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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. 

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