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CMS Issues Four Final Payment Rules

December 5, 2023

For more information about this blog post, please contact Ryan L. O’Neill, Labinot Alexander Berlajolli, Jessica T. Osterlof or Samantha T. Baccaro.

The United States Centers for Medicare & Medicaid Services (“CMS”) recently issued four final payment rules for 2024. Below are the highlights from each update.

Physician Fee Schedule Final Rule

CMS released the calendar year (“CY”) 2024 Medicare Physician Fee Schedule (“PFS”) final rule (88 FR 78818) which finalizes policies for Medicare payments under the PFS and other Medicare Part B issues, and will take effect on January 1, 2024.

Notably, the PFS conversion factor for 2024 is $32.74, a $1.15 or 3.4% decrease from the 2023 conversion factor of $33.89, which reduces overall physician pay. Beyond the reduction, CMS finalized policies relating to telehealth services, updates to the Medicare Shared Savings Program ("MSSP"), programs to promote coverage and payment for additional services, and changes to develop physician quality initiatives.

The final rule also implements a new add-on code G2211 for Medicare billing split (or shared) visits to better recognize the costs associated with a patient’s serious or complex condition and the need for evaluation or management visits for primary or longitudinal care.

Relating to telehealth, CMS created a differential payment based on place of service for Medicare telehealth services and extended the COVID-19 public health emergency telehealth policies through December 31, 2024.

CMS also finalized its proposal for Medicare to pay for caregiver training services as part of patients with certain conditions, such as dementia, treatment or therapy plan of care.

A fact sheet for the CMS final rule may be accessed here.

OPPS and ASC Payment Systems Final Rule

CMS released the CY 2024 Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center (“ASC”) Payment Systems Final Rule (88 FR 81540) which finalizes payment rates and policy changes affecting Medicare services furnished in hospital outpatient and ASC settings and will take effect on January 1, 2024.

CMS updated OPPS and ASC payment rates by 3.1% for hospitals that meet the applicable quality reporting requirements, a slight increase from the 2.8% payment update initially proposed. This adjustment reflects the projected hospital market basket percentage increase of 3.3% with a .2% reduction for productivity. These payment policies will affect about 3,500 hospitals and 6,000 ASCs.

Other key takeaways from the final rule include:

  • Continuing to use the adjusted productivity hospital market basket update to increase ASC payment systems rates for 2024 and 2025
  • Finalizing changes to CMS’s hospital price transparency requirements which will require hospitals using a template to submit charge information and affirm the accuracy of that information
  • Establishing payment for intensive outpatient program services to close the coverage gap for behavioral health
  • Continuing to pay the statutory default rate for 340B acquired drugs and biologicals, which is generally the average sale price plus 6%
  • Adding 26 dental and 11 surgical procedure codes to the ASC-covered procedures list that are widely performed in outpatient settings, including total ankle and total shoulder replacement surgery
  • Adding 9 services to the inpatient-only list
  • Maintaining the current list of service categories subject to prior authorization
  • Modifying the requirements for community mental health centers conditions of participation

A fact sheet for the CMS final rule may be accessed here.

340B-Acquired Drug Payment Final Rule

CMS issued a final rule (88 FR 77150) to remedy the underpayments from the invalidated 340B-acquired drug payment policy for calendar years 2018 to 2022 following the Supreme Court’s decision in American Hospital Association v. Becerra, 142 S. Ct. 1896 (2022) and the District Court for the District of Columbia’s remand to the agency. The final rule goes into effect on January 8, 2024.

CMS will provide a lump sum payment to each hospital that was unlawfully underpaid from 2018 to 2022 for applicable 340B-acquired drugs. CMS estimates approximately $9 billion is owed across the 1,700 affected 340B covered entity hospitals. These payments are also intended to cover beneficiary cost-sharing that the affected entities did not earn due to the payment policy.

CMS estimates that hospitals were paid $7.8 billion more for non-drug items and services from CY 2018-2022 and to comply with the rule’s budget-neutrality requirement, CMS will offset that cost by adjusting the OPPS conversion factor for non-drug items and services by -0.5% starting in CY 2026. CMS estimates it will take 16 years to recoup the $7.8 billion. Providers who enrolled in Medicare after January 1, 2018 are excluded from the rate reduction.

The final rule updates the Addendum AAA to account for all payment activity since the proposed rule was issued. CMS will likely begin to make payments at the beginning of CY 2024.

A fact sheet for the CMS final rule may be accessed here.

Medicare Shared Savings Program Rule

CMS’s PFS final rule (88 FR 78818) discussed above includes changes to the Medicare Shared Savings Program (“MSSP”) focused on value-based care.

The changes to the MSSP continue to move accountable care organizations (“ACOs”) toward “digital measurement of quality” by establishing a new Clinical Quality Measure (“CQM”) collection type for ACOs. The Medicare CQMs will aid ACOs in patient matching and will require ACOs to report on only those beneficiaries who meet the ACO assignment criteria.

CMS delayed implementation of the Merit-Based Incentive Payment System (“MIPS”) Promoting Interoperability performance category one year, until January 1, 2025, to give ACOs time to work with participants and meet the new requirements.

These changes to the MSSP include financial benchmarking methodology for ACOs and beneficiary assignment methodologies to better recognize the role of nurse practitioners, physician assistants, and clinical nurse specialists in delivering primary care services.

CMS expects these changes to increase participation in the MSSP by 10% to 20%.

A fact sheet for the CMS final rule may be accessed here.

Our Team

Ryan Lee O'Neill

Ryan Lee O'Neill

Samantha T. Baccaro

Samantha T. Baccaro

Labinot Alexander Berlajolli

Labinot Alexander Berlajolli

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