Becker's Hospital Review

17 CFO / FINANCE CMS proposing $9B lump sum payment for unlawful 340B cuts By Andrew Cass C MS is proposing a $9 billion lump sum payment to hospitals participating in the 340B Drug Pricing Program to make them whole from unlawful payment cuts from 2018 to 2022. e proposal comes aer the Supreme Court in June 2022 sided with hospital groups challenging the payment cuts. e case centered around whether CMS has the authority to make cuts to the program under its Medicare Outpatient Prospective Payment System. Under the payment rule, HHS cut the reimbursement rate for covered drugs by 28.5 percent in 2018, but it later lowered the reimbursement rate cut to 22.5 percent. CMS estimated that unlawful cuts resulted in 340B providers receiving $10.5 billion less in drug payments between 2018 and the third quarter of 2022, according to a July 7 CMS fact sheet. e agency said many drug claims have been reprocessed at the higher default payment rate since the policy was vacated, resulting in 340B providers already receiving $1.5 billion of that total. CMS said it is proposing to maintain budget neutrality, as required by statute, according to the fact sheet. e agency estimates that hospitals were paid $7.8 billion more for non-drug items and services during the affected time period than they would have been in the absence of the 340B payment policy. To carry out the $7.8 billion budget neutrality adjustment, CMS is proposing to reduce future non-drug item and service payments by adjusting the OPPS conversion factor by -0.5 percent starting in 2025. e full adjustment is estimated to take 16 years. Comments for the proposed rule are due by Sept. 5. Reaction American Hospital Association CEO Rick Pollock said in a July 7 statement that the group is gratified that hospitals are being paid promptly with a single lump sum payment but is disappointed HHS has "chosen to recoup funds from other hospitals that cannot afford additional Medicare payment cuts, including rural sole community, cancer and children's hospitals that were initially exempted from HHS' illegal policy." America's Essential Hospitals CEO Bruce Siegel, MD, said in a July 7 statement that the organization is pleased with the proposed lump sum reimbursement but is disappointed that the remedy does not include interest and is budget neutral. "e proposed remedy is a positive step to compensate hospitals for the difference between the cuts and what they would have received otherwise," Dr. Siegel said. "We urge CMS to reconsider its proposed budget neutrality policy and make the remedy payments as soon as possible." 340B Health said it appreciates CMS' recognition of the need for accountability and their commitment to providing lump sum reimbursements but is urging the agency to "reconsider its proposed remedy of rate decreases for non-drug items, which would represent a financial penalty for many hospitals that had no option for avoiding those payments." e organization said it is also seeking repayments with interest. n C-suite healthcare planning 'paralyzed by the tyranny of the urgent,' report says By Nick Thomas S hort-term necessities are hindering any vital longer- term strategic planning for hospitals as they continue to soldier on against a backdrop of continuing financial challenges, according to The Keckley Report July 10. Hospital executives across the country, however, must consider five questions and priorities beyond just surviving in 2023, and as they make "guarded bets" about 2024, the report said. 1. Is the status quo sustainable? 2. Are social determinants a core strategy or distraction? 3. How should the health system of the future be funded? 4. How will innovations in therapeutics and information technology change how individuals engage with the system? 5. How will regulators and court decisions enact fair competition, consumer choices and antitrust protections? Such questions, which come ahead of an AHA leadership summit July 16-17, must be addressed as well as facing more immediate challenges, which have led to an industry "nearing meltdown," according to the report. "To that end, the questions above deserve urgent discussion in every hospital board room and C suite," the report says. "Trade-offs aren't clear, potential future state hospital scenarios are not discreet and winners and losers unknown. But a fact-driven process recognizing a widening array of players with deep pockets and fresh approaches is necessary." n

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