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Four Things You Need to Know About the 2023 OPPS Payments Rule

by | Nov 11, 2022 | Essential, National Lab Reporter, Reimbursement-nir

The final Outpatient Prospective Payment System Final Rule for 2023 provides for a rate increase of nearly four percent.

While cutting rates for physicians and labs, the Centers for Medicare & Medicaid Services (CMS) is raising reimbursements for hospital outpatient services. The Hospital Outpatient Prospective Payment System Final Rule for 2023 (OPPS Rule) published on Nov. 1 provides for a rate increase of nearly four percent. Here’s a high-level briefing of the four key changes that managers of labs providing services to hospital and ambulatory surgical center (ASC) outpatients need to know about.1

1. 2023 OPPS Payment Rates

After last year’s 2.0 percent increase, CMS is hiking overall 2023 OPPS payment rates for hospitals and ASCs that meet their applicable quality reporting requirements by 3.8 percent. The rate increase follows the productivity-adjusted hospital market basket update to payment rates that the agency adopted in 2019 for use through calendar year (CY) 2023. The CY 2023 calculation is based on the following factors:

  • Projected hospital market basket percentage increase is 4.1 percent (as opposed to just 2.7 percent in CY 2022); minus
  • The Affordable Care Act (ACA)-required multifactor productivity adjustment of -0.3 percent (which was -0.7 percent last year).

The overall 3.8 percent increase contained in the final OPPS Rule represents a significant victory for hospitals given that the proposed rule included only a 3.1 percent increase to the market basket rate. The American Hospital Association (AHA) and other provider groups objected that the method used to calculate the market basket rate, which is designed to estimate the costs of goods and services providers are expected to incur in the coming year, didn’t adequately capture the impacts of inflation. CMS ultimately agreed and jacked up the market basket rate another 1.0 percent to 4.1 percent.

While pleased with the increase and the agency’s expanded use of data to calculate it, the AHA contends that it’s still not enough to keep pace with inflation “given the extraordinary cost pressures hospitals face from labor, supplies, equipment, drugs and other expenses,” according to a statement from AHA executive vice president Stacey Hughes. “Hospitals are still dealing with a wide range of challenges in providing care,” Hughes added, “which is why the AHA is urging Congress for additional support by the end of the year.”2

2. New Rural Emergency Hospital (REH) Designation

The other headliner in the 2023 OPPS Rule is the establishment of a Medicare provider type designation called a rural emergency hospital (REH) into which entities which are currently designated as critical access hospitals (CAHs) and small rural hospitals may convert. The new REH designation is designed to expand access to hospital care in rural and other underserved communities. Here’s how it will work:

What an REH Is: The definition of REH includes a hospital with no more than 50 beds that provides outpatient, emergency, and observation care, but not acute care inpatient services—other than hospital extended care furnished in a distinct part unit licensed as a skilled-nursing facility. Significantly, REHs may also provide services that the OPPS doesn’t cover, including, but not limited to, lab tests covered by the Clinical Laboratory Fee Schedule (CLFS).

REH Payments: REHs will receive Medicare reimbursement at a rate equal to the OPPS payment rate for the equivalent covered outpatient department service, plus five percent. Beneficiaries won’t have to pay coinsurance on the additional five percent payment. Services provided by REHs that aren’t paid under the OPPS, will be paid under the fee schedule for the particular service. Thus, for example, REHs will be reimbursed at the CLFS rate for any CLFS lab tests they furnish. REHs will also receive a monthly facility payment that will increase each year in accordance with the hospital market basket percentage increase.

REH Conditions of Participation (CoPs): CMS has established separate CoPs that REHs must meet to ensure patient health and safety and care quality. The new REH CoPs closely align with those that currently apply to CAHs and ASCs. Key requirements:

  • REHs must have an on-call physician who can reach the site within 30 to 60 minutes at all times;
  • The emergency department must be staffed by competent personnel 24/7;
  • REHs must implement an effective, ongoing, facility-wide, and data-driven Quality Assurance and Performance Improvement (QAPI) program;
  • Annual per-patient average lengths of stay, from check-in/triage to discharge, can’t exceed 24 hours; and
  • REHs must have an infection prevention and control and antibiotic stewardship program.

Stark Law Rules for REHs: CMS has revised current Stark Law exceptions to ensure that compensation arrangements between an REH and physician aren’t deemed violations of the law’s ban on referrals by physicians to entities in which they (or their immediate family members) own, invest in, or have other financial relationships with.

3. New Exemption to Clinic Visit Payment Policy

CMS currently pays the Physician Fee Schedule (PFS)-equivalent payment rate of 40 percent of the OPPS rate for the clinic visit service when it’s provided at an excepted off-campus provider-based department (PBD) paid under the OPPS. To ensure access to care in rural areas, CMS is making a new exemption in this policy for clinic visits furnished in the off-campus PBD of Rural Sole Community Hospitals (SCHs). These hospitals will now receive the full OPPS rate for these visits.

4. OPPS Payment for Software as a Service

The 2023 OPPS Rule clarifies rules for payment of software as a service (SaaS), such as clinical decision support software, clinical risk modeling, computer aided detection (CAD), and other algorithm-based technology that can help providers make clinical assessments. Rather than packaging SaaS into the general Ambulatory Payment Classification (APC) for the underlying service, CMS will assign SaaS add-on codes to identical APCs, allowing for separate payment for these services. The agency also says it will consider additional payment policies related to SaaS in its future rulemaking.


  1. https://www.cms.gov/newsroom/fact-sheets/cy-2023-medicare-hospital-outpatient-prospective-payment-system-and-ambulatory-surgical-center-2
  2. https://www.aha.org/press-releases/2022-11-01-aha-statement-2023-opps-final-rule

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