What does the final CMS rule implementing the site neutrality provision mean to 340B Hospitals?

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What does the final CMS rule implementing the site neutrality provision mean to 340B Hospitals?

As summarized by 340B Health, the final CMS rule will not impact enrollment of new Off-campus clinics in 340B in 2017, but could leave the door open to possible changes in the future.

It appears that CMS’ rule will not prevent hospitals from enrolling new off-campus provider based departments (PBDs) as 340B child sites in 2017. However, CMS plans to reevaluate its policy for future years, and changes could impact 340B.

340B Health submitted comments to CMS in response to the original proposed rule requesting that whatever payment system CMS adopted, hospitals be allowed to report costs and charges for new off-campus PBDs on reimbursable lines of the cost report. In response to criticism about its proposed payment policy, CMS is adopting a significantly different payment system for new off-campus PBDs than the one it proposed. Because the revised policy is so different than the proposal, CMS issued an interim final rule effective Jan. 1, 2017 and is accepting comments until Dec. 31, 2016. Under the interim final rule, hospitals will bill Medicare for services provided in new off-campus PBDs on the institutional claim form using a new modifier to identify the services. Medicare will pay hospitals for those services under new, reduced rates (generally, 50 percent of the OPPS rate) that will apply specifically to new off-campus PBDs.

CMS said:

Hospital outpatient services identified with the modifier will continue to be reflected on Provider Statistical and Reimbursement reports. We believe implementation of this policy will obviate the commenters’ concerns with the possibility that facility costs for [new off-campus PBDs] items and services would not be billed and reflected as reimbursable costs on the Medicare hospital cost report.

CMS also addressed 340B implications in the final rule’s preamble, stating:

We note that, under our finalized policy, services provided at [new] off-campus PBDs will continue to be reported on the hospital cost report. We refer interested parties to HRSA for questions on when drugs qualify for discounts under the 340B program. To the extent that our final payment policies necessitate a change for hospital cost reporting, we will issue guidance, as applicable, in subregulatory guidance.

In the future, CMS admitted that charges for PBD services could be submitted on either a professional or institutional claim form. Hospitals have expressed concern that billing on the professional claim form may make it more difficult for costs and charges to be listed on the cost report and may make cost reporting more complicated.  So, 340B Health will be preparing comments again to submit to CMS.

Comments on the interim final rule are due to CMS no later than 5 p.m. EST on December 31, 2016. Comments should refer to file code CMS-1656-IFC. Hospitals may submit electronic comments to http://www.regulations.gov and follow the instructions under the “submit a comment” tab.


About Author

Jennifer Hagen, PharmD, 340B ACE

Jennifer Hagen joined the Turnkey Pharmacy Solutions team in October of 2016. She has served in various pharmacy leadership positions including Director of Ambulatory Pharmacy Services for CentraCare Health for over 5 years. Dr. Hagen had operational responsibility for Infusion Pharmacy Services, the Health System’s four retail pharmacies, and was responsible for 340B compliance at St. Cloud Hospital, a 489 bed regional medical center. Jennifer has served as a HRSA peer-to-peer mentor for the past two years and has presented numerous times for 340B University and chaired round table events for 340B Health. Jennifer is a member of our 340B independent auditing team. Her perspective involves rural health program administration.

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