Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Government
July 13, 2017 01:00 AM

CMS proposes slashing 340B rates, paying for joint procedures at outpatient facilities

Virgil Dickson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    (Story updated on July 17)

    The CMS wants to slash 340B drug payments to hospitals and is considering paying for hip and knee replacement surgeries that take place in ambulatory surgical centers, according to a proposal released Thursday.

    The agency proposes paying hospitals 22.5% less than the average sales price for drugs acquired under the 340B program. The CMS is looking to cut its budget for drug through this program, which is intended to lower operating costs for hospitals with disproportionate numbers of low-income patients.

    The 340B program is controversial because it does not specify or restrict how hospitals can use money generated by the program and critics say that leads to some hospitals taking advantage of the savings.

    The current 340B payment for drugs is 6% on top of the average sales price, which is Medicare's longstanding pricing method, despite rising drug costs.

    With the proposed changes, if a drug costs $84,000, the CMS would pay just over $65,000, instead of $89,000. Vaccines would continue to be paid at the current rate.

    Industry stakeholders immediately slammed the suggestion and noted it put safety-net hospitals at risk. Hospitals participating in the 340B program provide 60% of uncompensated care, even though they comprise only 36% of the nation's hospitals.

    "The data show 340B hospitals provide significantly higher levels of care to low-income patients, including low-income Medicare beneficiaries," Ted Slafsky, CEO of 340B Health, an association of more than 1,300 participating hospitals, said in a statement. "With the uninsured rate rising again and so much uncertainty about the healthcare marketplace, this is no time to cut reimbursement to hospitals that serve patients in need."

    Dr. Bruce Siegel, CEO of America's Essential Hospitals, said the proposal threatens hospitals' ability to maintain critical services to patients and communities.

    It was the Medicare Payment Advisory Commission that said hospitals on average were receiving ASP minus 22.5%. The CMS took that metric and used it as a way to reach savings in the program. The agency proposed the change earlier this year to combat costs that have grown 543%.

    From 2004 to 2013, Medicare spending for Part B drugs at hospitals that participate in 340B grew from $500 million to $3.5 billion. Hospitals in the 340B program accounted for 22% of Medicare spending for Part B drugs at acute care hospitals in 2004. That grew to 48% in 2013, according to MedPac.

    The rule released on Thursday also seeks comments on the impact of hip and knee replacement surgeries taking place ambulatory surgical centers. The procedures already increasingly take place in outpatient units of acute care hospitals.

    Total joint replacements are one of the largest and most profitable service lines at many hospitals. In 2014, more than 400,000 Medicare beneficiaries received a hip or knee replacement, costing the government more than $7 billion for the hospitalizations alone—over $50,000 per case.

    The move to outpatient settings also raises questions about the future of Medicare's mandatory bundled-payment initiative for inpatient procedures in 67 markets around the country, called the Comprehensive Care for Joint Replacement program, which began last April. The CMS rule appears to undermine that initiative.

    The CMS is asking for feedback on how reimbursement of the procedures at outpatient facilities could harm the bundle pay initiative. Comments on the rule are due Sept. 11.

    Correction: This story was updated on July 17 to clarify the proposed 340B cuts and their impact.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    abortion-pill-misoprostol-legal
    Abortion pill case advances to appeals court, on course to Supreme Court
    young doctor medical resident
    Federal physician recruitment program at risk
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Modern Healthcare Alert: Sign up for this breaking news email to be kept in the loop as urgent healthcare business news unfolds.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing