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The Centers for Medicare & Medicaid Services today  it will update the hospital outpatient prospective payment system rates by 1.35% in calendar year 2018 compared to CY 2017. The rule also finalizes CMS’s proposal to drastically cut Medicare payment for drugs that are acquired under the 340B Drug Pricing Program. Specifically, CMS will pay separately payable, non pass-through drugs (other than vaccines) purchased through the 340B program at a rate of the average sales price minus 22.5%, rather than ASP plus 6%. Sole community hospitals in rural areas, PPS-exempt cancer hospitals and children’s hospitals will be excepted from this policy for CY 2018. CMS is implementing this policy in a budget neutral manner by offsetting the estimated $1.6 billion in reductions in drug payments by redistributing that amount to other non-drug services within the OPPS. “CMS’s decision in today’s rule to cut Medicare payments to hospitals for drugs covered under the 340B program will dramatically threaten access to health care for many patients, including uninsured and other vulnerable populations,” said AHA Executive Vice President Tom Nickels. “…We strongly urge CMS to abandon its misguided 340B rule, and instead take direct action to halt the unchecked, unsustainable increases in the cost of drugs. In the meantime, the AHA will work with Congress to address this issue. In addition, the AHA will be joining the Association of American Medical Colleges, America’s Essential Hospitals and our members to pursue litigation to prevent these significant cuts to payments for 340B drugs from moving forward.” Among other changes, the OPPS final rule reinstates for CYs 2018 and 2019 the moratorium on enforcement of the direct supervision policy for outpatient therapeutic services for critical access hospitals and small rural hospitals with 100 or fewer beds. In addition, CMS is removing total knee arthroplasty from the inpatient only list. Further, the agency delays implementation of the outpatient and Ambulatory Surgery Center Consumer Assessment of Healthcare Providers and Systems survey-based measures in the Outpatient Quality Reporting program until further notice. The rule also removes six quality measures from the OQR program. AHA members will receive a Special Bulletin with further details tomorrow. The CY 2018 physician fee schedule final rule, which will contain final site-neutral policies under Section 603 of the Bipartisan Budget Act of 2015, is expected to be released later this week.