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Fall 2023 - Innovation

2024 OPPS, ASC and PFS Proposed Payments

The proposed calendar year 2024 Outpatient Prospective Payment System (OPPS), Ambulatory Surgery Center (ASC) and Physician Fee Schedule (PFS) payment rule sets are being finalized to begin Jan. 1, 2024. Their scope covers healthcare in all outpatient settings, including ASCs and physician offices, allowing for shifts among various sites of care to best meet patients’ needs and achieve cost savings that are critical with costs rapidly spiraling to new heights. Inpatient healthcare in a variety of settings is covered by its own payment rules, which follow a fiscal year beginning Oct. 1, 2023.

Several other pieces of legislation are being debated that will also significantly impact practices’ revenue streams, operations and clinical services. Common prevailing themes include prior authorizations, pharmacy benefit managers (PBMs), transparency and site-of-care changes, among others.

Equity and quality are major factors used to determine payment rates. These rules update and refine the requirements for the hospital Outpatient Quality Reporting, ASC Quality Reporting and Rural Emergency Hospital Quality Reporting programs. They also establish payment for certain intensive outpatient services under Medicare beginning Jan. 1, 2024, and update and refine requirements for hospitals to make public their standard charge information and enforcement of hospital price transparency.

2024 Proposed Payment Rule Sets

Small molecule drugs and biologicals. Small molecule drugs and biologicals are paid for in one of four ways: new drugs not yet assigned unique healthcare common procedure coding system (HCPCS) codes; new pass-through drugs; non-pass-through, separately payable drugs less than $140 per day based on average sales price (ASP); and policy packaged or lower-cost packaged products costing equal or less than $140 per day based on ASP (Table).

Table. 2024 OPPS Proposed Payment for Drugs and Biologicals ($5 Threshold Increase)

Table. 2024 OPPS Proposed Payment for Drugs and Biologicals

Three-year transitional pass-through payment period for all pass-through drugs, biologicals and radiopharmaceuticals and quarterly expiration of pass-through status. The pass-through payment provision requires additional payment under Part B for current orphan drugs, current drugs and biologicals and brachytherapy sources used in cancer therapy, and current radiopharmaceutical drugs and biologicals. For at least two years, they also are provided for certain “new” drugs and biologicals whose cost is “not insignificant” in relation to OPPS payments for the procedures or services associated with the new drug or biological. For pass-through payment purposes, radiopharmaceuticals are included as “drugs.”

Non-opioid pain management in ASC settings. Four drugs will receive separate payment at ASP+6%. These include HCPCS codes C9290 (injection, bupivacaine liposome, 1 mg); J1096 (dexamethasone, lacrimal ophthalmic insert, 0.1 mg); J1097 (phenylephrine 10.16 mg/ml and ketorolac 2.88 mg/ml ophthalmic irrigation solution, 1 ml); and C9089 (bupivacaine, collagen-matrix implant, 1 mg).

Note: HCPCS C9144 (injection, bupivacaine [posimir], 1mg) will have transitional pass-through payment, making it separately payable in both the OPPS and ASC setting.

Proposed remedy to 340B ruling. The Centers for Medicare and Medicaid Services (CMS) is proposing to make a one-time lump-sum payment to each 340B-covered hospital that was paid less due to the now-invalidated policy for 2018 through 2022. The proposed one-time payment to hospitals involves:

  1. A one-time $9 billion lump sum budget neutral payment (includes beneficiary co-payment amounts) divided among 1,649 covered entities impacted by reimbursement cuts. Claims won’t be reprocessed. Through their Medicare administrative contractors, hospitals will be remitted the calculated difference between paid ASP-22.5% rates and ASP+6% rates. Methods for disputing CMS-determined amounts owed aren’t included.
  2. Budget neutrality will cut non-drug services reimbursement by 0.5 percent over 16 years.
  3. Hospitals enrolled in Medicare after 2018 will be exempted from the proposed cuts to non-drug services reimbursement.

Additionally, the Senate issued a bipartisan request for information on the 340B Drug Pricing Program covering multiple areas, including Health Resources and Services Administration oversight, contract pharmacies, duplicate discounts and specific patient benefits.

PBM oversight. The Senate Finance Committee advanced legislation reigning in PBM abuses in the Medicare and Medicaid programs, consistent with American Society of Health System Pharmacists’ recommendations. The Modernizing and Ensuring PBM Accountability Act seeks to limit fees imposed on pharmacies, bring greater transparency to PBM practices, including those related to white bagging, and prohibit PBMs from spread pricing in Medicaid.

2024 PFS key proposed focus areas. Key 2024 PFC areas of focus include a $1.14 reduction in the 2024 conversion factor with a 1.25 percent decrease in overall proposed payment amounts compared with 2023, coupled with a proposed 2024 PFS conversion factor of $32.75 — a decrease of 3.34 percent, or $1.14, from 2023. However, CMS also proposed payment increases for some visit services such as primary care. Part B coverage in a physician office setting remains at ASP+6% by statute.

Telehealth services and practitioners. The proposed new rule will:

  • Add health and well-being coaching services; continue to allow telehealth services in any geographic area and in any originating site, including the beneficiary’s home; and allow certain services to be furnished via audio-only telecommunications.
  • Add new telehealth Medicare-eligible qualified practitioners, including occupational therapists, physical therapists and speech-language pathologists. Pharmacists currently aren’t included.
  • Extend the flexibility of allowing institutional providers to bill for diabetes self-management training, outpatient therapy and medical nutrition therapy when provided remotely, and virtual supervision flexibility through 2024.
  • Allow diabetes prevention programs to continue to provide services remotely if providers maintain an in-person Centers for Disease Control and Prevention organization code through 20267.

Opioid treatment programs. The proposed rule extends flexibilities for audio-only telecommunications providing periodic assessments “when video is not available to the beneficiary, to the extent that use of audio-only communications technology is permitted under the applicable (Substance Abuse and Mental Health Services Administration) and (Drug Enforcement Administration) requirements at the time service is furnished and all other applicable requirements are met.”

Vaccine provision and reimbursement. The proposed rule extends additional add-on payment for in-home vaccination for COVID-19 and pneumococcal, influenza and hepatitis B vaccines when provided in a beneficiary’s home. The one-time add-on payment applies even if multiple vaccines are provided. Vaccine administration payment applies for each vaccine given.

Evaluation and management coding. A new separate add-on code for G2211 will recognize costs associated with evaluation and management visits for primary and longitudinal care with complex patients, billed with a modifier to denote an office or outpatient visit unbundled from another service. Current split/shared billing practices will be continued to give clinicians a choice of using history, physical exam, medical decision-making or time to determine who bills for the visit.

Complex drug administration coding. CMS is seeking stakeholder feedback on coding and payment policies for complex, non-chemotherapeutic drugs to “promote coding and payment consistency and patient access to infusion services” for certain Part B drugs that are usually self-administered.

Manufacturer refunds for medication waste. The new rule will implement a provision of the Infrastructure and Investment Jobs Act of 2021 requiring “manufacturers to provide a refund to CMS for certain discarded amounts from a refundable single-dose container or single-use package drug” once the amount of waste reaches a certain threshold of a product’s total allowed charges (at least 10 percent) in a quarter.

Additional policies include timelines for the initial and subsequent discarded drug refund reports to manufacturers; the method of calculating refunds for discarded amounts from lagged claims data; the method of calculating refunds when there are multiple manufacturers for a refundable drug; increased applicable percentages for certain drugs with unique circumstances; and an application process by which manufacturers may request an increased applicable percentage for a drug with unique circumstances.

Site-of-care neutral reimbursement. The House Ways and Means Committee advanced HR 4822, the Health Care Price Transparency Act of 2023. Among other provisions, the bill requires off-campus outpatient hospital departments to use separate and unique provider identifiers for billing Medicare and be reimbursed for clinician-administered drugs at the same level as the Medicare physician fee schedule. Allowances for a phase-in apply to health professional shortage areas, rural areas and cancer hospitals.

Proposed Medicare payment for intensive outpatient programs. This new concept would establish payment for intensive outpatient programs (IOPS) under Medicare with defined scope of benefits, physician certification requirements, coding and billing, and payment rates under the IOP benefit. The IOP services may be furnished in hospital outpatient departments, community mental health centers, federally qualified health centers and rural health clinics. It also establishes payment for intensive outpatient services provided by opioid treatment programs (OTPs) under the existing OTP benefit.

Request for public comments for establishing and maintaining access to essential medicines. CMS is seeking comment on separate payment under the Integrated Personnel Payment System (IPPS) for establishing and maintaining access to a three-month buffer stock of essential medicines to foster a more reliable, resilient supply of these medicines. Based on the review of comments received, this could be finalized early for cost-reporting to CMS beginning on or after Jan. 1, 2024, with an OPPS adjustment considered for future years. The essential medicines include the 86 products on the Administration for Strategic Preparedness and Response list in its Essential Medicines Supply Chain and Manufacturing Resilience Assessment. Possible buffer supply payment could be based on the “IPPS shares of the additional reasonable costs of a hospital to establish and maintain access to its buffer stock.” Reasonable costs could include “costs to hold essential medicines directly at the hospital, arrange contractually for a distributor to hold, or arrange contractually with a wholesaler for a manufacturer to hold” the stock, but won’t include medication costs.

Bonnie Kirschenbaum, MS, FASHP, FCSHP
Bonnie Kirschenbaum, MS, FASHP, FCSHP, is a freelance healthcare consultant with senior management experience in both the pharmaceutical industry and the pharmacy section of large corporate healthcare organizations and teaching hospitals. She has an interest in reimbursement issues and in using technology to solve them. Kirschenbaum is a recognized industry leader in forging effective alliances among hospitals, physicians, pharmaceutical companies and distributors and has written and spoken extensively in these areas.