CMS Expands Site-Neutral Payments, Extends 340B Drug Discounts

CMS announced a raft of proposed changes Wednesday, including expanding its site-neutral payments between what Medicare pays for at physicians’ offices and off-campus hospital clinics, where rates are higher because of added hospital facility fees. It is also extending 340B drug discounts to off-site hospital clinics.

The agency said it was making the moves to address concerns raised by healthcare consolidation among hospitals and providers, and that the action would save hundreds of millions of dollars.

In a speech at the Commonwealth Club of California in San Francisco right before the proposed change was announced, CMS Administrator Seema Verma said that Medicare changes are needed to ensure the sustainability of Medicare, because otherwise “the program may not be there for many of us in the room today.”

CMS said it would apply a physician fee schedule—equivalent payment rate for the clinic visit when a patient is seen at an off-campus provider-based department paid under Medicare’s Hospital Outpatient Prospective Payment System (OPPS). The clinic visit is the most common service billed under the OPPS.

The OPPS payment rate would increase by 1.25% under the rule, bringing payments to OPPS providers to $74.6 billion—a nearly $5 billion increase from this year. The agency said this proposed change would result in lower copayments for beneficiaries, as well as Medicare savings estimated at $760 million for 2019.

For an individual Medicare beneficiary, current Medicare payment for the clinic visit is approximately $116, with $23 being the average copayment. The office copayment would drop to $9, a savings of $14 for each visit, with the change.

In addition, CMS is extending its new hospital payment methodology for 340B drugs to outpatient clinics. That means it will pay nonexcepted off-campus hospital clinics average sales price minus 22.5% for drugs acquired through the 340B program. The agency said it has saved beneficiaries $320 million since it began the change earlier in the year.

The Community Oncology Alliance (COA), which has advocated for site neutrality and 340B changes, said Thursday it was generally pleased with the changes.

“The Trump administration deserves a huge round of applause for these bold proposals. They demonstrate a real commitment to meaningfully fix many of the misguided policies that cast a shadow on our nation’s cancer care system,” said Jeff Vacirca, MD, FACP, chief executive officer of NY Cancer Specialists and president of COA.

He added that the proposal is good news for taxpayers and seniors on Medicare, who will see reduced out-of-pocket spending.

“President Trump, HHS Secretary Azar, Administrator Verma, and the staff at HHS deserve a resounding round of applause for these spot-on and extremely positive proposals,” said Ted Okon, executive director of COA. “Expanding the scope of 340B reforms and extending site-neutral payment policies included in this rule are good for cancer patients, the Medicare program, and all Americans.”

However, 340B Health, which has opposed the new payment methodology, said it was "deeply disappointed" with the proposed rule, which 340B Health believes will “make a bad rule worse by extending the cuts to drugs provided in certain off-campus hospital clinics, including facilities providing infusion therapy for cancer patients and other high-cost drug therapies to treat chronic and life-threatening conditions."

Two hospital associations criticized the site neutral changes, as well as the 340B changes.

Bruce Siegel, MD, MPH, president and chief executive office of America’s Essential Hospitals, said in a statement the proposed changes will not accomplish what CMS intends and instead will “create road blocks to care in communities across the country—communities that already struggle with care shortages and severe economic and social challenges.”

Adding 340B reimbursement cuts to hospital outpatient clinics will add to "hospitals’ financial woes" and even worsen care disparities in underserved communities, Siegel said.

“With today’s proposed rule, CMS has once again showed a lack of understanding about the reality in which hospitals and health systems operate daily to serve the needs of their communities,” Tom Nickels, American Hospital Association executive vice president, said in a statement. “CMS has misconstrued Congressional intent with its proposal to cut payments for hospital clinic services in certain outpatients departments.”

CMS would also propose to shift more care to ambulatory surgery centers, instead of hospitals, by changing payment rates, and will allow more procedures to be performed at such centers.

In addition, CMS is asking for comments about how it can leverage its authority under the competitive acquisition program that would allow vendors to negotiate drug prices under Part B, which pays for drugs received in a doctor’s office, such as biologics. Currently, CMS pays the average sales price plus an extra add-on payment.

Verma said Medicare can no longer be a “price taker” for these medicines, and is looking for vendors to negotiate payment amounts.

Earlier, Verma used her speech in San Francisco to slam a proposal by championed by some Democrats, led by Senator Bernie Sanders, I-Vermont, called Medicare for All. "In essence, Medicare for All would become Medicare for None," she said, adding that it would become a "socialized system."