CMS released its final hospital outpatient prospective payment system (OPPS) rule for 2018, which included a significant cut to drug payments to hospitals which use the 340B drug discount program. The result was the quick threat of a lawsuit from three major medical groups.

The agency defended those provisions of the rule, saying it would “lower out-of-pocket drug costs for people with Medicare and empower patients with more choices.” Pharmaceutical Research and Manufacturers of America (PhRMA) have claimed the program has incentivized the shift of care from physician offices to hospital-owned outpatient settings, while community oncology practices represented by the Community Oncology Alliance (COA) have said “mega hospital corporations” are “abusing” a program intended to help a smaller group of safety-net facilities.

1. The 340B change hospitals want to prevent

Under this rule, the pay rate for physician-administered Medicare Part B drugs purchased through the 340B program would be cut from the average sales price (ASP) plus 6 percent to ASP minus 22 percent. The total impact would be a $1.6 billion cut in payments to those hospitals.

In response, the American Hospital Association, America’s Essential Hospitals and the Association of American Medical Colleges have promised to sue CMS, saying the change would force them to cut back on services and staff and arguing it goes against what Congress intended when it created the 340B program.

“CMS has offered no evidence these payment cuts would achieve its stated policy goal: to combat rising drug prices,” America’s Essential Hospitals president and CEO Bruce Seigel, MD, MPH, said in a statement. “Instead, this policy weakens the 340B program’s value as a tool to lower prices while raising costs and administrative burdens on hospitals least able to absorb these changes.”

Some 228 members of the U.S. House and 57 members of the Senate had backed up parts of the hospitals’ position in letters sent to CMS in September.

The final rule would exempt children’s hospitals, critical access hospitals and some cancer hospitals from the cuts.

2. For-profit hospitals would benefit

Since the OPPS rule is budget neutral, CMS has to redistribute the $1.6 billion in savings from the 340B change. That money would be reallocated by raising non-drug pay rates for all hospitals. This would financially benefit for-profit providers which don’t qualify for 340B and thus wouldn’t be impacted by the cuts.

3. Payment update

Taking into account all the policies in the final rule, CMS estimated providers paid under OPPS will receive a 1.4 percent payment increase in 2018. That’s close the rate hike of 1.35 percent before taking into account other adjustments, such as one for multi-factor productivity. Overall OPPS payments will total $70 billion, CMS said, an increase of $5.8 billion from 2017.

4. New procedures available for OPPS payment

Six procedures are being removed from the Inpatient Only (IPO) list, allowing outpatient departments to receive OPPS payments when Medicare beneficiaries receive those services in these lower cost settings.

The six procedures are: 1) total knee arthroplasty; 2) laparoscopy, surgical prostatectomy, retropubic radical, including nerve sparing, includes robotic assistance, when performed; 3) laparoscopy, surgical, repair of paraesophageal hernia with implantation of mesh; 4) laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device component only; 5) laparoscopy, surgical, gastric restrictive procedure; removal and replacement of adjustable gastric restrictive device component only; and 6) laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device and subcutaneous port components.

One procedure for acute myocardial infarction patients was added to the IPO list: Percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary artery bypass graft, any combination of intracoronary stent, artherectomy and angioplasty, including aspiration thrombectomy when performed, single vessel.

5. Home health model not finalized

Along with the OPPS rule, CMS released the final rule for payments to home health agencies for 2018. It abandoned the planned Home Health Groupings Model, estimating the change from the current 60-day episode of care into a 30-day payment period would have cut reimbursements to those providers by as much as 15 percent.

“CMS's actions today will help preserve access to care for the three and a half million Medicare beneficiaries who rely on home health services every year,” said William Dombi, president of the National Association for Home Care & Hospice (NAHC).