Hospital outpatient providers to see $6.5 billion Medicare pay bump

The Centers for Medicare and Medicaid Services will increase hospital outpatient provider reimbursement by $6.5 billion next year, the agency said late Tuesday in the 2023 Outpatient Prospective Payment System final rule.

The regulation also offered more detail on the agency’s rural emergency hospital program, which will offer a 5% Medicare reimbursement boost for covered outpatient services and an average facility fee payment of nearly $3.3 million next year if rural hospitals eliminate their inpatient beds, among other conditions of participation in the program. Medicare beneficiaries will not be charged a copayment on the additional 5% payment.

Leading up to the final rule, some rural hospital leaders were skeptical the initiative would have much impact, in part, because critical-access hospitals would have to give up their cost-based reimbursement, rural hospitals would lose 340B revenue and some facilities would have to get rid of their psychiatric beds.

Ambulatory surgery centers will receive a $230 million Medicare reimbursement boost next year. 

A spokesperson for Premier, the group purchasing and consulting organization, said they appreciated the hospital outpatient provider rate increase, but it wasn’t enough to cover providers’ expense increases. 

“The truth remains that a 3.8% payment update falls woefully short of reflecting the rising labor costs that hospitals have experienced since the pandemic’s onset,” Soumi Saha, senior vice president of government affairs for Premier, said in a statement. 

The rule also updated 340B payments, after the Supreme Court sided with the American Hospital Association in its challenge of the proposed pay cuts. Medicare next year will restore the default rate—the average sales price plus 6%, rather than the average sales price minus 22.5% that took effect Jan. 1, 2018. CMS is still figuring out how to apply the Supreme Court’s decision to prior calendar years, the agency said in the rule.

Medicare has paid many 340B hospitals nearly 30% less for drugs administered to Medicare patients over the past four years, Maureen Testoni, CEO of the hospital-backed association 340B Health, said in a statement issued after the regulation was made public. 

“We are very pleased to see that CMS has restored equity to the Medicare outpatient prospective payment system. We look forward to working with CMS on compensation for the hospitals that were financially harmed by the unlawful OPPS payment cuts in 2018 to 2022,” she said.

Also in the rule, CMS established permanent Medicare payments for hospital outpatient department clinicians who provide behavioral health services remotely to patients in their homes.

The agency will remove 11 services from the inpatient-only list, a list of around 1,700 services Medicare would only pay for on an inpatient basis due to the complexity of the procedure, the underlying physical condition of the patient or the need for at least 24 hours of postoperative recovery time. CMS began a three-year phaseout in 2021 by removing 298 services from the list, but reversed course late last year after heavy lobbying from hospital and physician associations over safety concerns.