On July 10, the Centers for Medicare & Medicaid Services (CMS) released its proposed Medicare Hospital Outpatient Prospective Payment System (OPPS) and Physician Fee Schedule (PFS) rules for calendar year (CY) 2025.
Of interest to members of America’s Essential Hospitals, the OPPS rule proposes:
- Routine updates to payment and outpatient quality reporting (OQR) provisions
- Changes to the conditions of participation (CoPs) for hospitals to target the maternal health crisis
- Policies expanding coverage for formerly incarcerated individuals
- Requests for feedback on potential future changes to the Overall Hospital Quality Star Rating methodology
- Continuous eligibility provisions for Medicaid and the Children’s Health Insurance Program as required by Congress in the Consolidated Appropriations Act (CAA), 2023
The PFS rule proposes, among other policies:
- Payment updates
- Extended flexibility for telehealth policies
- Changes to the Medicare Shared Savings Program (MSSP) intended to promote participation by safety net providers and inclusion of underserved populations in accountable care organizations (ACOs)
CMS will accept comments on the proposed OPPS and PFS rules through Sept. 9. America’s Essential Hospitals is closely reviewing the proposed rule and evaluating issues of importance to its members. We encourage all members to review the proposed rule, provide feedback, and submit separate comments to CMS.
OPPS Proposed Rule
CY 2025 Payment Update
CMS proposes to increase base payment rates under the OPPS by 2.6 percent for CY 2025 (representing a market basket increase of 3 percent, less a productivity adjustment of 0.4 percentage points). CMS estimates $88.2 billion in total OPPS payments for CY 2025, an increase of approximately $5.2 billion compared with CY 2024. The rule would reduce payment rates by an additional 2 percentage points for hospitals that fail to meet Hospital OQR Program requirements.
Hospital Outpatient Outliers
For CY 2025, CMS proposes to keep outlier payments — the extra payment Medicare provides for certain high-cost cases — at 1 percent of total OPPS payments. CMS would set the threshold for triggering an outlier payment at 175 percent of the ambulatory payment classification (APC) payment amount and at least $8,000 more than the APC amount.
Inpatient-Only (IPO) List
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 the IPO list for procedures that should be removed because they can be provided in the outpatient setting.
For CY 2025, CMS does not propose to remove any procedures from the IPO list. CMS proposes to add three services for which current procedural terminology (CPT) codes were recently created: 0894T, 0895T, and 0896T (related to liver allograft procedures).
Comprehensive Ambulatory Payment Classifications (C-APCs)
In 2015, CMS began packaging payments for individual items and services paid for under the OPPS into C-APCs. CMS pays one prospective payment amount for all services 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 does not propose to add any new C-APCs in CY 2025, leaving the total number of C-APCs at 72.
For one year only, CMS proposes to exclude certain cell and gene therapies from C-APC packaging. The agency will gather more information to evaluate whether to continue this policy or propose an alternative in future years.
Proposed New Maternal Health CoPs
To further advance the current administration’s obstetric health policy objectives, CMS proposes new CoPs to protect the health and safety of patients who are pregnant, birthing, or postpartum.
CMS proposes to establish requirements for maternal quality assessment and performance improvement; baseline standards for organization, staffing, and care delivery in obstetrical units; and staff training on evidence-based maternal health practices on an annual basis.
Expansion of Coverage for Formerly Incarcerated Individuals
In the CY 2025 rule, CMS proposes several policies to improve access to Medicare coverage for individuals returning to the community after incarceration. By statute, Medicare is prohibited from paying for items or services if the recipient has no legal obligation to pay. Individuals in the custody of penal authorities are presumed to have no legal obligation to pay for health care services, thereby prohibiting Medicare coverage for these individuals.
CMS regulations historically have defined “custody” broadly to include not only individuals who are physically detained in prison or jail, but also those who are on parole, probation, or home detention. Beginning in CY 2025, CMS proposes to exclude those on parole, probation, or home detention from the definition of “custody,” expanding access to Medicare coverage for formerly incarcerated individuals.
Quality Programs
For the Hospital Outpatient Quality Reporting Program (OQR), CMS proposes to adopt three new measures and remove two measures. New measures include the Hospital Commitment to Health Equity (HCHE) measure, the Screening for Social Drivers of Health (SDOH) measure and the Screen Positive Rate for Social Drivers of Health (SDOH) measure.
Additionally, CMS proposes to modify the program’s immediate measure removal policy to an immediate measure suspension policy that will apply when the use of a measure raises patient safety concerns. CMS also proposes these changes to the Ambulatory Surgical Center Quality Reporting Program.
Additionally, CMS seeks feedback on potential modifications to the Safety of Care measure group in the Overall Hospital Quality Star Rating methodology, including a question regarding special considerations for safety net hospitals.
Medicaid and CHIP Continuous Eligibility
CMS proposes to codify provisions in the CAA, 2023 requiring 12 months of mandatory continuous eligibility in Medicaid and CHIP for children under age 19, with limited exceptions.
CMS proposes to eliminate several exceptions available under current law, including options to:
- Provide continuous eligibility to a subgroup of Medicaid and CHIP enrollees
- Provide continuous eligibility for time periods less than 12 months
- Disenroll children from CHIP during a continuous eligibility period for failure to pay premiums.
CMS proposes to continue the following exceptions to continuous eligibility:
- Voluntary termination of coverage if requested by a child or their representative
- Termination if eligibility is determined to be erroneously granted due to agency error or fraud, abuse, or perjury attributed to a child or their representative
- Termination upon the death of a child
PFS Proposed Rule
CY 2025 Conversion Factor Update
For CY 2025, CMS proposes to adjust the conversion factor, which is the base amount used to determine physician payment rates for specific services, to $32.36 — a decrease of $0.93 compared with the conversion factor now in effect. The proposal accounts for several statutory requirements, including elimination of temporary increases required by the CAA of 2023 and application of a 0.00 percent update adjustment factor.
Medicare Telehealth Services
Medicare reimburses practitioners under the PFS for a list of telehealth services updated through annual rulemaking. CMS proposes to remove radiation treatment management (CPT code 77427) from the list of reimbursable telehealth services and add codes for Home International Normalized Ratio Monitoring, caregiver training services, and preexposure prophylaxis (PrEP) of human immunodeficiency virus. CMS also relayed that it intends to conduct a comprehensive review of all items currently identified as provisional before converting any codes from provisional to permanent.
CMS proposes to continue several flexible telehealth policies enacted in recent years in response to the COVID-19 pandemic
MSSP Flexibilities to Promote Participation by Providers Serving Underserved Communities
CMS proposes several changes to the MSSP that intend to promote participation by ACOs serving underserved communities, including safety net providers. Under a new “prepaid shared savings” option, ACOs participating in the MSSP with a history of earning savings could receive advance payment of anticipated savings to allow for up-front investments in infrastructure improvements that support ACO participation.
CMS also proposes a new health equity benchmark adjustment in the MSSP, which would provide an upward adjustment to the historical benchmark of ACOs serving underserved communities, increasing the likelihood of earning shared savings.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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