Trump Administration Proposes Medicare Reimbursement Changes

Overview of Proposed Changes

The Trump administration has announced a plan to alter the Medicare payment system for outpatient care. The new proposal aims to reduce costs for older Americans but raises concerns about potential impacts on hospitals serving low-income patients.

Details of the Proposed Rule

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would adjust payments for hospitals involved in the 340B drug discount program. It also outlines the expansion of site-neutral payment policies for some outpatient services.

The goal is to make health care more affordable and address disparities contributing to higher costs for Medicare beneficiaries. CMS Administrator Dr. Mehmet Oz emphasized the focus on patient affordability, aligning payments with actual acquisition costs, and eliminating disparities.

Importance of the Proposal

Health care costs remain a significant concern for older Americans. Rising premiums, deductibles, and prescription drug prices affect many Medicare beneficiaries. While the proposal addresses affordability, hospitals worry about the potential weakening of safety-net providers.

Jennifer DeCubellis, CEO of America’s Essential Hospitals, expressed concerns about funding cuts threatening hospitals that serve underserved populations.

Proposed Changes Explained

Outpatient Payment Adjustments

If finalized, the rule could lower out-of-pocket expenses for certain drugs and outpatient procedures from 2027. It proposes a 2.4 percent increase in pay for outpatient care, slightly lower than the previous year.

Kevin Thompson, CEO of 9i Capital Group, cautioned that hospitals could seek ways to recover revenue losses, possibly affecting other areas of health care.

340B Drug Payment Cuts

The proposal includes reducing Medicare reimbursement for drugs bought through the 340B program. This program supports hospitals serving large numbers of low-income patients by allowing them to buy drugs at discounted rates.

CMS aims to lower Medicare drug costs without eliminating the 340B program. However, questions remain about who would absorb the reduced reimbursement.

Expansion of Site-Neutral Payments

The rule intends to expand site-neutral payment policies for certain imaging services in hospital outpatient settings. This would equalize reimbursement rates between hospital outpatient departments and physician offices.

Alex Beene, a financial literacy instructor, noted potential savings on coinsurance for patients receiving specific physician-administered drugs at participating hospitals.

Potential Effects on Medicare Beneficiaries

The proposed rule could lead to:

• Lower cost-sharing for certain outpatient prescription drugs.
• Reduced costs for some imaging services.
• Consistent pricing between hospital outpatient departments and physician offices.

The impact would depend on the services used and any changes to the proposal before finalization.

Next Steps

The proposal is part of the draft 2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center payment rule. It will undergo a public comment process before finalization, targeting implementation next year.

The long-term challenge is whether expensive markups can be reduced without impacting safety-net hospitals that utilize 340B revenue.