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NASH Comments on Proposed Medicare Outpatient Payment Regulation (part 2 of 4)

The National Alliance of Safety-Net Hospitals has submitted extensive comments to the Centers for Medicare & Medicaid Services about its proposed changes in the Medicare outpatient prospective payment system for 2020.

In its letter to CMS, NASH focuses on four issues:

  • CMS’s price transparency proposal
  • Reimbursement for 340B-covered prescription drugs
  • Medicare site-neutral payment policy
  • Proposed updates of the inpatient-only list of medical procedures

Today this blog features NASH’s comments about reimbursement for 340B-covered prescription drugs.  Yesterday we presented NASH’s views on CNN’s price transparency proposal; on Friday we present NASH’s views on Medicare site-neutral payment policy; and on Monday we present NASH’s perspective on CMS’s proposal to permit Medicare to pay for certain medical services on an outpatient basis rather than limiting them to being performed only on patients admitted to a hospital.

See the complete NASH letter to CMS here.

Reimbursement for 340B-Covered Prescription Drugs

The 340B prescription drug discount program helps improve access to high-cost prescription drugs for low-income patients and helps put additional resources into the hands of qualified providers so those providers can do more for such patients:  provide more care that their patients might otherwise not be able to afford, offer more services that might otherwise by unavailable to such patients, and do more outreach into communities consisting primarily of low-income residents.  Only providers that care for especially large numbers of low-income patients qualify to participate in the 340B program.

In this year’s proposed rule, CMS calls for reimbursing 340B-eligible providers at average sale price less 22.5 percent for 340B-covered prescription drugs.  NASH strongly opposes this proposal.

For the past two years CMS also has reimbursed 340B-eligible providers at average sale price less 22.5 percent for 340B-covered prescription drugs, a break from past policy, which reimbursed eligible providers at average sale price plus six percent.  This policy change was implemented even though Congress, which created the program, did not direct CMS to reduce payments to 340B providers that serve especially large numbers of low-income patients just to save money and certainly did not direct CMS to introduce new policies that seek to reduce the federal government’s commitment to serving low-income Americans.

Shortly after implementation of the reimbursement reduction that took effect in calendar year 2018, various stakeholders sued CMS over the payment cut and the courts agreed with the stakeholders and rejected the cut.  Despite the court’s ruling, CMS did not restore payments to average sale price plus six percent but continued to pay average sale price less 22.5 percent even though the court rejected this payment.

Despite the court’s rejection, CMS proposed the same payment cut for calendar year 2019:  average sale price minus 22.5 percent.  The stakeholders again sued and the courts again sided with stakeholders and rejected the payment cut.  Despite this, CMS again did not restore payments to average sale price plus six percent but continues to pay average sale price less 22.5 percent even though the court had now twice rejected this payment.

In light of these continued rejections by the courts, NASH encourages CMS to restore 340B payments to their previous level of average sale price plus six percent.  The courts have spoken and it is time to respect their verdict.

This leaves the question of how to reimburse providers for the revenue they lost when CMS continued to make essentially illegal underpayments for two full years, refusing to adjust its payments in the face of its losses in court – a question posed in the proposed regulation.  NASH believes the best way, the only way, to repair the damage done to safety-net providers by two years of underpayments is to restore those payments retroactively through a one-time, lump-sum payment that compensates them for every underpaid claim, every under-reimbursed prescription drug during the two-year period during which CMS continued to pay eligible providers average sale price less 22.5 percent despite not one but two court rulings that it must not do so.  These lump-sum payments, NASH believes, should be made in their entirety to all affected hospitals by the end of calendar year 2020.  To do this, NASH urges CMS to identify the amount of individual hospitals’ underpayments based on data hospitals have already submitted rather than requiring additional action by the injured parties.

As explained by the web site of the Health Resources and Services Administration, which operates the 340B program,

The 340B Program enables covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.

Federal policy should enhance this program and help it achieve its objectives, not make it harder for low-income patients and the providers that serve them.  NASH urges CMS to heed the federal government’s own rationale for the program and restore 340B payments to their previous level

See the complete NASH letter to CMS here.

Tomorrow:  NASH addresses CMS’s proposed changes in site-neutral payment policy

New Web Site Shows Maximum 340B Prices

Providers can now see the maximum prices for 340B-covered drugs on a new web site established by the federal Health Resources & Services Administration.

The web site, mandated by Congress after the U.S. Department of Health and Services’ Inspector General found that some providers are being overcharged, will enable 340B-eligible providers to identify the maximum price they can be charged for covered drugs.  This, HRSA believes, will help providers avoid being overcharged in the future.

Most private safety-net hospitals participate in the 340B program and consider it a vital tool in helping them serve their low-income communities.

Learn more in the Becker’s Hospital Review article “HRSA launches 340B ceiling price website” and visit the new web site itself (registration required).

More Potential Budget Obstacles for Private Safety-Net Hospitals

Part two of the Trump administration’s proposed FY 2020 budget brought more potential bad news for private safety-net hospitals.

 

Last week’s “lean budget” released by the White House included a number of challenges for private safety-net hospitals and this week’s release, intended to fill in some of the blanks that last week’s document left, brought more of the same.

Proposed Medicare challenges include:

  • a call for establishing a new process for calculating Medicare disproportionate share (Medicare DSH) uncompensated care payments
  • slashing Medicare bad debt reimbursement from 65 percent to 25 percent
  • continued movement toward site-neutral payments for outpatient services provided at hospital outpatient facilities

Newly proposed Medicaid challenges include:

  • extending Medicaid disproportionate share (Medicaid DSH) cuts beyond the currently planned six years
  • redesigning the formula for allocating Medicaid DSH funds to the states
  • authorizing states to verify beneficiaries’ Medicaid eligibility more than once a year
  • permitting states to apply means tests to Medicaid eligibility

The latest FY 2020 budget proposal also calls for:

  • consolidating Medicare, Medicaid, and children’s hospital medical education payments into single new capped medical education grant program
  • reduced 340B prescription drug discount program payments for some hospitals
  • reducing the grace period for payment of premiums for health insurance purchased on an insurance exchange
  • income-based increases in premiums for low-cost insurance purchased on those exchanges

All of these changes, if implemented, would pose problems for NASH members and most private safety-net hospitals.

Learn more from this week’s White House budget document.

New Reg Pushes Medicare Toward Site-Neutral Outpatient Payments

Medicare would make more payments for outpatient services on a site-neutral basis under a newly proposed regulation just released by the Centers for Medicare & Medicaid Services.

The 2019 Medicare outpatient prospective payment system regulation, published in proposal form, calls for:

  • paying physician fee schedule rates rather than hospital outpatient rates at excepted off-campus provider-based departments;
  • slashing payments for office visits;
  • extending this year’s 340B prescription drug discount payments, already cut nearly 30 percent this year, to additional providers; and
  • raising ambulatory surgical center rates and expanding the list of procedures that can be performed in such facilities so they can compete with hospitals for outpatient services.

The proposed regulation also calls for reducing quality reporting requirements and giving providers financial incentives to prescribe non-opioid pain medicine for surgery patients.

The regulation, which would affect provider payments beginning on January 1, 2019, was published in proposed form and will be finalized later in the year.  Stakeholders have until September 24 to submit comments to CMS.  For further information about what CMS has proposed, see this CMS fact sheet outlining the proposed regulation and the 761-page proposed regulation itself.

Energy and Commerce to Look at 340B Today

The Health Subcommittee of the House Energy and Commerce Committee will hold a hearing today to review various proposals to alter the 340B prescription drug discount program.

That program enables hospitals that care for especially large numbers of low-income patients to receive discounts on prescription drugs that they dispense on an outpatient basis to low-income patients.

Among the issues the Health Subcommittee is expected to consider are whether hospitals are using these discounts to benefit their low-income patients and whether the extent of the discounts the pharmaceutical industry is required to provide result in increased prescription drug costs for others.

The subcommittee has already held two hearings on the 340B program this year and is currently considering more than a dozen proposals to change the program in some way.

Private safety-net hospitals typically participate in the 340B program and consider it an essential tool in their efforts to serve the residents of the low-income communities in which they are located.

Learn more about the 340B program and the various proposals to change it currently before Congress in this Roll Call article.

GAO Recommends Changes in Oversight of 340B Program

The federal Government Accountability Office is recommending that the Department of Health and Human Services improve its oversight of the 340B prescription drug discount program.

That program was created by Congress to help safety-net providers obtain discounts on prescription drugs they dispense to low-income patients on an outpatient basis.  Those discounts are provided by pharmaceutical companies and not paid for with taxpayer money.

The 340B program has been controversial in recent years, and in response to a request from Congress for the GAO to look into the contract pharmacies that operate the 340B programs for many safety-net providers, the GAO performed an examination of the program.

Its review identified several weaknesses in the manner that HHS’s Health Resources and Services Administration oversees the program.

  • HRSA audits do not fully assess compliance with the 340B Program prohibition on duplicate discounts for drugs prescribed to Medicaid beneficiaries. Specifically, manufacturers cannot be required to provide both the 340B discount and a rebate through the Medicaid Drug Rebate Program. However, HRSA only assesses the potential for duplicate discounts in Medicaid fee-for-service and not Medicaid managed care. As a result, it cannot ensure compliance with this requirement for the majority of Medicaid prescriptions, which occur under managed care.
  • HRSA requires covered entities that have noncompliance issues identified during an audit to assess the full extent of noncompliance. However, because HRSA does not require all the covered entities to explain the methodology they used for determining the extent of the noncompliance, it does not know the scope of the assessments and whether they are effective at identifying the full extent of noncompliance.
  • HRSA does not require all covered entities to provide evidence that they have taken corrective action and are in compliance with program requirements prior to closing the audit. Instead, HRSA generally relies on each covered entity to self-attest that all audit findings have been addressed and that the entity came into compliance with 340B Program requirements.

To address these concerns, the GAO recommends that the HRSA administrator:

  • require covered entities to register contract pharmacies for each site of the entity for which a contract exists
  • issue guidance to covered entities on the prevention of duplicate discounts under Medicaid managed care, working with CMS as HRSA deems necessary to coordinate with guidance provided to state Medicaid programs
  • incorporate an assessment of covered entities’ compliance with the prohibition on duplicate discounts, as it relates to Medicaid managed care claims, into its audit process after guidance has been issued and ensure that identified violations are rectified by the entities
  • issue guidance on the length of time covered entities must look back following an audit to identify the full scope of noncompliance identified during the audit
  • require all covered entities to specify their methodology for identifying the full scope of noncompliance identified during the audit as part of their corrective action plans, and incorporate reviews of the methodology into their audit process to ensure that entities are adequately assessing the full scope of noncompliance
  • require all covered entities to provide evidence that their corrective action plans have been successfully implemented prior to closing audits, including documentation of the results of the entities’ assessments of the full scope of noncompliance identified during each audit. The Administrator of HRSA should provide more specific guidance to covered entities regarding contract pharmacy oversight, including the scope and frequency of such oversight

Private safety-net hospitals typically participate in the 340B program and consider it an essential tool in the work they do serving the low-income residents of their communities.

Go here to see highlights from the report and here to see Drug Discount Program: Federal Oversight of Compliance at 340B Contract Pharmacies Needs Improvement, the full GAO report.

Senate Committee Looks at 340B Program

The Senate Health, Education, Labor, and Pensions Committee (HELP) held a hearing last week on the 340B prescription drug discount program.

The hearing was prompted by complaints from pharmaceutical companies about the discounts they are required to provide to eligible providers and by concern that hospitals are insufficiently accountable for how they use the savings they derive from those discounts to serve their low-income patients.  In addition, the Centers for Medicare & Medicaid Services recently reduced its Medicare payments to participating hospitals.

During the hearing, Senate Republicans expressed support for the program but spoke of the need for greater transparency in the use of the savings the 340B program generates for hospitals and a clearer sense of how those savings benefit low-income payments.  Committee Democrats expressed similar concern but with less urgency.

Hospital industry representatives expressed concern that any new requirements could weaken the program and rejected the idea that savings are misused.  Committee members pushed back against these contentions.

Most private safety-net hospitals participate in the 340B program and it is a vital tool in their efforts to serve their low-income communities.

The Senate HELP Committee intends to hold additional hearings about the 340B program.

Learn more about the 340B hearing and the concerns that led to in this Healthcare Dive article.

Leave 340B Alone, CMS Advisory Group Says

The Centers for Medicare & Medicaid Services should not significantly reduce Medicare payments for some prescription drugs.

Or so says one of CMS’s own advisory panels.

The agency’s Advisory Panel on Outpatient Prospective Payment reached this conclusion after listening to testimony from hospital industry stakeholders who told of the savings the federal government’s 340B prescription drug discount program produces and how those savings enable hospitals in low-income areas to help low-income patients who would not otherwise be able to afford their drugs and help improve access to care for low-income patients with very limited health care options.

The panel’s recommendation came just a month after CMS proposed reducing Medicare reimbursement for 340B drugs from its current level, average sales price plus six percent, to average sales price less 22.5 percent.

NAUH agrees with the advisory panel:  it opposes the proposed change in the 340B program.

Critics of the program maintain that it is abused by hospitals, which are not required to reinvest their 340B savings in health care for the poor.  Program supporters maintain that hospitals do use those savings for this very purpose.

Most of the country’s private safety-net hospitals participate in the 340B program and consider it an essential part of their overall effort to serve the many low-income residents of the communities they serve.

CMS called for the change in the 340B program in a proposed regulation published in July.  Interested parties have until September 11 to comment on the proposal.

Learn more about this issue and the CMS advisory panel’s recommendation in this Fierce Healthcare article.

Congress Looks at 340B Program

Last week the House Energy and Commerce Committee took a look at the 340B prescription drug discount program, which requires pharmaceutical companies to sell discounted drugs for outpatient use to hospitals that care for especially large numbers of low-income patients.

The previous week, the Centers for Medicare & Medicaid Services issued a proposed Medicare regulation calling for significant reductions in Medicare payments for such drugs.

The hearing touched on the CMS proposal to reduce Medicare payments for 340B drugs, the high prices of prescription drugs, the 340B program’s growth over the years, the possibility that the program is being abused by hospitals and clinics, and more.

The 340B program is an essential tool in the efforts of private safety-net hospitals to help the many low-income residents of the communities they serve.

Learn more about the hearing and the issues raised during it this Kaiser Health News report.

Group Organizes Advocacy in Support of 340B Program

Under pressure from federal regulators and MedPAC, the advocacy group 340B Health is attempting to rally hospital groups behind the 340B prescription drug discount program that requires pharmaceutical companies to provide discounts to qualified hospitals for drugs dispensed on an outpatient basis to Medicaid patients.

Last year the Health Resources and Services Administration, which runs the program, issued proposed regulations that would change how the program operates and is governed. Recently, MedPAC proposed reducing the size of the discount hospitals receive for the drugs, with the savings to be redirected to fund additional Medicare disproportionate share (Medicare DSH) payments for selected hospitals.

Prescription Medication Spilling From an Open Medicine BottleMore than 2100 organizations participate in the 340B program, including most private safety-net hospitals. NAUH has conveyed its concern about the proposed regulatory changes to the Health Resources and Services Administration and about the proposal to reduce 340B payments to MedPAC.

For a closer look at the 340B program, the changes that have been proposed, and what hospitals are attempting to do about it, see this report from CQ Roll Call presented by the Commonwealth Fund.