Dive Brief:
- Medicare is bumping reimbursement for hospital outpatient departments by 2.6% for next year, which should result in $5.2 billion more being paid to the providers compared to this year, according to a proposed payment rule released by the CMS on Wednesday.
- If the rule is finalized, ambulatory surgery centers that meet quality standards will also receiving a 2.6% payment bump, equating to about $202 million more in reimbursement in 2025.
- The rule also requires states to provide one year of continuous eligibility in Medicaid and the Children’s Health Insurance Plan for children under the age of 19, formally enacting a requirement in spending legislation passed in 2022 that’s gotten some pushback from red states. The rule also puts baseline safety requirements for hospitals’ obstetric services in place for the first time.
Dive Insight:
The CMS’ proposed 2.6% bump for hospital outpatient centers and ASCs is the same as the agency’s proposed increase for hospital inpatient departments released in April.
Hospital groups decried both rules as insufficient, pointing to their financial turbulence during the COVID-19 pandemic along with higher costs for labor and supplies.
Premier, a group purchasing organization for hospitals, said in a statement Wednesday it was “deeply disappointed” with the rule, which will “continue to widen the chasm between Medicare reimbursement and hospitals’ actual operational costs.”
Hospitals’ argument that they need higher reimbursement from the government in the face of persistent financial challenges doesn’t hold up for most major operators, which have recorded high margins in recent years, including during the pandemic, due to government aid.
Recently, higher patient volumes and strong investment returns — along with a growing focus on offering outpatient services — led most national hospital chains to report year-over-year profit growth in the first quarter this year.
Along with setting a payment increase for 2025, the proposed rule also solidifies continuous coverage requirements for children in safety-net insurance programs from the Consolidated Appropriations Act passed two years ago.
Proponents of the measure cite research finding children who lose coverage for all or part of a year are more likely to have worse health outcomes than children who have coverage continuously.
Keeping eligible children on Medicaid and CHIP is particularly important as states continue to remove beneficiaries from the programs following a pandemic-era pause on disenrollments, patient advocates say. Through June, more than 5 million children were disenrolled from Medicaid because of those redeterminations, according to Georgetown University’s Center for Children and Families.
Last fall, the CMS released guidance to states to implement the continuous coverage requirement, which was effective at the start of this year. As of March, 46 states had implemented the 12-month extension, though a few were lagging behind or were seeking a more limited expansion, according to health policy research firm KFF.
In February, the state of Florida sued the CMS to stop it from enforcing the continuous eligibility requirement, arguing it should still be able to terminate children from coverage if they or their families are unable to pay premiums. A district judge tossed the suit in May but the state is appealing that decision.
With the payment rule, the CMS is also seeking to put new standards for obstetrical services in place for hospitals participating in Medicare. Regulators said their goal is to improve the U.S.’ shoddy maternal health outcomes, which are some of the worst out of all developed nations with 33 deaths per 100,000 live births in 2021.
For Black women, that rate jumps to 70 deaths per 100,000 live births, according to the Centers for Disease Control and Prevention.
The proposed standards include requirements for maternal quality assessment and performance improvement, maternal health data reporting and baseline standards for organization, staffing and care delivery in obstetrical units.
If the rule is finalized as proposed, hospitals that don’t meet the obstetric standards will be booted out of Medicare. That’s a steep punishment, Premier noted.
“An obstetric services [condition of participation] that results in the loss of Medicare certification for compliance failure is far too harsh a penalty,” said Soumi Saha, the group’s SVP of government affairs, in Premier’s statement.
The rule also requires Medicare to complete prior authorization requests for hospital outpatient services in seven days, down from the previous 10-day window. The update brings traditional Medicare in line with shorter prior authorization review standards for other insurers, including those operating Medicare Advantage plans.
Regulators are also proposing changes that should make it easier for previously incarcerated individuals who are eligible for Medicare to enroll, and to add more equity measures to programs measuring the quality of outpatient centers, ASCs and rural emergency hospitals.
