On November 1, 2017, the US Department of Health and Human Services released a Final Rule implementing a payment reduction for most covered outpatient drugs billed to Medicare by 340B-participating hospitals from the current Average Sales Price (ASP) plus 6 percent rate to ASP minus 22.5 percent, which represents a payment cut of almost 30 percent. The payment reduction is effective January 1, 2018, for all 340B-participating hospitals paid under the Medicare Hospital Outpatient Prospective Payment System (OPPS) with the exception of rural Sole Community Hospitals, PPS-excluded Children’s Hospitals and PPS-excluded Cancer Hospitals.
Savings to the Medicare program from the payment cut will be redistributed in a budget-neutral manner to all hospitals paid under OPPS through an increase in the payment rate for non-drug items and services.
This Final Rule represents a critical change in Medicare policy affecting the continued viability of the 340B Program and CMS authority to make material payment changes through sub-regulatory guidance.
Please contact the authors of this article or your regular McDermott lawyer for guidance in understanding the Final Rule.