Skip to main content

CMS Final Rules Cut 340B, OPPS as Hospitals Carp

Analysis  |  By John Commins  
   December 03, 2020

The new final rules did not sit well with providers, who complained that the cuts are coming at a critical time for financially strapped hospitals.

Medicare on Wednesday unveiled long-anticipated final rules that will continue cuts to the 340B drug program, expand coverage for some procedures in ambulatory surgery centers, and gradually eliminate all 1,700 inpatient-only procedures under the Outpatient Prospective Payment System.

Eliminating the In-patient Only List

The Centers for Medicare & Medicaid Services said that eliminating the inpatient-only list -- starting with about 300 primarily musculoskeletal-related services, effective January 1, 2021 -- will give patients and physicians more freedom to choose an appropriate and potentially cost-saving care setting.

In the short term, CMS said, providing care in an outpatient setting during the public health emergency will also improve access to care for non-COVID-19 patients.

CMS Administrator Seema Verma said eliminating the in-patient only list will remove an incentive to send patients to hospitals for higher-priced procedures that could be done in lower-cost outpatient settings that will "level the playing field and boost competition at every turn."

"Today's rule is no different," Verma said Wednesday. "It allows doctors and patients to make decisions about the most appropriate site of care, based on what makes the most sense for the course of treatment and the patient without micromanagement from Washington."

The new final rule did not sit well with hospital stakeholders, who complained that the cuts are coming at a critical time for financially strapped providers.

"(The) Outpatient Prospective Payment System final rule takes critical resources away from hospitals as they strain under the heavy financial burden of COVID-19, and it threatens access to health are in underserved communities across the country now and after the public health crisis ends," said Beth Feldpush, SVP of policy and advocacy at America's Essential Hospitals.

"This rule would be bad policy at any time and is especially harmful now, as the public health emergency intensifies and front-line hospitals face unprecedented capacity and cost pressures," Feldpush said.

Tom Nickels, EVP at the American Hospital Association, said the elimination of inpatient-only list over three years has the potential to harm patients.

"The services on the inpatient-only list are often complex and complicated surgical procedures that require the close care and coordinated services provided in a hospital inpatient setting," he said.

340B Cuts Continue

The final rule also continues CMS's ongoing policy since 2018 of reducing payments for 340B drug, using a formula that pays the Average Sales Price plus 6% to an ASP minus 22.5%.

CMS said the policy lowers out-of-pocket drug costs for Medicare beneficiaries by letting them share in the discount that hospitals receive under 340B. Medicare beneficiaries have saved nearly $1 billion on drug costs, since the policy went into effect in 2018, and CMS expects to see an additional $300 million in savings for beneficiaries in 2021.

A federal appeals court in July overturned a district court ruling in a suit brought by hospital stakeholders. In upholding the policy, the appeals court said that CMS was acting within a "reasonable interpretation of the Medicare statute."

The AHA's Tom Nickels said that continuing the 340B cuts "undermines the effectiveness of the 340B program and exacerbates the strain placed on hospitals serving vulnerable communities."

"These cuts conflict with Congress' clear intent, perpetuate the Administration's inaccurate interpretation of the law, as well as its failure to protect the program from continued assaults by drug companies," Nickels said.

Feldpush said "there is no policy justification" for the 340B cuts, which she said "flout congressional intent for the 340B program and undermine the savings it was designed to create for hospitals that care for underserved people and communities."

She urged CMS to "reverse course on this damaging policy and restore support essential hospitals need to meet their safety-net mission."

ASC CPL Expands

The final rule also adds 11 procedures to the ambulatory surgery center covered procedures list, including total hip arthroplasty, and revises the criteria used to add surgical procedures to the ASC CPL.

"Using our revised criteria, we are adding an additional 267 surgical procedures to the ASC CPL beginning January 1, 2021," CMS said. "Finally, we are adopting a notification process for surgical procedures the public believes can be added to the ASC CPL under the criteria we are retaining."

“(The) Outpatient Prospective Payment System final rule takes critical resources away from hospitals as they strain under the heavy financial burden of COVID-19, and it threatens access to health are in underserved communities across the country now and after the public health crisis ends.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Los Angeles, California, USA - 21 Jule 2019: Illustrative Editorial of MEDICARE.GOV website homepage. MEDICARE logo visible on display screen. II.studio / Shutterstock


KEY TAKEAWAYS

CMS says eliminating the inpatient-only list will give patients and physicians more freedom to choose an appropriate and potentially cost-saving care setting.

The 340B cuts lower out-of-pocket drug costs for Medicare beneficiaries by letting them share in the discount that hospitals receive under 340B.

Medicare beneficiaries have saved nearly $1 billion on drug costs, since the policy went into effect in 2018, and CMS expects to see an additional $300 million in savings for beneficiaries in 2021.


Get the latest on healthcare leadership in your inbox.