CMS outlines 2.8% pay increase for outpatient facilities, ASCs in 2024 proposed rule

The Centers for Medicare & Medicaid Services (CMS) has released its proposed Medicare payment rates and policy updates under the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System.

In the proposed calendar year 2024 rule, set to be published in the Federal Register, CMS floated payment rates for hospitals that meet applicable requirements for quality reporting at 2.8%, reflecting a projected 3% hospital market basket increase reduced by 0.2% percentage points for a required productivity adjustment.

Additionally, CMS proposed extending a productivity-adjusted hospital market basket update to ASC payment system rates for an additional two years due to pandemic interruptions on care services such as elective surgeries.

“This will enable us to gather additional claims data further removed from the COVID-19 [Public Health Emergency] to more accurately analyze whether the application of the hospital market basket update to the ASC payment system had an effect on the migration of services from the hospital setting to the ASC setting,” the agency wrote in a fact sheet.

Applying the proposed two-year extension yields a proposed productivity-adjusted hospital market basket update factor to the ASC rates for calendar year 2024 of 2.8%, reflecting a 3% hospital market basket percentage increase and a -0.2% percentage point productivity adjustment.

Outside of top-line pay rates, CMS shined a spotlight on new hospital price transparency proposals included in the FY 2024 OPPS proposed rule.

The agency said changes included in the proposed rule would support its commitments earlier this year to clamp down on hospitals that are not compliant with the requirements.

It also proposed language changes that aim to increase the transparency of its enforcement process and is seeking public comment on whether its work aligns with other price transparency initiatives, such as the Transparency in Coverage regulation and the No Surprises Act.

Of particular note to the industry, CMS said its rule proposal includes a requirement that hospitals use a specific template when displaying the required standard charges in a machine-readable file—a frequent request among critics who said the initial requirements were too vague on formatting.

“Currently, hospitals have flexibility in form and format for display of the standard charges they have established as long as they are posted online in a single machine-readable file,” CMS wrote in a separate fact sheet. "While the hospital price transparency regulations take some steps to bring consistency to the way standard charges are presented, hospitals and users of the [machine-readable file] data have recommended improving standardization of the data required for display.”

In a statement released Thursday evening, American Hospital Association Executive Vice President Stacey Hughes said the industry group was "concerned" the proposed 2.8% payment update would be insufficient to offset financial headwinds hospitals faced in 2022 and beyond. 

"Without a more robust payment update in the final rule, hospitals’ and health systems’ ability to continue caring for patients and providing essential services for their communities may be jeopardized,” she said.

As for the price transparency updates, Hughes said her organization would be "carefully reviewing" the proposed changes "to ensure they continue to advance our shared objective with CMS of making it easier for patients to access pricing and cost information while reducing unnecessary administrative burden and costs on hospitals and health systems.”

Other major components of the proposed OPPS and ASC Payment System rule outlined by CMS included:

  • Establishment of the “Intensive Outpatient Program” (IOP) under Medicare, a benefit that would furnish several services delivered in hospital outpatient departments, Community Mental Health Centers (CMHCs), Federally Qualified Health Centers, and Rural Health Clinics. CMS said the IOP proposals could “address one of the main gaps in behavioral health coverage in Medicare and promote access to needed behavioral health care”
  • Update Medicare payment rates to for partial hospitalization program services furnished in hospital outpatient departments and at CMHCs
  • Changes to CMHCs’ Conditions of Participation that would reflect provisions of the Consolidated Appropriations Act, 2023
  • Payment rate updates for tribal and Indian Health Service hospitals converting to Rural Emergency Hospitals that CMS said is expected to “bring further stability” to facilities that decide to convert
  • Continuation of the statutory default rate (average sales price plus 6%) for drugs and biologicals acquired through the 340B program
  • Changes to and a request for public comment on, reporting measures of outpatient care within the Hospital Outpatient Quality Reporting Program, Ambulatory Surgical Center Quality Reporting Program and the Rural Emergency Hospital Quality Program
  • Request for public comment on separate payment under the Inpatient Prospective Payment System (IPPS) to help facilities establish and maintain access to a stockpile of essential medicines, an adjustment which CMS noted could then come to OPPS in “future years”
  • A request for public comment on payment for high-cost drugs and services outside of the Indian Health Service All-Inclusive-Rate

The FY 2024 OPPS and ASC Payment System Proposed Rule will be up for public comment until Sept. 11. CMS said it will issue the final rule in early November.

Editor's note: Updated July 14 with comments from industry organizations.