The Trump administration has introduced a plan to revise Medicare’s payment method for outpatient care. Officials claim this may lower costs for millions of older people, while hospitals argue it might threaten funds for those supporting low-income and vulnerable groups.
The Centers for Medicare and Medicaid Services (CMS) released the proposed rule, suggesting cuts to Medicare payments for hospitals involved in the 340B drug discount program. These changes aim to make healthcare more affordable and resolve payment disparities leading to higher costs. CMS Administrator Dr. Mehmet Oz stated that the proposal targets patient affordability by enhancing management tools and aligning drug payments with real acquisition costs.
Importance of the Changes
Healthcare expenses are a significant concern for older Americans, with many facing increasing premiums, deductibles, and prescription drug costs. While the proposal emphasizes affordability, hospitals worry that reduced funding could harm providers catering to underserved populations. Jennifer DeCubellis from America’s Essential Hospitals expressed concerns about critical funding cuts.
Details of the Proposed Rule
If enacted in 2027, the rule may affect Medicare beneficiaries’ out-of-pocket expenses for some drugs and procedures. The rule suggests a 2.4% increase in pay for outpatient care, slightly below the previous year’s 2.6%. Short-term, beneficiaries might pay less due to reimbursements aligning with hospital payment amounts. However, there are concerns that hospitals might offset lost revenue elsewhere.
340B Drug Payment Reductions
CMS proposes reducing Medicare reimbursements for drugs acquired through the 340B program. This initiative, designed to assist hospitals serving low-income patients, will see Medicare paying less for such drugs from 2027. The goal is to lower Medicare drug costs without eliminating the 340B program. The impact on the healthcare system, if hospitals do not absorb the reduced reimbursements, remains a discussion point.
Expansion of Site-Neutral Payments
CMS also plans to broaden site-neutral payment policies, affecting specific imaging services in outpatient hospital departments. Currently, Medicare pays hospitals more than doctors’ offices for identical services. Under the proposal, some imaging services would receive reimbursements equal to those of physician offices. This approach could address discrepancies in patient cost-sharing when services are billed via hospital outpatient services.
Potential Benefits for Medicare Beneficiaries
For patients, the proposed changes might result in lower out-of-pocket expenses. Reduced payments for 340B drugs could decrease beneficiary cost-sharing, and site-neutral payments may lower outpatient care costs. However, the overall impact depends on the services used by patients and potential revisions to the rule.
Future Steps
The proposal is part of CMS’s draft 2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center payment rule. It will undergo public comments before a final decision. The main concern remains whether Medicare can remove excessive markups without weakening hospitals that rely on 340B program revenue.