CMS to raise hospital payments to buy N95 masks, proposes 2.7% pay hike for facilities

The Biden administration is proposing a 2.7% increase to outpatient payment rates for hospitals for 2023 and an enhanced payment if a facility buys domestically manufactured N95 respirator masks. 

The Centers for Medicare & Medicaid Services (CMS) released Friday the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System proposed rules. The regulation includes updates to outpatient and ambulatory surgical center payment rates as well as changes to payment policies for rural hospitals and the 340B program. 

“The proposals in this rule, if finalized, will expand access to care options in rural communities and permanently allow behavioral health services to be provided to people in their homes,” said CMS Administrator Chiquita Brooks-LaSure.

CMS is proposing a 2.7% update for the outpatient payment rates based on a 3.1% increase in the hospital market basket percentage. The agency also proposes the same update for ambulatory surgical centers for 2023.

In addition to the rate hike, CMS is proposing to offer enhanced payments in the inpatient and outpatient payment systems to cover the initial costs for buying domestically made N95 masks. The goal is to head off the delays that led to a crippling shortage of N95 masks at the start of the pandemic, fed in part by an over-reliance on foreign manufacturing.

CMS proposes to offer biweekly, lump sum payments to hospitals that would be reconciled in a cost report settlement. 

“The rule outlines the information that would be collected on the cost report to determine payments under this proposal, which would apply to cost reporting periods beginning on or after January 1, 2023,” according to a fact sheet on the rule. 

But the agency is still working out how to apply a new decision from the Supreme Court that found cuts to 340B drug payments unlawful. CMS anticipates it will reverse the cuts in the final rule, but it is still figuring out how to repay hospitals for the several years the cuts were already in effect.  

In addition to the payment changes, CMS is proposing new payment policies for rural emergency hospitals, a new designation aimed to curb the trend in rural facility closures. 

CMS is proposing to “consider all covered outpatient department services” as emergency hospital services. Any outpatient service payments would also be increased by 5%. A rural emergency hospital could also provide outpatient services not covered under the OPPS such as laboratory services. 

The agency is also proposing exceptions to the Stark Law for ownership or investment interests in a rural emergency hospital and “revisions to certain existing exceptions to make them applicable to compensation arrangements to which the [hospital] is a party."

CMS is proposing that behavioral health services furnished by clinical staff via telehealth should be covered outpatient services under the OPPS. This flexibility is currently available, but only until the COVID-19 public health emergency ends, which could be some time this year.

The rule is open for a 60-day comment period that will end Sept. 13.