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The Medicare Payment Advisory Commission (MedPAC) released its 2021 Medicare provider rate update recommendations on March 13, 2020 – the same day President Trump declared a national emergency due to COVID-19.  MedPAC’s recommendations were based on an assessment of various Medicare “payment adequacy indicators” that are unlikely to reflect the state of the health…

Reducing prescription drug prices is a major theme in the Trump Administration’s fiscal year (FY) 2020 budget proposal, with policies intended to increase competition, encourage better negotiation, incentivize lower list prices, and cut out-of-pocket costs for beneficiaries.  The Administration’s projected savings from its designated prescription drug budget proposals top $69 billion over 10 years, although that does not include savings for provisions for which the budget impact was not available or that were included in other sections of the budget (e.g., a Medicaid State Drug Utilization Review provision within the Medicaid budget section).

We summarize below the major prescription drug pricing and related proposals in the President’s proposed budget, covering Medicare Parts B and D, Medicaid, and the 340B discount drug program.  All budget savings reflect the 10-year period of FYs 2020-2029.  Note that while most of these provisions would require legislative approval, Congressional committees have already held several hearings this year on prescription drug pricing.  Stay tuned for more action in this area.

Major Medicare Part B Proposals

The proposed Trump budget would:…
Continue Reading Trump Administrations’ Proposed FY 2020 Budget Targets Prescription Drug Prices

The Health Resources and Services Administration (HRSA) has announced that it will implement its January 5, 2017 340B drug pricing program rule on January 1, 2019.  The oft-delayed final rule addresses:  (i) the calculation of the 340B “ceiling price” that may be charged to covered entities; (ii) the substantive standards applicable to civil monetary penalties…

After multiple implementation delays, the Health Resources and Services Administration (HRSA) now seeks to move up the effective date of its January 5, 2017 rule on 340B drug pricing program ceiling price calculation and civil monetary penalties (CMPs).  By way of background, HRSA most recently delayed implementation of the 2017 rule because the Trump Administration…

CMS has issued its proposed rule to update Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2019.  In addition to providing routine annual updates, the proposed rule includes several provisions intended to encourage “site-neutral payments” for different types of providers.  CMS also proposes a change to the basis for updating ASC rates that has long been sought by stakeholders.  CMS will accept comments on the proposed rule until September 24, 2018.

Hospital Outpatient Provisions

CMS proposes a 1.25% update to Medicare OPPS rates for 2019, reflecting an expected 2.8% market basket increase that is partly offset by both a statutory 0.75 percentage point reduction and a 0.8% multi-factor productivity (MFP) reduction.  The update for hospitals that fail to meet quality reporting requirements is reduced by 2.0% points.  Payment changes for individual procedures vary.

In the proposed rule, CMS emphasizes its interest in addressing payment differentials that the agency believes drives site-of-service decisions, especially between the physician’s office and hospital outpatient department settings, and increases costs to the Medicare program and beneficiaries.  In particular, CMS targets certain off-campus hospital provider-based departments (PBD) that are “excepted” under section 603 of the Bipartisan Budget Act of 2015.  Section 603 provides that effective for services provided on or after January 1, 2017, certain off-campus PBDs are generally paid under the physician fee schedule (PFS), rather than the typically higher-paying OPPS, unless an exception applies.  For 2019, CMS proposes:

  • Paying a PFS equivalent rate for clinic visit services (G0463, Hospital outpatient clinic visit for assessment and management of a patient) when provided at an “excepted” PBD. CMS observes that clinic visits are the most common service billed under the OPPS, and this policy is expected to save approximately $760 million in FY 2019, including $150 million in reduced beneficiary copayments.
  • CMS proposes to apply to exempted PBDs a current policy that reduces OPPS payment for separately payable, nonpass-through drugs and biologicals (other than vaccines) purchased through the 340B drug discount program from average sales price (ASP) plus 6% to ASP minus 22.5% (with certain exceptions).
  • Revising payment when an excepted PBD expands into new lines of service. Under the proposed rule, if an excepted off-campus PBD furnishes a service from one of 19 proposed clinical families of services that it did not furnish during a baseline period (November 1, 2014 through November 1, 2015), the service from the “new” family would be paid under the PFS rather than the OPPS.
  • CMS notes that it is “developing a method to systematically control for unnecessary increases in the volume of other hospital outpatient department services.” In the meantime, CMS requests comments on alternative approaches to controlling unnecessary volume increases, while “not impeding development or beneficiary access to new innovations.”

Other proposed provisions include the following:  …
Continue Reading CMS Proposes CY 2019 Medicare OPPS, ASC Update, with Emphasis on Promoting Site-Neutrality

The Health Resources and Services Administration (HRSA) is once again delaying the effective date of its January 5, 2017 rule on 340B drug pricing program ceiling price calculation and civil monetary penalties (CMPs). Specifically, under a final rule published June 5, 2018, HRSA is pushing back the 340B ceiling price/CMP rule’s effective date for an…

In addition to the numerous hearings and markups on the opioid crisis discussed in a separate post, Congressional committees are examining the following health policy topics:

  • The Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing to review HHS Office of Inspector General and Government Accountability Office oversight reports regarding the

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The Trump Administration has launched a high-profile initiative aimed at reducing prescription drug prices, including release of a blueprint containing a series of short- and long-term policy proposals and a request for public comments on additional reforms.

First, on May 11, 2018 the Department of Health and Human Services released its “Blueprint to Lower…

The Department of Health and Human Services (HHS) is seeking comments on an additional delay in the effective date of the January 5, 2017 Health Resources and Services Administration (HRSA) final rule addressing calculation of the ceiling price and application of civil monetary penalties under the 340B drug pricing program. Specifically, HHS proposes to push…

The opioid crisis continues to be a focus for Congressional committees. The House Energy and Commerce Committee held hearings on prevention and public health solutions to the opioid crisis, along with the Drug Enforcement Administration’s role in combating the opioid epidemic. The Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing focusing on…

The Trump Administration has released its fiscal year (FY) 2019 budget proposal, which includes extensive health policy provisions. While most of the President’s policy proposals for Department of Health and Human Services (HHS) programs would require Congressional approval, others are characterized as administrative proposals that presumably would not involve Congress.
Continue Reading Trump Administration’s Proposed FY 2019 Budget Targets Medicare, Medicaid for Savings, Seeks (Again) to Repeal/Replace ACA

The Trump Administration has updated its “Unified Agenda of Regulatory and Deregulatory Actions,” which lists the scope and anticipated timing of pending and future regulations. In releasing the agenda, the Administration highlights its “ongoing progress toward the goals of more effective and less burdensome regulation,” including its plans to finalize three deregulatory actions…

CMS has published a final rule updating Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2018. In addition to rate updates, notable policy changes in the rule include a deep ($1.6 billion) OPPS reimbursement cut for drugs obtained through the 340B drug discount program, expanded OPPS drug administration packaging, and removal of total knee replacement procedures from the “inpatient only” list.

With regard to OPPS payments, the final rule provides a 1.35% update for 2018, reflecting a 2.7% market basket increase that is partly offset by both a 0.75 percentage point reduction and a 0.6% multi-factor productivity (MFP) reduction. The update for hospitals that fail to meet quality reporting requirements is reduced by 2.0% points.  Payment changes for individual procedures and ambulatory payment classifications (APCs) vary.  Under the new 340B discount drug policy CMS will reduce OPPS payment for separately payable, nonpass-through drugs and biologicals (other than vaccines) purchased through the 340B drug discount program from ASP plus 6% to ASP minus 22.5% (rural sole community hospitals, children’s hospitals, and certain cancer hospitals are excluded from this policy). CMS is redistributing the $1.6 billion in savings from this change by increasing by 3.2% conversion factor for non-drug items and services for 2018.  CMS may revisit how the 340B drug savings should be applied in the future.  Note that various hospitals and hospital associations have filed a lawsuit seeking to block this policy.

Other major provisions of the final rule include the following:  …
Continue Reading CMS Finalizes Medicare OPPS, ASC Rates and Policies for CY 2018

The Health Resources and Services Administration (HRSA) has adopted its proposal to delay the effective date of its final rule revising the calculation of the 340B “ceiling price” that may be charged to covered entities and related civil money penalties.  As previously reported, while implementation of the January 5, 2017 rule was already delayed …

The Energy and Commerce Subcommittee on Health has scheduled an October 11, 2017 hearing to discuss how covered entities use the 340B drug pricing program. A second Subcommittee hearing on October 11 will consider proposals from House members on ways to address the opioid crisis.

On October 17, the Senate Health, Education, Labor, and Pensions…

The Trump Administration is proposing to once again push back the effective date of a January 2017 final rule making changes to the calculation of the 340B “ceiling price” that may be charged to covered entities and related civil money penalties. As previously reported, while implementation of this rule has already been delayed until…

CMS has published its proposed rule to update Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment system rates and policies for calendar year (CY) 2018. In addition to proposing rate updates for the two payment systems, CMS solicits comments on a wide range of topics, including, among others:  deep OPPS reimbursement cuts for drugs obtained through the 340B drug discount program; a new OPPS drug administration packaging proposal along with a broader query regarding the need for packaging policy reforms; a proposal to allow total knee replacement procedures to be performed on an outpatient basis; and potential changes to the way CMS calculates the ASC payment update.  CMS will accept comments on the proposed rule until September 11, 2017.

With regard to OPPS payments, CMS proposes a 1.75% update for 2018, reflecting a 2.9% market basket increase, which is partly offset by a 0.75 percentage point reduction and a 0.4% multi-factor productivity (MFP) reduction. CMS expects that overall OPPS payments would increase by 2% ($897 million) compared to 2017 levels (although this estimate does not include the effects its 340B drug proposal, discussed below).  The update for hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements is reduced by 2.0 percentage points.  Rate updates for individual procedures vary based on changes in ambulatory payment classification (APC) assignments and other proposed policies.

Other major provisions of the proposed rule include the following:  …
Continue Reading CMS Proposes Medicare OPPS, ASC Update for CY 2018