September 14, 2010—Medicare reimbursement to hospital outpatient facilities would rise by 2.2 percent overall in 2011 above this year’s level, including a 2 percent increase in the payment rate for separately payable drugs and biologicals, the Centers for Medicare and Medicaid Services (CMS) have proposed.
At the same time, however, CMS has called for a reduction in Medicare inpatient reimbursement rates that is expected to affect nonprofit hospitals more than others.
In proposed rules for the Hospital Outpatient Prospective Payment System (HOPPS) published Aug. 3, CMS said that in calendar year 2011 it will pay for drug acquisition and pharmacy overhead costs at average sales price (ASP) plus 6 percent. For the past two years, CMS has paid at ASP plus 4 percent.
CMS also proposed to continue including 340B data in the calculation of hospital reimbursement rates. Safety-net hospital advocates have long urged CMS not to take a hospital’s 340B status into account when calculating drug payment rates in order to avoid unduly reducing Part B drug reimbursement for all hospitals. They made this point most recently during an August meeting of the Advisory Panel on Ambulatory Payment Classification (APC) Groups, which makes recommendations to CMS on Medicare reimbursement to hospitals. The panel did not transmit the recommendation to CMS, but 340B hospital advocates are on record urging CMS to adopt this approach.
Safety-net hospitals have also pushed for the continued reimbursement of all hospitals at the same rate, regardless of 340B status. CMS agreed to once again include equal reimbursement rates in the 2011 proposed rule. The National Rural Health Association (NRHA) recently wrote to CMS urging both the exclusion of 340B hospital data from the reimbursement calculation in the final rule and the continued reimbursement to all hospitals at the same rate.
Inpatient Reimbursements Will Fall
Although hospital Medicare payments for outpatient services are slated to rise, there will be decreases in payments for inpatient services in fiscal year 2011. In a rule issued on July 30 updating the Inpatient Prospective Payment System (IPPS), CMS projected that payments will decline by 0.4 percent.
Hospital groups are urging Congress to prevent the cuts from taking place. The American Hospital Association (AHA) said the rule “cuts billions of dollars from the health care system at a time when patients are sicker, more people are losing coverage due to the economic downturn and hospitals are dealing with significant changes contained in the health care reform bill.”
The inpatient reimbursement cuts will probably affect nonprofit hospitals more than for-profit providers because the former rely more on Medicare payments.
On July 13, CMS also published a proposed rule for the Medicare Physician Fee Schedule and other Medicare Part B payment policies. It would establish a process to deal with a manufacturer’s failure to report average sale price (ASP) data in a timely fashion.