On July 10, 2024, CMS issued a proposed rule with updates to the Medicare payment rates for the Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Ambulatory Surgical Center (ASC) payment system for calendar year 2025 (the Proposed Rule). The Proposed Rule revises payment rates for OPPS and the Medicare ASC payment systems and proposes policies that address health outcomes, expand access to behavioral health care, improve transparency in the health system, and promote safe patient care.

The proposed payment policies included in the Proposed Rule would affect around 3,500 hospitals and approximately 6,100 ASCs. Below is a summary of the updates and proposals set forth in the Proposed Rule.

Updates to the OPPS and ASC Payment Rates

The Proposed Rule updates the OPPS payment rates for hospitals by 2.6%, based on the projected hospital market basket percentage increase of 3.0%, reduced by a productivity adjustment of 0.4%. CMS also proposes to update ASC rates for ASCs by 2.6%, based on the proposed inpatient prospective payment system market basket percentage increase of 3.0%, reduced by a productivity adjustment of 0.4%. The Proposed Rule would also update the Medicare payment rates for intensive outpatient program (IOP) services furnished in hospital outpatient departments and Community Mental Health Centers (CMHCs). The IOP is a distinct outpatient program of psychiatric and behavioral health services paid on a per diem basis for a minimum of nine (9) hours of IOP services per week under the OPPS or another applicable payment system when furnished in hospital outpatient departments, CMHCs, Federally Qualified Health Centers, and Rural Health Clinics. Beginning in 2024, CMS established four separate per diem payment rates for IOPs: one for CMHCs for three-service days and another for CMHCs for four-service days, and one for hospital-based IOPs for three-service days and another for hospital-based IOPs for four-service days. The Proposed Rule would maintain the calculation of both hospital outpatient and CMHC IOP payment rates for three (3) services per day and four (4) or more services per day based on cost per day using OPPS data that includes partial hospital program and non-partial hospitalization program days.

Partial Hospitalization Program

The Proposed Rule would also update the Medicare payment rates for partial hospitalization program (PHP) services furnished in hospital outpatient departments and CMHCs. The PHP is an outpatient program alternative to psychiatric hospitalization and consists of mental health services paid on a per diem basis for at least twenty (20) hours of PHP services per week under the OPPS.

Access to Non-Opioid Treatments for Pain Relief

The Proposed Rule would implement Section 4135 of the Consolidated Appropriations Act (CAA). The CAA provides temporary additional payments from January 1, 2025 through December 31, 2027 for non-opioid treatments for pain relief in the hospital outpatient department and ASC settings. Seven drugs and one device are proposed by the Proposed Rule to qualify as non-opioid treatments for pain relief.

Hospital Inpatient Quality Reporting Program

The Hospital Inpatient Quality Reporting (IQR) Program is a quality program that reduces payments to hospitals that do not meet program requirements. Hospitals that fail to meet all IQR requirements are subject to a one-fourth reduction in their annual payment update under the IPPS. The Proposed Rule proposes to continue voluntary reporting of the core clinical data elements and linking variable for both the Hybrid Hospital-Wide Readmission and Hybrid Hospital-Wide Standardized Mortality measures for the performance period from July 1, 2023 through June 30, 2024.

Hospital Outpatient Qualify Reporting Program

The Hospital Outpatient Quality Reporting (OQR) Program is a quality program for hospital outpatient departments that requires hospitals to meet quality reporting requirements or receive a reduction of two percentage points in their annual payment update. The Proposed Rule would adopt the following quality measures with respect to the OQR:

• Hospital Commitment to Health Equity
• Screening for Social Drivers of Health
• Screen Positive Rate for Social Drivers of Health
• Patient Understanding of Key Information Related to Recover After a Facility-Based Performance

The Proposed Rule would remove the following quality measures with respect to the OQR:

• MRI Lumbar Spine for Low Back Pain
• Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery

The Proposed Rule would also require that Electronic Health Record (EHR) technology be certified to all electronic clinical quality measures (eCQMs) available to report in the Hospital OQR Program measure set to ensure that hospitals can accurately capture and report data for all eCQMs in the measure set.

ASC Quality Reporting Program

The ASC Quality Reporting (ASCQR) Program is a quality reporting program under which ASCs must report data on certain quality measures required by CMS. If an ASC fails to report on such measures, the ASC will receive a two-percentage point payment penalty to its annual payment rate update. The Proposed Rule would adopt the following additional measures with respect to the ASCQR:

• Facility Commitment to Health Equity
• Screening for Social Drives of Health
• Screen Positive Rate for Social Drives of Health

Proposed Obstetrical Services Conditions of Participation

The Proposed Rule also proposes to adopt new Conditions of Participation (CoPs) for hospitals and critical access hospitals (CAHs) with respect to obstetrical services, including the following:

• Organization and Staffing. Under the Proposed Rule, hospitals and CAHs providing obstetrical services outside of an emergency department would be required to provide such obstetrical services in accordance with nationally recognized acceptable standards of practice for the health care of pregnant and postpartum patients. This would include ensuring adequate integration with other service departments of the hospital, such as the laboratory, surgical, and anesthesia departments. The Proposed Rule would also require that obstetrical patient care units be supervised by an individual with necessary education and training, such as an experienced registered nurse, certified midwife, nurse practitioner, physician assistant, or doctor of medicine.
• Delivery of Service. The Proposed Rule would require that obstetrical services be consistent with the needs and resources of the facility and that hospital policies ensure high standards of medical practice and patient care. The Proposed Rule would also require that labor and delivery rooms have certain basic resuscitation equipment, including a call-in system, cardiac monitor, and fetal doppler or monitor.
• Staff Training. The Proposed Rule would require that hospitals and CAHs providing obstetrical services to develop policies and procedures to ensure that staff are trained on certain topics to improve maternal care. Under the Proposed Rule, hospitals and CAHs would be required to identify which staff must complete the required trainings, document such training, and be able to demonstrate staff knowledge on the training topics.
• Quality Assessment and Performance Improvement (QAPI) Program. Under the Proposed Rule, hospitals and CAHs would be required to use its QAPI program to assess and improve health outcomes among obstetrical patients, including conducting at least one annual performance improvement project focused on improving health outcomes and disparities among the hospital’s obstetrical patients.
• Emergency Services Readiness. The Proposed Rule would revise the Emergency Services CoP to require hospitals and CAHs providing emergency services to have adequate provisions and protocols to meet the emergency needs of patients. The Proposed Rule would also require hospitals with emergency services to require staff to be trained annually on these protocols.
• Transfer Protocols. The Proposed Rule would also require hospitals to have written policies and procedures for transferring patients to the appropriate level of care as needed to meet the patients’ needs and to provide appropriate staff training on the transferring of patients.

A copy of the Proposed Rule can be downloaded here. Comments on the Proposed Rule are due by September 9, 2024.