340b hospitals to get $9 billion in back pay under CMS proposal

The Centers for Medicare and Medicaid Services will pay $9 billion to offset reductions in payments to 340b-eligible hospitals that the Supreme Court has ruled illegal, the agency said in a proposed rule released Friday.

CMS Cuts Medicare 340b Payments Nearly 30% for most outpatient drugs from 2018 to September 27, 2022, The Supreme Court will give its verdict in June 2022 CMS did not have the authority to reduce reimbursement because it did not collect data on how much hospitals paid for outpatient drugs.

On Friday, CMS proposed a one-time payment of $9 billion to each of the roughly 1,600 affected 340b-covered hospitals in late 2023 or early 2024. Underpaid due to lapsed policy, Providers and other stakeholders have 60 days to submit comments on the proposal, which CMS plans to finalize by November 1.

“It fills her [payment] “It’s up to hospitals to make a difference in the most expedient way that isn’t disruptive,” said Dr. Meena Seshamani, CMS Deputy Administrator and Director of the Centers for Medicare & Medicaid. ,

340b drug discount program Hospitals that treat low-income and uninsured patients receive steep drug discounts of up to 50%. hospital, especially in rural areassays the program is important, especially when providers are struggling to high labor and supply costs,

The proposed rule would need to be budget-neutral, meaning that CMS would reduce reimbursement for other services and products so as not to change annual Medicare spending. CMS estimates that all hospitals were paid $7.8 billion more for non-drug goods and services from 2018 through September 27, 2022, than they would have been paid in the absence of the 340b payment cut.

Under the proposal, the agency would reduce future non-drug item and service payments by reducing outpatient payment rates by 0.5% from 2025 to 2041. CMS estimates that a 0.5% reduction in the outpatient potential payment system conversion factor for those non-drug items and services will amount to $335 million in 2025.

The proposed rule drew mixed reactions from hospital associations. Rick Pollack, president and CEO of the American Hospital Association, said in a statement that while the AHA is pleased that hospitals will be paid immediately through a lump sum, the association is disappointed that the federal government will charge other hospitals funds that “Can’t Afford the Extra Cost” to Cut Medicare Payments.”

Dr. Bruce Siegel, president and CEO of Essential Hospitals of America, said in a statement that the cut in non-drug payments “blunts the measure’s effect by ensuring lower payments for years into the future.” Siegel said the organization is also disappointed that the remedy doesn’t include interest.

The proposal takes into account the pressures on hospitals from inflation to workforce shortages, but rolling back five years of payments sets a dangerous precedent, Chip Kahn, president and CEO of the Federation of American Hospitals, said in a statement. “It is contrary to the law and violates the principles of finality and predictability that are foundational to the Medicare outpatient prospective payment system.”

Group buying and consulting organisation, Premier, said in a statement that the proposal represented “hidden claws”.

The American Hospital Association, among other stakeholders, has lobbied to preserve the 340b program, which faces a number of legal and regulatory threats. drug maker Continue to limit 340b drug exemptions offered through contract pharmacies That followed a Third Circuit Court of Appeals decision in January that largely supported three drug companies seeking to reduce drug rebates. Two similar cases are pending in federal appellate courts.

Hospital outpatient clinics are worried they’ll lose 340b eligibility since the Health Resources and Services Administration removed the guidance from its website in May, Guidance, issued during June 2020 covid-19 pandemic340b-eligible hospitals were allowed to prescribe discounted drugs for patients seen at off-site clinics, before the clinics were registered with the Office of Pharmacy Affairs Information System and listed on Medicare cost reports.

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