CMS cuts hospital outpatient rates in final rule

CMS plans to cut $380 million in 2019 by establishing site-neutral payments to hospitals. The change, which was outlined in CMS’ Outpatient Prospective Payment System (OPPS) final rule on Friday, will lower out-of-pocket costs for beneficiaries but also reduce payments for hospital-owned outpatient settings.

The payment change will be phased in over two years.

The hospital industry immediately responded to the payment cut, with the American Hospital Association (AHA) slamming the rule and announcing its plan to launch a lawsuit against CMS’ actions.

“These ill-advised cuts will hit patients in rural and vulnerable communities especially hard,” Tom Nickels, executive vice president of the AHA, said in a statement.

According to the AHA, the rule “ignores” the differences between outpatient departments and other sites of care by treating the payments the same. Studies shows outpatient settings tend to treat patients who are sicker and poorer than other settings.

In addition, the final rule also expands payment cuts to off-site hospital facilities for the 340B drug program, which was met with industry backlash when it was originally proposed in July. The 340B program allows certain hospitals to purchase outpatient drugs from manufacturers at or below specified prices and be reimbursed at a higher rate from Medicare. Reimbursement was already cut to this program in 2018.

The rule extends the cuts to other sites of care.

Combined, the actions overstep CMS’ authority, the AHA alleged. AHA has already sued HHS over the 340B cuts.

“These actions clearly exceed the administration’s legal authority,” Nickels said. “The AHA, joined by the AAMC (American Association of Medical Colleges) and member hospitals, intends to promptly bring a court challenge to the new rule’s site-neutral provisions. The AHA, along with other hospital associations and member hospitals, is already challenging the 340B policy included in the current outpatient rule.”

HHS announced on Oct. 31 that it would speed up a rule to set price ceilings and penalties for 340B by implementing it on Jan. 1, 2019, instead of July 1, 2019.

See the final OPPS here.