Regulatory Bulletins

Bulletin 17 – CMS 2023 OPPS & ASC Final Rule

CMS 2023 OPPS & ASC Final Rule


On November 1, 2022, CMS released the CY 2023 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System (ASC) Final Rule with Comment Period (CMS–1772–FC), with the official Federal Register publication scheduled to occur on November 23, 2022. The comment period for the Final Rule will remain open until January 1, 2023.

Key Updates

According to CMS, the CY 2023 OPPS final rule includes numerous updates focused on improving the access to quality health care for the rural and underserved Medicare beneficiaries, increase preparedness for the next pandemic and improve the overall transparency of the health care system. In addition to the standard proposed payment rate adjustments, what follows are a few noteworthy adjustments CMS has finalized to which we believe providers should pay close attention.

Payment rates under OPPS and the ASC payment system are scheduled to increase by a staggering 3.8 percent for CY 2023!  However, there will be a more impactful downward adjustment due to changes to the 340B Program. CMS finalized an increase of 3.8 percent for OPPS payment rates in CY 2023, which is based on a market basket update of 4.1 percent reduced by a productivity adjustment of 0.3 percentage points. This is an increase from the 2.7 percent update originally proposed for CY 2023. The agency estimates this will result in a total of approximately $86.5 billion in payments to OPPS providers ($6.5 billion more than CY 2022). Hospitals successfully meeting the hospital Outpatient Quality Reporting Program requirements will be eligible for this full increase.

CMS also made impactful adjustments to the 340B Drug Pricing Program, finalizing a general payment rate of average sales price plus 6% for drugs and biologics acquired through the 340B Program. Unfortunately, and as required by statute, these massive adjustments now require CMS to implement a 3.09 percent reduction in payment rates for non-drug services to achieve budget neutrality to account for changes to its 340B drug purchasing policy. The net-gain after all these conversions will result in only a 1.67 percent increase in payment rates.

CMS has also finalized an increase in ASC payment rates in the CY 2023 OPPS Final Rule. Utilizing the hospital market basket update, a productivity-adjusted hospital market factor resulting in a 3.88 percent increase for those ASCs meeting relevant quality reporting requirements. This adjustment should not be a surprise as it is consistent with the CMS CY 2019 policy which applies the update to ASC payment system rates for an interim period of 5-years (CY 2019 through CY 2023). This increase is projected to result in approximately $230 million more in ASC provider payments than CY 2022.  Hospitals and ASCs failing to meet their respective quality reporting program requirements will be subject to a 2% reduction penalty.

The categories of services subject to the prior authorization process have been expanded to also include facet joint interventions. To allow providers time to prepare for this adjustment, CMS has indicated implementation of this change will not occur until July 1, 2023, rather than the initially proposed implementation date of March 1, 2023.

Flexibilities allowing certain nonphysician practitioners to supervise select diagnostic services have also been extended under the final rule. CMS finalized its proposal to extend the flexibility of outpatient virtual supervision services through audio/video real time beyond the end of the PHE to the end of the calendar year within which the PHE ends. Furthermore, CMS clarified the existing supervision requirements noting that nurse practitioners, clinical nurse specialists, physician assistants, certified registered nurse anesthetists and certified nurse midwives may provide general, direct and personal supervision of outpatient diagnostic services to the extent that they are authorized to do so under their scope of practice and applicable state law.

New payment policies have been finalized in the CY 2023 OPPS specifically related to facilities identified as the recently established Rural Emergency Hospital (REH). In direct response to the pandemic-related hospital closures and loss of emergency services in rural areas, the REH designation was established by Congress in December 2020 via the Consolidated Appropriations Act (CAA) of 2021. Under this legislation, Critical Access Hospitals or small rural hospitals (no more than 50-beds) are allowed to convert to the new REH designation; however, CMS is broadly proposing in this rule to consider all covered outpatient department services as REH services. Under the proposition, the REH will receive the standard OPPS payment rate plus 5% for each REH service provided.

CMS also finalized a permanent payment solution for remote behavioral health services. During the pandemic, CMS had implemented flexibilities intended to support both patients and providers facing health care constraints due to COVID-19 restrictions. One such flexibility, which is slated to expire at the end of the current Public Health Emergency (PHE), allows for the payment of the services of hospital outpatient clinical staff providing behavioral health services to patients in their homes. The CY 2023 OPPS Final Rule continues this flexibility beyond the expiration of the PHE indefinitely, in an effort to broaden the accessibility of behavioral health services. To ensure payment, CMS will create OPPS-specific Healthcare Common Procedure Coding System (HCPCS) codes for these services: C7900, C7901 and C7902 and the beneficiaries will be required to be in their homes when receiving these services. Further, CMS has modified 42 CFR 410.27(a)(1)(iii) to include an amendment that would allow these services to be provided to a patient in-home and not require a physician’s physical presence.

It should be noted that CMS is continuing to finalize the proposed provisions for these in-home services, including the need for these patients to have at least one in-person visit within 6-months prior to the commencement of the behavioral telehealth services. Further detailed guidance is expected and updates may be found at the CMS blog: Strengthening Behavioral Health Care for People with Medicare.

CMS has finalized the removal of several services from the Inpatient Only List (IPO), as well as several additions.  After review and analysis, CMS has identified eleven (11) procedures for removal from the IPO List, as well as eight (8) procedures to addition to the List.

Reviewing the Proposed Rule, only nine (9) of the initial ten (10) proposed procedures were determined to have met current criteria for removal from the IPO, including: CPT codes 21141, 21142 and 21143  (Facial Reconstruction); CPT codes 21194 and 21196 (Reconstruction of mandibular); CPT code 21347 (Open treatment of nasomaxillary complex fracture); CPT code 21366 (Open treatment of complicated fracture(s) of malar area) and CPT code 21422 (Open treatment of palatal or maxillary fracture) and CPT code 22632 (Arthrodesis – joint fusion). There were a number of comments received by CMS regarding these removals, lending to CMS’ decision to reconsider its initial decision to remove CPT code 16036 (Escharotomy), reasoning that there was sufficient evidence to support this was a procedure that necessitated inpatient setting, and there was a heightened risk of miscoding otherwise. Public comments also lead to two (2) new procedures slated for removal from the List, including both 47550 (Biliary endoscopy), as well as 21255 (Reconstruction of the zygomatic arch and glenoid fossa w/ bone and cartilage).

Hospitals should also be advised that CMS has finalized the addition of eight (8) procedures to the IPO, which have been newly created by the AMA CPT Editorial Panel for CY 2023. These procedures include new CPT codes for a mesh implantation procedure (15778), total disc arthroplasty procedure (22860) and six (6) new hernia repair-related procedures (49596, 49616, 49617, 49618, 49621 and 49622). Unless amended by CMS, these new procedures will all be effective January 1, 2023. 

In response to the Requests for information (RFIs) offered in the OPPS proposed rule, CMS received and responded to numerous comments regarding new quality measures for rural telehealth, behavioral health and maternal health for the Rural Emergency Hospital (REH) Quality Reporting Program. CMS indicated they continue considering input for future proposals as part of a commitment to assess healthcare quality disparities in hospital-based outpatient department (HOPDs) and ASCs. A 60-day comment period remains open on the final rule until January 1, 2023, including the opportunity to participate in RFI regarding competition and transparency.

For more information regarding the proposed rule and all feedback opportunities, CMS has developed a Fact Sheet which highlights the updates and offers additional insight into Agency intent.


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