Two reasons why the 2027 OPPS proposed rule hurts your hospital

By Brian Murphy

 

The 2027 OPPS (outpatient) proposed rule landed just prior to the July 4 holiday weekend. CMS’ timing is conspicuous, presumably to dodge the tomatoes hurled at it from the likes of the American Hospital Association.

Not a whole lot of great news in here for healthcare orgs; here are two and I haven’t touched the huge slash to drug payments.

As a reminder these changes are PROPOSED; things can and may change between now and the final rule issued in the fall.

Also, brace for GLP-1 expansion as a new CMS program expanding access to the wonder-weight loss drug just took. See below.

 

Elimination of the Inpatient Only (IPO) List

CMS continues to end the IPO list which it plans to end entirely on Jan. 1, 2028.

Last year CMS started a 3-year phase out when it removed 285 mostly musculoskeletal procedures (along with 16 previously removed non-musculoskeletal procedures).

This year CMS is proposing to remove 638 additional services from the following clinical families: auditory, digestive, endocrine, female genital, hemic and lymphatic systems, integumentary, male genital, maternity care and delivery, mediastinum and diaphragm, respiratory, and urinary.

CMS believes that the evolving nature of medical practice allows more procedures to be performed on an outpatient basis with a shorter recovery time. While true, it hurts hospitals. “Physician flexibility” and “patient choice” are the expressed mantras, but the reality is CMS pays significantly less for procedures performed OP instead of IP.

Hospitals can still admit patients for these procedures when medically necessary … but they are now more prone to denial, giving auditors plenty of “this could have been safely done outpatient” ammunition.

 

Expanded “site neutral” payment provisions

This one irks me… let me explain.

Hospitals typically receive a higher payment rate than physician practices for the same services, which on its face seems unfair and wasteful.

It isn’t.

Hospitals have emergency services on standby for more medically complex patients; presumably this is a good thing.

For CY 2027, CMS is proposing to pay hospitals a lesser Physician Fee Schedule equivalent rate for imaging without contrast procedures provided at an off-campus provider-based department (i.e., hospital clinic).

Stripping away additional payments for hospitals with the justification that imaging procedures should cost the same regardless of setting is reasonable; but so is paying hospitals more for having life-saving staff on call.

How about site neutral AND adding OPPS reimbursement for on-call ED services, CMS?

Unfortunately that won’t happen … but hospital advocacy groups are rightfully ticked off.

If finalized, the rule would reduce Medicare Part B expenditures to hospitals by about $260 million in the first year.

Healthcare Dive offered up the following quote from Jennifer DeCubellis, president and CEO of advocacy group America’s Essential Hospitals:

“The proposed OPPS rule from CMS takes an axe to critical funding that supports essential hospitals without concern for how it will affect the patients they serve.”

 

References

• CMS, 2027 OPPS proposed rule fact sheet: https://www.cms.gov/newsroom/fact-sheets/calendar-year-2027-hospital-outpatient-prospective-payment-system-opps-ambulatory-surgical-center
• CMS, Medicare GLP-1 bridge: https://www.cms.gov/medicare/coverage/prescription-drug-coverage/medicare-glp-1-bridge
• Healthcare Dive, Medicare slashes 340B payments, broadens site-neutral policies in proposed 2027 payment rule: https://www.healthcaredive.com/news/regulators-propose-slashing-340b-payments-broadening-site-neutral-policies-2027/824312