Skip to main content

Understanding CMS’ proposed remedy for 340B payment

Understanding CMS’ proposed remedy for 340B payment

The healthcare industry has seen considerable government policy changes over the years that significantly impact patients and providers alike. A recent proposed change is the Medicare Outpatient Prospective Payment System Remedy for 340B Drug Payment Policy proposed rule.

Issued in response to the U.S. Supreme Court’s decision on American Hospital Association v. Becerra, the 340B proposed remedy rule would provide 340B hospitals that were improperly underpaid during calendar years 2018 through 2022 with a one-time lump sum payment.

This blog post will delve into the proposed rule, the potential impact of changes that providers could face and what 340B hospitals can expect in terms of remedy payments.

How the 340B proposed rule changes would impact providers

Payment reduction

The proposed rule includes significant changes that would impact providers. First is the estimated annual payment reduction to offset the 3.19% rate increase in calendar year 2018. This proposed change would result in a 0.5% reduction to the annual outpatient rate for each of CYs 2025-2040. The impact of this reduction may seem modest, but over time, it can add up to a significant amount. This means that providers need to prepare for a continued impact on their payments, which can affect their financial stability in the long run.

Lump sum remedy payment

CMS proposed the lump sum remedy payment for 340B hospitals that experienced decreased Medicare fee-for-service payments for drugs acquired through the 340B program during CYs 2018 through 2022. The value of the payment would equal the difference between the amount paid for 340B-acquired drugs and the amount that would have been paid (i.e., average sales price+6%) had the drug not been acquired through the 340B drug discount program. This is a significant development for 340B hospitals, as it can offer them some much-needed financial assistance.

These repayments would go out either late in CY 2023 or early in CY 2024. It's essential to carefully monitor the situation, as repayment amounts include additional payments to account for beneficiary cost-sharing.

Comments due Sept. 5

Providers have a relatively short window within which to submit comments on the proposed rule. Comments are due to CMS by Sept. 5.

Providers must examine the proposals and submit their comments as soon as possible to allow the CMS sufficient time to review and act on the feedback.

Conclusion: Recommendations for providers

Navigating the impact of this proposed rule can be challenging. The proposed 340B lump sum remedy payment would offer some immediate relief to affected hospitals, but providers must carefully monitor the situation to assure that the repayments received are in line with the amount owed. With careful monitoring and diligence, providers can stay updated about these changes and make plans accordingly.

Not sure how this applies to you? Contact DataGen to learn how our analyses offers insight to providers to more effectively advocate, budget, plan changes to payment and workflow and educate key stakeholders. 


Popular posts from this blog

BPCI Advanced – take advantage of the model extension now

The Bundled Payment for Care Improvement (BPCI) Advanced Model is now open for applications until May 31, 2023. This model provides a unique opportunity to acute care hospitals and physician group practices who are looking to: evaluate their bundle performance; rejoin if they have previously dropped out due to being under a convener; or take advantage of the changes to the model. With a small window to sign the participation agreement, you’ll need experts to process data quickly and accurately for evaluation. BPCI Advanced Program Details The Centers for Medicare & Medicaid Services (CMS) announced in October 2022 that this program will extend from January 2024 to December 2025. Data used for evaluation will be taken from the baseline period between October 2018 and September 2022. A participation agreement will be sent out in September 2023 and needs to be signed by October 2023 in order to participate. Those who apply before the May 31 deadline will benefit

BPCI Advanced Model Extension

CMS recently made several major announcements about the Bundled Payments for Care Improvement Advanced Model.  The model, which was due to expire at the end of 2023 (Model Year 6), will be extended for an additional two years through Dec. 31, 2025.  New applications will be accepted in 2023 for the two-year extension. Participants still active in Model Year 6 can continue without reapplying by signing an amended and restated participation agreement for Model Year 7.  New methodological changes will be implemented for Model Year 6, which starts on Jan. 1, 2023. Methodological changes include that: the CMS Discount Factor for medical clinical episodes will be reduced from 3% to 2%;  the Peer Group Trend Factor Adjustment cap for all clinical episodes will be reduced from 10% to 5%; the Major Joint Replacement of the Upper Extremity clinical episode category will become a multi-setting episode category by allowing episodes to be triggered when the procedure is performed in the hospital ou

You’ve been accepted to the Enhancing Oncology Model. Now what?

The Centers for Medicare and Medicaid Services Innovation Center recently announced approved applicants for the new Enhancing Oncology Model. If your facility has been selected by CMS, are you still weighing your options during the current baseline evaluation period?  Two deciding factors may include the program data that CMS provides and whether EOM is enough of an improvement over the prior Oncology Care Model to make your investment worthwhile. Another factor to consider: Will you have the resources in place to conduct a baseline evaluation before EOM’s program start on July 1, 2023? How EOM differs from OCM EOM aims to improve the coordination of oncology care, drive practice transformation and reduce Medicare fee-for-service spending through episode-based payment. It includes three major updates: Fewer cancer types. Compared with OCM’s 21, EOM will be limited to seven common cancer types: breast, prostate, lung, small intestine/colorectal, multiple myeloma, lymphoma and chronic le