Medicare Payments in 2024: Quick Highlights & Takeaways as CMS Announces Policy Changes
November 7, 2023
On November 2, 2023, the Centers for Medicare & Medicaid Services (CMS) released the CY 2024 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 finalized its proposal to continue to align the ASC payment system by using the hospital market basket update, rather than the Consumer Price Index for All Urban Consumers (CPI-U) for an additional two calendar years through 2025. The final rule resulted in overall expected growth in payments equal to 3.1% in CY 2024. This increase was determined based on a projected inflation rate of 3.3% less the multifactor productivity (MFP) reduction of 0.2% mandated by the ACA. This is an increase of 0.3% from the proposed rule. In an official AHA statement on the CY 2024 OPPS final rule Executive Vice President of AHA Stacey Hughes said:
Presented in the chart below is a summary of the historical net inflation adjustments for CY 2015 through CY 2024. 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 2024 inflation adjustment is slightly lower than the increase observed last year, although it continues to be elevated compared to the adjustments observed prior to 2023 largely driven by labor and supply cost pressures.
CMS noted in its fact sheet that “in addition to finalizing payment rates, this year’s rule includes policies that align with several key goals of the Biden-Harris Administration, including promoting health equity, expanding access to behavioral health care, improving transparency in the health system, and promoting safe, effective, and patient-centered care. The final rule advances the Agency’s commitment to strengthening Medicare. It uses the lessons learned from the COVID-19 PHE to inform the approach to quality measurement, focusing on changes that will help address health inequities.”
CMS finalized the addition of 37 surgical procedures to be added to the ASC CPL for CY 2024, outlined in the table below. These include 26 dental codes that were included in the proposed rule, and 11 surgical codes that were not included in the proposed rule -most notably total shoulder arthroplasty. These codes correspond to procedures that have little to no inpatient admissions and are widely performed in outpatient settings.
CMS has projected total ASC payments in 2024 will increase from approximately $207 million in 2023 payments to approximately $7.1 billion. The source of this increase in payments is a combination of enrollment, case mix, and utilization changes.
In conclusion, the trend of rising labor and supply costs continues to play out through 2023 and into the finalization of the CY 2024 payment system. CMS continues to show stability on the annual inflation adjustment by utilizing the hospital market basket to update rates and extending the five-year interim period. However, as Hughes has said, the costs of providing care continue to rise rapidly which directly impacts health systems’ margins and ability to provide effective care. CMS finalized the addition of 37 procedures to the ASC CPL for CY 2024, which is a substantial increase from the addition of only four codes in 2023. These additions have created positive feedback from outpatient providers due to the ability to continue to perform additional procedures in the ASC setting safely and successfully.