CMS Proposes Rulemaking to Remedy 340B-Acquired Drug Payment Policy
The United States Centers for Medicare and Medicaid Services (“CMS”) recently announced proposed rulemaking to remedy the payment rate dispute for the 340B Drug Pricing Program (the “340B Program”) in the wake of the Supreme Court’s decision in American Hospital Association v. Becerra, 142 S. Ct. 1896 (2022).
The 340B Program arises under section 340B of the Public Health Service Act, allowing participating hospitals and providers to purchase certain covered outpatient drugs or biologicals (collectively “drugs”) from manufacturers at discounted prices. Prior to 2018, CMS generally calculated reimbursement for Part B outpatient drugs provided under the 340B Program as the average sales price ("ASP") plus 6%. In a 2017 final rule, CMS cut the 340B Program payment rate to ASP minus 22.5% for the period of CY 2018 through CY 2022. To meet statutory budget neutrality requirements, CMS increased payments to all hospitals, regardless of participation in the 340B Program, for non-drug items and services for the same period On June 15, 2022, the Supreme Court unanimously ruled that the differential payment rates for 340B-acquired drugs were unlawful, finding that the U.S. Department of Health and Human Services’ (“HHS”) had failed to conduct a survey of hospitals’ acquisition costs under the relevant statute prior to implementing the rate changes. The matter was remanded back to CMS for further rulemaking.
In the recently announced proposed rulemaking, 88 FR 44078, CMS proposes making a one-time lump-sum payment to each 340B-covered entity that was paid less due to the 340B Program rate dispute for CY 2018-2022. This one-time, lump-sum payment would reimburse both the lower reimbursement rates and any beneficiary cost-sharing lost during the 340B Program rate dispute. However, to offset such reimbursement and maintain budget neutrality, CMS further proposed reducing future non-drug item and service payments by adjusting the OPPS conversion factor by minus 0.5% starting in CY 2025. New providers, who did not enroll in Medicare until after January 1, 2018, and thus did not fully benefit from the increased payment for non-drug items and services from CY 2018 through CY 2022, would be excluded from the prospective rate reduction.
A fact sheet for the proposed 340B Program rulemaking can be found here. The comment period on this proposed rule closes on August 28, 2023.
CMS Announces Proposed Updated Rates for Hospital Outpatient and ASC Payment Systems, Expanded Behavioral Healthcare Access, and Increased Hospital Price Transparency for CY 2024
CMS recently announced proposed rulemaking, updating payment rates for hospital outpatient services and ambulatory surgery centers ("ASCs") as well as expanding behavioral health service coverage and increasing hospital price transparency. Such rulemaking is part of CMS’ annual updates to the Hospital Outpatient Prospective Payment System ("OPPS") and ASC Payment System for CY 2024.
CMS is proposing to update OPPS payment rates for CY 2024 for hospitals that meet applicable quality reporting requirements by 2.8%. This rate was calculated by estimating a hospital market basket percentage increase of 3% which was then reduced by a 0.2 percentage point productivity adjustment. ASCs that meet relevant quality reporting requirements would similarly be eligible for a 2.8% increase in payment rates.
Regarding behavioral health services, CMS proposes implementation of certain provisions of the 2023 Consolidated Appropriations Act that created a new benefit category for Intensive Outpatient Program (“IOP”) services. Under this proposal, CMS would establish payment and program requirements for IOP services across various settings, including hospital outpatient departments, Community Mental Health Centers, Federally Qualified Health Centers, and Rural Health Clinics, and Opioid Treatment Programs ("OTPs"), effective January 1, 2024. Regarding IOP services offered by OTPs, the proposed rule clarifies that these intensive behavioral health services are available for individuals with mental health conditions and for individuals with substance use disorders.
In addition, CMS proposes several methods to strengthen the current hospital price transparency regulations, which require each hospital operating in the United States to make its standard charges public. Such proposals include new requirements for standardizing a hospital’s publication of its standard charge information by requiring standard charge information be maintained in a machine-readable file format that is publicly available on their websites. CMS also proposed new policies to improve enforcement of hospital price transparency, including: (1) certification by hospital officials as to the accuracy and completeness of data; (2) requiring hospital acknowledgment of warning notices; (3) reserving the right for CMS to communicate directly with health system leadership about all of its hospitals, not just one hospital at a time; and (4) publishing other enforcement activities, in addition to civil monetary penalties, on a CMS website.
Proposed 2024 Physician Fee Schedule Advances New Initiatives but Retreats on Physician Payment Rate
CMS recently announced its proposed annual updates to the Medicare Physician Fee Schedule ("PFS") for CY 2024. Significantly, although the proposed rulemaking includes initiatives to expand health equity and increase access to critical medical services, including behavioral health care and certain oral health services, the update also reduces the overall PFS payment rate (the “conversion factor”).
Under the proposed rule, the proposed CY 2024 PFS conversion factor would be reduced to $32.75, a decrease of $1.14 (or 3.34%) from the current CY 2023 conversion factor of $33.89. Such reduction decreases the PFS conversion factor to its lowest rate since 1992. Despite this reduction, CMS claims that overall payment rates under the PFS would only be reduced by 1.25% as compared to CY 2023, as CMS is further proposing significant increases in payment for primary care and other kinds of direct patient care which would offset the conversion factor decrease.
Moreover, under this proposed rulemaking, CMS has announced coding and payment updates for several new services. Such coding and payment updates include: (1) allowing marriage and family therapists, mental health counselors, and addiction counselors to enroll in Medicare and bill for their services; (2) increased payment for crisis care, substance use disorder treatment, and psychotherapy; (3) coding and payment for social determinants of health risk assessments as add-ons to an annual wellness or evaluation and management visits; (4) separate coding and payment for community health integration services, including person-centered planning, health system coordination, promoting patient self-advocacy, and facilitating access to community-based resources; (5) payment for Principal Illness Navigation services to help patients navigate cancer treatment and treatment for other serious illnesses; and, (6) payment for certain dental services prior to and during several different cancer treatments, including, but not limited to, chemotherapy.
In addition, under this rule, CMS proposes updates to its Innovation Center programs, including the Medicare Shared Savings Program, the Medicare Diabetes Prevention Program ("MDPP"), and Merit-Based Incentive Payment System ("MIPS") for CY 2024. Such changes involve annual updates to benchmarking/performance thresholds, treatment modalities, and reporting standards which participating providers should review and familiarize themselves with prior to the start of CY 2024.
The proposed rule (CMS-1785-P) will be published on August 7, 2023. An unpublished version of the proposed rule can be accessed here. The proposed A fact sheet for the proposed rule can be found here.