On August 21, 2017, a CMS advisory panel consisting of provider representatives recommended that CMS not finalize its proposed rule to reduce payments for outpatient drugs to hospitals under the 340B Drug Pricing  Program. Under the CY 2018 Outpatient Prospective Payment System (“OPPS”) Proposed Rule, CMS proposed to reduce Medicare Part B reimbursement for separately payable, non-pass-through outpatient drugs and biologicals purchased under the 340B Program from a current rate of average sales price (“ASP”) plus six percent to ASP minus 22.5 percent. CMS estimated this change would decrease OPPS payments for such drugs by approximately $900 million. As proposed, the policy would be budget neutral, with CMS soliciting comments on whether to redistribute the generated savings for specific OPPS services or under Part B generally. King & Spalding previously issued a client alert detailing CMS’s 340B proposal, available here.

Prior to voting against the proposal, the Advisory Panel on Hospital Outpatient Payment (“Advisory Panel”) heard comments from three groups of provider representatives, whose remarks included the following:

• The Provider Roundtable (written comments here), a hospital industry group, argued that “[i]t is inappropriate for CMS to ‘take’ from the 340B Program to address other, broader, Part B drug payment issues (e.g. , underlying costs due to manufacturer’s prices). ”

• MedStar Health (written comments here), a Washington, D.C. , healthcare system, presenting on behalf of the American Hospital Association, argued that the proposed cuts would harm hospitals serving vulnerable populations, undermine the purposes of the 340B Program, and misdirect funds otherwise intended for indigent care.

• Association of Community Cancer Centers (written comments here), a provider and supplier organization focusing on cancer care, argued that CMS “lacks the data needed to truly understand where patients are being served and how resources are being used,” such that CMS’s 340B proposal is “premature. ”

The Advisory Panel is expected to publish its written recommendations on its website, available here. The meeting of and recommendations provided by the Advisory Panel allows CMS to meet the requirements of Social Security Act section 1833(t)(9)(A) (“The Secretary shall consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of [APC] groups and weights. ”).

The CY 2018 OPPS Proposed Rule is available at 82 Fed. Reg. 33558 (July 20, 2017), here. Comments to the proposals are due by September 11, 2017. If proceeding along typical timelines, CMS can be expected to issue a final rule in November.