CMS floats 2.6% annual outpatient, ASC pay increase, new obstetrics Conditions of Participation

A proposed rule outlining the Centers for Medicare & Medicaid Services’ (CMS’) intended Medicare payment rates and policy updates for outpatient and ambulatory surgical centers (ASCs) in the coming year includes several provisions to improve obstetrical services, quality reporting and care access.

The Calendar Year 2025 Outpatient Prospective Payment System (OPPS) and ASC Payment Systems proposed rule floated payment rates for hospitals that meet applicable requirements for quality reporting at 2.6%. This reflects a projected 3% hospital market basket increase reduced by 0.4% percentage points for a required productivity adjustment.

ASC rates for the upcoming calendar year are also proposed to land at 2.6%, reflecting the 3.0% market basket increase of the Inpatient Prospective Payment System and a 0.4 percentage point productivity adjustment. 2025 is slated to be the last year with a productivity adjustment for ASCs.

In reaction statements, industry groups like the American Hospital Association (AHA) and hospital group purchasing organization Premier said that the "inadequate" pay update proposal and called for an upward adjustment in the final version of the rule.

But beyond the topline pay rate increases, the Biden administration headlined its annual proposed rule with new policies targeting health inequities, behavioral care access and quality. Chief among these are new proposed Conditions of Participation (CoP) for hospitals and critical access hospitals related to obstetrical services.

According to a fact sheet, Medicare would install baseline staffing and care delivery standards, annual staff training on evidence-based maternal health practices, maternal quality assessment and performance improvement (QAPI) requirements.

“For too long, too many women in the United States have been dying during pregnancy or in the postpartum period, and this crisis has disproportionately affected women of color,” Health and Human Services (HHS) Secretary Xavier Becerra said in a release. “HHS is taking additional steps to improve maternal health by strengthening the care new moms and their babies receive at our nation’s hospitals.

The administration also wants participating hospitals’ emergency departments to be “continually prepared” to provide emergency screening or stabilization. Though CMS’ fact sheet outlined emergency services for pregnant, birthing and postpartum women, the proposed revision to Emergency Services CoP would apply to all hospitals and critical access hospitals offering emergency services “regardless of whether they provide specialty services” such as obstetrics.

“CMS is using all of our tools to improve the safety, quality, and timeliness of the care that hospitals provide to pregnant women,” Dora Hughes, M.D., acting CMS chief medical officer and acting director for CMS’ Center for Clinical Standards and Quality, said in a release. “Through these proposals, we will ensure people get timely access to quality care in their communities, leading to improved outcomes and better health.”

The administration said the obstetrics proposals reflect comments from stakeholders received during prior years.

Outside of maternal health, CMS said it is proposing to help certain Indian Health Services (IHS) and tribal facilities afford certain high-cost drugs and to authorize federal reimbursement for certain Medicaid clinic services delivered outside the “four walls” of a freestanding IHS or tribal clinic.

Further, the administration’s push to increase care access includes a plan to modify CMS’ definition of “custody” so that Medicare services may be provided to recently incarcerated individuals now on parole, probation or home detention. Elsewhere, CMS’ proposed rule would codify a recent statute that children under the age of 19 have 12 months of continuous eligibility in Medicaid and CHIP.

More broadly, the proposed rule outlines a slew of adjustments and expansions to quality reporting programs applying to outpatient hospitals, inpatient hospitals, Rural Emergency Hospitals and ASCs. CMS also noted that it is considering “potential modifications” to the Overall Hospital Quality Star Rating methodology related to the Safety of Care measure group, and will seek stakeholder comments on such changes.

In a statement, Soumi Saha, senior vice president of government affairs for hospital group purchasing organization Premier, said the organization is "deeply disappointed" in the 2.6% increase "that will continue to widen the chasm between Medicare reimbursement and hospitals' actual operating costs." 

AHA Senior Vice President of Public Policy Analysis and Development Ashley Thompson concurred, underscoring hospitals' "negative or very thin margins" and the threat to "hospitals and health systems' ability to continuing caring for patients and providing essential services for their communities." 

Both groups' policy heads also critiqued the proposed obstetrics CoP, saying that while they  broadly support standardized data collection and care standards, such policy interventions must not risk access to care. 

"An obstetric services CoP that results in the loss of Medicare certification for compliance failure is far too harsh a penalty, resulting in further limits to obstetrical care and potentially higher rates of maternal morbidity and mortality," Saha said. "In trying to address the maternal crisis, the last thing we want to do is intensify disparities we know are already present in obstetrical care."

Thompson added that AHA believes "a less punitive and more collaborative and flexible approach is far superior" to CMS' "continued and excessive use of [CoP] to drive its policy agenda."

The proposed rule is scheduled to publish in the Federal Registrar on July 22. Its 60-day comment period will end on Sept. 9.