Beyond their calls for increased outpatient payments, hospitals are urging the Biden administration to reconsider a plan for new care requirements that they say would “inadvertently reduce access to vital obstetrical services.”
In July, the Centers for Medicare and Medicaid Services (CMS) released its Calendar Year 2025 Outpatient Prospective Payment System (OPPS) and ASC Payment Systems proposed rule, which as is would see a 2.6% pay rate bump for qualifying hospital outpatient departments. This reflects a projected 3% hospital market basket increase reduced by 0.4% percentage points for a required productivity adjustment.
In comment letters submitted to the agency yesterday, industry groups like the American Hospital Association (AHA), the Federation of American Hospitals (FAH) and America’s Essential Hospitals (AEH) urged CMS to take another pass at both the hospital market basket increase and the productivity adjustment.
For the former, FAH outlined historical under-forecasting of hospitals’ inflationary spending increases that “did not capture profoundly aberrant and historic economic forces that fueled rapid cost increases for goods and services purchased by hospitals.” Based on data available after the fact, CMS understated the hospital basket by a total of 4.3 percentage points from 2021 to 2023—and using Q1 2024 data as a guide is on track to add 0.2 percentage points in 2024.
“We believe that three (and potentially four) consecutive years of understatement in the hospital market basket necessitates applying an adjustment for past year forecast errors in applying the CY 2025 update,” FAH wrote in its comments on the proposed rule. “CMS’ continued denial of appropriate payment updates is creating significant financial pressures for hospitals and threatens patient access as hospitals struggle to maintain services with ongoing inadequate reimbursement.”
AEH and AHA mounted similar concerns, with the former pointing out that the net 2.6% pay update “is woefully insufficient and well below MedPAC’s recommendation to provide an additional 1.5% increase above the statutory amount.”
AHA also put the productivity adjustment in its crosshairs. Though required by statute, the group wrote that the adjustment’s calculation using the annual economy-wide, private nonfarm business total factor productivity—a metric intended to capture gains from new technologies and other effects—is “flawed” in a hospital sector economy “marked by great uncertainty due to labor and other productivity shocks, such as those caused by the cyberattack on Change Healthcare.” AHA requested that CMS “eliminate” the productivity adjustment for calendar year 2025.
Outside of the pay rate changes, CMS headlined its proposed rule with new Conditions of Participation (CoPs) for hospitals and critical access hospitals related to obstetrical services. These included baseline staffing and care delivery standards, trainings, quality assessment and performance improvement (QAPI) requirements and an expectation for emergency departments to offer emergency maternal health services “regardless of whether they provide specialty services” such as obstetrics.
These updates were a common point of contention among the hospital groups. Though they specified support for CMS’ “well-intentioned” goal of improving maternal health, AHA noted that most pregnancy-related deaths occur up to a year after giving birth and that about half occur in the home.
“In other words, our nation’s maternal health challenges do not cleanly start, or end, with hospital-based obstetric care,” AHA wrote in its comments. “The broad-based nature of the issue limits the effectiveness of hospital CoPs, which, by their very nature, are focused on care during hospitalization.”
As written, the proposed rule’s maternal health requirements are “redundant with existing regulations, lack clarity and would impose potentially unworkable one-size-fits-all requirements,” AHA wrote.
CMS should hold off on the CoPs and instead work with hospitals and other healthcare stakeholders who “span the maternal health continuum” on potential regulatory improvements, AHA continued. Barring that, however, the group asked that the agency reconsider its approach of blanket requirements across different types and sizes of hospitals and limit those that extend “beyond maternal health, such as the proposed updates to emergence services and discharge planning CoPs.”
FAH and AEH voiced similar concerns, with the latter mentioning that member hospitals in underserved or resource-limited areas could be inadvertently penalized.
“Rather than implementing new CoP requirements, we strongly urge CMS to explore alternative approaches that offer hospitals the flexibility to innovate and improve care in ways that best serve their communities,” AEH wrote in its comment letter. “Technical assistance programs, learning collaboratives, and well-developed, thoroughly tested quality metrics are all potential tools that could help hospitals achieve better maternal health outcomes without the punitive implications of new CoPs.”
CMS typically locks in the OPPS Final Rule in early November. The industry had some success persuading the agency to increase the annual pay rate increase in its final Inpatient Prospective Payment System (IPPS) rule, from a proposed net 2.6% increase to 2.9%, though groups still described the bump as insufficient.
Landing alongside the OPPS proposed rule was a draft Medicare physician fee schedule (PFS) in which CMS has floated a 2.8% cut. In recently submitted comments, the American Medical Association similarly pointed to inflationary pressures on providers in its argument for more pay. The group also took issue with the exclusion of its telehealth evaluation and management codes and the proliferation of G-codes for behavioral health and digital mental health treatment devices.