On May 19, 2017, HHS further delayed the effective dates concerning two final rules issued during the Obama administration.  First, HHS delayed until October 1, 2017 the effective date of a January 5, 2017 final rule for the 340B Drug Pricing Program.  This final rule addresses the calculation of drug ceiling prices and imposes civil monetary penalties on drug manufacturers who knowingly and intentionally charge a covered entity more than the ceiling price for a covered outpatient drug.  Second, HHS further delayed until January 1, 2018 the effective dates for several new Episode Payment Models (EPMs) (treatment for heart attack, bypass surgery, and hip/femur fracture), the Cardiac Rehabilitation Incentive Payment (CR) Model, and changes to the Comprehensive Care for Joint Replacement (CJR) Model from a final rule issued December 20, 2016. 

Further Delay of Effective Date for 340B Drug Pricing Program

As previously reported here, the Health Resources and Services Administration (HRSA) published a final rule on January 5, 2017, updating the price structure that drug manufacturers participating in the 340B Drug Pricing Program may charge to covered entities purchasing drugs under the Program.  HRSA also established in the final rule a maximum $5,000 civil monetary penalty per instance for manufacturers that knowingly and intentionally charge a covered entity more than the ceiling price for a covered outpatient drug.  The final rule was to become effective on March 6, 2017.  As previously reported here, HHS then delayed the effective date to March 21, 2017, and subsequently to May 22, 2017, in accordance with a January 20, 2017 executive order that froze the imposition of new federal regulations.

In the May 19, 2017 final rule, HHS delayed the effective date for the third time to October 21, 2017.  HHS explained that it was further delaying the effective date in response to comments from stakeholders regarding the challenges of complying with the January 5, 2017 final rule.  HHS determined that the delay was necessary to provide adequate time for compliance and to mitigate implementation concerns.  A copy of the May 19, 2017 final rule is available here.

Further Delay of Effective Date for New EPMs, CR Model, and Changes to CJR Model

As previously reported here, CMS issued a final rule on December 20, 2016 implementing three new Medicare Parts A and B episode payment models for patients admitted for treatment for heart attack, bypass surgery, or hip/femur fracture under its Section 1115A authority to test innovative payment and service delivery models.  For the three conditions, hospitals will be accountable for the quality and cost of care provided during hospitalization and virtually all care within 90 days of hospital discharge.  The final rule also implemented a cardiac rehabilitation incentive payment model and made adjustments to the CJR Model. 

HHS subsequently issued an interim final rule in March of 2017 that delayed the effective date of the EPMs, CR Model, and changes to the CJR Model from July 1, 2017, to October 1, 2017, and proposed a further delay until January 1, 2018, to align the payment year with the calendar year.    

In the May 19, 2017 final rule, HHS finalized the delay of the EPMs, the CR Model, and changes to the CJR Model from October 1, 2017 to January 1, 2018.  After receiving feedback from commenters, HHS determined that delaying the EPM and CR Model’s start date will ensure that CMS has adequate time to undertake notice and comment rulemaking, if modifications are warranted.  HHS also delayed the CJR changes until January 1, 2018 to align these changes with the EPMs.  A copy of the May 19, 2017 final rule is available here.