On Wednesday, November 1, CMS issued its final Hospital Outpatient Prospective Payment System rule (the final rule was published in the Nov. 13 Federal Register). Part of the ruling includes the 340B Drug Pricing Program reimbursement cuts that were first proposed on July 13th of this year. The existing rule paid hospitals 6 percent above the sale price of drugs that qualify under the 340B program, but the final rule instead pays hospitals 22.5 percent less than sale prices—a move that will cut $1.6 billion in drug discount payments, according to a CMS fact sheet. The cut will go into effect January 1 of next year; rural sole community hospitals, children’s hospitals, and certain cancer hospitals are excluded from the reimbursement changes in 2018, but will be required to adhere to the claim modifier requirement.
Over the past four months, objections to the ruling have come from 340B Health, the American Hospital Association, unified protest from rural hospitals that will be negatively affected, and even CMS’ own Advisory Panel on Hospital Outpatient Payment. Additionally, the U.S. government has displayed unprecedented bipartisan support of the 340B program, with a letter signed by 228 of the 435 members of the US House of Representatives, and another letter signed by 57 of the 100 members of the Senate. Despite all this, however, the rule has passed; CMS maintains that “the OPPS rule will increase access to care, lower out-of-pocket drug costs for Medicare beneficiaries and allow for more choices for patients,” reports Fierce Healthcare. CMS Administrator Seema Verma said in an announcement, “Medicare beneficiaries would benefit from the discounts hospitals receive under the 340B program by saving an estimated $320 million on copayments for these drugs in 2018 alone.”
Hospitals participating in the 340B program are not accepting the ruling lying down, and are being vocal about their opposition. The ruling will “harm patients, raise the cost of prescription drugs and other services, and undermine the vital safety net providers across the country that serve low-income and other vulnerable populations,” according to a statement release by 340B Health, an association of hospitals and health systems in the 340B program. “By slashing Medicare Part B outpatient drug payments for 340B hospitals by nearly 30 percent, CMS is taking an unprecedented action that will harm patient care.”
“CMS’s decision in today’s rule to cut Medicare payments to hospitals for drugs covered under the 340B program will dramatically threaten access to health care for many patients, including uninsured and other vulnerable populations. We strongly urge CMS to abandon its misguided 340B rule, and instead take direct action to halt the unchecked, unsustainable increases in the cost of drugs,” said American Hospital Association Executive Vice President Tom Nickels in a statement.
Legal action in the works
These objections have resulted in a recently filed lawsuit. On November 13, the American Hospital Association, America’s Essential Hospitals, and the Association of American Medical Colleges, along with three health systems, Eastern Maine Healthcare Systems in Maine, Henry Ford Health System in Detroit, and Park Ridge Health in North Carolina, jointly filed a lawsuit in U.S. District Court for the District of Columbia. The lawsuit “argues the 340B provisions of the OPPS final rule violate the Social Security Act and should be set aside,” and “further alleges the 340B provisions are outside of the HHS secretary’s statutory authority,” Becker’s Hospital Review reports.
And, on November 14, Reps. David McKinley (R-WV) and Mike Thompson (D-CA) introduced H.R. 4392, a bill that aims to prevent these dramatic Medicare reimbursement cuts. The bill asks HHS to maintain current 340B rates, rather than implement the recently announced ruling. David McKinley said in a statement, “CMS’ misguided rule jeopardizes the ability of rural hospitals to provide vital services. This bill ensures that hospitals are able to continue providing affordable services, and gives rural families peace of mind.”
However, the Pharmaceutical Research and Manufacturers of America (PhRMA) remains in favor of the reimbursement cuts. “There is growing evidence that in certain instances Medicare is vastly over-paying for medicines used at some 340B facilities, and moreover patients are not always seeing any benefit,” a spokeswoman for the group told Bloomberg Law. “This rule corrects the overpayment problem, and Medicare patients will also see a reduction in their costs. There is still more work to be done to fix the 340B program so that patients do in fact benefit and it no longer drives up health care costs.”
Compliance remains a priority
Despite, or perhaps because of, CMS’ new ruling, and regardless of ongoing politics and lawsuits surrounding the 340B program, hospitals must continue to remain vigilant when it comes to 340B compliance and serving their communities. Sentry recognizes that the ruling could have a significant impact on your 340B program. Rest assured knowing our solutions have accommodated the addition of claim modifiers for years, and we are prepared to do the same for Medicare. We are currently considering all aspects of the new regulation to ensure that our solutions will help you continue meeting any and all new requirements.