New CMS Rule Seeks to Lower Out-of-Pocket Costs for Medicare

Advocacy groups praise policy change towards reforming 340B and reducing drug costs for seniors.

Yesterday, the Centers for Medicare and Medicaid Services (CMS) finalized 2 Medicare reimbursement policies that ensure patients are put first and payments support high-quality and affordable care, according to a press release.

The finalized Hospital Outpatient Prospective Payment System (OPPS) rule will reduce out-of-pocket costs for Medicare-insured patients, while also increasing access to healthcare in rural areas, according to CMS.

“As part of the President’s priority to lower the cost of prescription drugs, Medicare is taking steps to lower the costs Medicare patients pay for certain drugs in the hospital outpatient setting. Medicare beneficiaries would benefit from the discounts hospitals receive under the 340B Program by saving an estimated $320 million on copayments for these drugs in 2018 alone,” said Seema Verma, administrator of CMS.

The OPPS final rule seeks to help seniors reduce the cost of prescription drugs by lowering the payment rate for Part B medications purchased by hospitals through the 340B program, according to the release. The savings from the new policy will be distributed to all hospitals equally.

The CMS noted that pediatric hospitals, cancer hospitals, and rural community hospitals will not be included in the drug payment reductions.

The agency plans to work with Congress to provide additional 340B flexibility, which may provide additional help to safety net hospitals, according to the release.

Additionally, the final rule will help rural hospitals and healthcare providers. The OPPS rule will place a 2-year moratorium on direct physician supervision requirements for rural and critical access hospitals in order to reduce burdens, according to the CMS.

“CMS understands the importance of strengthening access to care, especially in rural areas,” said Administrator Verma. “This policy helps to ensure access to outpatient therapeutic services for seniors living in rural communities and provides regulatory relief to America’s rural hospitals.”

The final rule also would make reimbursement available for Medicare beneficiaries when certain procedures are safely performed in an outpatient setting, according to the release. Starting January 2018, beneficiaries can choose to receive common procedures in a lower cost setting.

Several advocacy organizations applauded these changes, including the Community Oncology Alliance (COA).

“CMS’ policy change is a great first step in reforming 340B and reducing drug costs for seniors, but more is needed to corral this out of control program,” said Jeff Vacirca, MD, president of COA and CEO of NY Cancer Specialists in Long Island, New York. “I see it firsthand in New York, and hear from colleagues across the country all the time, how patients are being taken advantage of by hospitals, not helped as the program was intended.”

These finalized changes are expected to address several issues with 340B programs and increase access to cancer treatment specifically. COA supports this policy since it is projected to reduce drug costs for Medicare beneficiaries by $320 million in co-payments in 2018, according to a press release.

“The Administration took a huge step today towards fixing the 340B program and should be roundly commended,” said Ted Okon, executive director of COA. “Because of their leadership seniors will see lower prescription drug costs and taxpayers will save money. Now Congress has to act to legislate greater transparency and accountability from 340B hospitals so that patients benefit from this critical safety net program, not mega hospital corporations profiting from it.”

The Alliance for Integrity and Reform of 340B (AIR340B) also issued a statement of support for the finalized rules.

“We applaud the Administration for taking action to help address one aspect of the 340B program that has been leading to higher costs for Medicare and its beneficiaries,” AIR340B said in the statement. “Moving forward, AIR340B will continue to focus on the key policy priorities that our members believe require immediate legislative and/or regulatory action to better align the program with its original intent of helping vulnerable patients. Areas for change include clearly defining a 340B eligible patient, examination of hospital and satellite clinic eligibility criteria, and a more rational and legally supportable policy on contract pharmacy arrangements.”