CMS proposes 2.6% boost to ASCs, outpatient clinics and further cuts 340B program

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CMS proposed a 2.6% increase to hospital off-campus clinics and ambulatory surgical centers but also doubled down on cutting the 340B drug discount program. (Image: Getty)

The Trump administration aims to increase Medicare payment rates for outpatient hospital departments and ambulatory surgical centers by 2.6% and doubles down on a nearly 30% cut to the 340B payment program.

The Centers for Medicare & Medicaid Services released the proposed hospital outpatient payment rule for the 2021 coverage year, outlining payment rates for ambulatory surgical centers and hospital outpatient departments.

The agency proposes a 28.7% cut to drugs acquired by safety-net hospitals under the 340B drug discount program.

CMS has previously proposed the cuts back in 2018, sparking a legal battle with hospital groups.

A federal appeals court ruled last Friday that the agency had the authority to install the cuts.

CMS estimates that total payments to outpatient providers will be approximately $83.9 billion, an increase of $7.5 billion compared with the 2020 payment rule.

CMS also proposed adding 11 procedures to the list of surgeries that an ambulatory surgery center can cover, including total hip replacement.

The agency also hopes to change how it decides which procedures are covered under Medicare and wants comments on two methods.

Under the first method, CMS would create a nomination process that relies on external stakeholders such as specialty societies to nominate procedures. CMS would then review those nominations and decide whether to add them to the covered procedures list.

The second method has CMS eliminating five of the general exclusions. Generally, CMS pays for surgical procedures at a center unless they meet exclusions such as requiring active medical monitoring and care past midnight and the procedure directly involves major blood vessels.

CMS also proposes adding about 270 surgery or surgery like-codes to the covered procedures list that currently aren’t on there.

The rule also proposes adding two new service categories that hospitals outpatient departments need to get prior authorization from CMS before getting Medicare reimbursement.

The new service categories are for cervical fusion with disc removal and implanted spinal neurostimulators.

CMS requires outpatient clinics to get prior authorization for certain outpatient department services in order to control any spikes in unnecessary use for such services.

Other parts of the rule include updating the methodology for calculating overall hospital star ratings starting in 2021. The agency plans to reduce the total number of measure groups and stratify the readmission measure group based on the proportion of dual-eligible Medicare-Medicaid patients, the rule said.

The hospital industry has been pressing CMS to update the methodology used to calculate the star ratings, and want the Hospital Compare website which shows the ratings to be taken down until the changes are made. 

The agency made changes to the methodology it used to calculate star ratings in 2019, but many in the industry said the changes did not go far enough.

The rule drew a swift rebuke from the American Hospitals Association, which blasted the cuts to the 340B program and other parts of the rule.

The rule "continues to threaten the financial viability of hospitals and health systems and their ability to provide care for patients during the coronavirus pandemic," AHA said. 

The association also condemned the rule's attempts to loosen current restrictions for physician-owned hospitals. 

"Physician-owned hospitals tend to cherry-pick the most profitable patients, jeopardizing communities’ access to full-service care," AHA said. "This trend creates a destabilizing environment that leaves sicker and less-affluent patients to community hospitals, threatening the health care safety net."

CMS Administrator Seema Verma defended the changes during a call with reporters Tuesday.

"Our position has been promoting competition in the marketplace," Verma said. "We want providers to compete on the basis of cost and quality."

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