The Centers for Medicare and Medicaid Services (CMS) is proposing lump-sum payments to reimburse safety-net hospitals for about $9 billion in illegal discount drug program cuts from 2018 to 2022. The payments will come at the expense of other hospitals, because CMS wants the reimbursements to be budget-neutral, over the objections of leading industry groups. The agency is proposing to claw back an estimated $7.8 billion in overpayments to other hospitals, including rural hospitals and children’s hospitals. The repayment plan to facilities in the federal 340B discount drug program stemmed from a unanimous Supreme Court decision that found the agency made illegal program cuts, because federal officials didn’t first conduct a survey of hospitals’ acquisition costs.
Proposed Rule
Under the proposed rule, the nearly 1,600 affected providers would be provided a one-time, lump sum payment for 340B-acquired drugs for claims spanning 2018 through 2022. The agency estimates that these payments would total $9 billion. Specifically, between 2018 and 2022, certain 340B providers received $10.5 billion less in 340B drug payments than prescribed, though $1.5 billion was remedied through reprocessed claims prior to publication of this proposed rule. CMS stated that, while it considered paying interest on the remedy payments, it does not believe it has the authority to do so.
In order to calculate the amount owed to each affected 340B covered entity hospital, CMS proposes to: (1) gauge what a hospital would have been paid for drugs acquired through the 340B Program under the OPPS from 2018 through September 27, 2022 had the prior 340B policy not been in effect; (2) subtract from this amount what was actually paid to these entities; and (3) reimburse hospitals for the difference.
The agency notes that this proposed additional lump sum payment would provide affected entities with the default ASP plus six percent rate — or WAC plus three or six percent or 95 percent of average wholesale price (AWP), as applicable — for drugs acquired under the 340B Program during this time period. To distribute such payments, a hospital’s Medicare Administrative Contractor (MAC) would issue a one-time lump sum payment within 60 calendar days of the MAC’s receipt of the instruction from CMS.
CMS confirms within the proposed rule that the proposed lump sum payments would not affect beneficiary cost-sharing. The agency estimates that beneficiary copayments account for roughly 20 percent of hospitals’ unreceived 340B payments, and CMS intends to account for this within its proposed remedy payment. Accordingly, affected 340B covered entity hospitals and providers would not be permitted to bill beneficiaries for coinsurance on remedy payments. The agency stated that it would consider “appropriate administrative action” for providers who bill beneficiaries unjustly under these circumstances.
CMS is proposing to exclude from its non-drug items and services payment offset hospitals that were not enrolled in Medicare prior to January 1, 2018. The agency explains that hospitals that enrolled in Medicare after January 1, 2018 — designated as “new providers” under this proposal — did not receive the full payment increase for non-drug items and services. Therefore, these hospitals would not be subject to the proposed payment reductions of this rule. CMS is seeking public comment on its definition of “new provider” and the decision to exempt them from the annual prospective payment rate reduction.