The Centers for Medicare and Medicaid Services (CMS) released its Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System proposed rule––and the payment increase included isn’t enough.
That’s what healthcare associations are saying in wake of the proposed rule, which affects 3,411 hospitals and approximately 5,500 ambulatory surgical centers (ASCs). CMS proposed a 2.7% payment rate increase for hospitals that meet applicable quality reporting requirements, based on the projected hospital market basket percentage increase of 3.1%, reduced by 0.4 percentage point for the productivity adjustment.
However, hospitals and health systems need a bigger increase in the face of current economic challenges and ongoing impacts from the COVID-19 pandemic, according to medical groups.
“We are deeply concerned about CMS' proposed payment updated of only 2.7%, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face. Hospitals and health systems - and their caregivers - have been on the front lines of the COVID-19 pandemic for over two years now,” Stacey Hughes, executive vice president of the American Hospital Association, said in a statement. “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.”
The cuts come as healthcare providers are facing a 2% payment cut from previous sequestration cuts that were temporarily paused for the last two years during the pandemic. Now, as those cuts have resumed, hospitals and health systems are also still facing resource strain and workforce challenges from the pandemic. Additionally, inflation has reached 40-year highs, meaning hospital costs are still rising.
In the proposed rule, rural emergency hospitals (REHs), which were established as their own provider type in 2021, will receive an additional 5% payment for covered outpatient department services, and REHs will receive a monthly facility payment. This new payment model also includes conditions of participation (CoPs) similar to critical access hospitals’ (CAHs) CoPs.
Additionally, CMS is proposing to cut 10 services from the inpatient only (IPO) list “after determining that these codes meet the current criteria to remove services from the IPO list,” the agency stated. Finally, CMS stated it anticipates paying a 6% premium on the average sales price of drugs acquired through the 340B Program. CMS is still evaluating the impact of the Supreme Court’s June decision that the agency may not vary payment rates for drugs and biologicals among groups of hospitals in the absence of having conducted a survey of hospitals’ acquisition costs.
“However, given the timing of the Supreme Court’s decision, we were unable to adjust the proposed payment rates and budget neutrality calculations to account for that decision before issuing this proposed rule,” CMS said. … “We are still evaluating how to apply the Supreme Court’s recent decision to prior calendar years.”
The OPPS proposed rule comes just after CMS proposed payment cuts of 4.4% for the 2023 Physician Fee Schedule (PFS). Physician services that are paid under the PFS are across a variety of settings, including physician offices, hospitals, ambulatory surgical centers (ASCs), skilled nursing facilities and other post-acute care settings, hospices, outpatient dialysis facilities, clinical laboratories and beneficiaries’ homes. That proposed rule was met with outcries from industry groups, which pointed out the cuts fail to recognize the current economic reality.
Stakeholders can participate in the public comment period on the OPPS proposed rule until September 13.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."