In this episode, Bob McDowell, Senior Reimbursement Consultant with BESLER, provides us with a glimpse into BESLER’s next live virtual event, CY 2025 OPPS Final Rule Summary, that he’s presenting live on Wednesday, December 11, 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:
- The outpatient updates for calendar year 2025
- CMS made for the 2025 OPPS Final Rule
- Changes to obstetric services
- Medicaid eligibility updates
- Up-and-coming areas that could be changing
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Bob McDowell, Senior Reimbursement Consultant with BESLER. In this episode, Bob will provide us with a glimpse into BESLER’s next live virtual event, CY 2025 OPPS Final Rule Summary, that he’s presenting live on Wednesday, December 11, at 1 PM Eastern Time. Welcome back and thank you for joining us, Bob.
Bob McDowell: Well, thanks for having me again, Kelly.
Kelly: Yes, let’s go ahead and jump in. So, in the final rules, CMS always makes updates to the payment rates for covered services. Can you give us some insights on the outpatient updates for calendar year 2025?
Bob: Absolutely, Kelly. For calendar year 2025, outpatient payment rates for hospitals that meet quality reporting requirements will increase by 2.9%. This increase is based on the market basket increase of 3.4% and reduced by half a percent for productivity adjustment. Once the budget neutrality factors are applied, we see the conversion factor increase from $87.38 for calendar year 2024 to $89.17 for calendar year 2025, which is a net increase of 2.045%. CMS estimates the calendar year 2025 OPPS total payments to providers to be $87.7 billion, an increase of approximately $4.7 billion compared to estimated calendar year 2024 OPPS payments. CMS is continuing the policy for hospitals that do not meet the outpatient quality reporting requirements to experience about a 2% reduction in payments using a reporting factor of 0.9806 applied to OPPS payments and copayments. CMS has extended the 7.1% payment adjustment for rural sole community hospitals.
And also, in regard to Indian Health Services and tribal outpatient departments, although typically reimbursed by an all-inclusive rate, CMS wanted to improve the payments for the cost of high-cost drugs furnished to people with Medicare. And CMS finalized their proposal to pay an add-on payment to the all-inclusive rate for all drugs whose per day cost exceeds two times the Medicare outpatient per visit rate who received care from my Indian Health Services or tribal hospital outpatient departments. CMS believes this will increase access to high-cost drugs.
Kelly: Thank you for those insights. In the last couple of years, Wage Index has received a lot of attention in the regulations and in litigation. Can you elaborate on any changes CMS has made for the 2025 OPPS Final Rule?
Bob: Well, as we all are aware and CMS admits that Wage Index is a challenge. And in the final rule, CMS reminds us of the myriad of different adjustments a provider may have to their wage index. Adjustments to wage index includes, but is not limited to reclassification of hospitals, rural floor provisions, imputed floor wage index adjustment in urban areas, adjustment for occupational mix, and adjustment based on commuting patterns of employees, also known as the out-migration adjustment, and a 5% cap on any decrease to a hospital’s wage index from its wage index in the prior year. And it’s truly amazing that anyone fully understands their own hospital wage index. If you remember, in the fiscal year 2025 Inpatient Final Rule presentation we did, CMS had finalized the inclusion of the 25th percentile rule, also otherwise known as a low-wage index hospital policy. A couple of days after that presentation, CMS came out with an interim final rule with comment period, removing the low-wage index hospital policy from the fiscal year 2025 IPPS regulations in response to ongoing litigation.
For calendar year 2025 OPPS Final Rule, CMS has once again included the low-wage index hospital policy to be applied to OPPS payments. CMS recognizes that this means some hospital facilities will have a different wage index for calculating their outpatient claims than they have for calculating their inpatient claims. CMS expressed that they would explore options to once again realign the two wage indexes and future rulemaking.
Kelly: Thank you for sharing that with us. So, CMS does not usually do a lot of changes to areas like obstetric services. It appears there are some updates to this area in the 2025 Final Rule. Can you tell us a little bit more about them?
Bob: Well, in the Final Rule, CMS addresses the maternal health crisis that we are currently facing in the United States. The current maternal mortality rate in the U.S. is among the highest in high-income countries. To address this crisis, CMS is finalizing new national health and safety standards in the hospital’s conditions of participation. For PPS hospitals and critical access hospitals that offer obstetrical services or OB services as part of CMS’s multi-pronged approach to improve maternal health outcomes. We will take a more defined look at the exact changes in our webinar, but the changes and/or additions and the final rule affect areas of general organization and staffing, delivery of care, staff training, quality assessment, emergency service readiness, and transfer protocols. CMS is providing facilities a two-year three-phase implementation timeline to make these changes.
Kelly: Very interesting. It sounds like some of those changes are needed. So, another area CMS doesn’t typically make changes to in the final rules is the Medicaid program. And it looks like there’s a couple of areas they did address in the 2025 Final Rule. One area was Medicaid eligibility. So can you tell us a little bit about what’s going to happen?
Bob: Sure. And prior to January 1st of 2024, states had the option to provide up to 12 months of continuous coverage to children under the age of 19 enrolled in a Medicaid or CHIP program, regardless of changes in circumstances that otherwise would impact their eligibility for these programs. The Consolidated Appropriation Act of 2023, or CAA 2023, amended the previously optional continuous coverage eligibility program policy of 12 months. Effective on January 1st of 2024, the CAA 2023 says states are required to provide 12 months of continuous coverage to children under the age of 19 and Medicaid and CHIP programs, regardless of any changes that may affect their eligibility for the program. An example, a change in financial status.
In the calendar year 2025 Outpatient Final Rule, CMS has codified the states are required to provide a continuous eligibility period of 12 months to children under the age of 19 who qualify for coverage regardless of changing circumstances that may disqualify them during the 12-month period. CMS also codified the removal from continuous eligibility in CHIP programs for non-payment of premiums. Now, some states have a small premium requirement for certain CHIP programs. And if the premiums could not be paid, individuals were potentially removed from the program. CMS has eliminated this provision from happening.
Kelly: Very interesting. In some of your previous presentations, Bob, you added a section for up-and-coming areas that could be changing. So, what are those areas that our audience may need or want to watch for?
Bob: Well, the first item is just kind of a reminder of the upcoming 340B fix to the OPPS conversion factor. Beginning in calendar year 2026, CMS will start recouping the $7.6 billion of increased OPPS payments that resulted from the reduction in payments from the 340B pharmaceuticals and the statutory budget neutrality of the program. CMS established a half a percent reduction in the conversion factor to begin next year. The last item that we like to keep an eye on is PAYGO sequestration. Congress has, over the years, continued to bypass this program in a number of ways to keep it from going into effect, either by wiping the scorecard clean or by using other devices to delay the sequester. Unless Congress quickly addresses this issue, the Medicare program is expected to experience an estimated 42 billion to 43 billion cut in expenditures. This would equate to an additional 4% sequestration reduction to Medicare payments across the program. As we sit here today, PAYGO sequestration is slated to begin in January of year 2025 or this coming January.
Kelly: Wow, we really appreciate you giving us that heads up there, Bob. Thank you so much for joining us and for sharing this sneak peek into the upcoming live webinar, CY 2025 OPPS Final Rule Summary, that you’re presenting live on Wednesday, December 11, at 1 PM Eastern Time. And as a bonus, you can earn CPE. Thanks again, Bob.
Bob: Thanks for having me, Kelly. Appreciated the time.
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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