Appeals court upholds nearly 30% payment cut to 340B hospitals

https://www.fiercehealthcare.com/hospitals/appeals-court-upholds-nearly-30-payment-cut-to-340b-hospitals?mkt_tok=eyJpIjoiWkRReFlqRmpaamRtWVdabSIsInQiOiJFTEp3SjQ3NG01NXcwRTg3Z0hCZkdTRlwvOURSeEVlblwvRlFUWlZcL09ONjZGNVEybzl3ekl3VFd2ZEgxSjY2NGQ0TkFIRFdtQ0ZDWUx0ak96NU15d09qMWcrdm9BMFUxOSszcVI0T21rak5raEN0aE5Kb0VUUGFcL254QnBjMjdCbzkifQ%3D%3D&mrkid=959610

In court filing, AHA says HHS should make 340B hospitals 'whole ...

A federal appeals court has ruled the Trump administration can install nearly 30% cuts to the 340B drug discount program.

The ruling Friday is the latest legal setback for hospitals that have been vociferously fighting cuts the Department of Health and Human Services (HHS) announced back in 2017.

340B requires pharmaceutical manufacturers to deliver discounts to safety net hospitals in exchange for participation in Medicaid. A hospital will pay typically between 20% and 50% below the average sales price for the covered drugs.

HHS sought to address a payment gap between 340B and Medicare Part B, which reimburses providers for drugs administered in a physician’s office such as chemotherapy. There was a 25% and 55% gap between the price for a 340B drug and on Medicare Part B.

So HHS administered a 28.5% cut in the 2018 hospital payment rule. The agency also included the cuts in the 2019 payment rule.

Three hospital groups sued to stop the cut, arguing that HHS exceeded its federal authority to adjust the rates to the program.

A lower court agreed with the hospitals and called for the agency to come up with a remedy for the cuts that already went into effect.

But HHS argued that when it sets 340B payment amounts, it has the authority to adjust the amounts to ensure they don’t reimburse hospitals at higher levels than the actual costs to acquire the drugs.

If the hospital acquisition cost data are not available, HHS could determine the amount of payment equal to the average drug price. HHS argued that hospital cost acquisition data was not available and so HHS needed to determine the payment rates based on the average drug price.

The court agreed with the agency’s interpretation.

“At a minimum, the statute does not clearly preclude HHS from adjusting the [340B] rate in a focused manner to address problems with reimbursement rates applicable only to certain types of hospitals,” the ruling said.

The court added that the $1.6 billion gleaned from the cuts would go to all providers as additional reimbursements for other services.

340B groups were disappointed with the decision.

“These cuts of nearly 30% have caused real and lasting pain to safety-net hospitals and the patients they serve,” said Maureen Testoni, president and CEO of advocacy group 340B Health, which represents more than 1,400 hospitals that participate in the program. “Keeping these cuts in place will only deepen the damage of forced cutbacks in patient services and cancellations of planned care expansions.”

This is the latest legal defeat for the hospital industry. A few weeks ago, the same appeals court ruled that HHS had the legal authority to institute cuts to off-campus clinics to bring Medicare payments in line with physician offices, reversing a lower court’s ruling.

The groups behind the lawsuit — American Hospital Association, American Association of Medical Colleges and America’s Essential Hospitals — slammed the decision as hurtful to hospitals fighting the COVID-19 pandemic. But the groups didn’t say if it would appeal the decision.

“Hospitals that rely on the savings from the 340B drug pricing program are also on the front-lines of the COVID-19 pandemic, and today’s decision will result in the continued loss of resources at the worst possible time,” the groups said in a statement Friday.

 

 

 

Hospitals lose legal challenge to 340B drug payment cut

https://www.healthcaredive.com/news/hospitals-lose-legal-challenge-to-340b-drug-payment-cut/582717/?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20Healthcare%20Dive:%20Daily%20Dive%2008-01-2020&utm_term=Healthcare%20Dive%20Weekender

340B Program: Important, but Weaknesses Cited - Pharmacy Practice News

Dive Brief:

  • A significant rate cut for some medications for 340B hospitals was based on a “reasonable interpretation of the Medicare statute” and can stand, the U.S. Court of Appeals for the District of Columbia ruled Friday.
  • The 2-1 ruling overturns a district court decision that HHS overstepped its bounds when it cut the reimbursement rate for a certain category of outpatient drugs by 28.5% for hospitals enrolled in the 340B drug discount program.
  • The American Hospital Association, which challenged the rate cut along with three individual hospitals, did not immediately respond to a request for comment. An advocacy group for 340B hospitals said in a statement it was disappointed in the ruling and that the rate change has “caused real and lasting pain to safety-net hospitals and the patients they serve.”

Dive Insight:

The decision is another major blow for hospitals, coming two weeks after the same court ruled HHS also acted within its authority when it reduced payments to off-campus hospital outpatient departments.

AHA said this week it is seeking to have that ruling overturned.

HHS made the cut to 340B hospital outpatient drug reimbursement in the 2018 Outpatient Prospective Payment System rule, arguing that those hospitals, which primarily serve low-income populations, get the drugs at a deep discount and thus could be incentivized to overuse them.

The cut was from 106% of the average sales price to 22.5% less than ASP. Hospitals immediately sued, but HHS retained the reduction in the 2019 OPPS. The department has said the change would save Medicare $1.6 billion in 2018.

Writing for the court, Chief Judge Sri Srinivasan said the department did indeed have the authority to make the reduction, “so as to avoid reimbursing those hospitals at much higher levels than their actual costs to acquire the drugs.”

He also called the cut “a fair, or even conservative, measure of the reduction needed to bring payments to those hospitals into parity with their costs to obtain the drugs.”

In a partially dissenting opinion, Circuit Judge Cornelia Pillard wrote that she believes the statute only allows HHS to make the change for a specific group of hospitals under a clause that requires the agency to use a certain data set it did not use.

 

 

 

 

Administration Wants To Cut Back A Billion-Dollar Healthcare Program. Hospitals Say Now Is A Really Bad Time.

https://www.buzzfeednews.com/article/zoetillman/trump-medicare-cuts-hospitals-coronavirus-lawsuits?mkt_tok=eyJpIjoiTVRRd00yUmpZbUV3TVRVeiIsInQiOiJTZ0piR2wyRnBZOU5jR3N2TTNzd3Vrb040dHA5K0hVT0lQRm82YnFkVlNVVko4QlVRU0Z0SVVTQWxZUXJmWTZFTVBqaVh0N1JRWHFJTmg2dkNDb0hQTjBYYmxyUnphMEVGSmhwN0NJWUE3V0FFa2FIenJRZTJjWmliSWZKRVwvcU8ifQ%253D%253D

340B Drug Pricing Program: What Is it, How Does It Work?

The Trump administration has been fighting in court with public and nonprofit hospitals since 2017 over a plan to slash the reimbursement rates for drugs prescribed to Medicare patients.

In 2018, Park Ridge Health, a not-for-profit healthcare network in western North Carolina that serves a large population of lower-income patients, delayed plans to buy a new CT scanner for stroke patients.

The Trump administration had drastically scaled back a federal drug reimbursement program that benefitted public and not-for-profit hospitals. Park Ridge, now called AdventHealth Hendersonville, stood to lose $3.3 million per year, the hospital’s chief financial officer wrote in a court affidavit, and it wasn’t just the CT scanner on the line — that money went toward a variety of services for elderly and poor patients, including new cancer treatment facilities, women’s healthcare, and partnerships with nonprofits on issues like prescription drug abuse.

Park Ridge and other hospitals have been battling with the administration in court for three years over a plan to slash by nearly 30% the reimbursement rate that hospitals get for certain drugs prescribed to Medicare patients. The hospitals won the first round. The US Court of Appeals for the DC Circuit heard arguments in November and has yet to rule, and for now the cut is still in effect. In the meantime, the Centers for Medicare & Medicaid Services (CMS) is exploring another way to make the cut if they lose the case, over the objection of hospitals.

The litigation predates the coronavirus pandemic, but the stakes are higher as hospitals nationwide lose tens of billions of dollars weekly while nonessential services and elective surgeries are on hold because of the ongoing crisis.

“If [hospitals] lost that money now, it would make an already dire financial situation worse,” Lindsay Wiley, director of the Health Law and Policy Program at American University Washington College of Law, wrote in an email to BuzzFeed News.

Hospitals that serve a high proportion of lower-income patients can buy outpatient drugs at a discounted price through what’s known as the 340B program. Until 2017, these hospitals were reimbursed by the federal government for drugs prescribed to Medicare patients at a higher rate than the discounted price the hospitals paid.

The CMS announced in 2017 that it was slashing the reimbursement rate from 6% above the average price of the drugs to 22.5% below the average cost. The agency said the program gave hospitals an incentive to overprescribe drugs and cost patients more money, and shouldn’t provide a windfall to subsidize other services.

Hospitals that opposed the change argued that they had put money earned through the program — which can run in the millions of dollars for a hospital each year — into services for poor and underserved communities, as Congress intended.

The CMS estimated that cutting the reimbursement rate for the drugs would reduce the amount of money paid to hospitals by $1.6 billion in 2018 alone. Scaling back that funding would actually increase the rates paid by the government for other services for Medicare patients — the payment system has to be “budget neutral” — but Park Ridge and other hospitals that took the administration to court said they still expected net losses of millions of dollars.

Many hospitals that participate in the 340B program “are in the red to begin with,” said Maureen Testoni, president and CEO of 340B Health, a membership group for hospitals and health systems that participate.

“So on top of that, you add this pandemic and all the financial turmoil that this has caused,” Testoni said. The pandemic has highlighted “how critical [hospitals] are … and what an important role they play. And, financially, they’re not in a situation where they can play that role when they have this big financial reduction.”

While waiting for the DC Circuit to rule, the CMS is exploring ways to move forward with the rate cut even if it loses. Last month, the agency launched a survey to collect data from 340B hospitals that the CMS says would address the issues that led the lower court judge to rule against the government. Hospitals opposed the survey and asked the agency to at least delay it, saying they’d have to divert resources that are already stretched thin during the pandemic to respond.

“Now is not the time to distract hospitals’ attention from the vital job at hand to complete a CMS survey on drug acquisition costs. By launching the survey with no notice on April 24 and providing less than three weeks to respond, CMS is creating an unnecessary burden on hospitals at the worst possible moment,” Testoni wrote in a May 4 letter to the agency. The agency didn’t respond.

Representatives of hospitals involved in the lawsuits declined interview requests, citing the pending litigation. The American Hospital Association, a lead plaintiff, declined an interview request but sent a statement:

“The COVID-19 pandemic has created the greatest financial crisis in history for America’s hospitals and health systems, with our field losing over $50 billion each month. While it is too soon to have precise data on the full impact of this pandemic, the unlawful Medicare cuts that we are contesting in federal court have added significantly to the financial pressure all hospitals face,” the group said.

A spokesperson for the Department of Health and Human Services did not return a request for comment. In court, the Justice Department has argued that the district court judge lacked authority to review the rate cut at all, and that even if he could, the government had the power to bring the rate in line with what the available data showed hospitals were paying for the drugs.

“[O]vercompensation for some drugs or treatments means reduced payments for other drugs and treatments, and correcting overcompensation permits more equitable distribution of limited funds,” Justice Department lawyers argued in the government’s brief to the DC Circuit. “The result of bringing the Medicare payment amount for 340B drugs into alignment with average acquisition cost was therefore the redistribution of the anticipated $1.6 billion in savings, resulting in a 3.2% increase in the Medicare payment rates for non-drug items and services.”

Congress created the 340B program in 1992. Healthcare providers eligible for the program can buy outpatient drugs at discounted rates from pharmaceutical companies. When hospitals prescribe those drugs to patients covered by Medicare — the federal insurance program for people who are over the age of 65 or have disabilities — they submit claims to the government for reimbursement.

Starting in 2006, Congress gave the CMS two options to set the drug reimbursement rate. It could rely on what hospitals were actually paying to buy drugs if it had “statistically sound survey data” or, if that wasn’t available, the average sales price of the drugs. If the agency used the second, alternative option, Congress set a default rate: the average sales price plus 6%.

In the summer of 2017, the Trump administration announced a plan to change the rate. Under the new rule, the Medicare agency said it would pay the average sales price of drugs minus 22.5%. That rate would come closer to matching the discounted rate hospitals were paying through the 340B program, the agency said.

Hospitals don’t have to track or disclose how they use money saved through the program. Kelly Cleary, who spent three years as the chief legal officer for the CMS, said hospitals had provided examples of how they were using the funds to expand services into underserved areas and provide free or low-cost care.

“The money was going toward a purpose that was consistent with their mission,” said Cleary, who was involved in the CMS’s effort to change the rate and defend it in court. She returned to private practice last month as a partner at the law firm Akin Gump Strauss Hauer & Feld.

The chief financial officer for the Henry Ford Health System, which serves patients in Detroit and Jackson, Michigan, wrote in a court affidavit that even if the cut meant that reimbursement rates increased for other Medicare services, the hospital network still expected to lose around $8.5 million by the end of 2018 — money that had gone toward services for patients with low incomes, such as free and low-cost medications, a free community clinic, and mobile health units.

The margin between what the Henry Ford Health System paid for drugs through the 340B program and what it received back from Medicare helped hospitals in that network provide care for “underserved and indigent populations … that would otherwise be financially unsustainable,” the officer wrote.

In support of the rate cut, the CMS pointed to a 2015 report by the Government Accountability Office that showed hospitals participating in the program had an incentive to prescribe more drugs than hospitals that weren’t in the program, and that meant higher copayments for Medicare patients who were prescribed more drugs or higher-priced drugs. The agency concluded hospitals were receiving too much of a net financial benefit.

“While we recognize the intent of the 340B Program,” the agency wrote in a November 2017 notice in the Federal Register, “we believe it is inappropriate for Medicare to subsidize other activities.”

It’s a position that aligned the government with the pharmaceutical industry, which argued that some hospitals had abused the program. Drugmakers pointed out that even with a cut to the reimbursement rate, the healthcare providers would still get the benefit of discounted drugs. A representative of PhRMA, a membership group for the pharmaceutical industry, declined an interview request, but sent BuzzFeed News a copy of comments the group submitted in support of the cut.

“PhRMA is concerned that the 340B program continues to grow rapidly and without patient benefits, thus increasingly departing from its purpose and statutory boundaries,” the group wrote. “This growth in the 340B program creates market-distorting incentives that affect consumer prices for medicines, shift care to more expensive hospital settings, and accelerate provider market consolidation.”

Hospitals that supported the program, meanwhile, said the proposal punished providers who work with vulnerable patients, and they urged the CMS to focus its efforts instead on bringing down drug costs.

The agency disputed that the plan was punitive and said that “lowering the price of pharmaceuticals is a top priority” but was outside the scope of what it was considering at the time.


Hospitals and hospital associations began suing the administration shortly after the rule became final in November 2017. They argued that the CMS had come up with the new rate using a process that Congress hadn’t approved. The agency admitted that it didn’t have the “statistically sound” survey data on what hospitals were actually paying for the drugs — the first method Congress had laid out — so instead it used an estimate of average purchase costs compiled by the Medicare Payment Advisory Commission, an agency that advises Congress.

The problem with the government’s approach, the hospitals argued, was that Congress had said the CMS could either use survey data on purchase costs or the average sales price of the drugs, but not a hybrid of the two. Congress had given the CMS authority to “adjust” rates, but cutting the reimbursement rate by nearly 30% was more than just an adjustment, the hospitals said.

US District Judge Rudolph Contreras in Washington, DC, sided with the hospitals. In a December 2018 opinion, he wrote that the rate cut’s “magnitude and its wide applicability inexorably lead to the conclusion” that the agency had “fundamentally altered” what Congress had spelled out.

The judge stopped short of blocking the rule and ordering the government to reimburse hospitals for the difference between the previous rate and the CMS’s new, lower rate, however, writing that it was “likely to be highly disruptive.” He noted that the payment system had to stay budget neutral, which meant the money would need to come from another source, a “quagmire that may be impossible to navigate” given how much money the government paid out of Medicare each year. He asked for more briefing on what the agency should do to fix the problem, but that issue was put on hold as the administration took the case to the DC Circuit.

A three-judge DC Circuit panel heard arguments on Nov. 8 and has yet to release a decision. In the meantime, hospitals have continued to file lawsuits as their claims for reimbursement at the previous, higher rate are rejected; earlier this month, a hospital system in Jacksonville, Florida, which is part of the University of Florida, filed a new suit in federal court in Washington. And the CMS is going ahead with its survey over the objections from hospitals.

“The pandemic amplifies the significance of this policy, but the fact remains that there were winners and losers with the policy and it’s always going to be a zero-sum game,” Cleary said. “If the court rules against the agency and the agency is forced to walk back the policy, that stands to negatively impact thousands of hospitals.”

Wiley, of American University, told BuzzFeed News that even before the pandemic, the fight over the 340B program highlighted how hospitals and drugmakers were “actively throwing each other under the bus” in the broader debate about who was to blame for the high cost of prescription drugs and what the federal government should do about it.

“Which stakeholders voters perceive to be the heroes of the pandemic response could affect health reform and reimbursement politics for years to come,” she wrote.

 

 

 

MedPAC’s report to Congress: 7 takeaways

https://www.beckershospitalreview.com/finance/medpac-s-report-to-congress-7-takeaways.html?utm_medium=email

Image result for MedPAC

The Medicare Payment Advisory Commission released its March 2020 report on Medicare payment policy to Congress, which includes a chapter analyzing the effects of hospital and physician consolidation in the healthcare sector.

Here are seven takeaways:

1. Medicare’s Insurance Trust Fund is likely to run out without changes. Trustees from Medicare estimate that the program’s Hospital Insurance Trust Fund, mostly funded through a payroll tax, will be depleted by 2026. To keep the fund solvent for the next 25 years, Medicare trustees advise that the payroll tax immediately be raised from 2.9 percent to 3.7 percent, or Part A spending to be reduced by 18 percent.

2. MedPAC recommends boosting payment rate for three sectors:

  • Hospitals. MedPAC recommended a 3.3 percent raise in Medicare payments for hospitals next year. The commission said it wants to give hospitals a 2 percent boost overall and tie the other 1.3 percent to quality metrics to motivate hospitals to reduce mortality and improve patient satisfaction. Currently, CMS has scheduled a 2.8 percent increase in 2021 Medicare payments.
  • Outpatient dialysis services. MedPAC recommended that the End Stage Renal Disease Prospective Payment System base payment rate is raised by the amount determined under current law. This is projected to be a boost of 2 percent
  • Long-term care hospitals. The commission recommended a 2 percent increase in the payment rates for long-term care hospitals in 2021.

3. MedPAC recommends unchanged payment rates for four sectors:

  • Physicians: Under current law, there is no update to the 2021 Medicare fee schedule base payment rate for physicians who treat Medicare patients. MedPAC is recommending that CMS keeps the physician rate the same as it is this year.
  • Surgery centers. MedPAC recommended eliminating an expected 2.8 percent payment rate bump for surgery centers next year. It said its decision was due to not having enough cost data from surgery centers.
  • Skilled nursing. MedPAC is recommending skilled nursing facilities receive no change to their base rate next year to better align payments with costs while exerting pressure on providers to keep their cost growth low.
  • Hospice. MedPAC recommends that the hospice payment rates in 2021 be held at their 2020 levels

4. MedPAC recommends payment rate reductions for two sectors: 

  • Home health. The commission recommended a 7 percent reduction in home health payment rates for 2021.
  • Inpatient rehabilitation hospitals. MedPAC is recommending that CMS reduce the payment rate to inpatient rehabilitation facilities by 5 percent for fiscal year 2021.

5. MedPAC builds on its recommendation to revamp quality programs. MedPAC is furthering its recommendation to replace Medicare’s four current hospital quality programs with a single hospital value incentive program. MedPAC said it believes that this recommendation would provide hospitals  higher aggregate payments than they would get under current law.

6. MedPAC’s findings on hospital and physician consolidation. MedPAC said that consolidation gives providers greater market power, which has a statistically significant association with higher profit margins for treating non-Medicare patients. Higher non-Medicare margins also are associated with higher standardized costs per discharge. But the direct association between market power and standardized costs per discharge is statistically insignificant, the commission found.

“The effect of consolidation on hospitals’ costs is not clear in theory or from our current analysis. From a theoretical standpoint, the merger of two hospitals could initially create some efficiencies and bargaining power with suppliers. But over time, higher prices from commercial payers could loosen hospitals’ budget constraints and lead to higher cost growth, thus offsetting any efficiency gains,” MedPAC’s report states.

7. MedPAC’s findings on the 340B Drug Discount Program. MedPAC was asked to analyze whether the availability of 340B drug discounts creates incentives for hospitals to choose more expensive products than they would without the program. MedPAC studied the effect of 340B market share on higher drug spending on cancer treatments between 2009 and 2017. The commission found that for two of the five cancer types studied, 340B participation boosted prices by about $300 per patient per month. However, the boost in spending attributed to 340B was much smaller than the general increase in oncology spending, which includes rising prices and the launch of new products with high drug prices. For example, cancer drug spending grew by more than $2,000 per patient month for patients with breast cancer, lung cancer, and leukemia/lymphoma.

“The MedPAC report released today uses rigorous analysis and finds little evidence 340B participation influences cancer drug spending. Modest differences may be attributable to the types of patients treated in 340B facilities. The safety-net hospitals that participate in the 340B drug-pricing program are essential providers of cancer care in this nation, especially to patients who are living with low incomes, those living with disabilities, and patients requiring more complex oncology care,” said Maureen Testoni, president and CEO of 340B Health, an association that represents more than 1,400 hospitals participating in the 340B program.

Access MedPAC’s full report here. 

 

 

 

 

MedPAC: 340B hospitals spent more on lung, prostate cancer drugs compared to other facilities

https://www.fiercehealthcare.com/hospitals-health-systems/medpac-340b-hospitals-spent-more-cancer-drugs-compared-to-other-facilities?mkt_tok=eyJpIjoiTTJaaE5EY3lZMlEzTVdZdyIsInQiOiI1UEZJUjBpbldUSVBteFl3OGpnd0FPRnIxMFJFUXIzSjE1YUJDMVdDSSsrdDlibDI1KzU5bXZsU1RIUjBZUWNPR2s1OTdwQXV5ZVY2cUhuWXkzYnpDWE55akhCczMxOVEyRWdpdkNYK1hKcjdIV01qNTdPemxyWkFVK1pDUmNzNyJ9&mrkid=959610

Image result for 340b drug pricing program

Hospitals in the 340B drug discount program spent more on drugs for prostate and lung cancers compared to facilities not in the program, a new analysis found.

But the preliminary analysis from the Medicare Payment Advisory Commission (MedPAC) couldn’t find that the controversial program incentivizes hospitals to pursue higher-priced drugs. The analysis, released Friday as part of MedPAC’s monthly meeting, was requested by Congress on the program, which has faced major cuts by the Trump administration.

Some lawmakers have argued that 340B, which offers safety-net hospitals discounts on drugs, has not worked as intended and led to hospitals specifically choosing higher-priced drugs to get a big discount.

So MedPAC looked at the spending from 2013 to 2017 of 340B and non-340B hospitals as well as physicians’ offices for five types of cancers: breast, colorectal, prostate, lung and leukemia and lymphoma.

MedPAC’s analysis found that 340B hospitals spent between 2% and 5% higher on average on cancer drugs than non-340B hospitals. But there were mixed results when 340B hospitals were compared to physicians’ offices, with 340B facilities spending 1% lower to 7% higher than physicians’ offices on cancer drugs.

The reason 340B hospitals spent more on cancer drugs than hospitals not in the program was linked to two types of cancer: lung and prostate.

For lung cancer, a possible reason for the higher spending is that a larger share of patients in 340B hospitals received new immuno-oncology therapies that are more expensive, MedPAC said. Prostate cancer also had higher drug prices per unit for both drugs in Medicare Part B, which reimburses for physician-administered drugs, and Part D.

However, MedPAC staff cautioned they couldn’t conclude 340B is incentivizing the spikes in spending.

The reason is “we lack access to the discount data,” said MedPAC staffer Shinobu Suzuki at the commission’s meeting Friday in Washington, D.C.

MedPAC also didn’t find that gaining 340B status led to a spike in average cancer drug spending, suggesting that 340B discounts “may not have had any effects on them,” the report said.

The analysis also found that the higher cancer spending would likely have a small, if any, impact on cost sharing for Medicare patients depending on the type of cancer and supplemental coverage.

The study will be finalized and likely included in MedPAC’s March report to Congress. It comes with some caveats, including a small sample size and that it did not examine the impact of a 22.5% cut to 340B payments that went into effect in 2018.

The hospital industry has been fighting the Trump administration in court over the cuts, which the industry claims are unlawful.

Despite the caveats, MedPAC’s findings could play a major part in lawmaker deliberations on the program, which some Republicans claim has gotten too big and led to hospitals bilking the federal government.

The pharmaceutical industry has also led an extensive campaign to shed more light on the program. 340B requires pharmaceutical companies to provide discounts to safety-net hospitals in exchange for participating in Medicaid.

The Government Accountability Office has also called for greater oversight of 340B.

340B industry group 340B Health praised the findings.

“The thoughtful analysis MedPAC presented today sheds important light on the role 340B hospitals play in treating people living with cancer,” said Maureen Testoni, 340B Health president, in a statement.

 

Nonprofit hospitals get bump in Moody’s ratings for 2020

https://www.healthcaredive.com/news/nonprofit-hospitals-get-bump-in-moodys-ratings-for-2020/568739/

UPDATE: Dec. 11, 2019: Fitch Ratings also changed its sector outlook for the U.S. nonprofit health systems market to stable from negative for 2020 in a report released Tuesday.

Dive Brief:

  • Next year should be kinder to nonprofit hospitals and health systems, with Moody’s Investors Service forecasting a 2% to 3% growth in operating cash flow next year, driven by stronger provider revenue due to Medicare and commercial reimbursement raises and growth in patient volumes.
  • Moody’s revised its 2020 outlook for the not-for-profit provider sector from negative to stable as a result, and expects to see increased consolidation as hospitals bid to gain “negotiating leverage with commercial insurers, achieve savings through economies of scale, and ensure a foothold in emerging offerings such as urgent care and telemedicine,” analysts wrote.​
  • That’s not to say health systems won’t continue to contend with sharp industry headwinds like rising labor costs and the aging population, along with uncertainty from up-in-the-air legislation, regulation and lawsuits.

Dive Insight:

High Medicare reimbursement rates should, along with slightly more favorable commercial reimbursements, drive sector revenue to jump 4% to 5%, Moody’s predicts. Medicare payment rates in 2020 are the most industry-friendly in a while, analysts say, at 3.1% for overall inpatient rates and 2.6% for outpatient.

Fitch Ratings, which also revised its sector outlook from negative to stable, noted balance sheet measures for the providers are now at levels not seen since before the Great Recession in 2007.

Expense management is also forecast to improve cash flow, though provider shortages will cause labor costs to grow.

A growth in the number of uninsured is projected to curb some of the gains expected under this positive forecast, however. The uninsured rate reached 13.7% at the end of 2018, ticking up from 12.2% in 2017 and a low of 10.6% in 2016, according to Gallup. Policy experts blame the elimination of the Affordable Care Act’s individual mandate, along with other Trump administration policies destabilizing the market.

Other regulatory waves could also impact hospital margins next year.

Cuts to Medicaid disproportionate share payments are likely to be postponed until late 2020 at least, which will help hospitals serving a large number of low-income patients. The $4 billion payment reduction was supposed to go into effect in 2014, but lawmakers have delayed the unpopular cuts annually since.

On Nov. 21, the Senate approved a continuing resolution to fund the federal government through Dec. 20. The CR once again pushed back the trims to the Medicaid payments.

Trump administration policy requiring payers and providers to post secret negotiated rates online could help some hospitals and hurt others, with some health experts arguing it would stimulate competition through transparency and others warning it could cause prices across the board to rise.

Hospital lobbies filed a lawsuit Dec. 4 to stop the rule, arguing it violates the First Amendment and would put overly onerous administrative burdens on providers.

Cuts to the 340B Drug Discount program, meant to prop up hospitals with a large amount of uncompensated care, could also hurt the sector. The program generated an average savings of almost $12 million across all U.S. hospitals last year.

In May, a federal judge struck down planned HHS cuts to 340B, arguing the change was outside of the agency’s authority. However, CMS has said it plans to go through with the payment reductions in the final outpatient rule for 2020.

On the legislative side, the Republican state-led initiative to find the Affordable Care Act unconstitutional would shear an estimated 20 million Americans from coverage and raise premiums on millions more, hitting both hospitals and the consumer hard. ​

“The fate of the ACA will likely again rest with the Supreme Court,” Moody’s analysts said. “An adverse ruling there would have painful implications for hospitals if millions of individuals lose insurance,” and “coverage gains from Medicaid expansion would likely be lost.”

 

 

 

CMS retains 340B, site-neutral payment cuts in final hospital payment rule

https://www.fiercehealthcare.com/hospitals-health-systems/cms-retains-340b-site-neutral-payment-cuts-final-hospital-payment-rule?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWTJZd1pqWXpZbVUwWTJKbSIsInQiOiJLV2JJQWM1clQ3OVBiaURjdFVUUUg2K093U21XZm0zVHNPa1hTUjdTWEdxSWZpYklsako0TVMrZFYxazVGZHFkOHJ3M1pWNlwvYW5pVWpPcjM1TEtVRnErOWgxU3NKc1dcLzk3TnZTc1pLZVI0Ymcrb0V1ZEZ2eDh1djFwa1FlaW50In0%3D

billing statement from a doctor's office

The Trump administration finalized a hospital payment rule Friday that retains proposed cuts to off-campus clinics and the 340B drug discount program. 

The changes outlined in the hospital Outpatient Prospective Payment System (OPPS) rule come despite both cuts being struck down in legal challenges and amid major pushback from providers.

Site-neutral payments

The agency decided to move ahead with the two-year phase-in of the cuts to outpatient services for clinic visits furnished in an off-campus hospital outpatient setting. The goal is to bring payments to off-campus clinics in line with standalone physicians’ offices.

“With the completion of the two-year phase-in, the cost sharing will be reduced to $9, saving beneficiaries an average of $14 each time they visit an off-campus department for a clinic visit in [calendar year] 2020,” the Centers for Medicare & Medicaid Services (CMS) said in a fact sheet.

However, the two-year project that was supposed to start in 2019 has been halted because of a federal court ruling.

CMS decided to move forward with the cuts for off-campus clinics.

“The government has appeal rights, and is still evaluating the rulings and considering, at the time of this writing, whether to appeal the final judgment,” the agency said.

The American Hospital Association (AHA) said that the site-neutral payment rule was misguided and that CMS ignored the recent court ruling. 

“There are many real and crucial differences between hospital outpatient departments and the patient populations they serve and other sites of care,” said Tom Nickels, executive vice president of the AHA, in a statement.

CMS also finalized a proposed cut for the 340B program that cuts payments by 22.5% in 2020.

CMS has installed prior cuts in 2018 and 2019 to the program that requires drug companies to provide discounts to safety-net hospitals in exchange for getting their products covered on Medicaid.

However, a court ruling has struck down the cuts, and CMS is currently appealing the decision.

CMS said that it hopes to conduct a 340B hospital survey to collect drug acquisition cost data for 2018 and 2019, and the survey will craft a remedy if the appeal doesn’t go their way.

“In the event the 340B hospital survey data are not used to devise a remedy, we intend to consider the public input to inform the steps we would take to propose a remedy for CYs 2018 and 2019 in the CY 2021 rulemaking,” the agency said.

Hospital groups commented that CMS should drop both the 340B and site-neutral cuts because of the legal challenges.

Several groups weren’t happy that the cuts were still there.

“The agency also prolongs confusion and uncertainty for hospitals by maintaining unlawful policies it has been told to abandon in clear judicial directives,” said Beth Feldpush, senior vice president of policy and advocacy for America’s Essential Hospitals, in a statement Friday.

The hospital-backed group 340B Health added that CMS needs to stop this “unfunny version of ‘Groundhog Day’ and restore Medicare payments for 340B hospitals to their legal, statutory level.”

 

 

 

Hospitals, insurers object to rule posting their negotiated rates

https://www.healthcarefinancenews.com/news/hospitals-object-posting-negotiated-rates-and-other-payment-rules?mkt_tok=eyJpIjoiWkdNMU56WmxabVl3TWpRMSIsInQiOiI0dlhaYUJpT2xBU0FqeDNmWkRlZHVZYnRsZ2xBK3pxMmN6RG5kS3Q1UWgrWFYyNllIK2lLZEYzclRDWUYyTFwvOGdhUzRVSnlscG5MQjBtY0NwT2d1TjZHdXJYRUlYRGszVEhrQmY5b0xhRDlFTWNTNUEwWnVvWGUwZXE3ME9kdGgifQ%3D%3D

CMS is proposing that hospitals make public their payer-specific negotiated charges for a limited set of “shoppable” services.

Hospitals and insurers have made clear their opposition to the Centers for Medicare and Medicaid Services proposed rule requiring the disclosure of their privately negotiated contract rates.

CMS is proposing that hospitals make public their payer-specific negotiated charges for a limited set of “shoppable” services or face civil monetary penalties, in a rule to go into effect on January 1, 2020. Comments were due by September 27.

Under the rule, hospitals would display payer-specific negotiated charges for at least 300 shoppable services, including 70 selected by CMS and 230 by the provider.

The American Hospital Association called it the wrong approach, even though it said it supported ensuring patients have the information they need, including knowing what their expected out-of-pocket costs would be. However, the AHA said, “Instead of helping patients estimate their out-of-pocket obligations, it would introduce confusion and fuel anticompetitive behavior among commercial health insurers in an already highly-concentrated insurance industry, seriously limiting the choices available to patients.”

America’s Essential Hospitals said, “We are particularly concerned that the agency’s proposals regarding the public posting of charges, in particular the posting of negotiated rates, offer little benefit to the consumer, add substantial burden to hospitals, and pose harm to competition, potentially driving up prices.”

America’s Health Insurance plans said that forcing disclosure of privately and competitively negotiated rates will not provide consumers with information that is actionable or helpful. I

“Instead,”AHIP said, “it will hamper competitive negotiations and push healthcare prices and premiums higher for patients, consumers, businesses and taxpayers. This proposed rule also has significant implications for, and is interconnected with, other proposed rules regarding interoperability of health care data. We are concerned that unknown entities will have open access to the data, with few restrictions on how they may use it.”

WHY THIS MATTERS

CMS released the proposals on July 29 in the 2020 hospital outpatient prospective payment and ambulatory surgical center payment rule.

The rule also has three additional proposed policies that run afoul of the law, the AHA said.

Specifically, the AHA opposes completion of the phase-in of payment reductions for the hospital outpatient clinic visit in excepted off-campus provider-based departments to the “physician fee schedule equivalent” rate of 40% of the outpatient prospective payment system rate.

The AHA said the proposal “exceeds the Administration’s legal authority and should be abandoned.”

The AHA has already won a case in court on the government’s site neutral payment policy.

“On the clinic visit policy, we remind CMS that the agency was recently found by the courts to have exceeded its statutory authority when it cut the payment rate for clinic services at excepted off-campus provider-based departments,” the AHA said.

Hospitals also object to continuing the current policy that pays for separately payable drugs acquired through the 340B drug savings program at the rate of average sales price minus 22.5%.

And the AHA objects to the implementation of a prior authorization process for five categories of outpatient department services.

THE LARGER TREND

On September 17, a federal judge ruled in favor of the AHA and hospital organizations, saying CMS exceeded its statutory authority when it reduced payments for hospital outpatient services provided in off-campus provider-based departments that were grandfathered under the Bipartisan Budget Act of 2015.

The AHA, joined by the Association of American Medical Colleges and several member hospitals, had filed the lawsuit in December.

ON THE RECORD

America’s Essential Hospitals said, “These cuts deter hospitals from expanding access in communities with the most need for healthcare services and run counter to CMS’ goal of integrated, coordinated healthcare.

“Taken together, these proposals would have a chilling effect on beneficiary access to care while also increasing regulatory burden,” the AHA said.