CY 2023 Medicare OPPS and ASC Payment System Final Rule

December 6, 2022

Written by Jack Hawkins and Ryan Mendez

The following article was published by Becker’s Hospital Review.

On November 1, 2022, the Centers for Medicare & Medicaid Services (CMS) released the CY 2023 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgery Center (ASC) payment system policy changes and payment rates final rule.

Based on the final ruling, CMS will continue to update the ASC payment system using the hospital market basket update rather than the Consumer Price Index for All Urban Consumers (CPI-U) for CYs 2019 through 2023.

As 2023 is slated to be the last year of the trial, CMS indicates in this final rule that the agency intends to “update the public on [its] assessment of service migration and other factors in the CY 2024 OPPS/ASC proposed rule.” The final rule resulted in overall expected growth in payments equal to 3.8% in CY 2023. This increase is determined based on a projected inflation rate of 4.1% less the multifactor productivity (MFP) reduction of 0.3% mandated by the ACA.

“While the AHA is pleased that CMS will provide hospitals and health systems with an improved update to outpatient payments next year compared to the agency’s proposal in July, the increase is still insufficient given the extraordinary cost pressures hospitals face from labor, supplies, equipment, drugs, and other expenses. As we urged, CMS will use more recent data in its calculations on the payment update, resulting in more accurate data that better reflects the historic inflation and tremendous financial pressures hospitals and health systems have confronted recently. However, hospitals are still dealing with a wide range of challenges in providing care which is why the AHA is urging Congress for additional support by the end of the year.”

Stacey Hughes, Executive Vice President, AHA

Presented in the chart below is a summary of the historical net inflation adjustments for CY 2015 through CY 2023. The annual inflation adjustments are presented net of additional adjustments, such as the MFP reduction, outlined in the final rule for the respective CY. The CY 2023 inflation adjustment is nearly double the increase we have observed in each of the last eight years and is largely driven by labor and supply cost pressures.

CMS is shaking things up for ASCs with the finalization of a new policy related to complexity adjustments for CY 2023. The policy will provide complexity adjustments for combinations of specific procedures and add-on procedure codes deemed eligible for the complexity adjustment under the hospital outpatient prospective payment system (OPPS). By themselves, add-on codes do not receive supplementary reimbursement when they are bundled with primary codes. However, the addition of add-on codes to a primary procedure code will often change the assigned complexity of a procedure and make it more costly in the process. As a result of the policy finalized by CMS, Medicare will provide complexity adjustments that affect the payment rate for certain primary procedures to make up for the additional cost of performing specific add-on services.

CMS received 64 recommendations for potential procedures to be added to the ASC CPL for CY 2023. Based on the review of clinical characteristics conducted by CMS, four out of the 64 procedures were added to the CPL for CY 2023. The four procedures are outlined in the table below. These codes correspond to procedures that have few to no inpatient admissions and are widely performed in outpatient settings.

“CMS’s decision to add only four new procedures to the ASC-CPL for 2023 after ASCA proposed 47 procedures that ASCs are performing safely and successfully for privately insured patients is a serious mistake and denies beneficiary access to high-value care. Forcing otherwise healthy Medicare beneficiaries to receive care in higher-cost settings for these procedures needlessly increases costs to the Medicare program and undercuts Medicare’s mission of serving as a responsible steward of public funds.”

-Bill Prentice, Chief Executive Officer, ASCA

CMS has projected total ASC payments in 2023 to increase from approximately $230 million in 2022, to approximately $5.3 billion. The source of the increase in payments is a combination of enrollment, case-mix, and utilization changes. In conclusion, we have continued to see the trend of rising labor and supply costs play out throughout 2022 and continue into the finalization of the CY 2023 payment system. CMS continues to show stability on the annual inflation adjustment utilizing the hospital market basket to update rates. With that said, ASCA Chief Executive Officer Bill Prentice and AHA Executive Vice President Stacey Hughes have pointed out how the costs of providing care continue to rise rapidly. CMS finalized the addition of four procedures to the ASC CPL for CY 2023. However, the addition of only four codes from the 47 proposed procedures resulted in further pushback and a continued desire for additional procedures to be added to the CPL that are being performed safely and successfully by ASCs.

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