On Friday, July 15th, CMS published its CY 2023 Medicare Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule (Proposed Rule) and gave 340B covered entities a glimpse into how the agency intends to react to the AHA v. Becerra SCOTUS opinion where the Supreme Court ruled that CMS lacked authority to alter Medicare payment rates for certain 340B drugs. The Proposed Rule outlines the new Part B rate for the upcoming year and the plan to determine remedies for prior year underpayments. Comments are due September 13, 2022.

New Payment Rate for CY 2023

Moving forward, CMS has committed to revising the Part B payment rate for separately payable, non-passthrough drugs to ASP plus 6% but will do so in the CY 2023 Medicare OPPS Final Rule (Final Rule). CMS anticipates that this will come at a cost of approximately $1.96 billion for CY 2023 (based on 2021 claims) which will result in a budget neutral adjustment to the OPPS conversion factor for all hospitals. CMS noted that although it proposed to continue ASP minus 22.5% in the Proposed Rule, it fully intends to restore ASP plus 6% in its Final Rule. CMS indicated it did not have time to propose the reversion to ASP plus 6% due to the timing of the SCOTUS opinion. We encourage covered entities to submit comments to support use of the ASP plus 6% rate and to advocate that CMS should never vary Part B drug payment rates by hospital group, particularly a group that participates in the 340B Program. Given the statutory framework confirmed by SCOTUS, it is critical that covered entities remain vocal regarding the flawed acquisition cost survey method that CMS previously employed.

Also, CMS did not explicitly address out-of-network Medicare Advantage (MA) payment rates/claims for separately payable 340B drugs, or the impact that the SCOTUS ruling will have on use of the JG and TB modifiers. We believe that the SCOTUS decision set the record straight and all CMS policies regarding separately payable 340B drugs should revert to pre-2018 policies, including non-contracted MA plan payments and modifiers (or lack thereof). Notwithstanding, impacted covered entities need to comment on these areas so CMS does not inadvertently leave such policies in place. Covered entities also need to consider how the SCOTUS decision and CMS’s Final Rule impact contracted MA plans and whether contract rates need to be amended.

How 340B Covered Entities Can Recover Losses from Part B Payment Reductions

More importantly, CMS is seeking comments on remedies for 2018-2022 underpayments. It appears that it is CMS’s intent to address the full range of 2018-2022 underpaid claims even though the SCOTUS case only covered 2018-2020. This is encouraging since the SCOTUS opinion only addressed HHS’s 2018-2019 340B rate reductions, and CMS eventually/partially relied on a survey (albeit flawed) to continue its rate reductions. It appears that CMS may be conceding relative to payment cuts that were not addressed in the SCOTUS opinion, but there is still a long road ahead. 340B covered entities should take advantage of the opportunity to request full repayment of losses experienced due to the reimbursement cuts. We encourage each covered entity to start to calculate its CY 2018-2022 underpayments as this information will be relevant and useful for comment purposes.

All impacted 340B covered entities should submit comments to influence how underpayment remedies will be addressed by CMS (due by September 13, 2022). Covered entities should consider MA plan payments in their approach. While preparing for comments, we recommend covered entities confirm the amount lost from the payment reductions from prior years. Please feel free to contact our 340B team for assistance with drafting comments and discuss remedy options to submit to CMS.