5 Key Changes in Final CMS Payment Rules

November 04, 2024

CMS finalized two payment rules for 2025 late Friday—the Outpatient Prospective Payment System and the Physician Fee Schedule—that contained several notable changes for hospitals and health care policy.

Here’s what you need to know:

1. Outpatient Payment Update ‘Worsens Chronic Problem’

• Key change:  After years of inadequate market basket updates, CMS finalized its proposal to increase Medicare payment for outpatient services by 2.9 percent.
• HAP’s take:  HAP and its allied hospital associations are deeply concerned by this continuation of inadequate payment increases.
• Quotable:  In a statement, the American Hospital Association wrote: “Medicare's sustained and substantial underpayment of hospitals has stretched for almost two decades, and today's final outpatient rule only worsens this chronic problem.”

2. Hospital Conditions of Participation Add Focus on Maternal Health

• Key change:  The final Medicare Conditions of Participation for hospitals and critical access hospitals include new standards for obstetrical services and maternal health that will cover the organization, staffing, and delivery of care within obstetrical units; update the quality assessment and performance improvement program; and require staff training on evidence-based maternal health practices.
• Notable:  Other policy changes include a new discharge planning standard for transfer protocols and revisions to the emergency services standard that will require hospitals and CAHs with emergency services to be prepared to meet the emergency needs of patients.

3. Addressing Medicaid’s “Four Walls” Issue

• Key Change:  Medicaid statute had required that either the patient or the provider be physically present at the clinic as a condition of payment for the clinic visit.
  • CMS addresses the “four walls” requirement in the outpatient payment final rule.
• More flexibility:  CMS is giving states the option to cover Medicaid clinic services outside the “four walls” for behavioral health clinics and clinics located in rural areas.
• In detail:  States can define rural area using a definition already used by a federal agency or a definition adopted by a state agency with a role in setting rural health policy.

4. Physician Fee Schedule Fuels Provider Concerns

• Key Change:  In the Physician Fee Schedule final rule for CY 2025, CMS controversially finalized a 2.9 percent cut to Medicare physician payments.
  • Several provider associations have expressed deep concern over these cuts and have announced their intention to seek Congressional action to address them.

5. Telehealth Flexibilities Hinge on Congressional Action

• Waiver extension:  The Physician Fee Schedule also extended some of the regulatory telehealth waivers in place through 2025, including the definition of two-way audio-only communication.
  • The agency notes that congressional action will be needed to extend remaining telehealth waivers beyond January 1, 2025 (geographic and location restrictions on where the services are provided, and limitations on the scope of practitioners who can provide Medicare telehealth services).
• What to watch for:  If the telehealth waivers are allowed to expire, people with Medicare would need to be in a medical facility in a rural area to receive most Medicare telehealth services.
  • Permanent exceptions are in place for behavioral health telehealth services which can continue to be provided in the patient’s home.

The final rule also includes new coding and payment provisions for digital mental health treatment devices, safety planning interventions that could prevent suicide or drug overdoses, and services to better integrate behavioral health and primary care.

The rule also broadens access to services provided by Opioid Treatment Programs including social determinants of health assessments, coordinated care and referral services, patient navigational services and peer recovery support services.

For additional questions, contact Kate McCale, vice president, compliance & regulatory affairs.