The American Hospital Association (AHA) questioned the legality of site-neutral and 340B payment policies in the Outpatient Prospective Payment System (OPPS), arguing the proposals would “have a chilling effect on beneficiary access to care while also increasing regulatory burden.”
In a letter to CMS Administrator Seema Verma on Sept. 27, the association demanded CMS abandon the OPPS policies that would expand site-neutral payments to grandfathered hospital outpatient provider-based departments (HOPDs) and reduce reimbursement to hospitals qualifying for prescription drug discounts under the 340B Drug Pricing Program. CMS should also abandon plans to implement prior authorization requirements for five categories of outpatient department services, the association added.
The AHA said in its letter that the three policies “run afoul of the law and rely on the most cursory of analyses and policy rationales.”
Federal courts have agreed with the association that represents nearly 5,000 hospitals, health systems, and other healthcare organizations. Last month, for example, a federal judge ruled that CMS exceeded its authority by extending site-neutral payments in 2019 to grandfathered HOPDs for certain clinic visits.
The judge explained that CMS may be paying more for patient services performed in HOPDs that could be provided at a lower cost in physician offices, but “CMS was not authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payments only for certain services performed by certain providers.”
In light of the judge’s ruling, AHA called on CMS to restore the higher payment rates for clinic visits furnished at HOPDs rather than phase-in site-neutral payments in 2020 as proposed in the OPPS rule. The association also urged the agency to repay hospitals the difference between the amounts they would have received if the site-neutral payment policy never took effect.
“Making additional cuts to outpatient payment of the magnitude proposed in the clinic visit policy would be excessive and harmful. It would endanger the critical role that HOPDs play in their communities, including providing convenient access to care for the most vulnerable beneficiaries, including the sickest, most medically complex patients,” the association stated in its letter.
AHA also pointed to another court’s decision when defending their proposal to recalculate the payments due to 340B hospitals subject to reduced OPPS reimbursement for drug claims in 2018 and 2019.
In January, a federal judge struck down a nearly 30 percent payment cut for 340B hospitals. The judge ruled that CMS did not have the power to alter the reimbursement formula for outpatient drugs part of the 340B Drug Pricing Program.
Since CMS enacted the 340B payment cuts prior to the court’s decision, AHA demanded CMS pay hospitals the difference between what they would have received under the original reimbursement formula plus interest.
“This remedy would not disrupt the Medicare program and is consistent with remedies HHS has adopted in past agency violations of law. There is no requirement that an effective remedy be budget neutral,” the letter stated.
CMS does not have to repay hospitals for losses they sustained under the 340B payment policy, according to the federal judge who struck down the policy. The judge agreed to the plaintiffs’ motion for a permanent injunction of the policy, but ruled against their request for retroactive payments based on the original formula.
Plaintiffs “are entitled to some relief” but “the potentially drastic impact of this Court’s decision on Medicare’s complex administration gives the Court pause,” the judge wrote. He ordered supplemental briefing in order to come to “proper remedy.”
CMS expects to finalize changes to the OPPS later this year.
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Photo courtesy of: RevCycle Intelligence
Originally Published On: RevCycle Intelligence
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