CMS Proposes 2.7% Increase in CY23 OPPS, ASC Reimbursement Rates

July 18, 2022 - CMS has released its Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule for calendar year (CY) 2023, which includes a 2.7 percent increase in Medicare reimbursement rates for OPPS hospitals and ASCs.

The payment increase for both providers reflects a proposed 3.1 percent increase to the hospital market basket and a 0.4 percentage point reduction for the productivity adjustment.

The 2.7 percent payment update exceeds the 2.3 percent increase proposed for hospitals and ASCs in the CY 2022 OPPS proposed rule.

Still, hospital groups, including the American Hospital Association (AHA), voiced concern about the update size as hospitals and health systems continue to face financial challenges.

“We are deeply concerned about CMS’ proposed payment update of only 2.7 percent, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face,” Stacey Hughes, executive vice president, said in a statement.

“Hospitals and health systems - and their caregivers - have been on the front lines of the COVID-19 pandemic for over two years now. While we have made great progress in the fight against the virus, our members continue to face a range of challenges that threaten their ability to continue caring for patients and providing essential services for their communities. A much higher update is warranted, and we will be closely analyzing CMS’ proposed market basket, as well as its proposed productivity offset.”

CMS also established payment policies for services provided at rural emergency hospitals (REHs). The agency proposed considering all covered outpatient department services as REH services, allowing REHs to receive higher reimbursement rates.

CMS issued a higher payment rate for furnished REH services in the proposed rule. For CY 2023, REHs will receive the standard OPPS payment rate plus an additional 5 percent for each REH service provided. The agency also proposed that REHs can provide outpatient services that are not paid under the OPPS and receive payment for them under the applicable fee schedule without the additional 5 percent increase.

In addition, the rule introduced a provision that would simplify the enrollment process to convert a critical access hospital to an REH.

As a result of the COVID-19 pandemic, CMS has proposed using cost report data from the June 2020 Healthcare Cost Report Information System (HCRIS) coupled with CY 2021 claims data to determine CY 2023 OPPS and ASC payment system rates. This cost report data includes data through CY 2019 and excludes CY 2020 data that was abnormal due to the pandemic.

CMS also clarified a key payment update under the 340B Drug Pricing Program. After the US Supreme Court sided with hospitals and ruled that the 340B Medicare reimbursement cuts from HHS were unlawful, CMS has decided to terminate the cuts for CY 2023.

Due to the timing of the Supreme Court’s decision, CMS could not adjust the proposed payment rates and budget neutrality calculations before issuing the proposed rule. Thus, the current CY 2023 proposed rule includes a payment rate of average sales price (ASP) minus 22.5 percent for 340B drugs.

However, the agency stated that it plans to apply a rate of ASP plus six percent for 340B drugs in the CY 2023 OPPS/ASC final rule.

This policy decision elicited a more positive response from hospital groups.

“This will help 340B hospitals provide comprehensive health services to their patients and communities. Having now recognized what 340B hospitals are owed under the law, we urge the Administration to promptly reimburse those hospitals that were affected by these unlawful cuts in previous years,” Hughes continued in the AHA statement.

America’s Essential Hospitals also expressed support for the policy change.

“We are pleased [CMS] clearly has stated its intention to fully restore payments for 340B-acquired drugs in the calendar year 2023 OPPS proposed rule,” Beth Feldpush, senior vice president of policy and advocacy for America’s Essential Hospitals, said in a statement emailed to RevCycleIntelligence.

“This is an important step toward reversing the damage caused by deep cuts to payments for outpatient drugs acquired through the 340B Drug Pricing Program—cuts the US Supreme Court unanimously found unlawful.”

The CY 2023 OPPS/ASC proposed rule also included payment boosts for IPPS and OPPS facilities that purchase domestically made NIOSH-approved surgical N95 respirators.

The complete rule and policy updates can be accessed here.