CMS on Tuesday proposed a 2.6% pay raise for Medicare outpatient services, but safety-net providers could see their payments for 340B drugs slashed again.
According to the proposed 2021 outpatient prospective payment system rule, total payments to providers would increase by $7.5 billion to nearly $84 billion. But CMS wants to cut reimbursements for 340B-acquired drugs by more than 6%.
"We propose for CY 2021 and subsequent years to pay for drugs acquired under the 340B program at (average sales price) minus 34.7 percent, plus an add-on of 6 percent of the product's ASP, for a net payment rate of ASP minus 28.7 percent based on the results of the Hospital Acquisition Cost Survey for 340B-Acquired Specified Covered Drugs," CMS said in the proposed rule.
On Friday, a three-judge panel upheld the agency's earlier cuts to 340B drug payments. The Trump administration may decide to extend the current payment policy of ASP minus 22.5% for 340B-acquired drugs if it doesn't move forward with more cuts, according to the rule. Rural sole community hospitals, some cancer hospitals and children's hospitals would continue to be exempt from the payment reductions.
"CMS claims the new round of hospital cuts is tied to the results of the flawed acquisition cost survey that the agency launched suddenly amid the COVID-19 pandemic. The survey failed to meet the basic requirements of federal statute, and its results should be thrown out," industry group 340B Health said in a statement.
The agency also plans to cover 11 more procedures delivered in ambulatory surgical centers, including total hip replacements, and phase out the inpatient-only list over three years. According to CMS, the proposed changes would increase patient choice and encourage site neutrality by allowing patients to receive treatment in a broader range of care settings.
Ending the inpatient-only list would allow nearly 300 musculoskeletal-related services "to be paid by Medicare in the hospital outpatient setting when outpatient care is appropriate," CMS said in a fact sheet.
Comments on the proposed rule are due October 5.
Urban hospitals would get a wage index boost of about 0.2%, while rural hospitals would get a raise of about 0.4%.
CMS plans to streamline the overall hospital star rating system beginning in 2021. According to the proposed rule, the agency would simplify how it calculates the ratings, cut the number of measure groups "and stratify the readmission measure group based on the proportion of dual-eligible patients." CMS says the changes would ease provider burden, improve the ratings' predictability and make it easier to compare ratings. The agency also proposed several updates to the hospital outpatient quality reporting and ambulatory surgical center quality reporting programs.
Regulators want to relax supervision requirements for outpatient therapeutic services in hospitals and critical access hospitals by allowing general supervision instead of direct supervision for so-called "non-surgical extended duration therapeutic services." CMS would also allow physicians to directly supervise pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac rehabilitation services using real-time telehealth technologies.
In addition, the Trump administration plans to make it easier for physician-owned hospitals with high shares of Medicaid patients to expand their facilities. The proposed rule would allow physician-owned hospitals to apply to expand more often and lift restrictions on where those hospitals could expand and by how much. CMS said it's "considering whether (it) should eliminate the opportunity for community input in the review process with respect to high Medicaid facilities" since the law doesn't require it.
Not-for-profit community and for-profit hospitals argue that physician-owned hospitals cherry-pick the most profitable patients and increase Medicare spending through higher utilization.
"This trend creates a destabilizing environment that leaves sicker and less-affluent patients to community hospitals, threatening the healthcare safety net," the American Hospital Association said in a statement.
Early reports on physician-owned hospitals supported the cherry-picking allegations. But a 2015 study in the British Medical Journal found that physician-owned hospitals treat similar patient populations to community hospitals, especially if they offer general care instead of specialty care only.
ASCs would get a 2.6% pay increase under the proposed rule, increasing their total payments by more than $5 billion to about $160 billion in 2021.
The agency wants stakeholders to weigh in on two alternative proposals to change how it decides which ASC procedures to cover.
CMS also proposed to create new comprehensive ambulatory payment classifications, approve new device pass-through payments, add new prior authorization categories and adjust cancer hospital payments, among other changes.