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2024 OPPS Proposed Rule: Part 2

July 26, 2023

Last week, in our initial treatment of Medicare’s recently released 2024 Outpatient Prospective Payment System (OPPS) Proposed Rule, we highlighted what the Center for Medicare and Medicaid Services (CMS) has planned for two areas: (a) payment rates, and (b) the intensive outpatient program (IOP). Today’s article will update our readers on the rest of the rule.

Partial Hospitalization Program

The Partial Hospital Program (PHP) is an intensive, structured outpatient program provided as an alternative to psychiatric hospitalization. It consists of a specified group of mental health services paid on a per diem basis under OPPS, based on PHP per diem costs.

Partial Hospitalization Program (PHP) Rate Setting

The CY 2024 OPPS/ASC proposed rule proposes updates to Medicare payment rates for partial hospitalization program services furnished in hospital outpatient departments and community mental health centers (CMHCs).

Update to PHP Per Diem Rates

CMS is proposing to expand 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.

For CY 2024, CMS is proposing to calculate hospital-based and CMHC PHP payment rates for (a) three services per day, and (b) four or more services per day, on a cost per day basis, using a broader OPPS data set that includes PHP and non-PHP days. This represents a change from the current methodology of using only PHP data. CMS believes using the broader OPPS data set would allow CMS to capture data from hospital claims that are not identified as PHP, but that include the service codes and intensity required for a PHP day.

Clarification about Substance Use Disorder (SUD) Treatment under PHP

CMS is clarifying in the CY 2024 proposed rule that Medicare covers PHP for the treatment of substance use disorders (SUD). Specifically, CMS is clarifying that, in general, 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.

Hospital Price Transparency

According to CMS, its hospital price transparency regulations “lay the foundation for a patient-driven healthcare system by making hospital standard charges’ data available to the public.” In an effort to strengthen compliance with these regulations and improve the public’s understanding and use of hospital information, the proposed OPPS rule for 2024 modifies the standard charge display requirements at 45 CFR 180.50. In addition, the rule updates the enforcement provisions at 45 CFR 180.70 to streamline and improve the transparency of the enforcement process.

Overall, the proposed policies would further advance the government’s commitment to increasing price transparency and hospital compliance. CMS has published a separate fact sheet that discusses the hospital price transparency provisions of the 2024 Hospital OPPS proposed rule, which can be found here: CY 2024 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Proposals (CMS-1786-P) | CMS.

OPPS Payment for 340B Drugs

Section 340B of the Public Health Service Act (340B) allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices. For CY 2024, CMS is proposing to continue to pay the statutory default rate, which is generally ASP plus six percent, for 340B acquired drugs and biologicals.

The payment for 340B acquired drugs and biologicals would not differ from the payment rate for drugs and biologicals not acquired through the 340B program. As our readers may recall, CMS released a proposed rule on July 7, 2023 discussing its remedy for payment for 340B acquired drugs for CYs 2018 to 2022—including how those payments would impact OPPS payment policy in future calendar years. This is addressed in a separately proposed rule, available here:

OPPS Payment for Dental Services

For CY 2024, CMS is proposing Medicare payment rates under the OPPS for approximately 230 dental codes to align with the dental payment provisions in the CY 2023 Physician Fee Schedule final rule by assigning them to clinical APCs (ambulatory payment classifications). In CMS’ estimation, assigning additional dental codes to clinical APCs would (a) result in greater consistency in Medicare payment for different sites of service, and (b) help to ensure patient access to dental services performed in the hospital outpatient setting when payment and coverage requirements are met. The proposed APC assignments for the dental codes can be found in the Addendum B of the proposed rule (2023-14768.pdf ( To view the full CMS fact sheet on the 2024 OPPS proposed rule, go to CY 2024 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS 1786-P) | CMS.

Missed our previous alert about the OPPS Proposed Rule? Check it out here.

With best wishes,

Chris Martin
Senior Vice President—BPO

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