CMS on Wednesday moved forward with changes that could increase provider competition, including allowing physician-owned hospitals to expand if they treat large numbers of Medicaid patients, phasing out its inpatient-only procedures list and continuing cuts for 340B-acquired drugs.
As part of the final outpatient prospective payment system rule, CMS will phase out its policy of paying for some procedures only if they're done in inpatient settings. Approximately 300 mostly musculoskeletal-related services will be cut first, followed by the rest of the inpatient-list by 2024. CMS will continue to pay for those treatments in either inpatient or outpatient settings and encouraged providers to use their judgment on the most appropriate venue of care.
Hospital groups and several experts had argued against ending the inpatient-only list. They claimed the move could jeopardize quality and safety because many of the procedures are high-risk. Hospitals also worried about how the move could affect their finances since it would likely lead to more treatment in lower-cost settings. According to a CMS official, the agency isn't sure how much money Medicare would save by ending the inpatient-only list.
But the Trump administration thinks quality and safety concerns are overblown.
"Private payers already pay for these services and they don't restrict the site of care," CMS Administrator Seema Verma said during a call with reporters. She said its doctors' responsibility to decide the best place for a patient to have surgery based on their individual needs.
Regulators claim the changes could save Medicare beneficiaries money by increasing competition among providers and moving procedures to lower-cost facilities. For example, a Medicare beneficiary's copay for a surgical procedure that removes chronic blood clots from the arteries in the lung could be $1150 in a hospital outpatient department compared to $1500 in an inpatient setting.
CMS said that the former inpatient list procedures will be exempt from its two-midnight rule for two years, and they will be indefinitely exempt from site-of-service claims denials in Medicare Part A.
"This exemption will last until we have Medicare claims data indicating that the procedure is more commonly performed in the outpatient setting than the inpatient setting," CMS said in a statement. 'This exemption will allow providers more time to become accustomed to the new ability to bill for Medicare payment of claims for services that were previously only paid on an inpatient basis."
Ambulatory surgical centers will be able to perform 11 more procedures, including total hip arthroplasty.
The Trump administration extended the current payment policy of average sales price minus 22.5% for 340B-acquired drugs. CMS had floated further cuts in its proposed rule based on the results of an acquistion cost survey. Providers balked at the proposal, claiming that the survey was flawed and could threaten beneficiaries' access to care in the midst of the pandemic.
But they don't think the current policy is much better.
"This rule would be bad policy at any time and is especially harmful now, as the public health emergency intensifies and front-line hospitals face unprecedented capacity and cost pressures. There is no policy justification for the agency's damaging Part B drug payment cuts to hospitals in the 340B Drug Pricing Program," said Beth Feldpush, senior vice president of policy and advocacy for America's Essential Hospitals.
During a call with reporters, Verma said the agency would continue to evalue whether more cuts are needed to protect taxpayers. She argued the 340B program can encourage provider consolidation and drive up healthcare costs.
"Maintaining the current payment policy is appropriate in order to maintain consistent and reliable payment amid the (public health emergency," CMS said in a fact sheet.
Other hospital owner types opposed CMS' plans to allow physician-owned hospitals to add operating rooms, procedure rooms and beds without running afoul of the Stark law.
The agency slightly lowered its outpatient payment boost from its initial proposal, increasing the rate 2.4% instead of 2.6%. Ambulatory surgical centers will see the same increase in their pay rate.
CMS also signed off on changes to simplify the hospital quality star ratings, including ending the much-maligned latent variable model. Experts say the changes should make things more predictable for hospitals. The agency said it didn't finalize its proposal to stratify readmission measures under the new methodology based on dually eligible patients, but will continue to study the issue.