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ASHP Submits Comments to CMS on the Proposed Outpatient Prospective Payment System for CY 2021

Centers for Medicare & Medicaid Services

October 5, 2020

[Submitted electronically to]

Ms. Seema Verma Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS–1736–P
P.O. Box 8013
Baltimore, MD 21244–1850


Re: Docket No. CMS-1736-P for “Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; New Categories for Hospital Outpatient Department Prior Authorization Process; Clinical Laboratory Fee Schedule: Laboratory Date of Service Policy; Overall Hospital Quality Star Rating Methodology; and Physician Owned Hospitals.”


Dear Administrator Verma:

ASHP is pleased to submit comments to the Center for Medicare & Medicaid Services (CMS) regarding the proposed changes to the hospital outpatient prospective payment system (OPPS) for calendar year 2021 (the “OPPS rule”). ASHP represents pharmacists who serve as patient care providers in acute and ambulatory settings, including hospitals, health systems, and clinics. The organization’s nearly 55,000 members include pharmacists, student pharmacists, and pharmacy technicians. For more than 75 years, ASHP has been at the forefront of efforts to improve medication use and enhance patient safety.

ASHP’s comments on the OPPS rule center on two proposals — the cuts to reimbursement for drugs acquired under the 340B Drug Pricing Program and the cuts to payment for hospital clinic services provided in hospital outpatient departments. Both proposals threaten patient access to vital services as well as established care models and we urge the agency not to finalize them.

1. Restoring 340B Reimbursement Cuts

ASHP strongly supports the 340B drug discount program and we are deeply troubled by CMS’s continued insistence, without evidence, that the program contributes to high drug costs. Many of our members practice in 340B-participating hospitals and health systems and have seen firsthand how the federal 340B program allows providers to stretch scarce resources. We continue to oppose any cuts to 340B reimbursement and believe that CMS should immediately rescind all cuts to 340B reimbursement for hospitals and their outpatient departments.

CMS’s cuts are, at best, misguided. At worst, they represent a clear threat to patient access to services, undergirded by questionable data-gathering techniques and a misrepresentation of the Medicare Payment Advisory Commission’s (MedPAC) stance on 340B.

  • Faulty Hospital Survey Data and Methodology: Although CMS insists that the hospital survey data “confirms that the ASP minus 22.5 percent rate is generous to 340B hospitals, and the survey data supports an even lower payment rate,” we remain skeptical of the survey’s results and methodologies. Because CMS demanded the survey data during the height of the public health emergency with very little notice, it is hardly surprising that the survey had a low response rate. The survey also covered a very short period and could not capture large fluctuations in drug price, which are not uncommon. Aside from limited responses, CMS also did not survey non-340B hospitals, noting that such a broad survey would have been “unduly burdensome” and was unnecessary because of “our belief that the current payment rate for non-340B hospitals continues to be an appropriate rate.” Without data from any reasonable control/comparator group, or any non-340B data at all really, it remains unclear how CMS determined that the reduced payment rate of ASP minus 22.5% is “generous” to 340B hospitals.

  • MedPAC Findings: In the proposed rule, CMS states that its ASP minus 22.5% cut to 340B reimbursement was justified by ”findings of the GAO and MedPAC that hospitals were acquiring drugs at a significant discount” under 340B. Given that the intent of the 340B program is, in fact, to provide drugs to covered entities at a substantial discount, this “finding” actually reflects that the 340B program was acting precisely as Congress intended. The manner in which CMS uses this broad MedPAC conclusion to justify the cuts is classic cherry picking and misstates MedPAC’s position on 340B. In March 2016, MedPAC did suggest a 340B reimbursement cut – of 10% of the then-current ASP + 6% rate.1 CMS makes no mention of that relatively conservative recommendation, instead using MedPAC’s general language to justify implementing a rate cut of more than twice the original MedPAC recommendation.

Aside from CMS’s questionable justification for the proposed 340B cuts, the agency’s actions are contrary to the intent of the 340B statue. Specifically, we question whether the proposed redistribution of 340B savings to maintain budget neutrality comports with the 340B statute. Under the 340B statute, Congress clearly defined which organizations (i.e., covered entities) should benefit from 340B savings. However, Congress’s proposed budget neutral redistribution plan would share savings with non-340B providers, effectively taking 340B savings from eligible participants and handing them to hospitals who are not 340B eligible, thereby completely circumventing Congress’s legislative intent.

Despite strong stakeholder opposition to 340B cuts, CMS clearly intends to proceed with some level of payment reduction. Again, ASHP opposes any and all such cuts. However, to protect patient access to services funded with 340B savings, if CMS proceeds with the cuts, it must institute the lowest payment reduction possible. We do, however, agree with CMS that hospitals should receive a 6% add-on payment to cover the overhead and storage costs associated with 340B drugs. This add-on payment would bring the effective 340B reimbursement rate for the proposed ASP minus 22.5% cut to ASP minus 16.5%. Such a cut would threaten patient access and create substantial challenges for hospitals already reeling from the impacts of COVID-19, but it would be marginally less catastrophic than either the ASP minus 22.5% or the ASP minus 34.7% cuts CMS has floated. Recognizing that CMS is unlikely to change its martial stance regarding the 340B program, ASHP will continue to work with other stakeholders to explore all possible means to safeguard the 340B program for the patients it benefits.

2. Site-Neutral Payment for Off-Campus Provider-Based Departments (PBDs)

ASHP remains opposed to CMS’s continued implementation of its reimbursement reductions for hospital clinic visits provided at grandfathered (excepted) PBDs. On the basis of site neutrality, CMS seeks to continue implementing it reimbursement cuts at PBDs for hospital clinic visits (the most commonly billed code – G0463) by 60% to match the rate paid under the Physician Fee Schedule (PFS). This change is in direct violation of Congressional intent to grandfather certain PBDs, as provided in the Bipartisan Budget Act of 2015 and the 21 st Century Cures Act.2 Hospitals relied on those two pieces of legislation to determine how best to develop their care delivery models and to allocate their clinical and financial resources, and they further relied on CMS’s interpretations of the laws to guide their actions. CMS’s wholesale reinterpretation of these laws is regulatory overreach that threatens patient care, particularly in rural areas.

Hospitals do not indiscriminately assign patients to receive care at PBDs. Instead, care delivery models are crafted to ensure that patients receive the highest quality care possible. For hospitals that belong to accountable care organizations or are otherwise part of an integrated network, seeing patients at the PBDs allows providers to better coordinate care, resulting in improved patient outcomes. Drastic alterations in payment for PBD services raise concerns about the long-term viability of these care delivery models – if services are cut or PBDs are closed, patient access will suffer.

Additionally, CMS seems to assume that the care provided at PBDs in no way differs from that provided by physicians’ offices. This ignores the fact that the care provided at PBDs is often highly complex and complementary to acute care the patient receives from the hospital. Care provided at PBDs is held to higher quality standards, with more oversight, than what is often required for alternate sites of care. In addition to the Medicare Conditions of Participation, PBDs must meet accreditation, United States Pharmacopeia (USP), and even FDA requirements.3 These standards result in high-quality patient care, but at a higher cost than what can be accomplished without the oversight. We urge CMS not to make reimbursement cuts that will ultimately harm patient access and care quality, particularly in light of the strain COVID-19 has already placed on hospital resources.

Thank you for your consideration of our comments. We continue to support CMS’s efforts to improve patient care and reduce patient costs, and we stand ready to assist the agency in any way possible. Please do not hesitate to contact me at 301-664-8698 or [email protected] if ASHP can provide any further information or assist the agency in any way.



Jillanne Schulte Wall, J.D.
Senior Director, Health & Regulatory Policy


1 MedPAC, Report to Congress: Medicare Payment Policy (March 2016), p. 57, available at

2 P.L. 114-74, 129 Stat. 584, Bipartisan Budget Act of 2015, § 603 (Nov. 11, 2015); P.L. 114-255, 130 Stat. 1033, 21 st Century Cures Act, §16001-2 (Dec. 13, 2016).

See e.g., 42 CFR § 413.65; United States Pharmacopeia Chapters <797> and <800>; FDA, Hospital and Health System Compounding Under the Federal Food, Drug, and Cosmetic Act (April 2016), available at Sincerely, Jillanne Schulte Wall, J.D. Senior Director, Health & Regulatory Policy