2023 OPPS proposed rule: CMS considers options for 340B reimbursement, more prior authorization

Wednesday, July 20, 2022

CMS is weighing an expansion of the hospital outpatient department prior authorization program, changes to 340B reimbursement in the wake of the Supreme Court’s decision, and alternative rate setting data among other proposals in the 2023 Outpatient Prospective Payment System (OPPS) proposed rule.

Payment update

CMS is proposing a 2.7% increase factor for OPPS payments in 2023. The agency estimates this will result in $86.2 billion in total payments to OPPS providers in 2023, an increase of more than $6 billion compared to 2022.

The agency continues to grapple with the effects of COVID-19 on traditional rate-setting methodology. CMS would normally use claims and cost report data from the two years prior to the upcoming calendar year. For 2023, the agency will use claims data from 2021 to set 2023 OPPS rates. However, cost report data generally lags claims data by a year, meaning complete 2021 cost report data may not be available. CMS believes that 2020 cost report data is unsuitable to base 2023 rates on due to temporary changes in the 2020 data due to COVID-19.

To address these concerns, CMS is proposing to use cost report data from the June 2020 extract from the Healthcare Cost Report Information System. This includes cost report data from 2019, prior to the onset of the public health emergency, and is the same cost report data that was used to set 2022 OPPS rates.

Prior authorization

CMS is proposing to add 10 facet joint interventions, including facet joint injections, medial branch blocks, and facet joint nerve destruction, to the hospital outpatient department prior authorization program.

CMS implemented the hospital outpatient department prior authorization program to control what it deemed unnecessary increases in volume for certain procedures. Claims volume for facet joint interventions (Current Procedural Terminology [CPT®] codes 64490-64495 and 64633-64636) increased by 47% between 2012 and 2021, according to the proposed rule. This reflects a 4% average annual increase, higher than the 0.6% increase for all outpatient department services.

In addition, the Office of Inspector General (OIG) has flagged facet joint interventions as vulnerable to improper Medicare payment and questionable billing practices and utilization. The OIG has urged CMS to take program integrity action targeting these procedures.

Based on these data, CMS has determined that the increase in volume is unnecessary. The agency believes prior authorization is an effective tool to control unnecessary increases in volume and is appropriate in this instance.

However, the proposal may be out of step with other CMS efforts and may not have the scope to effectively address any truly unnecessary increases in volume.

The prior authorization program applies only to hospital outpatient departments, and not to procedures provided in physician offices or ambulatory surgery centers (ASC). The likelihood of an unnecessary procedure being provided at a physician office is often higher than at a hospital outpatient department, points out NAHRI Advisory Board member Ronald Hirsch, MD, FACP, CHCQM, CHRI, vice president, regulations and education group, with R1 RCM in Murray, Utah.

However, CMS lacks the authority to implement similar controls under the Medicare Physician Fee Schedule (MPFS), notes NAHRI Advisory Board member Valerie A. Rinkle, MPA, CHRI, president of Valorize Consulting LLC.

“In addition, CMS may be using the prior authorization program to redirect services to physician offices and ASCs—and indirectly discouraging performing these services at hospital outpatient departments,” Rinkle says.

The facet joint interventions CMS is proposing to add to the prior authorization program are used in pain management. Targeting them for additional scrutiny based on an increase in volume may inadvertently contradict the agency’s approach to acute and chronic pain management in the MPFS, Rinkle says.


In June, the Supreme Court unanimously ruled that cuts to hospital reimbursement under the 340B drug discount program were unlawful. The ruling put an end to a legal battle stretching back to 2017, when CMS finalized cuts to hospital reimbursement under the 340B program in the 2018 OPPS final rule.

Many in the industry were curious to see how CMS would address the reversal in the OPPS, particularly given how close the ruling came to the proposed rule’s projected release date. With payment rate presumably already calculated, how would CMS make changes in time?

CMS’ solution is to formally propose to continue to pay average sales price (ASP) minus 22.5% for drugs and biologicals acquired through the 340B program. However, the agency “fully anticipates” applying ASP plus 6%. Payment impacts for both options are included in the proposed rule’s addenda.

CMS has yet to determine how to apply the ruling to previous years, but hints that since the 340B savings were put into the conversion factor and impacted payment to all hospitals, a remedy may not be necessary.

“I’m sure 340B hospitals do not agree with this sentiment,” Rinkle says.

Although CMS didn’t clarify how it intends to address previous years, there are several potential options that raise interesting questions, says NAHRI Advisory Board member Jugna Shah, MPH, CHRI, president of Nimitt Consulting Inc., in Spicer, Minnesota.

For example, what years would any potential remedy be applied to? Would it cover the entire span the overturned policy was in effect—2018 to 2022—or will CMS say it only needs to address the years prior to when it conducted a survey of 340B hospitals drug acquisition costs? And how might the survey results factor into CMS’ decision for applying a remedy? For example, CMS might indicate that even deeper cuts are warranted and use that information to decline making any sort of remedy for the past.

It is also possible that CMS will conduct another, broader survey of all hospitals and use that data for payment reductions in future years such as a reimbursement cut to separately payable, non-pass through drugs for all providers, Shah says.

“These are some of the questions in my mind more so than the actual mechanics of figuring out the remedy amount or how to pay for it, because that’s a matter of calculations that can be done. CMS can implement whatever the amount is by reducing the conversion factor slightly, year over year, until all of the monies are paid back without it being a huge negative hit to any one hospital,” Shah says. “So what I think is crucial now is for folks to comment to CMS on this topic even if they do not have a specific remedy solution in mind. They should at least say a remedy is in order and that CMS should not place an operational burden on providers in terms of paying back money, etc.”

Other proposals

CMS is also proposing updates to various quality programs, as well as a proposal to make permanent the expanded coverage of remote behavioral health services currently covered under public health emergency waivers. The proposed rule also contains additional details relating to the rural emergency hospital designation.

The agency is also proposing to provide OPPS payment for software as a service (SaaS). It is considering different scenarios for using add-on codes or establishing Healthcare Common Procedure Coding System (HCPCS) codes that could be reported as standalone services billed with an associated imaging service.

CMS has begun to recognize over the past few years that artificial intelligence and new technologies, e.g., analytical/diagnostic tools that enhance traditional imaging or diagnostic testing, are advancing and don’t fit in their traditional existing payment policies and mechanisms, says NAHRI Advisory Board member John Settlemyer, MBA, MHA, CPC, CHRI, assistant vice president, enterprise revenue management/CDM operations at Atrium Health in Charlotte, North Carolina.

“These technologies can and do reduce more invasive testing and also reduce costs to the program,” he says.

In short, CMS is proposing to create new HCPCS codes, and not use existing CPT codes for add-on codes, to pay for certain SaaS services that would otherwise fall under traditional packaging policies, Settlemyer explains. In some instances, the AMA has created single/standalone CPT codes to describe SaaS service, but in some cases it has chosen a primary/add-on code structure. CMS has previously acknowledged these technologies do not fit the definition of adjunctive. It is also requesting comment on future payment policy for SaaS and offer several potential options.

Revenue integrity professionals should read the proposed rule thoroughly. Identify the sections that are most pertinent to your organization and would have the most impact on your job and department. Reach out to colleagues in other departments to discuss any proposals that would have an interdepartmental impact and to share information on proposals that could have significant impact on other departments. It may be helpful to conduct an analysis of some proposals to determine the effects they may have on the organization and the Medicare beneficiaries it serves.

Revenue integrity professionals may wish to submit comments on the proposed rule. Through the rulemaking process, CMS actively encourages stakeholders to analyze its proposals and submit comments the agency can use to improve the final rule. For tips on how to write and submit comments on proposed rules, see NAHRI’s white paper Advocacy in Action: Commenting on Proposed Rules.

Comments on the 2023 OPPS proposed rule are due by September 13.