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CMS proposes 2.7% payment bump, announces expected reversal of 340B payment cuts, and outlines enhanced payments for new Rural Emergency Hospitals.

On July 15, the Centers for Medicare & Medicaid Services (CMS) issued their calendar year (CY) 2023 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule. CMS proposes to update OPPS and ASC payment rates for hospitals and ASCs that meet applicable quality reporting requirements by 2.7%. The rule, however, does not yet take into effect the Supreme Court's recent ruling that the agency did not have the authority to cut pay for 340B drugs in previous years. While the agency said it didn't have enough time to bake that into the proposed rule, it "fully anticipates" returning the hospital pay rate for 340B drugs to 106% of the average drug sales price, which must be done so in a budget neutral manner resulting in cuts to other outpatient services. The proposed rule also outlines enhanced payments and more flexible policies for Rural Emergency Hospitals (REH), a new provider type, which will go into effect on January 1, 2023.

Other proposals in the rule include continuing pandemic-era flexibility, allowing clinical staff of hospital outpatient departments to provide telehealth behavioral care, exempting Rural Sole Community Hospitals from site-neutral clinic visit payments, and adding a bi-weekly lump sum payment for domestically produced National Institute for Occupational Safety and Health (NIOSH)-approved surgical N95 respirators, among other changes. A request for information (RFI) also asks for feedback on how the data it collects "could be used to promote competition across the health care system or protect the public from the harmful effects of consolidation within healthcare," noting the Biden Administration's "whole-of-government approach" to addressing excessive concentration, abuses of market power, and unfair competition.

CMS Administrator Chiquita Brooks-LaSure said, "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." Dr. Meena Seshamani, Deputy Administrator and Director for CMS' Center for Medicare added: "With this proposed rule, we are taking important steps forward to ensure that CMS is doing our part to make sure we have a competitive American health care system that works for all people with Medicare." As anticipated, the American Hospital Association and other provider groups have said the 2.7% increase isn't enough to offset the effects of inflation and the ongoing COVID-19 pandemic.

Comments are due September 13, 2022.

For more information:

• Fact Sheet: CY 2023 OPPS/ASC Payment System proposed rule
• Fact Sheet: Rural Emergency Hospitals
• Press release: CMS Proposes Rule to Advance Health Equity, Improve Access to Care, and Promote Competition and Transparency

Additional information is also available in the attached Tax Alert.

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CMS CY2023 proposed rule