New 2025 Hospital Outpatient Payments, Requirements Proposed

The Centers for Medicare & Medicaid Services (CMS) released its proposed hospital prospective payment system (OPPS) and ambulatory surgical centers (ASC) rule for fiscal year (FY) 2025. Access the full proposed rule on the Federal Register.

Payment updates  

For calendar year (CY) 2025, CMS proposes an increase to the outpatient department fee schedule factor of 2.6%. This increase factor is based on the proposed inpatient hospital market basket percentage increase of 3% reduced by a proposed productivity adjustment of 0.4%. 

CMS estimates total payments to OPPS providers (including beneficiary cost sharing and estimated changes in enrollment, utilization, and case mix) for CY 2025 would be approximately $88.2 billion, a proposed increase of approximately $5.2 billion compared to estimated CY 2024 OPPS payments.

Using a conversion factor of $87.382 in the calculation of the national unadjusted payment rate, plus other required adjustments — wage index budget neutrality adjustment of approximately 1.0026, the proposed 5% annual cap for hospital wage index reductions adjustment of approximately 0.9982, proposed adjustment of a negative 0.44% for the difference in pass-through spending — results in a proposed conversion factor for CY 2025 of $89.379.

Wage index changes

CMS proposes adopting the Office of Management and Budget’s new core-based statistical area delineations (CBSA). CMS notes these updates reflect changes to rural or urban status for existing counties, as well as addition or removal of certain individual CBSAs compared to the previous delineations. CMS indicates any policies and adjustments finalized for the FY 2025 inpatient prospective payment system post-reclassified wage index would be reflected in the final CY 2025 OPPS wage index beginning on January 1, 2025, if appropriate. 

You can see a more in-depth discussion of these changes in the proposed FY 2025 hospital wage index files posted on the CMS website. 

Sole community hospitals

For CY 2025, CMS proposes continuing the current payment policy adjustment of 7.1% for rural sole community hospitals 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. 

Device pass-through status

CMS indicates it received 14 complete applications for device pass-through status for CY 2025.

Inpatient only list (IPO)

CMS proposes adding three newly created codes for liver allograft services to the IPO list for CY 20205. They do not remove any codes from the IPO list. 

Virtual direct supervision

CMS proposes extending through December 31, 2025, virtual direct supervision of therapeutic and diagnostic services under Medicare’s Physician Fee Schedule. CMS argues reverting to pre-COVID definitions creates a barrier to access for many services, and practices would need time to adjust their now-established practice patterns. 

Diagnostic radiopharmaceuticals

CMS proposes to separately pay for diagnostic radiopharmaceuticals with per day costs above a threshold of $630. That threshold is approximately two times the volume weighted average cost amount currently associated with diagnostic radiopharmaceuticals. 

CMS proposes relying on the CY 2023 mean unit cost data derived from hospital claims data for payment rates for diagnostic radiopharmaceuticals for CY 2025, and will update the $630 threshold in CY 2026 and subsequent years by the producer price index for pharmaceutical preparations. 

Add-on payment for radiopharmaceutical technetium-99m (Tc-99m)

For CY 2025, an add-on payment will apply for radiopharmaceuticals using Tc-99m produced with highly enriched uranium. For 2026, CMS proposes replacing this add-on payment with one for radiopharmaceuticals using Tc-99m derived from domestically produced molybdenum-99 (Mo-99). To address foreign-domestic payment inequity, CMS is proposing an add-on payment of $10 per dose for radiopharmaceuticals using Tc-99m derived from domestically produced Mo-99.

Partial hospitalization program (PHP), intensive outpatient programs (IOP)

For PHPs and IOPs, CMS proposes continuing their rate structure and updating it using the CY 2023 claims data and the latest available cost information from cost reports from the prior three fiscal years.

Indian health services (IHS), tribal clinics

CMS proposes amending the Medicaid clinic services regulation to authorize federal reimbursement for services furnished outside the “four walls” of a freestanding clinic by IHS/tribal clinics. In addition, at state option, federal reimbursement would also be available for services provided by behavioral health clinics and services provided by clinics located in rural areas via the same “four walls” proposal. 

CMS also proposes starting January 1, 2025, to separately pay IHS and tribal hospitals for high-cost drugs furnished in hospital outpatient departments through an add-on payment in addition to the all-inclusive rate (AIR). CMS indicates the add-on payment would not affect the calculation of the annual AIR payment amount. 

Inpatient only procedures only (IPO)

CMS proposes no removals from the IPO list but adds three liver allograft services for 2025. 

Colorectal cancer screening coverage

CMS proposes removing coverage for the barium enema procedure, adding coverage for the computed tomography colonography procedure, and expanding the definition of a “complete colorectal cancer screening” to include a follow-on screening colonoscopy after a Medicare covered blood-based biomarker test. 

HIV PrEP payment

For CY 2025, CMS proposes paying for HIV PrEP drugs and related services as additional preventive services under the OPPS, if covered in the final national coverage determination. These drugs are currently covered under Part D, though with cost-sharing and deductibles. 

CMS believes the resource costs for listed codes (see Table 72 in proposed rule) would be similar across different care settings, including hospital outpatient departments (OPD) and physician offices. Therefore, CMS proposes paying for the listed codes in OPD in a similar manner as when these codes are furnished in physician offices.

Non-opioid pain treatments

CMS proposes seven drugs and one device would qualify as non-opioid treatments for pain relief and be paid separately in both the OPD and ASC settings starting in CY 2025.

Revision of term “custody” for penal authorities

CMS proposes narrowing the definition of “custody” so it no longer includes individuals who are on parole, probation, and home detention. The proposal, if finalized, would remove the presumption Medicare is prohibited from paying for health care items or services furnished to individuals on parole, probation, or home detention. 

Prior authorization 

For 2025, CMS is changing the review timeframe for prior authorization requests for certain OPD services from 10 business days to seven calendar days for standard reviews.

Conditions of participation (CoPs): obstetrics, emergency services

Based on ongoing concerns with the delivery of maternity care, CMS proposes a new obstetrics (OB) services CoP, including requirements for the organization, staffing, and delivery of OB services and staff training. These include requirements for: 

• Organization and integration of obstetrical services within the hospital, including baseline standards for the organization
• Maternal quality assessment and performance improvement program, including maternal health data measurement, tracking, reporting, and performance improvement annually  
• Staffing and delivery of care within obstetrical units
• Staff training annually using evidence-based best practices 

CMS also proposes a new standard entitled “emergency services readiness” within the existing emergency services CoP for patients — including pregnant, birthing, and postpartum women — for hospitals and critical access hospitals (CAHs) providing emergency services, regardless of whether they provide OB services. 

In addition, the hospital discharge planning CoP does not currently include baseline requirements related to patient transfers. CMS proposes revisions to the discharge planning CoP for all hospitals and CAHs related to transfer protocols. This would require hospitals have written policies and procedures for transferring patients under their care, inclusive of hospital inpatients (for example, transfers from the emergency department to inpatient admission, transfers between inpatient units in the same hospital, as well as transfers between inpatient units at different hospitals).

Quality programs

CMS proposes cross-cutting program proposals for three programs: the Hospital Outpatient Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs. CMS proposes the following for all: 

• Adopt the Hospital Commitment to Health Equity measure in the Hospital OQR and REHQR Programs and the Facility Commitment to Health Equity (FCHE) measure in the ASCQR Program beginning with the CY 2025 reporting period/CY 2027 payment or program determination 
• Adopt the Screening for Social Drivers of Health (SDOH) measure in all three programs beginning with voluntary reporting for the CY 2025 reporting period followed by mandatory reporting beginning with the CY 2026 reporting period/CY 2028 payment or program determination 
• Adopt the Screen Positive Rate for SDOH measure in all three programs beginning with voluntary reporting for the CY 2025 reporting period followed by mandatory reporting beginning with the CY 2026 reporting period/CY 2028 payment or program determination

Outpatient quality program (OQP)

In addition to the above cross-cutting measures, CMS proposes the OQP adopt the patient understanding of key information related to recovery after a facility-based outpatient procedures or surgery for the CY 2025 reporting period with mandatory reporting beginning in CY 2026.

CMS proposes removing from the OQP the MRI lumbar spine for low-back pain measure and the cardiac imaging for preoperative risk assessment for non-cardiac, low-risk surgery measure with the CY 2025 reporting period/CY 2027 payment determination.

Ambulatory surgical centers (ASC)

Payment updates 

For CYs 2019 through 2023, CMS had previously adopted a policy to update the ASC payment system using the hospital market basket update. Considering the impact of the COVID-19 public health emergency on healthcare utilization, CMS extended that policy an additional two years, through CYs 2024 and 2025. 

Using the hospital market basket methodology, for CY 2025, CMS proposes increasing payment rates under the ASC payment system by 2.6%. Based on this proposed update, CMS estimates total payments to ASCs for CY 2025 will be approximately $7.4 billion, an increase of approximately $202 million compared to estimated CY 2024 Medicare payments.

The CY 2024 ASC conversion factor rate of $53.514 would be adjusted by the proposed wage index budget neutrality factor of 0.9958 plus the 2.6% proposed market basket update, resulting in a proposed CY 2025 ASC conversion factor of $54.675.

Covered surgical produces list (CPL) 

For CY 2025, CMS proposes adding 20 medical and dental procedures to the ASC CPL and ancillary services lists. See Table 82 in proposed rule. 

How CLA can help with the 2025 hospital outpatient rule

Proposed payment and program changes can have real financial and operational impacts. CLA can help you analyze these policies and chart your course for the future. 

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