Hospital outpatient providers could see $6.2B pay bump in 2023

Hospital outpatient providers could see a $6.2 billion increase in Medicare reimbursements next year under a proposed rule issued Friday.

In addition, the draft regulation provides more details on the agency’s new rural emergency hospital program, which is designed to help facilities in remote areas remain open.

Medicare would pay 2.7% more for outpatient and ambulatory surgical center services in 2023 under the proposed rule. The agency also would extend reimbursement for behavioral telehealth care beyond the COVID-19 pandemic and would offer higher payments when providers purchase U.S.-made N95 respirators, which typically are costlier than foreign-made products. The rule offers insight into how CMS may respond to a recent Supreme Court decision on 340B payment cuts, as well.

“We are deeply concerned about CMS’s proposed payment update of only 2.7%, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face,” American Hospital Association Executive Vice President Stacey Hughes said in a news release. “A much higher update is warranted.”

Rural emergency hospitals

CMS proposed conditions of participation for the new rural emergency hospital designation last month that include eliminating acute care inpatient services. The draft outpatient payment regulation offers more insight into how the agency wants to run the rural emergency hospital program, which is designed to help facilities in remote areas remain open. Some rural hospital leaders are skeptical the initiative will have much impact.

Facilities designated as rural emergency hospitals would be eligible for a 5% Medicare reimbursement boost for covered outpatient services. The outpatient payment rule proposes that this not translate into higher coinsurance costs for beneficiaries. The regulation states that all outpatient services these hospitals provide would be deemed rural emergency hospital services. Rural emergency hospitals can provide other services, although they wouldn’t receive extra payments for them. Under the proposal, rural emergency hospitals would get monthly facility payments that rise annually based on the hospital market basket.
CMS proposes extending exceptions under the self-referral law to allow physician ownership or investment interests in rural emergency hospitals. The statute known as the Stark law after late Rep. Pete Stark (D-Calif.) prevents physicians from directing Medicare patients to providers in which they have financial stakes. CMS suggests revising the policy to make existing exemptions applicable to compensation agreements to which rural emergency hospitals are parties, according to the fact sheet.
CMS also wants to reduce the administrative burden for critical access hospitals seeking rural emergency hospital status, which the agency believes could help ease provider enrollment into the new program.

CMS asks for feedback on Rural Emergency Hospital Quality Reporting Program measures and on considerations for reporting results stratified by patients’ social risk factors and demographics. CMS also wants to know if it should release further information on provider mergers, acquisitions, consolidations and ownership changes. The agency released data on hospital and nursing home ownership this year.
The agency plans to release the final conditions of participation and payment policies for rural emergency hospitals in a single final rule this fall.


Additionally, CMS intends to withdraw payment cuts for drugs acquired through the 340B program in 2023. Last month, the Supreme Court ruled that CMS improperly reduced reimbursements for 340B drugs when it changed payment policy in 2018.

CMS wasn’t able to adjust its proposed continuation of these cuts for next year due to the timing of the court decision, but plans to eliminate them in a final rule. CMS also asks for comments on how to remedy the reductions implemented between 2018 and 2022. The policy was budget-neutral and the agency already redistributed the savings from the 2018 cuts to hospitals.


The draft regulation also addresses reimbursements for behavioral telehealth services. CMS proposes paying for remote mental healthcare after the COVID-19 emergency ends. Medicare would pay a hospital outpatient department for telehealth and audio-only care so long as the provider has seen a patient within six months prior to the commencement of remote services and sees them at least once a year afterward. CMS would allow certain exceptions to the in-person visit requirement.

Personal protective equipment

The agency also outlines a potential pay increase to compensate hospitals for the extra cost of buying domestically produced N95 respirators. Payments would be made biweekly and reconciled in cost reports.

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