Physician Practice

Payment changes for 340B drug discount program in 2018 OPPS proposed rule

Physician Practice Insider, July 21, 2017

One proposal that would have an enormous impact on a large number of hospitals is CMS’ proposal to reduce the payment to hospitals that acquire their drugs through the 340B drug discount program. The program allows eligible hospitals, such as disproportionate share, rural and cancer centers to purchase drugs at a reduced price to allow those resources to be used elsewhere. CMS currently reimburses all hospitals for separately payable drugs at the standard average sales price (ASP) plus 6%.

For 2018, the agency proposes a dramatic decrease in what it would pay hospitals participating in the 340B program for separately payable drugs, excluding those with pass-through status and vaccines, at ASP minus 22.5%, basing that deduction on an estimate from the Medicare Payment Advisory Commission.

The agency admits it does not know how much hospitals actually pay for these drugs, but predicts it could decrease such payments by up to $900 million. Since the proposal is to be budget neutral, this money would be redistributed throughout the OPPS for other items and services. In the rule, CMS notes that it may need to adjust the conversion factor in future years as it did previously because of a billion-dollar miscalculation in its clinical laboratory packaging policies.

To gather data about which drugs are purchased under the 340B program, CMS proposes to introduce a modifier, but the Executive Summary of the rule doesn’t indicate which providers would need to report this new modifier. In the text of the rule, CMS notes that it is asking those providers who do not receive drugs at discounted rates to be the ones reporting the new modifier.

“I wonder if this is a typo,” says Jugna Shah, MPH, president and founder of Nimitt Consulting. “Asking providers who do not get a discount to report a modifier seems to fly in the face of the very administrative burden the agency and this administration says it’s interested in reducing. Providers will want to weigh in with their comments.”

CMS is soliciting input on multiple facets of its 340B proposal, including the amount of the payment reduction, how to collect data, over what timeframe to implement the policy and whether certain types of hospitals should be excluded.

This article was originally published in Revenue Cycle Advisor.

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