CMS issued the CY 2024 OPPS/ASC Final Rule on November 2, 2023. You can read about changes to the Inpatient Only (IPO) Procedure List and ASC Coverage Procedure List (CPL) in a related article in this week’s newsletter. This article highlights additional topics that historically our clients have reached out to us to learn about.
OPPS Remedy for 340B-Acquired Drug Payment Policy
On July 7, 2023, CMS published a proposed rule, referred to as “remedy proposed rule” to address reduced payment amounts to 340B hospitals for CYs 2018 through 2022 and to comply with the statutory requirement to maintain budget neutrality. The “remedy proposed rule” proposed changes to the calculation of the OPPS conversion factor beginning in CY 2025.
The 340B final remedy was also issued on November 2nd. In this final rule, CMS finalized their proposed methodology of estimating the reduction in drug payments to affected 340B covered entity hospitals in CY 2018 through September 27, 2022, and will make total lump sum payments in the amount of $9.004 billion.
CMS will be issuing instructions to the MACs to issue a one-time lump sum payment to the affected hospitals within 60 calendar days of the MAC’s receipt of the instructions.
Based on updated analyses, the final rule Addendum AAA was updated with new hospital-specific payment amounts and accounts for all payment activity that has happened since the proposed rule was issued. Updated claims data reflects that affected hospitals received approximately $10.6 billion less in 340B drug payments (including money that would have been paid by Medicare and money that would have come from the beneficiaries as copayments) than they would have for drugs provided in CY 2018 through September 27, 2022, had the 340B policy not been implemented.
“The amounts included in Addendum AAA are the amounts that hospitals will receive, except that payment amounts may be affected by MACs continuing to follow normal accounting processes for collecting repayment amounts stemming from provider-specific overpayment obligations, adjustments resulting from errors identified through the lump-sum technical correction process described below, as well as other unique situations such as provider bankruptcy or payment suspension, any of which may impact the provider’s net payment amount.”
Unfortunately, the lump sum payments do not include interest and CMS is following budget neutrality requirements to make these payments. This means that “beginning in CY 2026, we will reduce all payments for non-drug items and services to all OPPS providers, except new providers (hospitals with a CMS CCN effective date of January 2, 2018, or later), by 0.5 percent each year until the total estimated offset of $7.8 billion is reached. We currently estimate that the payment decrease will be completed after approximately 16 years. To implement this reduction and exception for new providers, we are finalizing the proposed regulation text changes at § 419.32(b)(1)(iv)(B) as proposed, except for changing the implementation date of the 0.5 percent reduction from CY 2025 to CY 2026.”
CMS notes in the 340B remedy final rule that “generally the impact of that annual 0.5 percent reduction to the OPPS conversion factor on individual providers, as well as categories of providers, will depend on the percentage of their OPPS payments that are conversion factor-based, and in most cases will be a decrease of slightly less than 0.5 percent of overall OPPS payments.”
Beneficiary Cost Sharing
CMS noted in the final rule that commenters overwhelmingly supported their proposed approach and rationale for accounting for beneficiary cost sharing. They finalized their “policy to account for beneficiary cost sharing as proposed. We will exercise our authority under section 1833(t)(2)(E) of the Act (42 U.S.C. 1395l(t)(2)(E)) to make adjustments “as necessary to ensure equitable payments,” to pay the full $9.0 billion difference, including $1.8 billion, an amount that is approximately equivalent to what affected 340B covered entity hospitals would have collected from beneficiaries for these 340B-acquired drugs if the 340B Payment Policy had not been in effect from CY 2018 through September 27, 2022, so that affected 340B covered entity hospitals are paid the approximate amount they would have been paid in full without application of the 340B Payment Policy.”
340B Modifiers “JG” and “TB”
The Inflation Reduction Act of 2022 expanded the provider types that must report one of these modifiers no later than January 1, 2024, to now include critical access hospitals, Maryland All-Payer or Total Cost of Care Model Hospitals, and Non-excepted off-campus provider-based departments (PBD).
In the CY 2023 OPPS/ASC final rule, CMS maintained the requirements that 340B hospitals report one of two modifiers, “JG” – Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes, or “TB” – Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes for select entities.
In the CY 2024 OPPS/ASC proposed rule, CMS notes they “now believe utilizing a single modifier will allow for greater simplicity, especially because both modifiers are used for the same purpose: to identify separately payable drugs and biologicals acquired under the 340B program.”
CMS is proposing that all 340B covered entity hospitals would report the “TB” modifier effective January 1, 2025, even if the hospital previously reported the “JG” modifier. The “JG” modifier will remain effective through December 31, 2024. Beginning January 1, 2025, the “JG” modifier would be deleted.
CMS notes hospitals currently using the “JG” modifier could choose to continue to use it in CY 2024 or choose to transition to the “TB” modifier during that year.
