In this episode, we’re pleased to welcome back Tim Powell, Senior Reimbursement Consultant at BESLER, to give us a glimpse into BESLER’s next webinar, FY2024 OPPS Final Rule Summary on Wednesday, December 13th at 1 PM ET.
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Learn how to listen to The Hospital Finance Podcast® on your mobile device.Highlights of this episode include:
- Changes to the price transparency rules
- Changes to the Intensive Outpatient Program
- Changes to the partial hospitalization program
- New payments for 340B hospitals
- Changes to rural emergency hospitals
- Changes for rural health clinics and federally qualified health centers
- American Hospital Association concerns
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Tim Powell, Senior Reimbursement Consultant here at BESLER. In this episode, Tim will give us a glimpse into Besler’s next webinar, FY2024 OPPS Final Rule Summary that we’re hosting on Wednesday, December 13th at 1 PM Eastern Time. Welcome back, and thank you for joining us, Tim.
Tim Powell: Nice to be back, Kelly, and it’s nice to be seen, so to speak.
Kelly: Yes, definitely. Let’s go ahead and jump in. Are there changes to the price transparency rules in the Final Rule?
Tim: Well, in the Final Rule, hospitals are required to comply with specific regulations regarding the publication of their standard charges. And these requirements include first publishing the standard charges. So, hospitals must make their standard charges publicly available, and this is intended to increase transparency around hospital pricing. In addition, they’re required to use CMS-approved templates. The Centers for Medicare and Medicaid Services (CMS) has approved specific templates for hospitals to use when publishing their charges. These templates are typically in CSV, comma-separated values, or JSON, JavaScript Object Notation formats. And using these standardized formats helps to ensure that the data is consistent and easily accessible for consumers. Next, the availability of templates. The templates have been available since November of 2022. The CMS-approved templates have been available since this time, and this indicates the hospitals have had access to these templates for a while and are expected to use them for their charge publications. And next is adhering to CMS’s data specifications in dictionary. The hospitals are required to follow the CMS data specifications in the dictionary when publishing their charges. And this means they must adhere to specific guidelines and definitions provided by CMS to ensure consistency and accuracy in the data presented. And these regulations are part of a broader effort to improve healthcare pricing transparency in the United States, allowing patients to better understand and compare the cost of hospital services.
Kelly: Thank you for reviewing those changes with us. Speaking of changes, are there changes to the Intensive Outpatient Program?
Tim: The Center for Medicare and Medicaid Services has expanded Medicare coverage to include intensive outpatient programs as detailed for the calendar year 2024 Outpatient Prospective Payment Summary and Final Rule. And this inclusion marks a significant enhancement in the continuum of care for Medicare beneficiaries, particularly for those struggling with acute mental illness or substance abuse disorders. Intensive outpatient programs are designed to bridge the gap between traditional outpatient therapy and inpatient care. They provide a structured therapeutic environment, offering a more intensive level of care than standard outpatient services, but without the need for hospitalization. IOPs are particularly beneficial for individuals who require more support than can be provided in a typical outpatient setting but do not need around-the-clock care. Under the new CMS ruling, IOP services are recognized and covered by Medicare, making these programs more accessible to a wider rate of patients, including those seeking treatment for opioid addiction. This inclusion is a direct response to the increasing need for comprehensive mental health and substance abuse treatment services as outlined in the Consolidated Appropriations Act of 2023. So, some key aspects to the Medicare coverage for IOP include eligibility certification. So, Medicare beneficiaries are eligible for IOP services if they suffer from acute mental illness or substance abuse disorders. A physician must certify the need for these services with a requirement of at least nine hours of IOP services per week. The certification must be renewed on a bi-monthly basis to continue receiving Medicare coverage.
Next is the billing and payment requirements. IOP services are bundled and paid on a per diem basis under OPPS. This payment structure simplifies billings and provides financial predictability for both providers and patients. Next, there are some expanded service codes. So, the range of services covered under IOP has been expanded. And this includes care coordination and caregiver support, acknowledging the critical role that these elements play in comprehensive treatment. And finally, there’s access to various settings. So, the IOP services are covered by Medicare accessible and diverse healthcare settings. And these include specialized clinics for opioid treatment, ensuring that patients can receive care in environments best suited for their specific needs. The inclusion of IOP and Medicare coverage represents a crucial step in addressing the growing demand for mental health and substance abuse treatment services, and it offers a viable option for those in need of intensive outpatient care, enhancing the overall quality of healthcare available to Medicare beneficiaries.
Kelly: Wow. What a great recap there. Are there changes to the partial hospitalization program under the Final Rule?
Tim: Outpatient partial hospitalization programs, or PHPs, as they’re called, present an alternative to full psychiatric hospitalization, offering structural mental health services while allowing patients to live at home. And these programs are designed to provide intensive care requiring a minimum of 20 hours of service per week. Patients typically receive a bundle of mental health services built on a per diem basis under the OPPS system. PHPs are categorized into two ambulatory care classifications, or APCs, based on the intensity of services provided. The first APC covers days when a patient receives three services, while the second is for days with four or more services. The rate charge for these services increased with the number of services provided, reflecting the higher intensity of the cost of care of those days. For 2024, the rates for PHP services will be adjusted to better reflect the actual intensity of the cost of the services provided. This adjustment is based on a broader set of OPPS data, which includes both PHP and non-PHP services. So, the aim here is to create more accurate and fair payment that aligns with the true cost and intensity of services. Both hospital-based PHPs and community mental health centers calculate their rates using the OPPS cost per day. This system ensures that the rates are consistent and based on standardized data, and by including both PHP and non-PHP services in the data used to calculate the rates, CMS aimed to ensure that these rates more accurately reflected the range of services provided and their associated cost. Change in how rates are calculated in the inclusion of broader OPPS data are steps towards a more precise and equitable payment system. And this system is intended to support the sustainability of PHPs while ensuring that patients receive the necessary level of care without the need for full hospitalization.
So, in summary, outpatient partial hospitalization programs offer a middle ground between outpatient treatment and full hospitalization for psychiatric care. And these programs are intensive requiring at least 20 hours of service per week based on the number of services provided. The payment system under OPPS is undergoing changes for 2024 to better reflect the true intensity and cost of these services, and these changes involve the use of broader OPPS data, including non-PHP service days, to calculate more accurate rates for both hospital-based and community mental health center-based PHP payments. So, the goal is to align the payments with these actual costs of the service in a more flexible setting.
Kelly: Wow. What a great thorough review. I hear that 340B hospitals are getting new payments. Is that true? And how does that impact non-340B hospitals?
Tim: Well, this is a good news and bad news scenario. If you’re a 340B hospital, it’s good news. If you are not a 340B hospital, there’s some bad news. So, there’s an overview of CMS’s proposal. CMS has proposed a solution to address underpayment issues for the 340B drug program that occurred between 2018 and 2022. So, CMS is proposing lump sum payments for the 340B to reflect these underpayments. And this is CMS’s primary remedies, these one-time payments. This is to compensate for past underpayments. Though the complexity lies in calculating these payments accurately without reprocessing the individual claims. And I do want to point out that for claims post-September 28th of 2022, the district court ruled that these payments are paid at ASP plus 6% rate and that these lump sum payments do not apply to this. So, in calculating the lump sum payments, it’s important to consider the methodology CMS is going to use. And since reprocessing of individual claims is not feasible, it appears that there may be a formulaic approach based on historical data and predetermined rates. And also, I want to point out that here at BESLER, we’re very concerned with the impact on Medicare Advantage payments.
So, there are swirling questions around how the proposal will affect Medicare Advantage payments, especially considering that the payments for Medicare Advantage are often determined based on Medicare rates. So, the OPPS conversion factor is the bad news for the non-340B hospitals. Since this has to be a budget neutral payment, Medicare has decided that they are going to reduce the annual payment by 0.05% for the outpatient prospective payment system from 2025 until the amount is fully paid. So, the non-340B hospitals are actually going to pay for these additional lump sum payments. And then in terms of roles for organizations like us, so we are going to be helping hospitals to evaluate these lump sum payments. They also are going to help them with the painful and potential appeals process, both in Medicare and the Medicare Advantage area. And the focus would be on ensuring that payments are fair and in line with CMS regulations.
Kelly: Fantastic. Were there changes for the rural emergency hospitals?
Tim: Yes, that’s right, Kelly. There were changes to the rural emergency hospital facility reimbursement, but particularly, it impacted Indian Health Services facilities and tribal facilities that were converting to REH status. So, the changes are as follows, is the outpatient services payment for these facilities will now be paid at the ambulatory payment classification or APC rate for outpatient services. This is the same rate that applies to non-REH IHS tribal hospitals. The co-insurance policies for these services under the APCs is going to remain unchanged for the current policy. And the REH monthly facility payment, so converted IHS and tribal REHs, will receive a standard monthly facility payment. And this ensures uniformity with the payment structures for non-tribal REHs.
Kelly: Thank you for that explanation. Were there changes for rural health clinics and federally qualified health centers in the Final Rule?
Tim: Yes. There were, Kelly. And so, CMS recently finalized regulatory text for changes to the rural health clinics, or RHCs, and federally qualified health centers, or FQHCs, making significant adjustments in alignment with hospital standards. And here’s a breakdown of the changes. First is an alignment with hospital standards. As mandated by Section 4124 of the Consolidated Appropriations Act of 2023, both RHCs and FQHCs are now required to follow the same certification and plan of care as hospitals. This is aimed at ensuring consistency in delivering intensive outpatient services, like IOP services. Next is the RHC payment model changes. So RHCs will now be paid for up to three services per day with a payment amount based on the rates for hospital outpatient departments. This change is expected to influence the financial operations of RHCs. And the FQHC payment adjustments, so FQHCs will receive the lesser of their actual charges based on the amount based on three services per day of hospital outpatient departments. And this adjustment is a move towards standardizing payment models across different types of healthcare facilities. And finally, there is a special provision for tribal FQHCs. Grandfathered tribal FQHCs have a different payment scheme. They will be paid at the lesser of their actual charges or the Medicare outpatient per visit rate as established under the Indian Health Services, or IHS. This recognizes the unique status and needs of tribal FQHCs. So, these changes are indicative of the ongoing effort to standardize healthcare facility operations and payment systems, ensuring uniformity and consistency across the board.
Kelly: Yeah. It seems like it. That makes a lot of sense. Does the American Hospital Association have concerns with the Final Rule?
Tim: Well, they sure do, Kelly. And the American Hospital Association has expressed very strong disapproval regarding the 2024 Medicare Hospital Outpatient Prospective Payment Final Rule, emphasizing that the 3.1% increase in hospital outpatient payments is insufficient. This rise reflects a market basket of 3.3% increase offset by a 0.2% productivity adjustment. Stacey Hughes, the AHA’s executive vice president, stated, “The AHA is concerned that CMS has again finalized an inadequate update of hospital payments. This increase for outpatient hospitals as only 3.1% comes in spite of persistent financial headwinds facing the field. Most hospitals across the country continue to operate on negative or very thin margins, making providing care and investing in their workforce a challenging day-to-day.” Furthermore, the AHA is actively seeking additional support from Congress before the end of the year, as has been articulated by Ms. Hughes.
Kelly: Very interesting. Well, thank you so much for joining us, Tim, and for sharing this sneak peek into BESLER’s upcoming webinar, FY 2024 OPPS Final Rule Summary that we’re presenting live on December 13th at 1 PM ET. And as a bonus, you can earn CPE. Thanks again, Tim.
Tim: You’re more than welcome, Kelly, and thank you.
Kelly: And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…
[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.com/podcasts. The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.
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