CY 2025 OPPS and ASC Final Rule: What’s Changed?

Payment Adjustments and Insights

On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) finalized the CY 2025 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule, as well as the Medicare Physician Fee Schedule (PFS). The updated PFS and Medicare Part B policies, along with the final measures outlined in the calendar year  2025 OPPS and ASC Final Rule, will take effect on January 1, 2025

For CY 2025, CMS has finalized a 2.9% payment rate increase for both HOPDs and ASCs that meet quality reporting requirements. This adjustment stems from a 3.4% hospital market basket increase, offset by a 0.5% productivity adjustment. For CY 2025, CMS finalizes an OPPS conversion factor of $89.169 for hospitals that meet quality reporting requirements.

CMS projects that these updates will result in approximately $87.7 billion in payments to OPPS facilities and $7.4 billion to ASCs for CY 2025. Compared to CY 2024, these figures represent a growth of $4.7 billion and $308 million, respectively. 

Providers failing to meet the requirements of the Hospital Outpatient Quality Reporting (OQR) and Ambulatory Surgical Centers (ASC) Quality Reporting (ASCQR) programs face a 2% reduction in their Annual Payment Update (APU), reinforcing the importance of compliance​. CMS finalizes an ASC conversion factor of $54.895 for ASCs that meet quality reporting requirements. Source

What is the Physician Fee Schedule (PFS)?

Since 1992, Medicare payments under (PFS) have supported physicians and other billing professionals by reimbursing them for services provided in a wide range of care settings. These include physician offices, hospitals, (ASCs), skilled nursing facilities, post-acute care centers, outpatient dialysis facilities, clinical laboratories, and even patients’ homes.

In addition to these traditional settings, the PFS also includes payments to certain suppliers for technical services in cases where no institutional payment is provided, such as independent diagnostic testing facilities and radiation treatment centers.

How Does the Physician Fee Schedule (PFS) Work?

Medicare payments under the PFS are calculated based on the resources required to provide each service. These calculations rely on relative value units (RVUs) assigned for three primary components:

1. Work: The effort and time required by the provider.
2. Practice Expense: The cost of overhead, equipment, and supplies.
3. Malpractice Expense: Costs associated with liability insurance.

The RVUs are adjusted for geographical cost variations using geographic practice cost indices. Finally, a conversion factor is applied to determine the payment rate for each service. Understanding the nuances of the PFS is critical for healthcare organizations to optimize reimbursement and align with CMS’s evolving goals for healthcare quality and equity.

Updated to the Physician Fee Schedule (PFS) From the CY 2025 OPPS and ASC Final Rule:  

The CY 2025 Medicare Physician Fee Schedule is facing a reduction of 2.83% across all services. This means the conversion factor for CY 2025 would be $32.35, a decrease of $0.94 compared to CY 2024.  This decrease is due to several factors:

• A statutory update of 0 % to the conversion factor for CY 2025.
• The expiration of the temporary 2.93% increase in PFS payments for CY 2024.
• A 0.02% budget neutrality adjustment to account for changes in (RVUs).

Hospital Outpatient Quality Reporting (OQR) Program: Key Updates 

Measure Removals:

• The MRI Lumbar Spine for Low Back Pain and Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery measures will no longer be required beginning in CY 2025.

Measure Changes:

• The immediate measure removal policy will transition to a measure suspension policy, allowing for temporary suspension rather than immediate removal.
• Electronic Health Record (EHR) Certification: Facilities must use certified EHR technology to report all available electronic clinical quality measures.
• Public Reporting: CMS will now publicly report the Median Time from ED Arrival to ED Departure for psychiatric and mental health patients.

Source

New Measures:

1. OQR – Hospital Commitment to Health Equity (HCHE): Reporting begins in CY 2025, influencing payments by CY 2027.

The Hospital Commitment to Health Equity (HCHE) measure evaluates a facility’s dedication to addressing health disparities across five key domains: equity as a strategic priority, data collection, data analysis, quality improvement, and leadership engagement. Each domain reflects a crucial aspect of advancing equity, from integrating it into strategic goals to actively engaging leadership in supporting initiatives that address disparities. Facilities must affirm their efforts within each domain to demonstrate a comprehensive commitment to equity. Scoring for the HCHE measure is straightforward. Facilities earn one point for each domain where they can affirm “Yes” to all required elements, with a total of five points possible.

2. Screening for Social Drivers of Health (SDOH): Voluntary reporting begins in CY 2025, with mandatory compliance in CY 2026 for CY 2028 payments.

The Screening for Social Drivers of Health (SDOH) measure assesses a hospital’s ability to identify health-related social needs (HRSNs) in patients. It calculates the percentage of admitted patients aged 18 or older who are screened for all five HRSNs, dividing the number of patients screened by the total number of admitted patients. Exclusions apply to patients who opt out or cannot complete the screening without a legal guardian or caregiver.

To ease reporting, facilities can submit aggregate data rather than patient-level information, reducing administrative burden. The initial voluntary reporting phase allows hospitals to implement and refine screening tools, preparing for potential future requirements while advancing health equity.

3. Screen Positive Rate for SDOH: Similarly phased, voluntary in CY 2025, mandatory in CY 2026.

The Screen Positive Rate for SDOH measure provides information on the percentage of patients who screened positive for each of the five HRSNs. This measure begins with voluntary reporting for the CY 2025 reporting period and transitions to mandatory reporting for the CY 2026 reporting period/CY 2028 payment determination. It enables facilities to capture the degree of patient need for each of the five core HRSNs, estimate the impact of HRSNs on healthcare utilization and quality of care, and create individual patient action plans to improve outcomes.

The numerator for this measure is the number of patients 18 years or older receiving care who screened positive for one or more of the HRSNs. The denominator is the number of patients receiving care, 18 years or older, who are screened for all five HRSNs, excluding patients who opt out of screening or are unable to complete it. Facilities would be required to submit aggregated data for the total number of patients who screened positive for each of the five HRSNs. The sources provided discuss the importance of identifying and addressing HRSNs and screening, referral, and support services in the MCP model. However, they do not mention a “Screen Positive Rate for SDOH,” the five core HRSNs, or the calculation and reporting of this measure. Our blog, ‘CMS’ SDOH Measures | Deep Dive Into SDOH-1, SDOH-2 and HCHE‘ covers the topic in greater detail.

4. Patient Understanding of Recovery Information (Information Transfer Protocol): Voluntary reporting starts in CY 2026, becoming mandatory by CY 2027 for CY 2029 payments

The Information Transfer PRO-PM

Among the significant updates in the CY 2025 OPPS Final Rule, the Information Transfer PRO-PM stands out for its focus on evaluating how effectively healthcare facilities communicate discharge instructions to patients aged 18 or older who undergo outpatient procedures and are discharged alive after stays shorter than two midnights.

The Information Transfer PRO-PM measure emphasizes the use of patient-reported outcomes to assess discharge communication quality. This reflects CMS’ growing focus on functional improvement and improving the recovery process. Research underscores three vital reasons this measure is transformative:

1. Lower Readmission Rates: Effective discharge communication reduces readmissions, cutting costs and improving outcomes.
2. Discharge Quality Disparity: Outpatient settings often lack the detailed discharge instructions seen in inpatient care, a gap that must be bridged.
3. Enhanced Decision-Making Leading to Better Patient Outcomes: Clear guidance on medications, activities, and recovery improves recovery experiences and reduces complications.

Summary

The CY 2025 OPPS and ASC Final Rule introduces changes focused on advancing health equity and improving patient outcomes. Key updates, such as the Hospital Commitment to Health Equity (HCHE) and Screening for Social Drivers of Health (SDOH) measures, underscore CMS’s focus on reducing disparities and improving care delivery. The inclusion of the Information Transfer Protocol also highlights the importance of clear discharge communication, vital for reducing readmissions and improving recovery.

With mandatory reporting set for the coming years, healthcare providers must prioritize integrating effective tools for data collection, reporting, and patient education. These updates reflect CMS’s broader push to link reimbursement to care quality and outcomes, providing opportunities for healthcare facilities to improve patient care while streamlining operations.