CY 2024 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule

Nov 21, 2023

On November 2, the Centers for Medicare & Medicaid Services released the final rule for the CY 2024 Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System. The final rule updates payments to services provided in hospital outpatient departments and ambulatory surgical centers, makes conforming changes to support payment for certain dental services, and provides an update on buffer stock policy. The rule, and accompanying addenda may be found here: 2024 OPPS Final Rule, and afact sheet is also available for more information.

Payment Rate Updates for OPPS and ASC Payment System – p. 1,575

The agency finalized a payment rate update for outpatient hospital services of 3.1% for those hospitals that meet quality reporting requirements. Medicare payment rates for outpatient hospitals are based on the hospital market basket update which is projected to increase by 3.3%. The rate is then reduced by 0.2% to account for the productivity adjustment, as required by law. The payment update is the same for ASCs, which will see a Medicare payment increase of 3.1%. The detailed economic impact may be found on page 1,575 of the display copy of the final rule.

Requirement in the Physician Fee Schedule CY 2024 Proposed Rule for HOPDs and ASCs to Report Discarded Amounts of Certain Single-dose or Single-use Package Drugs – p. 622

In the OPPS rule, the agency did not propose or discuss the policies associated with discarded drug amounts and instead refers readers to the CY 2024 Medicare Physician Fee Schedule, page 417. The reporting of certain discarded amounts of drugs was created by Section 90004 of the Infrastructure Investment and Jobs Act of 2021. This provision requires manufacturers to refund the CMS for certain discarded amounts from a refundable single-dose container or single-use package drug.

Payment for Dental Services – p. 835

To conform with the MPFS changes in policy to cover certain dental services when related to specific conditions, CMS has finalized 229 dental procedure codes to ambulatory payment classifications (APCs). Table 110 on page 845 lists those dental procedures. Of importance, the agency reiterates that simply because a procedure is assigned to an APC does not mean that Medicare will cover the service. Medicare Administrative Contractors (MACs) will make the determination if the dental procedure meets program requirements and conditions for coverage and subsequent payment. CMS will continue to evaluate future claims data and solicit comments as payment for dental services continues to evolve.

Request for Public Comments on Potential Payments under the IPPS and OPPS for Establishing and Maintaining Access to Essential Medicines

CMS recognized that drug shortages force hospitals to incur additional financial and labor costs as well as delay or revise patients’ treatment regimens. Given the role of hospitals in procuring essential medicines, their procurement preferences can directly influence manufacturer behavior and be leveraged to foster a more resilient supply chain. To better support supply chain resiliency, hospitals can maintain a sufficient inventory of essential medicines, which can be used in the event of a disruption or demand increase, and source them from multiple manufacturers. CMS seeks to support practices that may limit shortages of essential medicines and promote resiliency to safeguard and improve the care delivered to Medicare beneficiaries.

In the OPPS proposed rule, CMS sought comments on separate payment under the Inpatient Prospective Payment System (IPPS) for establishing and maintaining access to a buffer stock of essential medicines to foster a more reliable, resilient supply. The agency decided not to finalize separate payment for IPPS cost reporting periods beginning on or after January 1, 2024. They also will not implement policy in the OPPS.

Here is a summary of the comments the agency received:

  • Some commenters supported a potential separate payment to maintain a buffer stock while some questioned whether hospitals could or should arrange for buffer stocks to be maintained upstream by manufacturers or wholesalers, rather than by hospitals themselves. Commenters noted that any policy should be implemented to mitigate potential demand-driven shortages or exacerbate existing shortages.
  • Commenters were not unanimous on the appropriate length of time for a buffer stock with some supporting the 3-month proposal and others believing it should be shorter or as long as 6-months.
  • The agency received comments expressing concern about the impact of the policy on small, rural providers and safety net hospitals that have less surplus funding to make the investment in a buffer stock.
  • Comments varied on the drugs that should be included in a buffer stock with some supporting applying a buffer stock policy to the eighty-six essential medicines prioritized in the report, Essential Medicines Supply Chain and Manufacturing Resiliency Assessment. Others suggested creating a list that is more inclusive and organized by disease state.
  • Several commenters were interested in a broader policy addressing quality management practices among manufacturers, including providing payment incentives for contracting with manufacturers with strong quality management maturity practices.
  • Commenters expressed concerns about the administrative burden of maintaining a buffer stock of essential medicines.

CMS appreciated the consensus regarding the need to curtail shortages of essential medicines to improve the care hospitals delivered to patients. Initially, the agency will propose new Conditions of Participation in the Medicare program in future rulemaking although no new policy is being adopted in this rulemaking. CMS seeks additional feedback on this issue from interested stakeholders.