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2024 OPPS Proposed Rule: What Hospitals Need to Know

July 19, 2023

Last week, the Centers for Medicare & Medicaid Services (CMS) published its calendar year (CY) 2024 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule (PR), along with the ASC Payment System Proposed Rule. There is a 60-day comment period on the PR, which will end on September 11, 2023. The final rule will be issued in early November. CMS also released a fact sheet that provides a summary of the key provisions of the PR. The following includes highlights from the fact sheet that deal specifically with payment updates and the proposed Intensive Outpatient Program.

OPPS Payment Update

In accordance with Medicare law, CMS proposes updating OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.8 percent. This update is based on the projected hospital market basket percentage increase of 3.0 percent, reduced by a 0.2 percentage point for the productivity adjustment.

Intensive Outpatient Program

The PR establishes the Intensive Outpatient Program (IOP) under Medicare, and includes the scope of benefits, physician certification requirements, coding and billing, and payment rates under the IOP benefit. Per the PR, IOP services may be furnished in hospital outpatient departments, Community Mental Health Centers (CMHCs), Federally Qualified Health Centers (FQHCs), and Rural Health Clinics (RHCs), if finalized. These proposals are designed to address one of the main gaps that CMS sees in the area of behavioral health coverage.

Here are some of the proposed details of the program:

Scope of Benefits for IOP

CMS is proposing to set forth the scope of benefits for IOP services as mandated by section 4124 of The Consolidated Appropriations Act (CAA), 2023. An 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. CMS is proposing to base the per diem costs of items and services included in IOP that have been, and are, paid for by Medicare either as part of the PHP benefit or under the OPPS more generally.

Physician Certification and Plan of Treatment Requirements for IOP

As amended by section 4124(a) of the CAA, 2023, section 1861(ff)(1) of the Social Security Act (the Act) requires that a physician determine that each patient needs a minimum of nine hours of IOP services per week, and this determination must occur no less frequently than every other month. CMS is proposing to codify this requirement in regulation for IOP provided in all settings and is soliciting comments on the recertification period.

IOP Payment Rates and Policy in Hospital Outpatient Departments and CMHCs

CMS is proposing to establish 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.

For CY 2024, CMS is proposing to calculate hospital-based and CMHC IOP payment rates for three services per day and four or more services per day based on cost per day using a broader set of OPPS data that includes PHP days and non-PHP days. While no Medicare IOP benefit currently exists, CMS believes using the broader OPPS data set would allow the capture of 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

For 2024, CMS is proposing to make conforming regulatory text changes to applicable RHC and FQHC regulations related to the scope of IOP benefits and services, certification and plan of care requirements, and special payment rules for IOP services as mandated by section 4124 of the CAA, 2023. The scope of IOP benefits and certification and plan of care requirements will be the same for RHCs and FQHCs as described above for hospitals. CMS is proposing to pay for three IOP services/day and according to the statute, payment is based on the hospital rate. That is, RHCs would be paid the three services per day payment amount for hospital outpatient departments. For FQHCs, payment would be the lesser of a FQHC’s actual charges or the three services per day payment amount for hospital outpatient departments. For grandfathered tribal FQHCs, payment would 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 PR extends IOP coverage to include OTPs. CMS proposes to establish a weekly payment adjustment via an add-on code for IOP services furnished by OTPs for the treatment of opioid use disorder and to revise the definition of opioid use disorder treatment services to include IOP services. The payment adjustment would also be updated based on the Medicare Economic Index and receive the Geographic Adjustment Factor if finalized.

CMS is proposing that Medicare would 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. In order for an OTP to receive the additional payment adjustment for IOP services, a physician 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.

We will have more highlights from the 2024 OPPS PR in next week’s alert.

Also interested in learning about the 2024 Inpatient Prospective Payment System (IPPS) Proposed Rule? Check out one of our previous alerts reviewing related details here.

With best wishes,

Chris Martin
Senior Vice President—BPO

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