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ASHP Comments on Hospital Outpatient Prospective Payment for Calendar Year 2020

Centers for Medicare & Medicaid Services

September 27, 2019

[Submitted electronically to ]
Ms. Seema Verma Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS–1717–P
P.O. Box 8013
Baltimore, MD 21244–1850

Re: Docket No. CMS-1717-P for “Medicare Program: Proposed Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency of Hospital Standard Charges; Proposed Revisions of Organ Procurement Organizations Conditions of Coverage; Proposed Prior Authorization Process and Requirements for Certain Covered Outpatient Department Services; Potential Changes to the Laboratory Date of Service Policy; Proposed Changes to Grandfathered Children's Hospitals-Within-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 2020 (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 50,000 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. We urge CMS not to finalize these changes for 2019. ASHP also provides CMS with feedback on its proposal to all general supervision for all therapeutic services provided by hospitals and critical access hospitals.

I. Restoring 340B Reimbursement Cuts

ASHP strongly supports the 340B drug discount program and we are deeply troubled by CMS’s continued insistence 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.

In response to CMS’s request for proposed remedies for the calendar year (CY) 2018 and 2019 payments and for use in CY 2020 payments in the event the agency receives an adverse ruling by the U.S. Court of Appeals, ASHP believes that the remedy should be as follows: Refund payments should be made to each affected 340B hospital and calculated using the JG modifier, which identifies claims for 340B drugs that were reduced under the 2018 and 2019 hospital outpatient prospective payment system (OPPS) rules, and others not adversely impacted by the reductions should be held harmless. This remedy would not disrupt the Medicare program and is consistent with those for past violations of law. Our detailed comments follow.

  • The Proper Remedy Is Straightforward and Easily Administered. There is a straightforward remedy that is easy to implement, will not be disruptive, does not require new rulemaking, and is comparable to those the courts and agency have adopted to correct other unlawful Medicare payment reductions. Specifically, the agency can recalculate the payments due to 340B hospitals based on the statutory rate of average sales price (ASP) plus 6% provided by the 2017 OPPS rule. Hospitals that have already received partial payment should receive a supplemental payment that equals the difference between the amount they received and the amount they are entitled to, including ASP plus 6% plus interest. Claims that have not yet been paid should be paid in the full amount, including ASP plus 6%.

While the claims will be for different total amounts, the percentage of the claim that the hospital was underpaid is identical in each case. These calculations should be on a hospital-by-hospital basis. Once the total amount that each hospital was paid is calculated, that amount can be multiplied by a single factor — which will be uniform across hospitals — to determine how much should have been paid and thus how much the reimbursement was reduced. Each hospital can be compensated according to the amount that its reimbursements were reduced plus interest. 

  • There Is Ample Precedent for Full Retroactive Adjustments that Are Not Budget Neutral. There is ample authority for the Department of Health and Human Services (HHS) to remedy the underpayments caused by its unlawful rule, including: Cape Cod Hospital v. Sebelius, (D.C. Cir. 2011) (HHS corrected errors for the future and past claims for which hospitals had been underpaid), Lee Moffitt Cancer Ctr. & Res. Inst. Hosp., Inc. v. Azar, (D.D.C. 2018), (HHS may make a retroactive adjustment without applying the budget-neutrality requirement to cancer hospitals that received a statutorily mandated adjustment a year later than the law required), and Shands Jacksonville Medical Center v. Burwell, (D.D.C. 2015), (HHS compensated hospitals for three years of across-the-board cuts with a one-time, prospective increase of 0.6%).

The remedy need not be budget neutral. The authority the agency cites is not applicable because such expenditures would be required by a court decision in service of fixing a prior unlawful underpayment. Moreover, the agency does not consistently apply budget neutrality to fix its missteps and in other relevant instances. For example, HHS allows for retroactive correction of the wage index without any budget-neutrality adjustment when it made the error and it was not something a hospital could have known or corrected. In addition, budget neutrality does not apply to changes in enrollment or utilization for drugs when the average sales price increases.

  • There Is No Basis for Paying Hospitals Less than the Statutory ASP Plus 6%.The OPPS mandates HHS reimburse hospitals for covered outpatient drugs at ASP plus 6%. This was the methodology used from 2013 to 2017. HHS has now requested comment on adjusting the payment for 2018, 2019, and 2020 from ASP plus 6% to ASP plus 3%. Although the agency has some authority to deviate from this law, the agency is attempting to use a policy rationale that is inconsistent with the law itself and, therefore, it would be unlawful to reduce ASP to 3%.
  • New Patients Co-Pays Are Not Required. Medicare reimburses hospitals 80% for covered outpatient and the remaining 20% is collected from the patients or their insurance. Because HHS deviated from the lawful payment rate for 2018 and 2019 with a 30% reduction, in theory hospitals could collect from patients or their insurance companies the difference between 20% of the lawful payment rate and the 20% copay that was actually collected. HHS has requested comment on the “most appropriate treatment of Medicare beneficiary cost-sharing responsibilities.”

Although the agency has raised the specter that a remedy would require patient co-pays to be adjusted retroactively, we do not believe that there is any law that would require hospitals to collect payments altered by the agency’s illegal act. Neither the False Claims nor anti-kickback statutes would apply since patients would not have been induced to seek services. Patients who reasonably believe that they have fully paid for hospital care provided months, or in some cases years, ago should not have to make these payments if hospitals are willing to forego them. We urge HHS to state this clearly in the final rule.

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

ASHP opposes the reduction of reimbursement for hospital clinic visits provided at grandfathered (excepted) PBDs. On the basis of site neutrality, CMS proposes to cut reimbursement 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 21st Century Cures Act. 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 precipitous reinterpretation of these laws is regulatory overreach that threatens patient care.

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 ACOs 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, including what CMS terms “check ups”, is often highly complex and complementary to acute care the patient receives from the hospital. Care provided at PBDs is held to higher quality standard, 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. 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.

III. General Supervision of All Hospital Therapeutic Services

ASHP applauds CMS’s proposal to require general, rather than direct, supervision of all therapeutic services provided by hospitals and critical access hospitals (CAHs). We believe this change will significantly increase provider flexibility and improve patient access. In order to ensure consistency across care settings, we encourage CMS to introduce the same policy in the FY 2021 Physician Fee Schedule. Chronic Care Management, (CCM) Transitional Care Management (TCM), and other services are already provided under general supervision per the PFS, and extending the policy to additional therapeutic services could further ease physician and provider burden.

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 contact me if you have any questions about ASHP’s comments on the proposed rule. I can be reached at 301-664-8696 or at [email protected].


Jillanne Schulte Wall, J.D.
Director, Federal Regulatory Affairs