CMS Finalizes CY2023 OPPS and ASC, 340B Changes and New Rural Hospital Designation

On November 1, the Centers for Medicare and Medicaid Services (CMS) finalized the Calendar Year (CY) 2023 Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rules. In the rule, OPPS and ASC payment rates will increase by 3.8% and announced a new provider designation: the rural emergency hospital (REH).

The OPPS also includes changes to the 340B drug payment program, in accordance with the Supreme Court decision in American Hospital Association v. Becerra earlier this year. CMS will offer a payment rate of the average sales price of a drug plus 6% for drugs and biologicals obtained through the 340B program. The CMS Fact Sheet on the final rule notes that CMS is implementing a 3.09% reduction to payment rates for non-drug services in order to maintain budget neutrality for the drug payment rate change. CMS also said that it would address a “remedy” for 340B payments between 2018 and 2022 in future rulemaking.

The American Hospital Association responded to the changes in 340B policy by strongly encouraging the agency to “properly reimburse” hospitals that have been penalized by the earlier cuts that were struck down by the Supreme Court ruling.

We continue to call on the agency to ensure that the remainder of the hospital field is not penalized for the prior unlawful policy, especially as hospitals and health systems continue to face immense financial pressures and workforce shortages. We do not believe the agency needs more time to put forth a separate rule as it has had more than adequate time to correct its mistakes.

CMS addressed its new designation for REHs in a separate press release, championing the designation as a new provider type that provides outpatient services, emergency services and observation care. Medicare will pay hospital outpatient departments to provide behavioral health services through telecommunications.

But many rural hospitals will likely pass on the new designation as they don’t feel it works for their facilities. Rural hospitals often use inpatient services for revenue and community integration. Becker’s reports that a majority of rural hospitals are more in need of solutions to staffing challenges, inflation-related costs and low reimbursement rates.