November 17, 2023

CMS Releases CY 2024 OPPS and ASC Final Rule

Holland & Knight Alert
Miranda A. Franco


  • The Centers for Medicare & Medicaid Services (CMS) finalized its Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment rates for calendar year (CY) 2024.
  • For hospitals that meet the quality reporting requirements, CMS updated OPPS and ASC payment rates by 3.1 percent for 2024.
  • The Final Rule also updates Medicare payment policies and rates for hospital outpatient departments and ASCs and takes effect on Jan. 1, 2024.

The Centers for Medicare & Medicaid Services (CMS) finalized its Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment rates on Nov. 2 for calendar year (CY) 2024. The Final Rule will be effective on Jan. 1, 2024.

The Final Rule updates Medicare payment policies and rates for hospital outpatient departments (HOPDs) and ASCs. The rule also incorporates lessons learned from the COVID-19 public health emergency (PHE) to enhance quality measurement and patient centricity. CMS also finalized several changes regarding price transparency, including a requirement that hospitals make cost data publicly available in a more standardized manner. The rule also finalizes provisions from the Consolidated Appropriations Act of 2023, creating a new benefit category for intensive outpatient services provided to behavioral health patients.

Additional information about the OPPS and ASC Final Rule is available at the following resources:

Key Proposals of Note

Comprising a number of notable elements, the Final Rule:

  • applies a payment update of 3.1 percent for CY 2024
  • finalizes changes to hospital price transparency requirements, including requiring hospitals to use a template to submit charge information and requiring hospitals to affirm the accuracy of that information
  • establishes payment for intensive outpatient programs
  • updates the hospital and ASC quality reporting programs
  • continues 340B payment at average sales price plus 6 percent and finalizes the payment remedy to 340B hospitals
  • adds nine services to the inpatient-only (IPO) list
  • maintains the current list of service categories subject to prior authorization
  • makes changes to community mental health centers' conditions of participation

OPPS and ASC Payment System Updates 

For hospitals that meet the quality reporting requirements, CMS updated OPPS and ASC payment rates by 3.1 percent for 2024, reflecting a 3.3 percent projected hospital market basket percentage increase, reduced by 0.2 percent for the productivity adjustment. This increase is 0.3 percent higher than the 2.8 percent increase stated in the CY 2024 Proposed Rule. CMS noted that the fee schedule increase must align with the market basket increase factor proposed in the 2024 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System Final Rule. CMS also codified the amounts of OPPS payment and cost-sharing for Part B drugs that are subject to inflation-based rebates codified in the Inflation Reduction Act (IRA) and aligned with regulations in the CY 2024 Medicare Physician Fee Schedule (MPFS). (See Holland & Knight's previous alert, "CMS Issues CY 2024 Medicare Physician Fee Schedule Final Rule," Nov. 15, 2023.)

ASC Conversion Factor

CMS is finalizing its CY 2024 ASC conversion factor to $53.514 for ASCs meeting quality reporting requirements and $52.476 for those that fail to meet the requirements. 

Ambulatory Payment Classification (APC) Group Policies

CMS designated five brachytherapy APCs as Low-Volume APCs for CY 2024. It also added two Comprehensive APCs (C-APCs) under the existing C-APC payment policy in CY 2024: C-APC 5342 (Level 1 Abdominal/Peritoneal/Biliary and Related Procedures) and C-APC 5496 (Level 6 Intraocular APC). CMS will retain services within New Technology APC groups until sufficient claims data is available to justify the reassignment of the service to an appropriate clinical APC, consistent with current policy. 

OPPS Payment for Remote Mental Health Services

CMS finalized creating a single, untimed healthcare common procedure coding system (HCPCS) code that can be reported when a beneficiary receives multiple hours of group therapy per day. This comes in response to stakeholders who have commented that the current HCPCS codes are administratively burdensome because providers are required to report and document each unit of time using multiple codes.

Payment for Drugs, Biologicals and Radiopharmaceuticals

  • Products With Pass-Through Status. CMS finalized that pass-through payment status will expire for 25 drugs and biologicals that received initial approval between April 2021 and January 2022. An additional 43 drugs and biologicals approved after April 1, 2020, will lose pass-through status by Dec. 31, 2023. Conversely, 42 drugs and biologicals given approval between April 2022 and April 2023 will maintain their pass-through payment status beyond Dec. 31, 2024.
  • Products Without Pass-Through Status. CMS modified the drug packaging threshold to $135 per day rather than $140 as proposed for determining separate payment classifications for drugs and biologicals, ensuring consistent packaging determinations. CMS also finalized allowing biosimilars to be paid separately if their reference biologicals are also paid separately.
  • Packaging Policy for Diagnostic Radiopharmaceuticals. CMS solicited comments on whether the current payment packaging policy for diagnostic radiopharmaceuticals has impacted beneficiary access, whether specific patient populations or diseases may be especially impacted, and what approaches for payment would allow for enhanced beneficiary access. CMS stated that they will continue to consider the comments that were received in future notices and rulemaking. 

340B Payment

CMS will continue to pay the statutory default rate, average sale price (ASP) plus 6 percent, for 340B-acquired drugs and biologicals. CMS applied this same rate in the CY 2023 Final Rule following the U.S. Supreme Court's unanimous decision, holding that CMS could not vary rates between different groups of hospitals without previously conducting a survey of the hospitals' acquisition costs.

CMS also finalized using a single modifier to identify drugs and biologicals acquired through the 340B program. All 340B-covered entity hospitals paid under the OPPS are required to report the "TB" modifier effective Jan. 1, 2025.

CMS released a separate Final Rule, Hospital Outpatient Prospective Payment System: Remedy for 340B-Acquired Drugs Purchased in Cost Years 2018-2022, providing a remedy for the reduced 340B payments hospitals received from 2018 through Sept. 27, 2022, the date on which CMS restored reimbursement for 340B drugs to the full OPPS rate. (See Holland & Knight's previous alert, "CMS Issues Final Rule Remedying Underpayments to 340B Covered Entities," Nov. 9, 2023.)

Inpatient Only List

CMS established the Inpatient Only (IPO) list in 2000 to designate procedures that, because of their invasive nature, the expected recovery time and/or underlying patient condition would not be paid if performed in an outpatient facility. The Agency believed that performing certain procedures on an outpatient basis would not be safe or appropriate and, therefore, not reasonable and necessary under Medicare rules. For CY 2024, CMS added nine newly created codes to the IPO list and revised one code under the Final Rule.

These new services are described by the CPT codes 0790T, 22836, 22837, 22838, 61889, 76984, 76987, 76988 and 76989 (described by placeholder codes X114T, 2X002, 2X003, 2X004, 619X1, 7X000, 7X001, 7X002, and 7X003, respectively, in the CY 2024 OPPS/ASC Proposed Rule). Upon clinical review, it was determined that these services require a hospital inpatient admission or stay and are not suitable for payment under the OPPS. Therefore, these services will be assigned to status indicator "C" (Inpatient Only) for CY 2024. 

Further, CMS finalized its proposal to reassign CPT code 0646T from status indicator "E1" (not payable by Medicare) to status indicator "C" for CY 2024.

Payment for Intensive Outpatient Program (IOP)

Section 4124(b) of the Consolidated Appropriations Act of 2024 established coverage for IOP services effective Jan. 1, 2024. CMS finalized the payment and program requirements for the new IOP benefit. The Final Rule includes the scope of benefits, physician certification requirements, coding and billing guidelines, and payment rates under the IOP benefit. CMS finalized its proposal that IOP services may be furnished in hospital outpatient departments, community mental health centers, federally qualified health centers and rural health clinics.

Updates to the Partial Hospitalization Program (PHP)

CMS amended the definition of "partial hospitalization services" to include only those where a physician determines that an individual requires a minimum of 20 hours of services per week. CMS received comments to amend the timing of Partial Hospitalization Program (PHP) recertification to at least monthly but is maintaining current regulations that require initial PHP recertification by the 18th day of partial hospitalization services.

Site-Neutral Payments for Clinic Visits at Off-Campus Provider-Based Departments 

CMS will continue to pay clinic visits provided by off-campus hospital outpatient departments at 40 percent of the OPPS rate. Beginning in 2019, CMS implemented a policy that reduced OPPS payments to a rate equivalent to the physician fee schedule (PFS) rate for clinic visits described by HCPCS code G0463 and furnished at off-campus provider-based outpatient departments (PBDs) that previously were excepted or grandfathered from site-neutral payment policies. The PFS-equivalent rate is 40 percent of the OPPS payment. Beginning in 2023, CMS implemented a policy that excepted off-campus PBDs of rural sole community hospitals from this clinic visit payment policy. 

For CY 2024, CMS will continue to pay clinic visits provided by off-campus hospital outpatient departments at 40 percent of the OPPS rate. Excepted off-campus PBDs of rural sole community hospitals will continue to be exempt from the policy. 

CMS also finalized its proposal that beginning in CY 2024, intensive cardiac rehabilitation services (HCPCS codes G0422 and G0423) provided by an off-campus, non-excepted PBD of a hospital will be paid at 100 percent of the OPPS rate (which is also 100 percent of the PFS rate) rather than at 40 percent of the OPPS rate. 

CMS stated that it would consider for future rulemaking commenters' suggestions for additional services that should similarly be excluded from the 40 percent PFS adjustment.

Prior Authorization Process

CMS maintained its current list of service categories subject to the hospital outpatient prior authorization process, adding no new categories for CY 2024. 

Hospital Price Transparency Requirement

Under federal law, hospitals in the United States must establish, update and make a public list of their standard charges for items and services they provide. CMS finalized several price transparency requirements for CY 2024 to promote greater awareness about hospital service charges.

CMS finalized its proposal to require hospitals to display required standard charges data in a CMS template publicly. This template would include a comma-separated values (CSV) "tall" or "wide" format or JSON schema.

CMS also finalized its proposal to require hospitals to affirm the accuracy and completeness of standard charges included in a machine-readable file (MRF). This requirement will go into effect on July 1, 2024. However, beginning Jan. 1, 2024, hospitals must "make a good faith effort to ensure that the standard charge information encoded in the MRF is true, accurate, and complete as of the date indicated in the MRF." 

In addition, CMS finalized its proposal to require hospitals to encode all standard charge information corresponding to a set of required data elements in the MRF and expand data elements that must be included in the MRF. This information must conform to CMS template layout, data and other specifications relevant to hospital standard charge information encoding.

Further, CMS finalized several changes to improve data accessibility by requiring hospitals to include, in their webpages, .txt files with standardized fields that correspond to MRF information and have a webpage link in the footer on the hospital website labeled "Price Transparency" that links directly to a webpage from which the MRF may be accessed.

CMS did not finalize its proposed 60-day enforcement grace period for hospitals to adopt the CMS template format and encode new data elements. The Agency will instead provide hospitals with more generous timelines, which can be found in Tables 151A and 151B. The majority of compliance dates are July 1, 2024, with the Estimated Allowed Amount standard charge data element being required on Jan. 1, 2025.

Hospital Outpatient Quality Reporting (OQR) Program

CMS solicited and received comments on quality measurement topics related to patient and workforce safety, telehealth and behavioral health. 

In response, the Agency is finalizing modifications to 1) the COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP) measures in order to be up to date with the Center for Disease Control's (CDC) National Healthcare Safety Network measure specifications, 2) the Contracts: Improvement in Patient's Visual Function Within 90 Days Following Cataract Surgery measure to standardized accepted survey instruments and mitigate administrative burdens for facilities, and 3) the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients measure to align with updated clinical guidelines. 

In addition, the Final Rule makes technical edits to accommodate recent and future systems requirements, such as by replacing references to "QualityNet" with "CMS-designated information system." 

The Final Rule also adopts the Risk Standardized Patient-Reported Outcome-Based Performance Measure (PRO-PM) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) in the hospital outpatient department setting, and the Excessive Radiation Dose or Inadequate Quality Diagnostic Computer Tomography (CT) in Adults measure beginning with voluntary reporting beginning in CYs 2025 through 2027 reporting periods.

Payment Policy for Indian Health Service (IHS) and Tribally Owned Facilities

In response to concerns from tribal and IHS hospitals regarding financial impacts associated with conversion to Rural Emergency Hospitals (REHs), CMS finalized its proposal to make payment for IHS and tribal hospitals that convert to REHs under the same All-Inclusive Rate (AIR) payment as IHS and tribal facilities that are not REHs. CMS also finalized that IHS and tribal hospitals that convert to REH facilities would receive the REH monthly payment consistent with how payment is applied for nontribal and non-IHS facilities. This approach is intended to increase the number of rural tribal and IHS hospitals obtaining an REH designation, thereby improving access to healthcare in these communities and promoting health equity.

Comment Solicitation: Health Equity

In the Proposed Rule, CMS sought feedback on what evaluations of health equity should be included in its economic analysis of OPPS and ASC policies. To gain insight into how OPPS and ASC policies affect health equity, CMS is considering adding elements to its economic analysis that would detail how OPPS and ASC policies impact particular beneficiary populations that are typically underserved by the healthcare system. Currently, OPPS impacts are presented by provider type, rural versus urban area, geographic region, teaching status and ownership type. CMS sought comments about structuring an impact analysis that addresses how OPPS and ASC changes may impact beneficiaries of different groups. CMS also requested input on what health equity questions should be examined, what categories or measures should be included and any other feedback on ways to continue building an OPPS health equity framework.

In the Final Rule, CMS noted that it would take into consideration the many suggestions it received for advancing equity in OPPS and ASC policies, such as engaging beneficiaries from minoritized groups, using the National Committee for Quality Assurance health equity framework and considering hospital performance and the proportion of vulnerable populations served.

Comment Solicitation: Potential Payments for Cost of Maintaining Access to Essential Medicines

In the Proposed Rule, CMS sought comments on establishing additional payments to hospitals for maintaining access to essential medicines. CMS described how it could pay hospitals under the IPPS to establish and maintain access to a buffer stock of essential medicines. The payments would have been in addition to payments for the essential medicines themselves, whether those payments are bundled with other items and services or separately paid. In the proposal, CMS considered potential separate IPPS payment for cost reporting periods beginning as early as Jan. 1, 2024. CMS noted an adjustment under the OPPS could be considered for future years of rulemaking. In the Final Rule, however, CMS did not adopt a policy regarding payment under the IPPS or OPPS for establishing and maintaining essential medicines. The Agency, however, will continue to seek feedback from interested parties.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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