The Centers for Medicare & Medicaid Services today proposed to update hospital outpatient prospective payment system rates by 1.25% in calendar year 2019 compared to CY 2018. In addition, the rule includes several “site-neutral” payment policy proposals. First, CMS would reduce the payment rate for hospital outpatient clinic visits provided at off-campus provider-based departments to 40% of the OPPS rate, regardless of whether the PBD is considered to be grandfathered under Section 603 of the Bipartisan Budget Act of 2015. The clinic visit is the most commonly billed service under the OPPS, and CMS estimates that this would reduce Medicare expenditures by $760 million for 2019. CMS also proposes to modify its policy regarding grandfathered PBDs that expand the families of services they offer. Specifically, if a grandfathered off-campus PBD adds a new service from a clinical family from which it did not previously furnish services, those services would be paid a site-neutral rate of 40% of the OPPS rate.
CMS also would change its 340B and other drug payment policies. Specifically, the agency proposes to extend the Average Sale Price minus 22.5% payment rate for drugs acquired under the 340B program to those 340B drugs furnished in non-grandfathered PBDs. Further, CMS proposes to pay for separately payable biosimilars acquired under the 340B program at a rate of ASP minus 22.5% of the biosimilar’s own ASP rather than ASP minus 22.5% of the reference product’s ASP. In addition, the agency would pay for new drugs and biological products at a rate of the wholesale acquisition cost plus 3%, instead of WAC plus 6%, before ASP data is available.

Among other changes, CMS also demonstrates its commitment to its Meaningful Measures initiative by proposing to remove 10 measures from the Outpatient Quality Reporting Program; one would be removed for CY 2020 and nine beginning with CY 2021. AHA members will receive a Special Bulletin with further details tomorrow. Comments on the proposed rule are due Sept. 24.

“With today’s proposed rule, CMS has once again showed a lack of understanding about the reality in which hospitals and health systems operate daily to serve the needs of their communities,” said AHA Executive Vice President Tom Nickels. “CMS has misconstrued Congressional intent with its proposal to cut payments for hospital clinic services in certain outpatients departments. In 2015, Congress clearly intended to provide current off-campus hospital clinics with the existing outpatient payment rate in recognition of the critical role they play in their communities. But CMS’s proposal runs counter to this and will instead impede access to care for the most vulnerable patients. … CMS also stepped up its assault on 340B hospitals that serve vulnerable communities by expanding last year’s nearly 30% cut to outpatient drug payments to a significant number of additional hospital outpatient departments and life-saving drugs. These, like the previous cuts to a program that requires no federal contributions but instead relies on discounts required of drug companies, exceed CMS’s statutory authority and remain subject to legal challenge.”

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