CY 2022 HOPPS Proposed Rule: What Pharmaceutical Manufacturers Need to Know

A link to the proposed rule can be found here.

Of most importance to pharmaceutical manufacturers, the Proposed Rule sets forth proposed payment methodologies for those drugs reimbursed under the Medicare outpatient hospital prospective payment system (OPPS) and the Medicare ambulatory surgical center payment system for calendar year 2022.

Not much has significantly changed since last year’s final rule. However, stakeholders should always avail themselves of the opportunity to comment on the payment methodologies set forth in the Proposed Rule, particularly if there are persuasive arguments that CMS needs to consider changes to payment policies in light of the ongoing public health emergency related to COVID-19.

The following payment proposals should be of most interest to manufacturers:

• The proposed packaging threshold (in order to establish a separate payment amount for drugs and biologicals without pass-through status) for calendar year 2022 would remain at $130 per day, the current amount for calendar year 2021.
• For CY 2022, CMS proposes to continue the payment policy that has been in effect since CY 2013 to pay for separately payable drugs, biologicals and therapeutic radiopharmaceuticals (with the exception of drugs purchased by hospitals that are 340B Covered Entities) at the drug’s Average Sales Price (ASP) plus 6%. If a drug, biological or radiopharmaceutical does not have an established ASP reimbursement amount, CMS will default to determining reimbursement at the drug’s Wholesale Acquisition Cost (WAC) plus 3%. All biosimilar biological products would continue to be eligible for pass-through payment status, not just the first biosimilar biological for a reference product (guaranteeing separate reimbursement for the drug for a period of time regardless of whether under the packaging threshold).
• CMS proposes to continue its policy of paying an adjusted amount of ASP minus 22.5% for drugs and biologicals acquired under the 340B Program. Similarly, CMS would continue to reimburse separately payable Medicare Part B drugs and biologicals (other than vaccines and drugs on pass-through status) that are acquired through the 340B Program at ASP minus 22.5% when billed by a hospital paid under the OPPS. CMS proposes to continue the adjustment for WAC-priced drugs (an adjustment of WAC minus 22.5%) when 340B drug stock is administered to a Medicare patient. Drugs acquired under the 340B Program and that are priced using average wholesale price (AWP) methodology would continue to be paid an adjusted amount of 69.46% of AWP. CMS would continue its current policy of paying for non-pass-through biosimilars acquired under the 340B Program at the biosimilar’s ASP minus 22.5% of the biosimilar’s ASP instead of an amount derived from the reference product’s ASP. Finally, CMS would continue to exempt rural sole community hospitals, PPS-exempt cancer hospitals, and children’s hospitals from the 340B payment policies.

Lastly, an additional item may be of interest. The United States Supreme Court has agreed to hear oral arguments in the case of American Hospital Association, et al. v. Becerra, in which the American Hospital Association has challenged CMS’ authority to issue rulemaking reducing Medicare Part B reimbursement when 340B drug stock is administered to Medicare patients. Depending on the Supreme Court’s ruling, the 340B payment policies addressed in the Proposed Rule could be short-lived. See our previous alert about the case.

As always, drug manufacturers and other participants in the pharmaceutical supply chain should take every opportunity to comment on policy and proposed rulemaking. Arent Fox routinely drafts comments for our clients and reviews policy positions impacted by agency rules and guidance.