Recent changes to the Medicare Part B Outpatient Prospective Payment System reimbursement system will end up benefiting hospitals, according to a new study.
The analysis by Avalere finds that 85 percent of hospitals will “see a net increase in their overall Medicare Part B reimbursement.”
The findings may come as a surprise to the many in the medical field who loudly protested the recent changes to the 340B program, which requires drug companies to provide discounted drugs to hospitals that serve a large population of low-income patients. Until Jan. 1, 340B hospitals were reimbursed by the federal government at the full market rate of the drugs, plus 4.3 percent, providing them additional money that they are supposed to invest in improving service for low-income patients.
Under the new 340B policy, the federal government’s reimbursement will be much lower (fair market price minus 23.7 percent). The American Hospital Association sued over the new policy, saying that it put many of its members at a great risk. A federal judge dismissed the lawsuit in December on a technicality, saying the group did not have standing to sue because the policy had not yet taken effect.
While the Avalere study acknowledges that the 340B changes will result in $1.6 billion less for hospitals through the discounted drug program, it reports that those savings will be reallocated to bolster other types of reimbursements that most hospitals will benefit from.
While hospitals will see reimbursements from the 340B program drop by 17.6 percent, they will experience a 19.1 percent increase in revenue from “non-drug payments.” As a result, hospital revenue from Medicare Part B will increase 1.5 percent overall, Avalere predicts.
The study projects that only 1 percent of hospitals will experience a net decrease in Medicare reimbursement greater than 10 percent. Hospitals that do not serve large low-income populations and are not eligible for the 340B program will also come out on top.
Rural hospitals will benefit disproportionately, while hospitals in urban areas are the ones most likely to experience a net decrease in revenue. The changes, said Joanna Young, senior director of Avalere, “effectively redistribute funds from urban hospitals and those participating in the 340B program.”
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
