Additional Reimbursement Cuts for 340B-Covered Entities

Thoughtware Article Published: Sep 14, 2018
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Medicare Managed Care

The Centers for Medicare & Medicaid Services (CMS) calendar-year (CY) 2018 Outpatient Prospective Payment System (OPPS) rule applied changes to traditional Medicare to reduce reimbursement for some 340B Drug Pricing Program (340B Program)-covered entities. Some managed care payors have aligned their 340B Program rates with the CMS payment policy. Covered entities should consult with their legal counsel and review their contracts, as other payors may reach out. Covered entities should be on the lookout for letters from other payors.

Some Medicare Managed Care providers have updated policy and now require that claims for separately payable OPPS drugs or biologicals purchased through the 340B Program have the appropriate modifiers “JG” and “TB” to identify 340B Program-acquired drugs to reduce reimbursement. Claims received by Medicare Managed Care from a 340B Program care provider for a separately payable OPPS or biological agent without the correct modifier will be reimbursed at the adjusted, reduced 340B Program rate.

CY 2019 Proposed OPPS Rule

CMS recently released the proposed OPPS rule for 2019. The rule proposes additional reimbursement reductions to drugs acquired through the 340B Program. It’s expected CMS will finalize the rule by November 1, 2018.

The proposed rule extends Medicare traditional reimbursement cuts for drugs purchased through the 340B Program for certain hospital off-campus departments. In 2018, the OPPS rule cut traditional Medicare reimbursement by almost 30 percent. However, hospital off-campus facilities that were paid under the Medicare Physician Fee Schedule—due to a site neutrality provision in the Bipartisan Budget Act of 2015—were exempted from the cut.

The proposed rule also includes a provision to pay for biosimilars that don’t have pass-through status but are purchased under the 340B Program at the Average Sales Price (ASP) minus 22.5 percent of the biosimilar’s own ASP, rather than the ASP of the reference product.

The proposed rule continues to exclude rural sole community hospitals and critical access hospitals from the reimbursement reduction.

Additional Reimbursement Cuts for 340B-Covered Entities – chart

For information on this and other matters, contact Brian, Rob or your trusted BKD advisor today.

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