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CY 2018 OPPS Proposed Rule Includes 340B Cuts

A new proposed rule for Medicare’s Outpatient Prospective Payment System (OPPS) for calendar year (CY) 2018 would increase outpatient payment rates by 1.75 percent.

In the proposed rule, the Centers for Medicare & Medicaid Services (CMS) proposes to drastically reduce Medicare Part B reimbursement for drugs purchased through the 340B Drug Pricing Program, a policy America’s Essential Hospitals strongly objected to in a media statement. Specifically, CMS would pay 340B hospitals 77.5 percent of the average sales price (ASP) for most separately payable Part B drugs. CMS currently pays for these drugs at 106 percent of the ASP. This policy does not apply to pass-through, or newer, drugs and vaccines.

CMS also proposes to require hospitals to use a modifier to identify drugs that are not purchased through the 340B program.

Finally, CMS is seeking comment on whether to require 340B hospitals to report their charges and acquisition costs for 340B drugs.

Outpatient Payment, Quality Reporting Provisions

In relation to outpatient payment and quality reporting, the proposed rule:

  • discusses payment policy for site neutral payments under Section 603 of the Bipartisan Budget Act of 2015, including reducing reimbursement to new provider-based departments to 25 percent of the OPPS payment rate;
  • suggests removing total knee arthroplasty from the inpatient-only (IPO) list and seeks comment on removing partial and total hip arthroplasty from the IPO list;
  • sets the threshold for triggering an outlier payment at 175 percent of the payment amount and at least $4,325;
  • seeks comments on incorporating social risk factors in the Outpatient Quality Reporting (OQR) Program;
  • removes six measures from the OQR Program (two for the CY 2020 payment determination and four for the CY 2021 payment determination);
  • delays implementation of data collection for the Consumer Assessment of Healthcare Providers and Systems Outpatient and Ambulatory Surgery Survey in CY 2018; and
  • seeks comment on ways to identify and reduce payment differences for similar services provided in the inpatient and outpatient settings.

Input Sought on Medicare Outpatient Payment Policy Changes

Finally, CMS in a request for information seeks public input on changes to Medicare outpatient payment policies that could increase flexibility and efficiency, while reducing burden on providers. Suggestions can be regulatory, subregulatory, policy, practice, or procedural in nature.

America’s Essential Hospitals is analyzing the proposed rule for comment and will send members a detailed Action Update in the coming days. CMS is accepting comments on the proposed rule until Sept. 11.

Contact Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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