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CMS Proposes Site-Neutral Payments, Drug Price Negotiation

HealthPayer Intelligence- Thomas Beaton- July 26,2018

A proposed rule from CMS aims to expand the use of site-neutral payments, and drug price negotiation at the federal level, to reduce Medicare costs.

CMS has proposed a rule that would expand the use of site-neutral payments and improve the drug price negotiation process with manufacturers in order to reduce Medicare’s overall spending.

The new rule would allow Medicare to reimburse providers with site-neutral payments for clinic visits, such as check-ups.

CMS explained that clinic visits contribute significantly to preventable spending, because many providers charge varying rates for clinic visits. By using site-neutral payments, CMS expects to control spending and reduce clinic costs for beneficiaries. The new payments would lower the cost of clinic visits from $116 with a $23 beneficiary copay down to $46 and a copay of $9.

“If finalized, this proposal is projected to save patients about $150 million in lower copayments for clinic visits provided at an off-campus hospital outpatient department,” the agency said in a press release. “CMS is also proposing to close a potential loophole through which providers are billing patients more for visits in hospital outpatient departments when they create new service lines.”

By 2019, CMS also expects to reduce hospital outpatient spending by $760 million through the use of site-neutral payments within the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. CMS is adjusting provider payment rates within both programs to promote site neutrality between ASCs and hospital settings.

The rule also contains a request for information (RFI) about how to improve the competitive acquisition program (CAP), so CMS can negotiate prescription drug prices with greater authority. CMS is seeking comments about how to innovate drug purchasing within Medicare Part B.

The proposed rule also removes several provider reporting measures from the Hospital Outpatient Quality Reporting (OQR) Program in order to help providers in hospital settings focus on patient outcomes.

The proposed rule aligns with recent policy actions from CMS that aim to expand price transparency for Medicare beneficiaries, and equip patients with their own health data through the MyHealthEData initiative.

CMS Administrator Seema Verma says that these changes will help make Medicare more affordable for beneficiaries and create a more cost-effective healthcare system.

“Our healthcare system should always put patients first, and CMS today is taking important steps to empower patients and provide more affordable choices and options,” said Verma.

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