On July 7, 2023, in light of the Supreme Court’s decision in American Hospital Association v. Becerra (142 S. Ct. 1896 (2022)) and the district court’s remand to the agency, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining the proposed remedy for the 340B-acquired drug payment policy for Calendar Years 2018-2022. CMS is publishing this proposed rule to remedy the payment rates the Court held were invalid. Aspects of this proposed policy will affect nearly all hospitals paid under the OPPS.
This proposed rule will have a 60-day comment period, which will end on September 5, 2023.
Section 340B of the Public Health Service Act (340B) allows participating hospitals and other providers to purchase certain covered outpatient drugs or biologicals (hereinafter referred to collectively as “drugs”) from manufacturers at discounted prices. Prior to 2018, the Medicare payment rate for Part B covered outpatient drugs provided in outpatient hospitals was generally the statutory default of average sales price (ASP) plus 6%. In the CY 2018 OPPS/ASC final rule that was finalized in 2017, CMS adjusted the payment rate for 340B drugs to ASP minus 22.5% to reflect more accurately the actual costs incurred by 340B hospitals when acquiring 340B drugs. This rate applied from CY 2018 through approximately the third quarter of CY 2022. To comply with statutory budget neutrality requirements under the OPPS, CMS made a corresponding increase to payments to all hospitals (340B hospitals and non-340B hospitals) for non-drug items and services, which was in effect from CY 2018 through CY 2022.
On June 15, 2022, the Supreme Court unanimously ruled that the differential payment rates for 340B-acquired drugs were unlawful because, prior to implementing the rates, HHS failed to conduct a survey of hospitals’ acquisition costs under the relevant statute.
On September 28, 2022, the District Court for the District of Columbia vacated the differential payment rates for 340B-acquired drugs going forward. As a result, all CY 2022 claims for 340B-acquired drugs paid on or after September 28, 2022, were paid at the default rate (generally ASP plus 6%).
In the CY 2023 OPPS/ASC final rule, CMS finalized a general payment rate of ASP plus 6% for drugs acquired through the 340B Program, consistent with the agency’s policy for drugs not acquired through the 340B program. As required by statute, CMS implemented a 3.09% reduction to the payment rates for non-drug items and services to achieve budget neutrality for the 340B drug payment rate change for CY 2023. This budget neutrality change ensured the CY 2023 OPPS conversion factor was equivalent to the conversion factor that would have been in place had the 340B drug payment policy never been implemented.
In the CY 2023 OPPS/ASC final rule, CMS announced that it would address the remedy for 340B drug payments from CY 2018-2022 in future rulemaking prior to the release of the CY 2024 OPPS/ASC proposed rule.
Proposed Remedy for the 340B-Acquired Drug Payment Policy for Calendar Years 2018-2022 . . .
Proposed rule:
https://www.federalregister.gov/d/2023-14623
Correction:
https://www.federalregister.gov/d/C1-2023-14623
Fact sheet:
https://www.cms.gov/newsroom/fact-sheets/hospital-outpatient-prospective-payment-system-remedy-340b-acquired-drug-payment-policy-calendar