Skip to main content Back to Top

Issue Brief: Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule CY 2024

Centers for Medicare & Medicaid Services (CMS)

July 25, 2023

This proposed rule makes changes to hospital outpatient prospective payment system (OPPS), which governs payment policy in Medicare Part B for hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). The proposed rule also includes updates to quality reporting requirements for HOPDs and ASCs. The Centers for Medicare & Medicaid Services (CMS) updates these rules annually, so many of the policy changes outlined for 2024 build on existing policies. Unlike in previous years, CMS split a major element of this year’s OPPS rule – the remedy for 340B underpayments from 2018 – 2022 – into a separate rulemaking. ASHP will submit comments on both the OPPS proposed rule and the 340B OPPS underpayment proposed rule by the comment deadlines.

Major Proposed Changes for CY 2024
  • Proposed Remedy for 340B Drug Pricing Program Reimbursement Cuts: As a result of the Supreme Court decision in favor of hospitals, CMS has restored the ASP + 6% rate for drugs purchased on the 340B Drug Pricing Program. However, CMS must still make hospitals whole for the wrongful cuts from 2018 – 2022. To accomplish this, CMS has proposed a one-time payment to hospitals, with the following elements:
    • A one-time $9 billion lump sum payment (which includes the higher amount that would have been paid to hospitals in beneficiary copayments) divided among the 1,649 covered entities impacted by the reimbursement cuts;
    • The payment will be budget neutral, so CMS is proposing to prospectively offset the cost of the lump sum payment by cutting reimbursement for non-drug services by 0.5% over 16 years; and
    • Hospitals that enrolled in Medicare after 2018 will be exempt from the proposed cuts to non-drug services reimbursement.

  • Rather than reprocessing claims to determine the amount hospitals will receive, CMS is proposing to calculate the difference between the ASP minus 22.5% rate actually paid and the ASP plus 6% rate that should have applied and remit that amount to hospitals through Medicare Administrative Contractors. The proposed rule does not include a proposed method for disputing the amount CMS determines a hospital is owed.

    While the remedy proposed aligns in part with ASHP’s previous recommendations to CMS, we urge members to provide additional feedback about the proposal, particularly regarding any major administrative or logistical considerations that need to be addressed.

  • Potential Buffer Stock of Essential Medications: To assist in mitigating drug shortages, CMS is proposing to provide an additional payment as part of the inpatient prospective payment system to support the creation of a three-month buffer supply of essential medications.

  • CMS is proposing to define an “essential medication” to include any of the 86 products on the Assistant Secretary for Preparedness and Response (ASPR) list included in its Essential Medicines Supply Chain and Manufacturing Resilience Assessment. CMS suggests that payment for a buffer supply could be based on the “IPPS shares of the additional reasonable costs of a hospital to establish and maintain access to its buffer stock.” Reasonable costs could include “costs to hold essential medicines directly at the hospital, arrange contractually for a distributor to hold, or arrange contractually with a wholesaler for a manufacturer to hold” the stock, but would not include the costs of the medication itself. These costs would be then reported to CMS on the hospital’s cost report.

  • CMS is proposing to begin implementing this provision in IPPS as early as January 2024. CMS indicated that it will consider a similar payment under OPPS in future years. The agency will also consider extending payment for critical devices as well. The buffer stock recommendation aligns closely with ASHP’s most recent set of drug shortage recommendations to Congress. Given the novelty of CMS’s proposal, ASHP strongly urges members to send us questions, concerns, and/or improvement suggestions regarding the buffer stock proposal to inform ASHP comments to the agency.

  • Biosimilar Payment: CMS is proposing to “to except biosimilars from the OPPS threshold packaging policy when their reference biologicals are separately paid, meaning we would pay separately for these biosimilars even if their per-day cost is below the threshold packaging policy.”

  • Packaging Policy for Diagnostic Radiopharmaceuticals: CMS is soliciting feedback on “how the OPPS packaging policy for diagnostic radiopharmaceuticals may have impacted beneficiary access, including whether there are specific patient populations, or clinical disease states, for whom this issue is especially critical.” Specifically, CMS is seeking feedback on how payment could be adjusted to improve beneficiary access within the OPPS framework.
Applicability and Timing

In general, policy proposals adopted in an OPPS proposed rule become effective on January of the next calendar year (so January 1, 2024, for this proposed rule).

We strongly encourage members to submit feedback, questions, or concerns to ASHP to assist in the development of our written comments on the proposed rule, particularly regarding the 340B and buffer stock proposals. Please send any input to Jillanne Schulte Wall at [email protected] by Aug. 15.