Hospitals condemn CMS site neutral rule that would cut payments to off-campus clinics

Under the new CMS rule, outpaitent clinics like the Hospital of Central Connecticut Family Health Center would receive a lower rate of reimbursement. Credit: The Hospital of Central Connecticut

Hospital groups, particularly 340B providers, have condemned the Centers for Medicare and Medicaid Services' proposed rule for site neutral payments that would reduce the rate paid to outpatient off-campus hospital clinics to 40 percent of their current reimbursement.

CMS's proposed the rule Wednesday would pay these clinics at the lower physician fee schedule rate, instead of at their current and higher outpatient rate.

The clinic visit is the most commonly billed service under the outpatient prospective payment system. Should the OPPS rule for 2019 be implemented, Medicare would save an estimated $760 million in the first year, according to the American Hospital Association. 

Essential Hospitals said CMS's proposal would cut $610 million in payments for clinic visits and would cut more should the facilities offer new services.

Bruce Siegel, MD, president and CEO of America's Essential Hospitals said the proposed rule for Medicare outpatient payments would make bad policies worse, impose draconian new cuts that jeopardize healthcare access for vulnerable patients and undermine the nation's healthcare safety net.

"The Centers for Medicare & Medicaid Services frames its proposals as empowering patients and providing more affordable choices and options. But we believe these proposals only would create roadblocks to care in communities across the country--communities that already struggle with care shortages and severe economic and social challenges," Siegel said.

The Association of American Medical Colleges President and CEO Darrell Kirch, MD, said, "Inexplicably, the administration has decided to double-down on its flawed policy by extending harmful cuts to safety net hospitals, many of which are teaching hospitals, that participate in the 340B drug pricing program. This proposal flies in the face of bipartisan legislation, introduced by Reps. David McKinley (R-W. Va.) and Mike Thompson (D-Calif.) and with nearly 200 cosponsors, which would rescind the cuts CMS began imposing on Jan. 1 as part of the CY2018 OPPS final rule."

340B Health, an association of more than 1,300 hospitals, also raised the issue of legislative support for H.R.4392 which would roll back the 2018 cuts and block CMS from making such reductions in the future. 

"We urge CMS to withdraw this latest proposal before it causes additional harm," 340B Health said.

CMS said if finalized, the rule would save patients about $150 million in lower copayments for visits at off-campus hospital outpatient clinics.

Hospitals will get 40 percent of their current outpatient prospective payment system rate, regardless of whether the off-campus facility is considered grandfathered under the Bipartisan Budget Act of 2015, according to the American Hospital Association.

CMS's proposed policy would modify payment to grandfathered off-campus provider-based departments, should they expand the services they offer. If a grandfathered PBD adds a new service from a clinical family from which it did not previously furnish services, the services would be paid a site-neutral rate of 40 percent of the outpatient rate.

"With today's proposed rule, CMS has once again showed a lack of understanding about the reality in which hospitals and health systems operate daily to serve the needs of their communities," said AHA Executive Vice President Tom Nickels. "CMS has misconstrued Congressional intent with its proposal to cut payments for hospital clinic services in certain outpatients departments. In 2015, Congress clearly intended to provide current off-campus hospital clinics with the existing outpatient payment rate in recognition of the critical role they play in their communities. But CMS's proposal runs counter to this and will instead impede access to care for the most vulnerable patients."

Vulnerable patients are served by 340B providers that use the difference between what they pay for drugs and what they're reimbursed to offset losses from patients who are uninsured or underinsured.

340B proponents say often these hospitals operate on negative margins. Critics have said these hospitals are using the system by prescribing more expensive drugs, for increased profits.

CMS also would change its 340B drug payment policies. The agency is proposing to extend the average sale price minus 22.5 percent payment rate for drugs acquired under the 340B program to those 340B drugs furnished in non-grandfathered provider-based departments. 

After slashing $1.6 billion from Medicare in 2018 by imposing a 30 percent outpatient drug payment cut, CMS is expanding the reduction.

The AHA said that in expanding the nearly 30 percent cut to outpatient drug payments to 340B hospitals, it has exceeded its statutory authority and remains "subject to legal challenge." 

The 340B program requires no federal contributions but relies on drug discounts by manufacturers, the AHA said.

Comments on the CMS proposed rule are due September 24.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com