The AHA July 13 criticized proposed deep cuts to how much the Centers for Medicare & Medicaid Services reimburses hospitals for drugs acquired under the 340B Drug Pricing Program and proposes changes to site-neutral payment policies under Section 603 of the 2015 Bipartisan Budget Act. The provisions are part of the proposed hospital outpatient prospective payment system/ambulatory surgical centers rule for 2018 and proposed rule for 2018 physician payments released yesterday by CMS.

Hospitals are reimbursed for the 340B drugs at their average sales price plus 6%. Under the proposed outpatient PPS rule, CMS would pay average sale price, minus 22.5%.

The proposal would selectively harm hospitals serving vulnerable patients, said Tom Nickels, the AHA’s Executive Vice President. “For 25 years, the 340B Drug Pricing program – which enjoys broad, bipartisan support – has been critical in expanding access to lifesaving prescription drugs to low-income patients in communities across the country,” he said. “The patients who benefit from the much-needed 340B program are the ones who will have their access to care threatened.”

He also took aim at CMS’ move to “punitively target 340B safety-net hospitals serving vulnerable patients, including those in rural areas, rather than addressing the real issue: the skyrocketing cost of pharmaceuticals.” He said the proposed 340B policy changes do not address the issue. “We strongly urge CMS to abandon its misguided 340B proposal and instead take direct action to halt the unchecked, unsustainable increases in the cost of drugs."   


Section 603. Another serious AHA concern is the way in which the outpatient PPS and physician payment proposals would change the Bipartisan Budget Act’s Section 603 site-neutral policies. 

Section 603 requires that, with the exception of dedicated emergency department services, services furnished in off-campus provider-based departments that began billing under the OPPS on or after Nov. 2, 2015 no longer be paid under the outpatient PPS, but under another applicable Part B payment system. The physician fee schedule proposed rule would pay hospitals at 25% rather than 50% of the outpatient PPS rate for non-excepted services in 2018

 “CMS at the same time is proposing further cuts to Medicare rates for services hospitals provide in 'new' off-campus hospital outpatient departments,” Nickels said. “This proposal also appears to have a questionable policy basis and is yet another blow to access to care for patients, including many in vulnerable communities without other sources of health care.”

Among other provisions, the proposed outpatient PPS rule would update hospital rates by 1.75% in calendar year 2018 compared to CY 2017. The proposal also would reinstate for CYs 2018 and 2019 the moratorium on enforcement of the direct supervision policy for outpatient therapeutic services for CAHs and small rural hospitals with 100 or fewer beds.

In addition, CMS proposes to delay implementation of the outpatient and ASC CAHPS survey-based measures in the Outpatient Quality Reporting program until further notice. The rule also would remove six quality measures from the OQR. CMS does not propose relief from the Stage 3 reporting requirements that begin on Jan. 1, 2018.


Proposed physician payment rule. CMS estimates a 0.31% increase in physician payment rates for 2018 compared to 2017, after applying a 0.5% payment increase required by the 2015 Medicare Access and CHIP Reauthorization Act and a misvalued code adjustment required under the 2014 Achieving a Better Life Experience Act.

CMS proposes to pay for new telehealth services, including psychotherapy for crisis, Health Risk Assessments and care planning for chronic care management. In addition, the rule would delay until Jan. 1, 2019, the appropriate use criteria program for advanced diagnostic imaging services; and establish payment to rural health clinics and federally qualified health clinics for regular and complex chronic care management services, general behavioral health integration services and psychiatric collaborative care model services.

While data submission for the CY 2018 Physician Quality Reporting System has passed, CMS proposes to retroactively lower the number of required measures from nine to six to more closely align the program with the new Merit-based Incentive Payment System that will affect payment starting in CY 2019.

CMS also proposes to lower the maximum amount of payment at risk under the CY 2018 value modifier program from 4% to 1% for individual clinicians and groups of under 10 clinicians, and to 2% for groups of 10 or more clinicians.

Comments are due on both proposed rules by Sept. 11.

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