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2024 OPPS Final Rule: What Hospitals Need to Know

November 8, 2023

It’s that time of year again. The Centers for Medicare and Medicaid Services (CMS) has been busy, putting out several new rules in just the last few days, including the 2024 Outpatient Prospective Payment System (OPPS) final rule. In addition to the voluminous OPPS rule, CMS also published a fact sheet that summarizes the major provisions of the rule. The following will highlight some of the more key provisions found in the fact sheet.

Payment Rates

The 2024 OPPS final rule increases the OPPS payment rates by 3.1 percent for hospitals that meet applicable quality reporting requirements. This update is based on the projected hospital market basket percentage increase of 3.3 percent, reduced by a 0.2 percentage point for the productivity adjustment.

Intensive Outpatient Program

An intensive outpatient program (IOP) “is a distinct and organized outpatient program of psychiatric services provided for individuals who have an acute mental illness or substance use disorder, consisting of a specified group of behavioral health services paid on a per diem basis under the OPPS or other applicable payment system when furnished in hospital outpatient departments, CMHCs, FQHCs, and RHCs.” The rule adds service codes to recognize activities related to care coordination and discharge planning, as well as to recognize the role of caregivers and peer support specialists in PHPs and IOPs.

Physician Certification and Plan of Treatment Requirements for IOP

The Social Security Act (the Act), as amended, requires that a physician determine that each patient needs a minimum of nine hours of IOP services per week. This determination must occur no less frequently than every other month. CMS is codifying this requirement in regulation for IOP provided in all settings.

IOP Payment Rates

CMS is establishing two IOP Ambulatory Payment Classifications (APCs) for each provider type:

  • One for days with three services per day; and
  • One for days with four or more services per day.

While no Medicare IOP benefit currently exists, CMS will use the OPPS data set to capture data from hospital claims that are not identified as IOP but that include the service codes and intensity required for an IOP day.

RHCs and FQHCs

The rule sets payment for three IOP services/day; payment is based on the hospital rate. That is, RHCs will be paid the 3-services per day payment amount for hospital outpatient departments. For FQHCs, payment will be the lesser of a FQHC’s actual charges or the 3-services per day payment amount for hospital outpatient departments. For grandfathered Tribal FQHCs, payment will be the Medicare outpatient per visit rate as established by the IHS when furnishing IOP services, and payment is based on the lesser of a grandfathered Tribal FQHC’s actual charges or the Medicare outpatient per visit rate.

Opioid Treatment Program (OTP) Settings

The rule finalizes CMS’ proposal to extend IOP coverage to OTPs. CMS is establishing a weekly payment adjustment via an add-on code for IOP services furnished by OTPs for the treatment of opioid use disorder (OUD) and revising the regulatory definition of opioid use disorder treatment services to include IOP services. The payment adjustment will also be updated annually based on the Medicare Economic Index and adjusted by the Geographic Adjustment Factor.

Medicare will pay for IOP services provided by OTPs as long as each service is medically reasonable and necessary and not duplicative of any service paid for under any bundled payments billed for an episode of care in a given week. For an OTP to receive the additional payment adjustment for IOP services, a physician or non-physician practitioner must certify that the beneficiary requires a higher level of care intensity compared to existing OTP services, and the certification, plan of care, and all other applicable requirements are met. In addition, CMS is not finalizing its proposal to deduct the payment rates for individual and group therapy services that are included in the existing OTP bundled payment.

Partial Hospitalization Program

Partial Hospitalization Program (PHP) Rate Setting

The final rule includes updates to Medicare payment rates for partial hospitalization program services furnished in hospital outpatient departments and CMHCs. The PHP is an intensive, structured outpatient program provided as an alternative to psychiatric hospitalization, consisting of a specified group of mental health services paid on a per diem basis for a minimum of 20 hours of PHP services per week under the OPPS, based on PHP per diem costs.

Update to PHP Per Diem Rates

CMS is expanding the existing rate structure to include two PHP APCs for each provider type; one for days with three services per day and one for days with four or more services per day. As a result, CMS is increasing payment rates for higher-intensity days in all settings.

For 2024, CMS is calculating hospital-based and CMHC PHP payment rates for three services per day and four or more services per day based on cost per day using OPPS data that includes PHP and non-PHP days, which is a change from the current methodology of using only PHP data.

Clarification about Substance Use Disorder (SUD) Treatment under PHP

The 2024 final OPPS rule clarifies that Medicare covers PHP for the treatment of substance use disorders (SUD). Specifically, notwithstanding the requirement that PHP services are provided in lieu of inpatient hospitalization, Medicare covers PHP for the treatment of SUD, and CMS considers services that are for the treatment of SUD and behavioral health generally to be consistent with the statutory and regulatory definitions of PHP services.


We will have more details arising from the 2024 OPPS final rule in upcoming alerts.

With best wishes,

Chris Martin
Senior Vice President—BPO

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