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Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System (ASCPS) Proposed Rule

Issue Brief

August 18, 2017


On July 13, 2017, the Centers for Medicare & Medicaid Services (CMS) issued the Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs.1 The payment system is used by CMS to reimburse for hospital outpatient services. CMS provided a fact sheet highlighting the major provisions of the proposed rule, including a proposed 1.75% increase in OPPS rates and a 1.9% increase in ASCPS.2 ASHP is particularly concerned about two provisions: 1) CMS’s proposal to Medicare reimbursement for drugs acquired under the 340B Drug Pricing Program and 2) CMS’s proposal to package payment for low-cost drug administration services. If finalized, these proposed changes would take effect on January 1, 2018.

Payment for Drugs and Biologicals (“Drugs”) Purchased with a 340B Drug Pricing Program Discount

In the Calendar Year (CY) 2018 proposed rule, CMS aims to change how Medicare pays hospitals for drugs that are acquired under the 340B drug-discount program.1 The 340B Drug Pricing Program allows certain hospitals and other healthcare providers to obtain discounted prices on prescription drugs and biologics (other than vaccines) from drug manufacturers so that patients can get access to lifesaving medication and services.3 To address the issue of increasing drug prices, CMS is proposing to reduce payment for separately payable Part B drugs (other than vaccines and drugs on pass-through) from average sales price (ASP) plus 6% to ASP minus 22.5%,1 which is the Medicare Payment Advisory Commission’s (MedPAC’s) estimate of the average minimum discount eligible hospitals received for drugs acquired under the federal 340B program.3 Applicable drugs not purchased under the 340B drug-discount program would continue to receive ASP plus 6% payment.1 ASHP strongly opposes this proposed cut to the federal 340B program for hospitals, which threatens patient access and services. We will advocate that CMS abandon its proposal in favor of policies better targeted to reduce drug prices.

In addition to the aforementioned cut to the federal 340B program, CMS proposes to establish a new claims modifier to better track the purchase of 340B-purchased drugs that are reimbursed under OPPS. Specifically, CMS proposes application of the modifier to all separately payable non-340B-purchased drugs reimbursed under OPPS, regardless of whether the hospital itself actually participates in the federal 340B program. CMS’s modifier proposal is vague, and the agency notes that it intends to provide more details regarding the modifier in the CY 2018 OPPS/ASC final rule with comment period and/or through subregulatory guidance.1 ASHP questions the necessity of the modifier as well as its application to non-340B-purchased drugs, particularly in cases where those drugs are purchased by hospitals that do not even participate in the federal 340B program. We are currently seeking feedback from members regarding the potential impact of this proposal.

Proposed Packaging of Low-Cost Drug Administration Services 

In CY 2014, CMS proposed but did not finalize a provision to package all add-on procedures, including drug administration add-on services. In CY 2015, CMS conditionally packaged payment for ancillary services when those ancillary services are assigned to an ambulatory payment classification group with a geometric mean cost of $100 or less, but excluded drug administration services. For CY 2018, CMS is proposing to conditionally package payment for low-cost drug administration services. CMS is excluding preventive services from the packaging, such as flu, pneumonia, and hepatitis B vaccine injection codes, as well as add-on drug administration codes such as drug administration additional hours, additional drugs, or sequential infusions.1 ASHP is currently analyzing the potential impact of this proposal and intends to seek additional clarification from CMS regarding the implementation of the proposed change.

ASHP plans to submit detailed comments on the proposed rule to CMS by the September 11, 2017, deadline. In the interim, questions or concerns should be emailed to Jillanne Schulte Wall, Director of Federal Regulatory Affairs, at [email protected]


  1. Centers for Medicare & Medicaid Services. Available from Accessed August 14, 2017.
  2. Centers for Medicare & Medicaid Services, Available from Accessed August 14, 2017.
  3. Medicare Payment Advisory Commission. Available from Accessed August 14, 2017.