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Payment Rate Increases for 2023 No Help to Hospitals' 'Tremendous Financial Pressures'

Analysis  |  By Amanda Norris  
   November 09, 2022

CMS released the 2023 OPPS final rule that includes increased Medicare reimbursement and the establishment of a new provider type, but hospital groups say it's not enough.  

CMS recently released the 2023 OPPS final rule, which brought increased hospital outpatient payment rates, the establishment of a new provider type, and 340B payment finalization.  

According to the final rule, CMS has increased Medicare reimbursement for hospital outpatient departments by 3.8%, reflecting a hospital market basket increase of 4.1 percent and a 0.3 percentage point decrease for productivity. This is higher than the 2.7% update included in the proposed rule earlier this year.

Blow-back from the proposed payment rate increase of 2.7% may have played a role in the finalized amount of 3.8%.

At the time, the American Hospital Association (AHA) Executive Vice President Stacey Hughes said, "We are deeply concerned about CMS' proposed payment update of only 2.7%, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face."

While more than what was proposed in July, the AHA doubled down on its original sentiment regarding the payment rate increase.  

"While the AHA is pleased that CMS will provide hospitals and health systems with an improved update to outpatient payments next year compared to the agency's proposal in July, the increase is still insufficient given the extraordinary cost pressures hospitals face from labor, supplies, equipment, drugs, and other expenses," Hughes said in the AHA's OPPS final rule statement.

"As we urged, CMS will use more recent data in its calculations on the payment update, resulting in more accurate data that better reflects the historic inflation and tremendous financial pressures hospitals and health systems have confronted recently. However, hospitals are still dealing with a wide range of challenges in providing care, which is why the AHA is urging Congress for additional support by the end of the year," Hughes said.

Also finalized in the OPPS was the introduction of the rural emergency hospital (REH) designation. Converting to REHs can help critical access hospitals and small rural hospitals avoid closure and maintain access to care in rural and underserved communities, CMS said. The rule finalized proposals related to REH payment, covered services, conditions of participation, and quality measurements.

CMS Administrator Chiquita Brooks-LaSure said in a press release that "CMS is committed to expanding access to care in rural communities and ensuring people with Medicare get the high-quality care they need."

Also in the final rule, clinical staff in hospital outpatient departments are now permitted to provide remote behavioral health services to patients in their homes.

"Through the establishment of Rural Emergency Hospitals, supporting clinic visits at rural sole community hospitals and enabling people with Medicare to remotely access behavioral health services in their homes, today's actions promote patient safety, equity, and quality for these underserved communities," Brooks-LaSure said.

We can't forget the turmoil facing 340B payments.

In the OPPS final rule, CMS solidified the payment policy for 2023 of average sales price of 6% for drugs and biologicals acquired through the 340B program because of the unanimous Supreme Court decision earlier this year.

As for your revenue cycle staff, CMS will continue its requirement that 340B hospitals report drugs purchased under the 340B program using either the -JG or -TB modifier depending on the type of 340B hospital you are.

Robin Damschroder, the CFO for Henry Ford Health, recently shared with HealthLeaders the impact that these regulatory updates have on hospitals.

"There's a lot of pressure—as there always has been—on reimbursement rates. Henry Ford Health system and a lot of folks rely on 340B discounts and other mechanisms like disproportionate share payments. We're a big teaching institution, so a lot of these special payments that we do in order to teach the healthcare leaders of the future or make sure that we can take care of vulnerable patients are extremely important," Damschroder said.

"So that is an area that we and others are actively—in our advocacy—ensuring that these programs stay intact or evolve to a place that enhances the programs for the people that were trying to care for," said Damschroder.

“There's a lot of pressure—as there always has been—on reimbursement rates. Henry Ford Health system and a lot of folks rely on 340B discounts and other mechanisms like disproportionate share payments. ”

Amanda Norris is the Director of Content for HealthLeaders.

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