CMS adopts misguided policies

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Despite strong opposition from SDAHO and America Hospital Association (AHA), and the majority of members in Congress, the Center for Medicare and Medicaid Services (CMS) plans to implement misguided policies related to two recently released final rules.

340B Proposal

CMS finalized a damaging proposal related to Medicare OPPS payments for drugs acquired under the 340B drug pricing program. The new payment policy takes effect January 1.

SDAHO strongly opposed this proposal and a bipartisan majority of both houses of Congress—228 members of the U.S. House of Representatives and 57 U.S. Senators—expressed their opposition.

CMS adopted its proposal to set payment for separately payable, non-pass-through Outpatient Prospective Payment System (OPPS) drugs purchased under the 340B program at the average sales price (ASP) minus 22.5%, rather than ASP plus 6%, a 28.5% reduction in payments.

In the final rule, CMS added an exception to this policy for rural Sole Community Hospitals, children’s hospitals, and PPS-exempt cancer hospitals for CY 2018 and stated it may revisit the types of hospitals excluded, if any, from the 340B payment policy in CY 2019 rulemaking. (Important note: this part of the final rule does not apply to Critical Access Hospitals (CAHs) and Federally Qualified Health Centers (FQHCs))

SDAHO will continue to work with our national partners to make the case that this policy is detrimental and will explore introducing a legislative option, if necessary.

Other provisions finalized in the OPPS final rule include:

  • a 1.35% rate update;
  • reinstatement of the non-enforcement of direct supervision for outpatient therapeutic services for Critical Access Hospitals (CAHs) and small rural hospitals having 100 or fewer beds for CY 2018 and 2019; and
  • removal of total knee arthroplasty (TKA) from the inpatient-only list, which would allow for Medicare coverage of TKA in either an inpatient or an outpatient setting beginning in CY 2018; and
  • the removal of six outpatient quality reporting measures.

CMS’ final provisions are included in the OPPS final rule for calendar year (CY) 2018. CMS’ Fact Sheet of the final rule is available online. SDAHO will provide a summary brief and impact analysis of the newly adopted policies in the near future.

HOPD Site-Neutral Payment Reductions for New Off-Campus Sites in MPFS Final Rule

CMS is reducing payment levels for outpatient services provided in newly established off-campus hospital outpatient provider-based departments (HOPDs)—in general, those that began billing under the Medicare Outpatient Prospective Payment System (OPPS) after November 2, 2015, from 50% of the OPPS rate to 40%. This is an improvement over CMS’ original proposal to reduce payments to 25% of the OPPS rate. The new payment policy will take effect January 1.

While this is an improvement over what CMS proposed, we remain highly concerned about Medicare site-neutral payment policies. Importantly, the immediate negative effect of a 40% OPPS payment level is significant, and the impact will grow over time as new off-campus hospital outpatient departments are opened and existing facilities relocate to serve the needs of their communities.

CMS’ final provision is included in the Medicare Physician Fee Schedule (MPFS) final rule for calendar year (CY) 2018. CMS’ Fact Sheet of the final rule is available online.