October 9, 2012—The Centers for Medicare and Medicaid Services (CMS) has published Supplemental Security Income (SSI) percentages for 2010 that could affect hospitals’ eligibility for 340B drug discounts.
The Medicare disproportionate share (DSH) adjustment percentage is a figure used to calculate a Medicare add-on payment to hospitals that serve a large volume of indigent patients.[ms-protect-content id=”2799″] To obtain 340B pricing, disproportionate share (DSH) hospitals must have a Medicare DSH adjustment percentage greater than 11.75 percent. Likewise, free-standing children’s and cancer hospitals must have a similar payer mix that would result in a DSH percentage greater than 11.75 percent. Sole community hospitals and rural referral centers must have a DSH percentage equal to or above 8 percent.
A hospital’s SSI percentage is the other component used to determine the DSH percentage. CMS is involved in a lawsuit over the inclusion of Medicare managed care data in those percentages. Adding Medicare managed care data to the SSI/Medicare fraction usually lowers a hospital’s DSH patient percentage.
In September 2011, a federal appeals court ruled that Medicare managed care data should be excluded for 2004 and prior years, but did not rule on whether those data should be excluded for subsequent years. Last March, CMS posted final SSI percentages for 2006 through 2009 that included Medicare managed care days. Last month, it released final 2010 SSI percentages that also include Medicare managed care days. Hospitals are continuing to litigate the issue.
The Office of Pharmacy Affairs (OPA), meanwhile, is reassessing its procedures for verifying a hospital’s DSH percentage. The newly updated OPA Web site still includes a spreadsheet of hospitals’ DSH percentages, but they are based on now-outdated 2007 SSI ratios and the sheet bears the disclaimer “provided for reference purposes only.”
OPA might begin to rely on hospitals’ self-reported DSH percentages. During their annual recertification of 340B eligibility, hospitals must supply OPA with their DSH percentage calculated from data on their most recently filed Medicare cost report. Also during recertification, hospitals sign a statement acknowledging that they must contact OPA “as soon as reasonably possible” if there is any material change in their eligibility.
OPA is drafting a policy release on 340B eligibility requirements for hospitals but has not said when it will be released.[/ms-protect-content]