Court declines to reconsider site-neutral and 340B decisions

The full U.S Court of Appeals declined to reconsider two recent decisions that upheld CMS’ cuts to reimbursement for certain off-campus provider-based department (PBD) visits and drugs acquired under the 340B program, the American Hospital Association (AHA) announced October 19.

Cuts to excepted off-campus PBD reimbursement upheld

On July 17, a three-judge panel ruled that CMS has the authority to reduce payments for certain services provided at excepted off-campus PBDs. The full court declined to rehear the decision.

Under Section 603 of the Bipartisan Budget Act of 2015, CMS was required to implement a site-neutral payment policy that reduced reimbursement to most off-campus PBDs. Certain off-campus PBDs were grandfathered under Section 603 and exempt from the reimbursement reductions.

In the 2019 OPPS final rule, CMS finalized a policy to extend reimbursement reductions to grandfathered off-campus PBDs, citing “unnecessary increases” in volume. CMS applied a 50% total reduction in payment to grandfathered off-campus PBDs as if these sites were paid the Medicare Physician Fee Schedule (MPFS) rate for services described by HCPCS code G0463 (hospital outpatient clinic visit for assessment and management of a patient). This effectively paid providers 70% of the OPPS rate for 2019. For 2020 and subsequent years, CMS planned to reimburse the grandfathered PBDs at the MPFS rate, which would equal 40% of the OPPS rate. Notably, the reductions were not budget-neutral, meaning the savings were not redistributed within the OPPS.

The AHA filed a lawsuit to halt the reductions, arguing that CMS lacked the statutory authority to enforce the policy. The July 17 decision reversed a 2019 district court decision that vacated the policy.

340B reductions to continue

On July 31, a three-judge panel determined that CMS has the authority to reduce 2018 and 2019 OPPS payments for 340B drugs by almost 30%. The full court denied the AHA’s request to reconsider the July 31 decision.

Prior to 2018, CMS reimbursed hospitals at the average sales price (ASP) plus 6% for drugs acquired through the 340B drug discount program, which is intended to allow hospitals to purchase drugs from manufacturers at a discounted rate to accommodate uninsured and low-income patients. The 2018 OPPS final rule cut that reimbursement dramatically to ASP minus 22.5%.

The AHA argued that CMS overstepped its statutory authority when in finalized the payment cuts. The July 31 decision reversed a 2018 district court ruling that sided with the AHA.

The AHA is currently evaluating its options, including petitioning the Supreme Court, according to its statement.