Proposed Legislation Would Require Greater Transparency and Disclosure from Hospitals, Reduce Reimbursement to Certain Off-Campus Patient Departments

The first, H.R. 3561, the Promoting Access to Treatments and Increasing Extremely Needed Transparency Act of 2023 (the PATIENT Act of 2023), is a large bipartisan package that includes numerous wide-ranging healthcare provisions, generally with the goal of reducing overall healthcare costs. The PATIENT Act of 2023 was reported out of the Energy and Commerce Committee on a bipartisan vote of 49 yeas and zero nays.

The second, H.R. 3290, To amend title III of the Public Health Service Act to ensure transparency and oversight of the 340B drug discount program, proposes to establish new reporting requirements on providers participating in the 340B Program. This bill was introduced by Rep. Bucshon (R-IN) and is often referred to in the healthcare stakeholder community as the “Bucshon bill.” The Bucshon bill advanced out of the Energy and Commerce Committee on a partisan vote of 29 yeas and 22 nays.

Hospitals and health systems must be prepared for the operational changes and potential for revenue loss that would occur should the PATIENT Act of 2023 or the Bucshon Bill become law.

IN DEPTH

1. H.R. 3561: THE PATIENT Act of 2023

H.R. 3561, the PATIENT Act of 2023, would affect hospitals most significantly by updating current federal hospital price transparency requirements, tightening federal oversight of and reducing reimbursement for off-campus hospital outpatient departments, and increasing reporting obligations and reducing reimbursement for drugs reimbursed by Medicaid Managed Care Organizations (MCOs).

a. Hospital Price Transparency

The portions of H.R. 3561 addressing hospital price transparency broaden existing requirements and increase potential penalties for violation of those requirements. In particular, if enacted, the bill would:

1. Increase maximum potential penalties for hospitals with more than 550 beds as of January 1, 2024, by an additional $10 per bed per day. The maximum penalty for large hospitals in noncompliance for more than one year would be increased from just over $2 million to no less than $5 million.
2. Establish that the price estimator tool would no longer exempt hospitals from publishing a list of their charges for shoppable services as of January 1, 2025.
3. Require the Centers for Medicare & Medicaid Services (CMS) to implement a template for hospitals to provide standard charges.
4. Require CMS to establish a monitoring process through notice and comment rulemaking.
5. Require CMS to establish accessibility standards to ensure the charges and information made available by hospitals will be accessible to individuals with limited English proficiency.
6. Expedite the corrective action timeframe, to come into compliance after receiving a notice of noncompliance, from the current 90 days to 45 days.
7. Require CMS to submit annual reports to Congress on enforcement activities. In particular, the bill would require the Government Accountability Office (GAO) to submit a report on compliance and enforcement within one year, and it would have CMS release a request for information (RFI) on how hospitals may be required to publish quality data alongside standard charge information.

Takeaways. The changes proposed by the PATIENT Act of 2023 are significant because they reduce options for hospitals to interpret the requirements of the price transparency rules and would materially increase the financial penalties for noncompliance. For example, under the PATIENT Act of 2023, hospitals would not be exempt from providing a list of shoppable services if they make a price estimator tool available. Further, the bill would require CMS to establish an oversight process through notice and comment rulemaking, incorporating specific additional requirements, and would significantly increase the amount of penalties for noncompliance.

b. Provider-Based Status Approval

Also included in H.R. 3561 is a requirement to submit a “provider-based attestation” for all off-campus outpatient departments. Provider-based attestations are voluminous documents that demonstrate that a particular hospital location complies with the Medicare provider-based rules at 42 C.F.R. § 413.65; the attestations are currently voluntary for most hospitals. The bill would require hospital off-campus provider locations to obtain location-specific National Provider Identifiers (NPIs) for each off-campus outpatient department and to use those NPIs for billing government payors.

c. Reduction in Medicare Payments for Off-Campus Outpatient Departments

Finally, the PATIENT Act of 2023 would continue the recent trend of “site neutral” payment provisions by reducing Medicare payments at all off-campus hospital departments to an amount equivalent to what would have been paid “under the applicable payment system.” This is similar to the current Medicare “Section 603” site neutral payment provisions, which reduced payments for services at off-campus outpatient locations opening after 2015 to 40% of the rate that would otherwise have been paid for the hospital services under the Medicare Outpatient Prospective Payment System (OPPS). The proposed language would extend these site neutral payment reductions to those hospital off-campus outpatient departments that currently receive the full OPPS payment rate (that is, those opening in 2015 or before).

Takeaways. While the first two provisions appear to be fairly innocuous, particularly when compared to the site neutral provision, these provisions would allow for payors to more specifically identify off-campus outpatient departments and the services provided at such locations. This would facilitate any future efforts by payors to take the position that such locations are not part of the hospital and to even further reduce payment for off-campus outpatient locations or perhaps even to exclude them from coverage. Further, the requirement to provide a provider-based attestation will impose additional burdens on hospitals and may deter some hospitals from establishing new off-campus outpatient locations, particularly if non-Medicare payors begin implementing similar site-neutral payment provisions.

2. The Bucshon bill: To amend title III of the Public Health Service Act to ensure transparency and oversight of the 340B drug discount program

The Bucshon bill establishes provisions that would require 340B covered entities to maintain records of their use of 340B savings and would allow for the Department of Health and Human Services (HHS) to audit such records. It would further require disproportionate share hospital (DSH) covered entities, as well as others at the discretion of the Secretary of HHS, to report certain information on an annual basis. Specifically, designated covered entities and their off-campus outpatient departments would also be required to annually report to HHS data on the metrics below, which would also be made publicly available online:

1. Number of individuals who were dispensed or administered drugs purchased through the 340B Program
2. Number of those individuals enrolled in certain commercial insurance plans, enrolled in Medicare Part A or B, enrolled in Medicaid, enrolled in CHIP, covered by another federal payor or not covered by any federal payor
3. Percentage of the number of individuals treated who were dispensed or administered drugs purchased through the 340B Program
4. Percentage of the number of individuals enrolled in certain commercial insurance plans, enrolled in Medicare Part A or B, enrolled in Medicaid, enrolled in CHIP, covered by another federal payor, or not covered by any federal payor treated who were dispensed or administered drugs purchased through the 340B Program
5. Costs incurred at each site, including costs of charity care
6. Costs incurred for treating patients entitled to Medicare Part A benefits or enrolled in Medicare Part B, enrolled in a Medicaid plan (or a waiver of such plan), or who were uninsured, minus the sum of Medicare reimbursements, Medicaid reimbursements and payments by uninsured patients
7. 340B Program savings.

Takeaways. In addition to creating burdensome and costly reporting requirements for providers that are already challenged financially, the Bucshon bill perpetuates misinformation about the 340B Program and the purpose of the 340B Program. The 340B Program was established to provide additional revenue to safety-net providers to allow them to stretch scarce federal resources. It was not intended to provide reduced-price drugs to patients. Further, the eligibility qualifications for the 340B Program already require reporting of data to establish that the covered entity is providing services to low-income and underserved communities, rendering the additional reporting unnecessary unless it is intended to allow for future changes to the 340B Program eligibility criteria. In addition, the differentiation between the data for the “covered entity” and “off-campus outpatient departments” continues the theme from the PATIENT Act of 2023 of treating off-campus outpatient departments as though they are not actually part of the hospital, and could also be a prelude to excluding such locations from the 340B Program.