340B Ruling & Potential Alternative Payment Model Impact
On September 28, 2022, the U.S. District Court for the District of Columbia vacated the prospective portion of the 340B Drug Pricing Program (340B) reimbursement rate in the 2022 Outpatient Prospective Payment System (OPPS) Rule. Reimbursement will be restored to the average sales price (ASP) plus 6% from ASP minus 22.5%. The 2023 OPPS rule will return reimbursement to ASP plus 6% as well.
While the ruling, according to Judge Rudolph Contreras, “will not cause substantial disruption,”1 there may be implications beyond traditional reimbursement impact for providers participating in Alternative Payment Models (APMs) such as the Medicare Shared Savings Program.
Specifically in the Shared Savings Program, potential savings are calculated based on performance year expenditures compared to a historical period benchmark with regional adjustments to account for expenditure fluctuation. While the impact of the change is expected to be budget neutral at the national level, individual providers and/or groups of providers participating in an accountable care organization (ACO) may experience varying effects based on 340B participation, hospital size, urban/rural designation, teaching status, and disproportionate share hospital (DSH) patient percentage. Additionally, due to certain elements of Medicare Shared Savings Program (MSSP) benchmarking methodology, participants should be aware of the potential impact on regional expenditures caused by this change and how this may influence current/future financial performance in the program.
While not unique to the 340B ruling, any significant changes in reimbursement structure over time could have favorable or unfavorable effects on APM performance. All APM participants, regardless of their 340B participation, should monitor the impact of this payment restoration, its effect on overall OPPS reimbursement, and potential headwinds or tailwinds created by reimbursement-related rulings.
FORVIS can help participants navigate these reimbursement changes and the effect they may have on each unique organization’s ability to generate performance-based dollars across their value-based contract participation. We also can assist your organization in maintaining a compliant 340B Program. Reach out to a professional at FORVIS today or submit the Contact Us form below.
- 1AMERICAN HOSPITAL, et al v. XAVIER BECERRA, et al, 1:18-cv-02084-RC. (U.S. District Court for the District of Columbia 2022)