Nov 2, 2022 - Health

Biden administration approves increase to safety-net drug payments

Maya Goldman

Medicare will increase payments for discounted drugs provided to safety-net hospitals next year under a policy the Biden administration finalized Tuesday that will affect how the program reimburses other facilities.

The big picture: Hospitals had called on the Centers for Medicare and Medicaid Services (CMS) to boost safety-net drug payments without dipping into other funds, but the agency said it didn't have the authority to do that.

Still, CMS agreed it could use a methodology that offered a slightly more favorable outcome.
Urban hospitals will see a positive effect from the policy, while rural hospitals will see a slight pay cut, CMS predicted.
Overall, pay rates for hospital outpatient facilities and ambulatory surgical centers will increase 3.8% in 2023.

Flashback: This summer, the Supreme Court invalidated CMS' payment cuts for safety-net providers in the federal discount drug program. Research had indicated some hospitals were profiting excessively from the program.

The agency didn't have time to make a formal proposal about how to pay hospitals for the discounted drugs going forward, so it is beginning to do that through the rule released Tuesday.

The intrigue: HHS still needs to figure out how to reimburse hospitals as much as $10 billion for the payment cuts between 2018 and 2022. The savings from the payment cuts have been redistributed, so either CMS needs to claw money back from other hospitals or ask Congress for help.

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Biden administration approves increase to safety-net drug payments

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