefore the agency incorrectly reduced payment for these services through the OPPS under its implementation of Section 603. Accordingly, CMS finalized its proposal to pay for ICR services provided in non-excepted, off-campus PBDs at 100 percent of the OPPS rate, so that payment for these services will be equivalent whether services are provided in a physician office or PBD.

Price Transparency

CMS finalized revisions to existing requirements for hospitals to publicly disclose their standard charges, including adding new data elements that must be included in the hospital’s machine-readable file (MRF) of standard charges, such as hospital name and addresses of inpatient facilities and standalone emergency departments, additional information for player-specific negotiated charges, and coding information for the items and services for which the hospital reports standard charges. The agency also finalized a proposal to require hospitals to conform their MRF to a new CMS template layout and include a text file and link on their website to help automate access to the MRF. CMS will phase in implementation of the new price transparency requirements beginning Jan. 1, 2024.

Outpatient Quality Reporting Program

CMS finalized its proposal to modify three previously adopted measures — COVID-19 Vaccination Coverage Among Healthcare Personnel; Cataracts measure; and Colonoscopy Follow-up Interval measure — beginning with CY 2024 reporting.

CMS finalized, with modification, the proposed adoption of the THA/TKA Patient-Reported Outcome measure and CT Radiation Dose measure. The measures will have an extended voluntary reporting period prior to requiring mandatory reporting.

CMS did not finalize its proposal to remove the Left Without Being Seen (LWBS) measure beginning with CY 2024 reporting period.

CMS did not finalize its proposal to readopt the surgical volume measure with modifications, beginning with voluntary CY 2025 reporting and mandatory CY 2026 reporting.

Procedures Paid Only as Inpatient Services

CMS maintains a list of procedures usually performed only in the inpatient setting, reimbursed at inpatient rates, and not paid for under the OPPS. Each year, CMS reviews this inpatient-only (IPO) list for procedures that should be removed because they can be provided in the outpatient setting. For CY 2024, CMS finalized the proposal not to remove any services from the IPO list.

CMS finalized the proposal to add nine new services with new current procedural terminology (CPT) codes to the IPO list. CMS also finalized the proposal to reassign one existing CPT code from non-payable to inpatient-only status.

Comprehensive Ambulatory Payment Classifications

In 2015, CMS began packaging payment for individual items and services paid for under the OPPS into comprehensive ambulatory payment classifications (C-APCs). CMS pays one prospective payment amount for all services on a claim related to the primary, device-dependent service associated with the C-APC. The C-APC payment amount is based on the cost of the primary, device-dependent service and all adjunctive services that support the primary service, such as laboratory tests or supplies. CMS finalized its proposal to add two new C-APCs in CY 2024: C-APC 5342 for level 2 Abdominal/Peritoneal/Biliary and Related Procedures and C-APC 5496 for Level 6 Intraocular Procedures, bringing the total number of C-APCs to 72.

Intensive Outpatient Program

CMS finalized its proposals establishing the Intensive Outpatient Program (IOP), a new coverage type created by the Consolidated Appropriations Act, 2023, for individuals needing intensive therapy services.  IOPs are outpatient programs of psychiatric services for patients who have an acute mental illness or substance use disorder that would be paid on a per diem basis. IOP services could be provided in hospital outpatient departments, community mental health centers, federally qualified health centers, and rural health clinics. The rule outlines the scope of benefits, physician certification requirements, payment rates, and coding and billing for IOP services.

Potential Payment for Maintaining a Buffer Stock of Essential Medicines

CMS sought comment in the proposed rule on providing separate payment through the Inpatient Prospective Payment System to cover the costs of maintaining a buffer stock of essential medicines that are subject to shortages. Under such a policy, CMS had said it could start paying hospitals as soon as cost reporting periods beginning on Jan. 1, 2024, for the costs of maintaining a three-month stock of essential medications. Payment would be in addition to the reimbursement hospitals receive for the costs of the medicines themselves and could be paid as biweekly interim lump-sum payments that would be reconciled at cost report settlement. In the proposed rule, CMS also discussed potentially providing separate payment under the OPPS for maintaining a buffer stock of essential medicines.

CMS did not finalize any policy changes but acknowledged comments received on addressing pharmaceutical shortages. The agency says it intends to propose new Conditions of Participation in forthcoming notice and comment rulemaking addressing hospital processes for pharmaceutical supply.

Contact Director of Policy Rob Nelb, MPH, at or 202.585.0127 with questions.

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