CMS Advisory Panel Urges Agency to Drop Proposed 340B Drug Payment Reform

Revenue Cycle Advisor, August 28, 2017

CMS proposes slashing reimbursement for drugs purchased in the 340B drug discount program by 22.5%.

This article was originally published on Revenue Cycle Advisor on August 23.

The CMS policy with potentially the largest administrative and financial burden for hospitals in the 2018 OPPS proposed rule should not be finalized, according to CMS' own advisory panel.

In the rule, the agency proposes reducing payments for drugs purchased under the 340B drug discount program by 22.5%. But when CMS advisory panel members from hospitals and health systems met at the Hospital Outpatient Payment (HOP) panel at CMS on Monday, August 21, the panel said they agreed with presenters and audience members who were against CMS moving forward with this proposal. Presenters also discussed CMS’ proposed use of a new modifier to signify drugs not purchased under the program.

“This [proposed policy] is one more reason we can’t get healthcare costs to go down,” said panelist Michael K. Schroyer, RN, regional president of St. Vincent Northeast Region, of Indianapolis. Schroyer noted CMS’ proposed 340B policy would both potentially reduce payments to hospitals that need the revenue most and would require all other hospitals to implement an administratively complex process involved in reporting a new modifier.

The 340B program allows eligible hospitals, such as disproportionate share, rural, and cancer centers, to purchase drugs at a reduced price so the savings generated can be used to provide additional services to the population the hospitals are serving. CMS currently reimburses all hospitals for separately payable drugs at the standard average sales price (ASP) plus 6%. Presenters from the Provider Roundtable (PRT) reminded CMS and the HOP panel of lengthy historical discussions on the separately payable drug policy, which resulted in CMS agreeing to pay all providers at the statutory requirement of ASP plus 6%.

CMS’ 340B proposal drew the most debate at the HOP panel, with public presentations from the PRT, MedStar Health on behalf of the American Hospital Association, the Association of Community Cancer Centers, and from audience members. All asked the panel to recommend not finalizing the policy.

In addition to recommending CMS not finalize the policy, the HOP panel recommended the agency review the comments it requested on the 340B proposal about how CMS might redistribute funds from any potential payment changes made. The panel also recommended CMS review comments on how to assess the regulatory burden and cost to providers for implementing a data collection policy. 

“It was very interesting to hear HOP panel members and CMS clearly articulate the options on the table for what CMS might do with the savings generated from its proposal,” said Jugna Shah, MPH, president and founder of Nimitt Consulting.

As part of the discussion, the panel suggested the possibility of CMS following its typical budget neutrality process and keeping the money in the OPPS by either increasing the conversion factor or the relative weights for other payable services. There was also discussion about the agency possibly assigning the money more directly to solely the 340B providers affected by the revenue reduction. Other options included taking the money out of the OPPS and directing it to other Part B providers, such as ambulatory surgery centers or physicians, or putting the money back in the Medicare Trust Fund.

“The latter two options are very controversial and have raised many concerns and much opposition,” says Shah. “There was a unanimous sentiment in the room that it would be egregious for CMS to take the savings out of the OPPS and to give it to other Part B providers or to simply keep the money.”

Presenters noted that hospitals participating in the 340B drug discount program often use those savings to invest in community-benefit programs or to assist in care for uninsured patients.

In addition, the panel made recommendations based on presenter proposals, including:

  • CMS should not change the status indicator for CPT code 38205 (blood-derived hematopoietic progenitor cell harvesting for transplantation, per collection; allogeneic) from B (non-allowed OPPS item or service) to S (significant procedure not subject to multiple procedure discounting)
  • CMS should not package low-level drug administration CPT/HCPCS codes associated with APC 5691 (Level 1 Drug Administration) and APC 5692 (Level 2 Drug Administration) when reported with other separately payable services

“It was great to see the HOP panel so engaged and supportive of presenter requests, especially on 340B and drug administration packaging,” said Shah. “But we have to remember that the panel’s recommendations are only recommendations and that CMS is not required to implement them.”

Shah reminds providers that it is still critical for them to weigh in on the 340B proposal, as well as any others included in the proposed rule, by submitting official comments to CMS. Comments on the 2018 OPPS proposed rule are due by September 11.

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