0938-AV18 202310 The Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions 0938 Centers for Medicare & Medicaid Services CMS 0900 Department of Health and Human Services HHS Hospital Outpatient Prospective Payment System: Remedy for 340B-Acquired Drugs Purchased in Cost Years 2018-2022 (CMS-1793)

This final rule describes the agency’s actions to comply with the remand from the district court to craft a remedy in light of the United States Supreme Court’s decision in American Hospital Association v. Becerra, 142 S. Ct. 1896 (2022), relating to the adjustment of Medicare payment rates for drugs acquired under the 340B Program from calendar year (CY) 2018 through September 27th of CY 2022.

]]> Section 3(f)(1) Significant Previously Published in The Unified Agenda Completed Actions Yes No Section 610 Review 42 CFR 419 42 U.S.C. 1395hh Judicial Final 10/31/2023 That rule is statutorily required to display in the FR on November 1, 2023. Statutory Final MMA sec. 902 requires Medicare final rules publish within 3 years of a proposed or interim final rule. Judicial Final 10/31/2023 CMS committed to the district court that it would finalize this remedy rule before the CY 2024 Hospital Outpatient Prospective Payment System rule was displayed. Per the CMS notice published December 30, 2004 (69 FR 78442), except for certain Medicare payment regulations and certain other statutorily-mandated regulations, we schedule all Medicare final regulations for publication within the 3-year standardized time limit in the current Unified Agenda. We do not intend to delay publishing a Medicare final regulation for 3 years if we are able to publish it sooner. Yes

From CY 2018 through September 27th of CY 2022, CMS paid a lower rate (generally ASP minus 22.5 percent) to certain hospitals for drugs acquired through the 340B discount program. The purpose of this policy was to pay these hospitals for 340B drugs at a rate that more accurately reflected the actual costs they incurred to acquire them. This 340B policy was the subject of several years of litigation, which culminated in a decision of the Supreme Court of the United States in American Hospital Association v. Becerra, 142 S. Ct. 1896 (2022), which held that if CMS has not conducted a survey of hospitals' acquisition costs, it may not vary the payment rates for outpatient prescription drugs by hospital group. The Supreme Court subsequently remanded the case, and the district court ultimately ordered CMS to implement a remedy to address the reduced payment amounts to the plaintiff hospitals from CY 2018 through September 27th of CY 2022.

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Under the Hospital Outpatient Prospective Payment System (OPPS), we generally set payment rates for separately payable drugs and biologicals (hereinafter referred to collectively as drugs) under section 1833(t)(14)(A) of the Social Security Act (the Act). Section 1833(t)(14)(A)(iii)(II) of the Act provides that, if hospital acquisition cost data are not available, the payment amount is the average price for the drug in a year established under section 1842(o), section 1847A, or section 1847B of the Act, as the case may be. Payment rates for drugs are usually established under section 1847A of the Act, which generally sets a default rate of the average sales price (ASP) plus 6 percent. Section 1833(t)(14)(A)(iii)(II) of the Act also provides that the average price for the drug in the year as established under section 1847A of the Act is calculated and adjusted by the Secretary of the Department of Health and Human Services (Secretary) as necessary for purposes of paragraph (14).

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We evaluated several options to determine which remedy would best achieve the objectives of unwinding the unlawful 340B payment policy while making certain OPPS providers as close to whole as is administratively feasible. A discussion of these options, including our reasons for not moving forward with them, will be included in the final rule.

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To comply with statutory budget neutrality requirements, we plan to annually reduce OPPS payments for non-drug items and services beginning in CY 2025 by decreasing the OPPS conversion factor by 0.5 percent each year, until a total offset of an estimated $7.8 billion is reached.

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Any risks regarding potential impacts will be included in the final rule.

]]> NPRM 07/11/2023 88 FR 44078 NPRM Comment Period End 09/05/2023 NPRM Comment Period Extension 09/05/2023 88 FR 60610 NPRM Comment Period Extension End 09/11/2023 Final Action 11/08/2023 88 FR 77150 Final Action Effective 01/08/2024 Yes Businesses Governmental Jurisdictions Federal Local State No Yes No Elise Barringer Health Insurance Specialist 0938 Centers for Medicare & Medicaid Services CMS 410 786-9222 elise.barringer@cms.hhs.gov Center for Medicare, MS: C4-03-06, 7500 Security Boulevard, Baltimore MD 21244