CMS Drastically Cuts 340B Payments in 2018 OPPS/ASC Final Rule
On November 1, CMS released the final rule updating the hospital Outpatient Prospective Payment System (“OPPS”) rates by 1.35 percent in CY 2018 compared to 2017. This is down from 1.75 percent in the proposed rule. In addition, CMS removed total knee replacements from the inpatient-only list, intending to save Medicare money and route more procedures into ambulatory surgery centers.
Notably, the rule also finalizes CMS’s proposal to drastically cut payment for drugs under the 340B drug pricing program. Hospitals participating in the 340B program currently receive six percent on top of the drug’s average sales price. Starting January 1, 2018, hospitals will receive the average sales price minus 22.5 percent. This change results in $1.6 billion in payment cuts to 340B participating hospitals. CMS plans on redistributing $1.6 billion to other non-drug programs within the OPPS.
The final rule comes on the heels of letters from a majority of the House and Senate asking CMS to be mindful of stakeholder feedback on the OPPS proposed rule. The American Hospital Association, Association of American Medical Colleges and America’s Essential Hospital groups are planning to sue CMS to prevent the significant payment cuts under the 340B program.
Physician Payment Rule Released by CMS
CMS released the CY 2018 Physician Fee Schedule final rule on November 2. The rule finalizes a policy to pay off-campus facilities 40 percent of what would have been paid under outpatient service rates. The reduction in payment is less severe than the agency’s initial proposal to cut payments in half. While CMS argues this change will promote more competition between hospitals and physician practices, providers are criticizing the decision because it would decrease access to care at off-campus facilities in already underserved communities.
CMS will also pay for new telehealth services, such as health risk assessments, psychotherapy for crisis and care planning for chronic care management.
Additionally, CMS issued a final rule updating the Quality Payment Program for physicians. The rule exempts small providers, or physician practices with less than $90,000 in Medicare revenue or fewer than 200 unique Medicare patients per year, from complying with MACRA. CMS claims the final rule eases the burden on clinicians by requiring only “meaningful measures.” To encourage the use of telehealth, the agency also claims it will reward doctors who read patient-generated health data from “consumer-grade devices” that send data in real or near-real time.
House Republicans Introduce Tax Reform Legislation
House Republican leaders unveiled a tax reform proposal. Despite a push from conservative Republicans, the legislation does not include a repeal of the ACA’s individual mandate. Also, the bill does not make any changes to tax exemption for not-for-profit hospitals. The measure only repeals two tax breaks related to health care: one allows patients to deduct some expensive health care bills and the other is designed to spur the development of new drugs to treat rare diseases. The proposal includes a section imposing a 20 percent excise tax on any wages of more than $1 million for executives who work at tax-exempt organizations, which the American Hospital Association has flagged as concerning for hospital executives.
Alternative Cost-Sharing Reduction Payment Plan Introduced
A conservative alternative to the bipartisan Alexander-Murray was introduced by Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Chairman Kevin Brady (R-TX). The Healthcare Market Certainty and Mandate Relief Act of 2017 (H.R. 4200 and S.2052) would fund cost-sharing reduction payments for two years and eliminate certain ACA mandates temporarily. Changes to the ACA include eliminating the individual mandate from 2017-2021, eliminating the employer mandate from 2015-2017 and expanding the use of health savings accounts.
House Passes CHIP Funding Legislation
On November 3, the House passed a bill to reauthorize the Children’s Health Insurance Program (“CHIP”) for five years. After extensive debate from the parties over the pay-for provisions prior to the vote, the proposal passed on a party-line vote: 242 to 174. The measure also includes funding for federally qualified health centers and other health programs. The CHIP funding bill now moves to the Senate for consideration.
Health-Related Bills Introduced This Week
Sen. John Thune, along with other senators in the Health IT working group, re-introduced S.2059 to roll back meaningful use requirements in several ways. This legislation creates a 90-day reporting period in 2017, removes meaningful use’s all-or-nothing scoring approach and expands hardship exemptions. One section eliminates part of the 2009 HITECH Act requiring HHS secretary to create “more stringent measures of meaningful use.”
Rep. Erik Paulsen (R-MN) introduced a bill (H.R. 4215) to amend Title XVIII of the Social Security Act to ensure that providers of services receive adequate payments for the acquisition of hematopoietic stem cells under Medicare.
Sens. Rob Portman (R-OH) and Michael Bennett (D-CO) introduced a bill (S. 2051) to amend Title XVIII of the Social Security Act to modernize the physician self-referral prohibitions to promote care coordination in the merit-based incentive payment system and to facilitate participation in alternative payment models under Medicare. Rep. Larry Bucshon (R-IN) introduced a companion measure on the House side (H.R. 4206).
Rep. Billy Long (R-MO) introduced the HHS Cybersecurity Modernization Act (H.R. 4191), which is intended to increase collaboration between HHS and the health care community to protect health data. The bill would require HHS to produce a report on its role in securing its own internal information systems compared to its role in providing guidance, information, education, training and assistance to the health care sector and how the agency will differentiate between those two roles.
Rep. Jodey Arrington (R-TX) introduced a bill (H.R. 4178) to amend Title XVIII of the Social Security Act to provide for a permanent extension of the Medicare-dependent hospital program.
Rep. Kenny Marchant (R-TX) introduced a bill (H.R. 4169) to amend Title XVIII of the Social Security Act to remove the enrollment restriction on certain physicians and practitioners prescribing covered outpatient drugs under the Medicare prescription drug program.
Next Week in Washington
The House and Senate return Monday for a full legislative week. On Wednesday, the House Energy & Commerce Health Subcommittee will hold a hearing on CMS’s treatment of alternative pay models in the new physician pay scheme. Congress will continue to work on tax reform and funding cost-sharing reduction payments.
This Week in Washington in History
214 years ago this week, 1803: The U.S. Senate ratifies the purchase of the entire Louisiana area in North America by a vote of 24 to 7. For $15 million dollars, the U.S. adds territory that will eventually become 13 more states. In doing so, President Jefferson forgoes the passage of a Constitutional amendment to validate the purchase. The Supreme Court would later affirm the decision.
15 years ago this week, 2002: Former Enron CEO Andrew Fastow is convicted on 78 counts of conspiracy, money laundering, obstruction of justice and wire fraud. The Enron collapse led to Congress passing the Sarbanes-Oxley Act in the summer of 2002. Sarbanes-Oxley dramatically increased the auditing and transparency rules for accounting firms.
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