2.7% payment increase not enough to offset labor and supplies, AHA says 

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The American Hospital Association is disappointed with the federal government's 2.7% payment increase for outpatient care, given continued financial challenges.

The payment rate was released last week by the Centers for Medicare and Medicaid Services in the 2023 Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System proposed rule.

WHY THIS MATTERS

"We are deeply concerned about CMS' proposed payment update of only 2.7%, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face," AHA Executive Vice President Stacey Hughes said in a statement. "A much higher update is warranted, and we will be closely analyzing CMS' proposed market basket, as well as its proposed productivity offset."

Both the AHA and America's Essential Hospitals expressed their appreciation to the Centers for Medicare and Medicaid Services for ending cuts to 340B payments.

In 2018 and 2019, the Department of Health and Human Services cut an estimated $1.6 billion in annual reimbursement for drugs purchased through the 340B program. The AHA and others sued.

The Supreme Court ruled in June in favor of hospitals in 340B drug payments. Providers have been waiting to see how HHS would respond as far as future payments, and potentially any back payments.

CMS proposes for CY 2023 a payment rate of average sales price minus 22.5% for drugs and biologicals acquired through the 340B Program, consistent with its prior policy. But it also said it fully anticipates applying a rate of ASP plus 6% to such drugs and biologicals in the final rule for CY 2023, in light of the Supreme Court's recent decision. 

"We are still evaluating how to apply the Supreme Court's recent decision to prior calendar years. Impacts for both policy options are included in the addenda to the proposed rule," CMS said. 

Beth Feldpush, senior vice president of policy and advocacy at America's Essential Hospitals, said, "This is an important step toward reversing the damage caused by deep cuts to payments for outpatient drugs acquired through the 340B Drug Pricing Program – cuts the U.S. Supreme Court unanimously found unlawful. We now must turn to a timely remedy that reinstates payments critical to essential hospitals' efforts to advance access and improve health equity."

THE LARGER TREND
 
Section 340B of the Public Health Service Act allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices. 

The American Hospital Association and several other organizations and health systems brought a lawsuit in 2018, after the Trump Administration issued a final payment rule that decreased the amount of reimbursement hospitals received from the 340B drug payment program by about 30%. 

Twitter: @SusanJMorse
mail the writer: SMorse@HIMSS.org