NPC Comments on CMS's Hospital Outpatient Prospective Payment Systems Proposed Rule

September 13, 2022

The Honorable Chiquita Brooks-LaSure
Administrator, Centers for Medicare & Medicaid Services
Department of Health and Human Services 
7500 Security Boulevard
Baltimore, MD 21244

Submitted electronically via https://regulations.gov 

RE: Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Acquisition; Rural Emergency Hospitals: Payment Policies, Conditions of Participation, Provider Enrollment, Physician Self-Referral; New Service Category for Hospital Outpatient Department Prior Authorization Process; Overall Hospital Quality Star Rating [CMS–1772–P]

Dear Administrator Brooks-LaSure:

The National Pharmaceutical Council (NPC) appreciates the opportunity to submit comments regarding the Centers for Medicare & Medicaid Services (CMS) notice of proposed rulemaking, Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Acquisition; Rural Emergency Hospitals: Payment Policies, Conditions of Participation, Provider Enrollment, Physician Self-Referral; New Service Category for Hospital Outpatient Department Prior Authorization Process; Overall Hospital Quality Star Rating. 

NPC is a health policy research organization dedicated to the advancement of good evidence and science and to fostering an environment in the United States that supports medical innovation. NPC is supported by the major U.S. research-based biopharmaceutical companies. We focus on research development, information dissemination, education, and communication of the critical issues of evidence, innovation, and the value of medicines for patients. Our research helps inform important health care policy debates and supports the achievement of the best patient outcomes in the most efficient way possible. 

In the proposed rule, CMS states its intent to make significant changes to the Calendar Year (CY) 2023 payment rate for drugs purchased through the 340B program. Since 2018, CMS has paid for non-pass-through drugs and biologics acquired under 340B prices at Average Sales Price (ASP) minus 22.5%. However, considering a recent Supreme Court decision American Hospital Association v. Becerra [1] which held that the Department of Health and Human Services (HHS) may not vary payment rates for drugs and biologicals among groups of hospitals in the absence of having surveyed hospitals’ acquisition costs, CMS has indicated it plans to revert to payment at ASP plus 6% in the Final Rule. 

While NPC recognizes the importance of the 340B program in addressing barriers to quality health care access among low-income uninsured and other vulnerable patients, NPC is concerned with implications for potentially higher beneficiary cost-sharing as an unintended consequence of CMS’s intended return to ASP plus 6%. 

NPC strongly supports CMS’s prior efforts to align hospital outpatient payments for drugs and biologicals more closely with hospitals’ acquisition costs for drugs purchased under the 340B program and, in light of the recent Supreme Court decision, urges CMS to continue to work towards applying the needed hospital survey data to set differential payment rates. 

I.    Payment for Drugs Purchased Under the 340B Program

CMS has expressed its intention to set payment rates for CY 2023 for drugs purchased under the 340B program at ASP plus 6% in the Final Rule. NPC is concerned with the impact of this planned change on patient care and beneficiary cost-sharing. Specifically, the large margin between reimbursement and the 340B acquisition cost can create significant perverse incentives resulting in higher health care costs. Several studies have pointed to the role of 340B in increasing hospital acquisition and conversion of independent physician practices to hospital outpatient departments eligible for 340B pricing, which ultimately limits patient access to care and increases health care costs.[2] In addition, this shift in payment results in increases in coinsurance for many Medicare beneficiaries as cost-sharing for Part B drugs is typically 20 percent of Medicare payment amount. Thus, CMS’s planned return to ASP plus 6% may have significant consequences for patient access to care and cost-sharing.

Given the potential impact, NPC supports CMS’s prior efforts to make Medicare payment more aligned with acquisition costs for drugs purchased under the 340B program and strongly recommends the Agency continue to work to secure the necessary hospital survey data to allow for application of differential payment for 340B acquired drugs. The Supreme Court’s decision held that HHS may not vary payment rates for drugs and biologicals among groups of hospitals without having surveyed hospitals’ acquisition cost. However, as CMS previously conducted a drug acquisition cost survey in 2020 for 340B hospitals to collect data for certain quarters in CY 2018 and 2019,[3]  NPC asks the Agency to consider further whether and how improved data transparency concerning hospital acquisition costs may inform the closer alignment of reimbursement rates with true costs associated with providing care. The 2020 survey included 1,422 340B hospitals between April 24 and May 15, 2020. CMS has since then indicated in its CY 2021 Outpatient Prospective Payment System (OPPS)/Ambulatory Surgical Center (ASC) Final Rule that the Agency would continue to explore whether “survey data should be considered hospital acquisition cost data” for 340B drug payment rate setting and noted that the use of survey data is complex, and several factors would need to be accounted for to set payment rates.[4]  In the CY 2022 OPPS/ASC Final Rule, CMS further stated its belief that the Secretary has the discretion to propose 340B drug payment rates based on 2020 survey results.[5[   

NPC strongly recommends CMS continue its efforts to align reimbursement for drugs purchased through the 340B program more closely with a hospitals’ acquisition costs. We ask that the Agency examine its current 2020 survey data and obtain any necessary additional data to support differential reimbursement of 340B purchased drugs. Such efforts are important to address the exponential growth of the program and the market-distorting effects of the differences between payment and 340B acquisition costs while allowing for lower cost-sharing for many Medicare beneficiaries. 

II.    Conclusion

NPC supports efforts to ensure a strong and sustainable 340B program that operates in accordance with the language and purpose of its authorizing statute. We believe that CMS’s efforts to align drug payment with 340B acquisition cost are important to maintaining patient access to care and lowering cost-sharing for patients.

We thank you for the opportunity to provide comments and look forward to continuing this conversation. We would be happy to meet to expand upon our comments and share our research. 

Sincerely,

John M. O’Brien, PharmD, MPH
President and Chief Executive Officer

 

[1] Am. Hosp. Assn et al. v. Becerra, No. 20–1114 (June 15, 2022). https://www.supremecourt.gov/opinions/21pdf/20-1114_09m1.pdf 
[2] Desai S, McWilliams JM. Consequences of the 340B Drug Pricing Program. N Engl J Med. 2018 378:539-548; Conti R, Bach P. Cost Consequences of the 340B Drug Discount Program. JAMA. 2014 May 15; 309(19): 1995–1996.
[3] CMS. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; New Categories for Hospital Outpatient Department Prior Authorization Process; Clinical Laboratory Fee Schedule: Laboratory Date of Service Policy; Overall Hospital Quality Star Rating Methodology; Physician-Owned Hospitals; Notice of Closure of Two Teaching Hospitals and Opportunity To Apply for Available Slots, Radiation Oncology Model; and Reporting Requirements for Hospitals and Critical Access Hospitals (CAHs) To Report COVID–19 Therapeutic Inventory and Usage and To Report Acute Respiratory Illness During the Public Health Emergency (PHE) for Coronavirus Disease 2019 (COVID–19) December 29, 2020. https://www.govinfo.gov/content/pkg/FR-2020-12-29/pdf/2020-26819.pdf
[4] Ibid.
[5] CMS. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency of Hospital Standard Charges; Radiation Oncology Model. November 16, 2021. https://www.federalregister.gov/documents/2021/11/16/2021-24011/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment