On November 1, 2022, CMS released its CY 2023 Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center Payment System (“ASC”) final rules.

Below is a summary of the key provisions of the final rules affecting health care providers.

1. OPPS and ASC payment rates

For hospitals and ASCs that meet the applicable quality reporting requirements, the OPPS and ASC payment rates will increase by 3.8%. This update is based on the projected hospital market basket percentage increase of 4.1%, reduced by 0.3 percentage points for the productivity adjustment.

2. 340B Acquired Drug Payments

CMS announced it will reimburse all drugs, including pass through drugs purchased at 340B costs at ASP +6%. Please see our full summary on this topic here for more details.

3. Rural Emergency Hospitals

In the final rule, CMS finalized Conditions of Participation (CoPs) for REHs. CMS also proposed new regulatory requirements for codifying payment policies, quality measures, and enrollment policies for REHs.

Congress established Rural Emergency Hospitals (REHs) through the Consolidated Appropriations Act (CAA) of 2021. REHs are expected to provide emergency department and observation care. REHs may also provide other specified outpatient medical and health services, if elected by the REH, and as long as those services do not exceed an annual per patient average of 24 hours. Hospitals may convert to REHs if they were Critical Access Hospitals (CAHs) or rural hospitals with not more than 50 beds participating in Medicare as of the date of enactment of the CAA.

Payment Updates

Starting on January 1, 2023, an REH that provides rural emergency hospital services will receive a Medicare payment that is equal to the amount of payment that would otherwise apply under the Medicare OPPS for covered outpatient department (OPD) services increased by 5 percent. The beneficiary co-payments for these services will be calculated the same way as under the OPPS for the service, excluding the 5 percent payment increase.

CMS also finalized the proposal that REHs may provide outpatient services that are not otherwise paid under the OPPS (such as services paid under the Clinical Lab Fee Schedule) as well as post-hospital extended care services furnished in a unit of the facility that is a distinct part of the facility licensed as a skilled nursing facility. However, these services would not be considered REH services. Therefore, these services would be paid under the applicable fee schedule and will not receive the additional 5 percent payment increase that CMS will apply to REH services.

Additionally, the CAA provides an additional monthly facility payment to an REH. Pursuant to the final rule, REHs will receive a monthly facility payment of $272,866. After the initial payment is established in CY 2023, the monthly facility payment amount will increase in the subsequent years by the hospital market basket percentage increase.

Conditions of Participation

Overall, the finalized the CoPs for REHs are modeled closely after the CoPs for CAHs. In some instances, CMS specified different or additional CoPs for REHs that diverge from the CAH CoPs.

Additionally, the rule finalized changes to CAH CoPs for the location and distance requirements, patients’ rights, and flexibilities for CAHs that are part of a large health system.

Provider Enrollment

CMS outlined the provider enrollment requirements for REHs in its final rules. The most important requirements for REHs are: (1) To enroll in Medicare, REHs must comply with all provider enrollment provisions of 42 CFR Part 424, subpart P; and (2) REHs may submit a form CMS-855A change of information application (rather than an initial enrollment application) to convert to an REH.

Rural Emergency Hospital Quality Reporting (REHQR) Program

In the final rule, CMS indicated that, REHs must have an account with the Hospital Quality Reporting (HQR) System secure portal and a designated Security Official (SO) to participate in the REHQR Program.

4. Behavioral Health Services Furnished Remotely by Hospital Staff to Beneficiaries in Their Homes

Behavioral health services furnished remotely (through telehealth) by clinical staff of hospital outpatient departments to beneficiaries in their homes will be considered covered outpatient services for which payments are made under OPPS in CY 2023. Currently, these services are considered covered outpatient services due to the Public Health Emergency (PHE) flexibilities. However, the emergency waivers that enable this flexibility will expire when the PHE for COVID-19 ends. Following the final rule, these services will be permanently considered covered outpatient services so long as the following conditions are met:

• Beneficiary receives an in-person service within 6 months prior to the first time hospital clinical staff provides the behavioral health services remotely; and
• There is an in-person service without the use of communications technology within 12 months of each behavioral health service furnished remotely by hospital clinical staff.

CMS will permit exceptions to the in-person visit requirement when the hospital clinical staff member and beneficiary agree that the risks and burdens of an in-person service outweigh the benefits of it, among other requirements.

Additionally, CMS will allow providers to use audio-only interactive telecommunications systems to furnish these services in instances where the beneficiary is unable to use, does not wish to use, or does not have access to two-way, audio/video technology.

5. IPPS and OPPS Payment Adjustments for Additional Costs of Domestic NIOSH- Approved Surgical N95 Respirators

Recognizing that hospitals may incur additional costs when purchasing domestic NIOSH-approved surgical N95 respirators, CMS will provide payment adjustments under the IPPS and OPPS that would offset the additional marginal resource costs related to procuring domestically made NIOSH-approved surgical N95 respirators. Under this policy, CMS will provide payments biweekly as interim lump-sum payments to the hospital. These payment amounts would be determined by the MAC. In general, interim payments are determined by estimating the reimbursable amount for the year using Medicare principles of cost reimbursement and dividing it into twenty-six equal biweekly payments. These payments would be reconciled at cost report settlement.

6. Rural Sole Community Hospital Exemption from the Clinic Visit Payment Policy

CMS will exempt Rural Sole Community Hospitals (SCHs) from this policy and pay for clinic visits furnished in excepted off-campus PBDs of these hospitals at the full OPPS rate. CMS currently pays approximately 40% of the OPPS payment rate when provided at an excepted off-campus provider-based department (PBD) paid under the OPPS.

7. Partial Hospitalization Program (PHP) Rate Setting

CMS announced that it will maintain the existing rate structure, with a single PHP Ambulatory Payment Classification (APC) for each provider type, for days with three or more services per day. Specifically, CMS will maintain the CMHC APC payment rate of $142.70 for CY 2023. However, CMS has signaled its intent to adjust this payment rate in the subsequent years.

Non-PHP Outpatient Behavioral Health Services Furnished Remotely to Partial Hospitalization Patients

CMS further clarified that the new HCPCS codes describing certain behavioral health therapy services furnished remotely via telehealth to beneficiaries in their homes will not be recognized as partial hospitalization services. However, those services will be available to patients in a partial hospitalization program, and a hospital could bill for non-PHP outpatient services furnished to a PHP patient—including remote therapy services furnished by a hospital outpatient department.

For any questions regarding the above legislation/rulemaking, or for organizational assistance with any other healthcare regulatory or operational matter, please contact an Advis expert or call 708.478.7030.

Published: November 4, 2022