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CMS Issues CY 2023 OPPS Proposed Rule, Plans to Reverse 340B Cuts

Shahid Zaman
July 19, 2022

The Medicare Outpatient Prospective Payment System (OPPS) proposed rule for calendar year (CY) 2023 reverses cuts to hospitals in the 340B Drug Pricing Program and seeks comment on crafting a remedy for cuts to 340B hospitals that have been in place since 2018. The rule also covers rural emergency hospital (REH) payment and enrollment policies, site-neutral payment, and hospital quality star ratings, among other provisions.

In a statement, America’s Essential Hospitals supported the administration’s decision to pay 340B hospitals the full OPPS payment rate for Part B drugs in 2023 and urged the agency to craft a timely remedy for the last five years of cuts. The policies in the rule, if finalized, would start Jan. 1, 2023.

Payment Update

CMS will increase base payment rates under the OPPS by 2.7 percent for CY 2023, representing a market basket increase of 3.1, less a productivity adjustment of 0.4 percentage points. The agency will reduce payment rates by an additional 2 percentage points for hospitals that fail to meet Hospital Outpatient Quality Reporting Program (OQR) requirements. To avoid payment rates being skewed by data collected during the first year of the COVID-19 public health emergency, CMS proposes to use cost report data from CY 2019 instead of CY 2020, as well as claims data from CY 2021, in setting outpatient payment rates for CY 2023.

340B Reimbursement Cuts

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 revert to the full reimbursement rate for 340B hospitals in 2023.

Since 2018, CMS has reduced Part B reimbursement for separately payable drugs purchased through the 340B program to 77.5 percent of average sales price, instead of the statutory default payment rate of 106 percent. In the rule, CMS formally proposes to continue these cuts in CY 2023, stating that it did not have enough time to revise its original proposal after the Supreme Court decision issued its decision last month. However, the agency says that it “fully anticipate[s] reverting to our prior policy of paying for drugs at ASP +6 percent” in the final rule. To keep OPPS payments budget neutral, CMS would offset the expected $1.96 billion increase in Part B drug spending by applying a budget neutrality reduction to the OPPS conversion factor.

CMS states that it is evaluating how to apply the Supreme Court’s decision in crafting a remedy for cuts from 2018 to 2022 and solicits public comments on remedies for these years. The Supreme Court remanded the case to lower courts to address the issue of an acceptable remedy for cuts in 2018 and 2019.

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 40 percent since 2019. CMS does not address the payment rate or other policies for non-excepted, off-campus PBDs in the CY 2023 OPPS proposed rule, indicating the agency likely will continue to pay these PBDs at 40 percent of the OPPS payment rate.

In CY 2019, CMS began a policy of paying for outpatient clinic visits (health care common procedure coding system code G0463) at excepted, off-campus PBDs at 40 percent of the OPPS payment rate. CMS proposes to exempt off-campus PBDs of rural sole community hospitals from these cuts beginning in 2023 but intends to continue these cuts for other hospital types. CMS seeks comment on whether to exempt other rural hospitals, such as those with fewer than 100 beds, from the clinic visit cuts.

Prior Authorization

In the CY 2020 OPPS final rule, CMS first instituted a policy to require prior authorization for certain categories of OPPS services, citing increased utilization for these services. For CY 2023, CMS proposes to add another category to the list of services requiring prior authorization: facet joint interventions. This category comprises 10 current procedural terminology codes covering facet joint injections, medial branch blocks, and facet joint nerve destruction. CMS provides a list of the proposed and previously finalized services subject to prior authorization.

Overall Hospital Quality Star Ratings

CMS will continue to include measures in the Overall Hospital Quality Star Ratings that might have been suppressed in the Hospital Value-Based Purchasing, Hospital-Acquired Condition Reduction, and Hospital Readmissions Reduction Programs but are still publicly reported. CMS intends to publish the Overall Hospital Quality Star Ratings in 2023. However, the agency might exercise its authority to suppress measures should the COVID-19 public health emergency substantially affect the underlying measure data.

Mental Health Services Furnished Remotely in Patients’ Homes

For CY 2023, CMS proposes to consider mental health services furnished remotely to beneficiaries in their homes as covered outpatient department services payable under the OPPS and would create OPPS-specific coding for these services. Further, the agency proposes that audio-only systems may be used in instances where the beneficiary is not capable of, or does not consent to, the use of two-way, audio/video technology.

Outpatient Quality Reporting Program

CMS proposed changes in the Hospital OQR Program, including changing one measure — Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery (OP-31 ) — from mandatory to voluntary beginning with the CY 2027 payment determination. CMS also requests comment on future adoption of a volume indicator measure, such as the Hospital Outpatient Volume on Selected Outpatient Surgical Procedures (OP-26) measure, for the Hospital OQR Program.

Principles for Measuring Disparities Across CMS Quality Programs

CMS refers to a request for information (RFI) contained in the fiscal year 2023 Inpatient Prospective Payment System proposed rule that sought stakeholder feedback on the use of measure stratification, among other approaches, to mitigate health care disparities and advance health equity across CMS programs. In the OPPS proposed rule, CMS seeks comment on application of these approaches to the Hospital OQR Program.

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 2023, CMS proposes to remove 10 services from the IPO list.

Rural Emergency Hospitals

CMS proposes payment and coverage policies governing REHs — a new provider type established by the Consolidated Appropriations Act of 2021. Critical access hospitals (CAHs), along with rural hospitals with fewer than 50 beds that do not provide acute inpatient services, except for skilled nursing facility services provided in a separate unit, can apply to become an REH. REHs will provide exclusively emergency department services and observation care, as well as other outpatient services.

CMS proposes that REHs be paid for all covered outpatient department services paid under the OPPS at a rate equal to the OPPS payment rate plus 5 percent. Beneficiaries would not be subject to cost-sharing on the 5 percent additional payment. CMS also proposes that REHs receive a monthly facility payment. CMS proposes to allow REHs to provide other outpatient services not otherwise paid under the OPPS, such as clinical lab fee schedule services and post-hospital extended care services provided in a distinct unit or facility licensed as a skilled nursing facility. Payment for these services would be made under the respective fee schedule instead of the OPPS.

The proposed rule covers enrollment procedures for REHs. Facilities converting from CAHs to REHs can submit form CMS-855A, the change of information application, instead of an initial enrollment application. CMS anticipates this will expedite the enrollment process.

Organ Procurement and Research  

CMS proposes policies related to organ procurement and research, including a new method of accounting for research organs that will improve payment accuracy and lower costs. Furthermore, CMS issues an RFI on alternative methodologies to count organs in calculating Medicare’s share of organ acquisition costs for transplant hospitals and organ procurement organizations.

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

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