Eliminating the Inpatient Only List
CMS is continuing to phase out the inpatient-only (IPO) list over a three-year period. For this second year of the phase-out, CMS is proposing to remove 638 services from the following clinical families: auditory, digestive, endocrine, female genital, hemic and lymphatic systems, integumentary, male genital, maternity care and delivery, mediastinum and diaphragm, respiratory, and urinary.
CMS believes that the evolving nature of medical practice allows more procedures to be performed on an outpatient basis with a shorter recovery time. This proposal would allow for these services to be paid by Medicare in the hospital outpatient setting when determined to be clinically appropriate, giving physicians greater flexibility in determining the most appropriate site of service.
Adjustment to Cost-of-Living in Alaska and Hawaii
Hospitals located in Alaska and Hawaii face unique circumstances. While higher labor-related costs for these two states are considered under the OPPS through the Inpatient Prospective Payment System (IPPS) hospital wage index, the nonlabor portion of OPPS payment does not currently address higher nonlabor costs in these states as in the IPPS through a Cost-of-Living-Adjustment (COLA) policy.
To resolve this inconsistency between the IPPS and OPPS, CMS is proposing to apply a COLA to the nonlabor share of outpatient hospital service payments provided in Alaska and Hawaii for CY 2027 and future years based on the IPPS COLA. This policy is proposed to be budget neutral across the OPPS and is projected to increase payments to hospitals in these states by $55 million in CY 2027.
Hospital Price Transparency Data
Since January 1, 2021, CMS has required each hospital operating in the United States to provide clear, accessible pricing information online about the items and services they offer in two ways: (a) as a comprehensive machine-readable file (MRF), and (b) via a consumer-friendly display. The data hospitals are required to disclose in the MRF serves as a critical resource for users, including employers, researchers and innovators, who may be leveraging the data with the goal of stimulating competition, generating new insights, and driving down healthcare costs.
To align with priorities and executive order of the current administration, CMS is including a request for information (RFI) to seek public comment on potential approaches to improve hospital price transparency (HPT) data consistency, comparability and consumer usability. Through this RFI, CMS seeks feedback on potential mechanisms to strengthen MRF requirements, including opportunities to increase hospital pricing data standardization and improve the accuracy and completeness of reporting within free text fields.
CMS is particularly interested in comments regarding the reporting of contract mechanisms such as outlier payments, stop-loss provisions, rate tiering and carve-outs. The RFI also seeks public comment on potential approaches to enhance the comparability and usefulness of the consumer-friendly display requirements.
Intensive Outpatient and Partial Hospitalization Programs
Intensive Outpatient Program (IOP) and Partial Hospitalization Program (PHP) Rate Setting
The CY 2027 OPPS/ASC proposed rule would update Medicare payment rates for IOP and PHP services furnished in hospital outpatient departments and Community Mental Health Centers (CMHCs). The 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 for a minimum of nine hours of IOP services per week under the OPPS, or other applicable payment system, when furnished in hospital outpatient departments, CMHCs, Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs). IOP services may also be furnished in Opioid Treatment Programs (OTPs) for opioid use disorder (OUD). 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 IOP and PHP Payment Rates in Hospital Outpatient Departments and CMHCs
CMS is proposing to maintain the existing rate structure, with two IOP APCs for each provider type and two PHP APCs for each provider type. CMS is also proposing to update PHP and IOP payment rates for CY 2027 using the CY 2025 claims data and the latest available cost information, from cost reports beginning three fiscal years before the year that is the subject of the rulemaking. The agency is not proposing any changes to the methodology finalized beginning in CY 2026 for calculating costs for hospital-based and CMHC IOPs and PHPs.
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We will be publishing our final installment on the 2027 OPPS proposed rule next week.