Changes to the OPPS/ASC payment system

In the proposed rule, CMS would increase the OPPS and ASC payment rates by 2.6%. These updates include a hospital market basket percentage increase of 3% offset by a -0.4-percentage point productivity adjustment. According to the agency, the payment updates would affect approximately 3,500 hospitals and 6,100 ASCs.

CMS also proposed a two-track per diem system for the Partial Hospitalization Program and the Intensive Outpatient Program, which was established by a 2024 final rule. Under the program, CMS would have two ambulatory payment classifications for each provider type (days with three services or days with at least four services).

In addition, the proposed rule includes several new health equity measures for hospitals, rural emergency hospitals, and ASCs. Hospital outpatient departments and ASCs that don't meet these health equity standards, which include screening for social determinants of health, will see a 2% reduction in their annual payment updates.

The proposed rule also aims to help improve maternal health in the United States. The rule revises conditions of participation for obstetrics, gynecology, and emergency transfers. It also includes additional maternal health quality assessment and improvement requirements and sets new standards for how obstetric units are set up and staffed.

The proposed rule will have a 60-day comment period, which will end on Sept. 9.

Reaction to OPPS/ASC changes

In response to the proposed rule, Soumi Saha, SVP for government affairs at Premier, said the organization is "is deeply disappointed that [CMS] is once again proposing an update for hospital outpatient services that will continue to widen the chasm between Medicare reimbursement and hospitals' actual operational costs."

"It is no secret that the financial pressures hospitals are facing are being compounded by inflation, stubborn labor shortages and an aging demographic," Saha added.

Similarly, Ashley Thompson, SVP of public policy analysis and development at the American Hospital Association (AHA), said that "CMS has yet again proposed an inadequate update to hospital payments."

"This proposed increase for outpatient hospital services of only 2.6% comes despite the fact that many hospitals across the country continue to operate on negative or very thin margins that make providing care and investing in their workforce very challenging," Thompson said. "Hospitals' and health systems' ability to continue caring for patients and providing essential services for their communities may be in jeopardy, and we urge CMS to provide additional support in the final rule." 

In addition, Thompson said that while AHA "fully shares CMS' goals of improving maternal health outcomes and reducing inequities in maternal care," it is "deeply concerned by CMS' continued and excessive use of Conditions of Participation to drive its policy agenda."

"We believe a less punitive and more collaborative and flexible approach is far superior," Thompson said. "We will carefully review CMS' proposals to determine whether they are feasible, sufficiently flexible for the wide variety of hospitals to which they would apply and do not inadvertently exacerbate maternal care access challenges."

Changes to the MPFS

In the proposed rule, average payment rates under the MPFS would be reduced in CY 2025 compared to the average amount paid for most of CY 2024. The payment update amounts to a proposed estimated conversion factor of $32.36 for CY 2025, a decrease of $0.93, or 2.8%, from the current CY 2024 conversion factor of $33.29.

CMS also proposed several measures to improve payment for and access to behavioral health services, including expanding payments for opioid treatment programs (OTP) and extending flexibilities for OTPs to use telehealth modalities.

The agency also proposed extending certain telehealth waivers through 2025. These waivers include one for reporting enrolled practice addresses instead of home addresses when providers perform services from their homes, one for federally qualified health centers and rural health centers, and one for virtual supervision of residents in teaching settings where services are provided virtually.

The proposed rule also includes six new, optional Merit-based Incentive Payment System Value Pathways for the Quality Payment Program beginning in 2025, as well as new proposals for the Medicare Shared Savings Program.

The proposed rule will have a 60-day comment period, which will end on Sept. 9.

Reaction to MPFS changes

"The calendar year 2025 physician fee schedule proposed rule supports physicians and other practitioners in delivering care that meets the needs of people with Medicare, including through telehealth flexibilities, strengthened primary, behavioral and oral healthcare, and improved access to caregiver training services," said CMS Administrator Chiquita Brooks-LaSure.

However, several medical groups, including the American Medical Association (AMA) and the Medical Group Management Association (MGMA), have criticized the proposed rule.

"The consecutive years of Medicare cuts demand a comprehensive legislative solution," said AMA president Bruce Scott. "Previous quick fixes have been insufficient — this situation requires a bold, substantial approach. A Band-Aid goes only so far when the patient is in dire need."

Similarly, Anders Gilberg, SVP of government affairs at MGMA, said the proposed payment rates are "critically short-sighted" and that "[m]edicare physician reimbursement is on a dire trajectory and these ongoing cuts continue to undermine the ability of medical practices to keep their doors open and function effectively — the need for comprehensive reform is paramount."

Separately, the American Academy of Family Physicians (AAFP) called for Congress to enact an annual inflationary update to reduce year-to-year uncertainty under the current reimbursement system. "Any payment reductions will threaten practices and exacerbate workforce shortages, preventing patients from accessing the primary care, behavioral healthcare and other critical preventive services they need," said AAFP president Steven Furr. (CMS OPPS/ASC fact sheet, 7/10; Early, Modern Healthcare, 7/10 [1]; Morse, Healthcare Finance, 7/10; Condon, Becker's Hospital CFO Report, 7/10; AHA News, 7/10 [1]; CMS MPFS fact sheet, 7/10; AHA News, 7/10 [2], Early, Modern Healthcare, 7/10 [2], Goldman, Axios, 7/11)

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