On November 1, CMS released its calendar year 2025 Outpatient Prospective Payment System (OPPS) Final Rule. The rule includes updates for hospital outpatient departments (HOPDs) and ambulatory surgery centers (ASCs). CMS estimates changes in the rule will increase payments to hospitals by $1.98 billion in 2025, excluding changes in enrollment, case mix, and utilization. Beyond the payment update, the rule finalizes additional conditions of participation (COPs) related to obstetrical services, an extension of virtual supervision for certain services, and separate payment for select, previously packaged items.
Below are takeaways from the final rule.
- Payment Updates Less Than Recent Input Price Inflation: CMS finalized a net OPPS market basket update (MBU) of 2.9% (3.4% gross MBU reduced by ACA mandated 0.5% productivity adjustment—same as Inpatient Prospective Payment System (IPPS) final rule market basket update) for hospitals meeting Outpatient Quality Reporting requirements. The resulting OPPS conversion factor is $89.169.
In a prior rule, CMS extended its pandemic era policy to use the hospital MBU for ASCs. Therefore, the net update is also 2.9% for ASCs meeting the ASC Quality Reporting Program (ASCQRP). CMS estimates that applying the inpatient market basket update to ASCs will increase payments by $193 million in CY 2025. The ASC conversion factor is $54.895.
The hospital MBUs from 2021 through 2023 were underestimated by a cumulative 4.3 percentage points compared to the actual data collected after the fact. Despite concerns from hospitals and MedPAC1, CMS has indicated it will not adjust the MBU to better reflect inflation. This puts pressure on providers to accelerate aggressive cost management efforts, look for opportunities to increase allowable Medicare reimbursement, and improve revenue cycle operations across all payors to increase the realized yield on negotiated rates.
- OPPS Wage Index Includes Low Wage Adjustment: The wage index values finalized for the OPPS will be based on the 2025 IPPS Final Rule wage index, adjusted for the IPPS correction notice. This includes updating core-based statistical area (CBSA) delineations based on more recent census data and finalizing its policy to apply a 5% cap on wage index decreases from the prior year. However, this does not include the October interim final rule that removed the bottom quartile adjustment. CMS notes the provisions of the OPPS statute regarding the wage index do not include the same language on which the D.C. Circuit Court based its ruling in Bridgeport v. Becerra. Therefore, the agency believes it has the authority to continue the low wage index policy, and related budget neutrality adjustment, in the OPPS.
The OPPS final rule creates separate wage indexes for the IPPS and OPPS. Hospitals should carefully review paid amounts for in- and outpatient services after January 1, 2025 to ensure the Medicare Administrative Contractors are processing claims using the correct wage index value.
- Extension of 7.1% Payment Adjustment for Rural SCHs: CMS extended its policy first implemented in 2006 to increase payment for rural sole community hospitals (SCHs) by 7.1% for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, items paid at charges reduced to costs, and devices paid under the pass-through payment policy. Similar to previous years, CMS declined to extend the adjustment to urban SCHs or Medicare dependent hospitals (MDHs).
- Ending Certain Pandemic Era Telehealth Flexibilities: Unless Congress passes legislation extending pandemic era telehealth flexibilities, hospitals will not be able to bill for remote therapy services (physical, occupational, speech language pathology, and medical nutrition) and diabetes self-management training after December 31, 2024.
In addition, individuals receiving remotely furnished mental health services will be required to have an in-person visit in the six months prior to initiation of services and then once annually thereafter beginning on January 1, 2025.
While Congress may extend these and other pandemic era telehealth flexibilities as part of the federal fiscal year 2025 budget package, hospitals should catalog where they are still using them to deliver care and develop processes to comply with their expiration should Congress not take action.
- Extending Virtual Supervision Flexibility: The rule extends pandemic era flexibilities in the OPPS related to virtual direct supervision of cardiac rehabilitation (CR), intensive cardiac rehabilitation (ICR), and pulmonary rehabilitation services and diagnostic services for CY 2025.
- Separate Payment for Diagnostic Radiopharmaceuticals: CMS finalizes separate payment for diagnostic radiopharmaceuticals with a per-day cost greater than $630. Qualifying products will be paid based on their mean unit cost, which is based on hospital claims data. Table 9 in the final rule includes the list of diagnostic radiopharmaceuticals that meet these criteria.
Hospitals should review their charge capture and billing processes for qualifying diagnostic radiopharmaceuticals to make sure these separately payable items are accurately captured and included on the Medicare claim.
- Separate Payment for Non-Opioid Pain Relief in HOPDs and ASCs: Beginning on January 1, 2025, the Consolidated Appropriations Act of 2023 requires CMS to make separate payment for non-opioid treatments—including drugs, biological products, and devices—for pain relief. Unless Congress extends this provision, separate payment is only available for three years. Table 158 contains the list of qualifying products. Payment will be at ASP plus 6% and is capped. CMS will base the 18% payment cap on the volume weighted average of the CY 2025 payment rates of the top five primary procedures by volume into which a non-opioid treatment for pain relief would have their payment packaged, absent this policy. For 2025, CMS is applying a $0 offset for qualifying separately paid non-opioid pain relievers as many of these products are new. CMS clarifies that qualifying products are not subject to the drug threshold packaging policy or comprehensive APC (C-APC) policy.
- Exclude Certain Gene Therapies From C-APCs: For CY 2025 and subsequent years, CMS will not package payment for cell and gene therapies into C-APCs when those cell and gene therapies are not functioning as integral, ancillary, supportive, dependent, or adjunctive to the primary C-APC service. CMS excludes the cell and gene therapies listed in Table 4 from comprehensive APC packaging in instances when they appear on the same claim as a C-APC.
- Inpatient Only (IPO) List Additions: The final rule removes one service (CPT code 22848, pelvic fixation) from the IPO list. It adds three new liver allograft services described by CPT codes 0894T, 0895T, and 0896T. The full list is available in Addendum E to the final rule.
- ASC Covered Procedure List Additions (CPL): CMS adds 21 medical and dental procedures to the ASC CPL. The new procedures eligible for Medicare payment when performed in an ASC are listed in Table 154.
- New Obstetrical Services COPs: CMS finalizes COPs for PPS hospitals and critical access hospitals (CAHs) providing obstetric and maternal health services. These added or changed COPs address baseline standards for the organization, staffing, and delivery of care, staff training on evidence-based maternal health practices, quality assessment and improvement, emergency services readiness, and transfer protocols.
In response to comments, CMS is phasing in these new requirements.
- Phase 1: Within six months, hospitals must meet the transfer protocol requirements and CAHs and hospitals must meet the emergency services readiness requirements.
- Phase 2: Within one year of the effective date of the final rule, hospitals and CAHs must meet the organization, staffing, and delivery of services requirements.
- Phase 3: Within two years, hospitals and CAHs must meet the staff training and quality assurance and performance improvement (QAPI) requirements.
- Adoption of Health Equity Quality Measures: CMS adds three equity related quality measures to the Outpatient (OP), ASC (ASCQR) and Rural Emergency Hospital (REH) Quality Reporting Programs (QRPs). On January 1, 2025, mandatory reporting at these sites will be required for the Hospital Commitment to Health Equity measure. The Screening for Social Drivers of Health and Screen for Positive Rate of Social Drivers of Health measures are voluntary in CY 2025 and become mandatory in CY 2026.
If you have questions about the CY 2025 OPPS final rule and how it may impact your organization, please reach out to a professional at Forvis Mazars.
- 1“Chapter 3: Hospital Inpatient and Outpatient Services,” medpac.gov, March 15, 2024.