Hospitals Criticize Major Policy Moves in 2021 OPPS Final Rule

Healthcare policies designed to boost competition between hospital outpatient departments and physician offices could actually end up harming hospitals during one of the worst financial crises to hit the industry, leading associations are saying.

Earlier this week, CMS finalized the Outpatient Prospective Payment System (OPPS) rule for 2021, which included significant policy changes, including the elimination of the inpatient only list and the continuation of rate cuts for drugs acquired through the 340B Drug Pricing Program.

CMS touted policy changes in the rule as the vehicle for giving Medicare patients and their providers more choices for lower cost care in the outpatient setting.

But hospital groups have disagreed.

The American Hospital Association (AHA) called the rule a “blow” to hospitals and health systems still struggling to provide care to patients during the COVID-19 pandemic. The Association was particularly critical of CMS’ decision to move forward with a relatively new method of calculating hospital reimbursement for 340B-acquired drugs.

“The continuation of deep cuts in payments for 340B drugs undermines the effectiveness of the 340B program and exacerbates the strain placed on hospitals serving vulnerable communities,” Tom Nickels, executive vice president of the American Hospital Association (AHA), said in a statement. “These cuts conflict with Congress’ clear intent, perpetuate the Administration’s inaccurate interpretation of the law, as well as its failure to protect the program from continued assaults by drug companies.”

The rule will continue paying hospitals average sales prices of 340B-acquired drugs minus 22.5 percent rather than the previous formula of average sales price plus 6 percent.

AHA had previously challenged the new formula for determining hospital reimbursement in a court case that was eventually decided in favor of CMS. But the industry group had appealed to CMS to reconsider the cuts despite the court’s decision because of the financial and operational challenges hospitals are facing during the COVID-19 public health emergency.

“Continued cuts will result in the further loss of resources for 340B hospitals at the very worst possible time as COVID-19 cases and hospitalizations continue to climb across the country,” Nickels stated.

Now, other industry groups are also stepping forward in opposition to the recently finalized cuts.

“We are disappointed that CMS continued its misguided 340B drug pricing policy, eliminating savings that hospitals use to provide support in underserved areas,” Blair Childs, senior vice president of public affairs at Premier Inc., said in an emailed statement.

America’s Essential Hospitals’ senior vice president of policy and advocacy Beth Feldpush, DrPH, also called the cuts “bad policy at any time,” but especially “harmful” during the public health emergency.

“There is no policy justification for the agency’s damaging Part B drug payment cuts to hospitals in the 340B Drug Pricing Program. These cuts flout congressional intent for the 340B program and undermine the savings it was designed to create for hospitals that care for underserved people and communities,” Feldpush added.

But industry groups like the AHA are also speaking out against CMS’ latest attempt to bolster physician-owned hospitals.

Under the OPPS final rule, CMS removed criteria physician-owned hospitals must meet to qualify as “high Medicaid facilities,” including the cap on the number of additional beds to be approved for the exception and the restriction on expansions beyond the hospital’s main campus.

“The Congressional Budget Office, Medicare Payment Advisory Commission and independent researchers all agree that physician self-referral to facilities in which they have an ownership stake leads to greater utilization of services and higher costs,” Nickels said. “In addition, physician-owned hospitals have a tendency to cherry-pick their patients, which leaves sicker and less-affluent patients to community hospitals, threatening the health care safety net.”

Additionally, AHA and Premier opposed the elimination of the inpatient only list.

“CMS’ decision to eliminate the inpatient only list over a three-year period is short-sighted, particularly in the absence of clinical guidance or best practices for determining site of service,” Childs stated.

The agency maintained in the OPPS final rule that phasing out the inpatient only list over the next three years will save Medicare beneficiaries money and give providers more choices for care.

CMS will start phasing out the inpatient only list when the OPPS final rule goes into effect on January 1, 2021.