Home Discount rate CMS reverses 340B drug pricing program rate reductions

CMS reverses 340B drug pricing program rate reductions

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The Centers for Medicare and Medicaid Services (CMS) has announced that it “fully expects” to reverse Medicare Part B rate reductions for separately payable drugs acquired through the 340B drug pricing program, which would result in a estimated increase of $1.96 billion for 340B hospitals. The announcement was made in conjunction with the recently proposed rule for calendar year (CY) 2023 Medicare Outpatient Prospective Payment System (OPPS) (related fact sheet), and stems from the recent Supreme Court ruling invalidating the same rate reductions for CY 2018 and CY 2019. 340B hospitals are public, non-profit hospitals that meet certain statutory conditions related to their commitment to serve low-income patients. As of January 1, 2018, certain separately payable drugs and biologics — which they can purchase at a discount under the 340B program — are reimbursed at significantly reduced rates by the Medicare program.

This news is especially significant given the unresolved issues surrounding the resolution of the Supreme Court’s decision. The Supreme Court litigation was limited to CY 2018 and CY 2019, but CMS had pursued the same payment reductions for 340B hospitals in CY 2020, CY 2021 and CY 2022 – and planned to continue them in CY 2023. However, CMS has announced that it will not continue the cuts in CY 2023, suggesting that it considers the Supreme Court ruling to apply to other years as well. CMS’s announcement indicates that going forward, it intends to discontinue its 340B drug payment policy differently than other drugs reimbursed by Medicare’s OPPS.

Significant issues remain with reversal of rate reductions for CY 2018 through CY 2022. Medicare OPPS payments are “budget neutral,” meaning rate reductions for 340B drugs have increased payments for other services reimbursed through the OPPS. For CY 2023, the estimated impact of these changes is $1.96 billion. CMS could potentially claw back payments from non-340B hospitals to remedy 340B hospitals for invalidated rate reductions for CY 2018 through CY 2022, although it is unclear if they will. In the proposed CY 2023 OPPS, CMS is seeking public comment on how best to craft remedies for CY 2018 through CY 2022. CMS’s remedies for CY 2018 and CY 2019 will also be subject to District Court oversight. American from the District of Columbia.

Also of interest to 340B hospitals is whether Medicare will continue to require identification of 340B drugs on Medicare claim forms, if there is no further impact on reimbursement. Identifying 340B drugs at the time of billing has created administrative complexity for 340B hospitals.

© 2022 Foley & Lardner LLPNational Law Review, Volume XII, Number 199