Next year’s Medicare outpatient payment rate increases will land alongside restored payments for drugs discounted under the 340B program, the Center for Medicare & Medicaid Services (CMS) announced Tuesday.
CMS’ 2023 Medicare Hospital Outpatient Prospective Payment System (OPPS) final rule is the agency’s latest step toward compliance with a June Supreme Court ruling in which the top court unanimously ruled against a nearly 30% pay cut for outpatient drugs purchased by 340B hospitals at discount.
The news was welcomed by hospital groups that said the resumed payments will help hospitals continue to provide care in underserved areas.
“We are very pleased to see that CMS has restored equity to the Medicare [OPPS],” Maureen Testoni, president and CEO of 340B Health, an industry group representing hospitals participating in the 340B program, said in a statement. “For 30 years, 340B has supported hospitals in serving patients living with low incomes, and full Medicare payments for those services are essential for the healthcare safety net.”
The American Hospital Association (AHA), which had brought the suit that eventually overturned the cuts, also said the end to CMS’ “unlawful” policy “will help 340B hospitals provide important comprehensive health services to their patients and communities.”
Both groups, however, said the agency still needs to rectify more than four years of underpayments.
“We continue to urge the Administration to promptly reimburse those hospitals that were harmed by their unlawful cuts in previous years,” AHA said.
Whereas CMS generally paid hospitals the average sales price (ASP) plus 6% for covered outpatient drugs, the agency adopted a policy in 2018 that paid 22.5% below ASP for certain drugs acquired through the 340B program.
The 2023 Hospital OPPS rule released Tuesday restores the 6% over ASP for the coming calendar year “consistent with our policy for drugs not acquired through the 340B program,” CMS said. To stay budget neutral, CMS said it would also be implementing a -3.09% reduction to the payment rates for non-drug services.
Though the Supreme Court had also instructed CMS to make good on years of reduced payments, it tasked lower courts with determining potential remedies. In late September, a U.S. district judge ordered CMS to vacate the rate cut for the remainder of the 2022 calendar year, but a repayment plan has yet to be specified by the courts.
CMS said in Tuesday’s final rule release that it plans to address a remedy in future rulemaking that will come before it proposes next year’s OPPS rule.
AHA, however, said it does not believe CMS “needs more time to put forth a separate rule on a remedy as it has had more than adequate time to correct its mistakes."
In August, AHA submitted several court filings warning against a budget-neutral recoupment plan that would require hospitals unaffected by the cuts to foot the bill. It reiterated those concerns in its most recent statement.
“We continue to call on the agency to ensure the remainder of the hospital field is not penalized for the prior unlawful policy, especially as hospitals and health systems continue to face immense financial pressures and workforce shortages,” the industry group said.
Beyond the 340B payments, Tuesday’s final OPPS rule set payment rates for hospitals that meet applicable requirements for quality reporting at 3.8%, up from the 3.1% CMS had proposed earlier in the year.
It also finalized a new Rural Emergency Hospital provider type designation. Proposed back in June, the designation offers small rural hospitals and critical access hospitals a 5% boost in Medicare payments and monthly facility payments of more than $270,000 in 2023 should they meet certain conditions of participation.