CMS Delays OPPS Payment Cuts For Breakthrough Medicines

Washington, D.C. (December 19, 2001) – The Centers for Medicare and Medicaid Services Wednesday postponed by at least three months implementation of a final rule (CMS 1159-2) that would have slashed by 68.9 percent pro rata pass-through payments for innovative medications used in the outpatient hospital setting. The cuts in the outpatient prospective payment system (OPPS) would have taken effect for services rendered on or after Jan. 1, 2002.

“CMS discovered ‘non-trivial errors’ in the calculations used to arrive at the cuts, and we are pleased that they are taking the time to gather and analyze more data – and share data with BIO and other interested parties – before implementing changes that would dramatically affect Medicare beneficiaries’ access to potentially lifesaving medications,” said Sharon Cohen, vice president for government affairs of the Biotechnology Industry Organization (BIO).

The total amount available for OPPS pass-through payments is currently capped at 2.5 percent of total Medicare outpatient program payments. CMS had earlier calculated that steep cuts were necessary to prevent the payments from breaking the 2.5 percent barrier in 2002. “Based on preliminary recalculations disclosed Wednesday during a CMS conference call, it appears that smaller cuts will keep the payments within the cap,” said Cohen.

BIO represents more than 1,000 biotechnology companies, academic institutions, state biotechnology centers and related organizations in all 50 U.S. states and 33 other nations. BIO members are involved in the research and development of health-care, agricultural, industrial and environmental biotechnology products.