Trump administration wants to reward hospitals that buy US-produced medical supplies

 The Centers for Medicare & Medicaid Services (CMS) is looking at ways it could incentivize hospitals to purchase supplies and medications made in the U.S.—including via a potential new “Secure American Medical Supplies” designation within the Medicare program.

The agency this week put out the call for public feedback, inviting stakeholders to weigh in on how such a designation “could facilitate the creation of new, streamlined payment policies to support hospitals in their efforts,” according to an advance notice of proposed rulemaking (ANPRM).

The CMS said it could also add a structural quality measure to the Hospital Inpatient Quality Reporting Program that would require hospitals to show they’ve met minimum procurement percentages for personal protective equipment (PPE) and essential medicines.

“We want to hear from hospitals, manufacturers, suppliers and the public on practical ways Medicare can support a stronger, more reliable domestic supply chain,” CMS Deputy Administrator and Director of the Center for Medicare Chris Klomp said in a statement. “Whether through targeted designations, payment structures or other approaches, our goal is to develop options that improve preparedness while giving providers workable, flexible policies that strengthen patient care.”

The potential moves are a recognition that shifting supply chains to domestic manufacturers would meaningfully strain hospital operating margins.

The CMS, in the ANPRM, pointed to an Administration for Strategic Preparedness and Response (ASPR) analysis that found the price of domestic nitrile gloves is about 1.5 to 3 times that of foreign-made gloves. Another ASPR price review found domestic active pharmaceutical ingredients are about 12 times more expensive on average than non-domestic alternatives.

While the agency said it's open to new ideas on how to facilitate the new designation-based payment policies, the ANPRM does outline a few likely approaches. One such approach would see the CMS, for instance, use cost report data to estimate the quantity of PPE used when treating Medicare fee-for-service patients, and compensate for the difference in cost when that PPE is purchased from a domestic supplier.

For N95 filtering face piece respirators (FFRs), that calculation for a hospital with the designation could be as follows: “If (a) General Hospital billed 10,000 Medicare patient days in a year, (b) the assumed average number of N95 FFRs used per day per patient nationally is 5, and (c) a domestically produced N95 FFR is assumed to cost $0.20 more than a non-domestic one, then General Hospital would receive a Medicare payment of $10,000 (= 10,000 days × 5 FFR per day × $0.20 per FFR additional cost),” the CMS wrote in the ANPRM.

The CMS, citing statute, said some of the approaches it's considering could bring payments to designated hospitals in a non-budget-neutral manner—meaning the payments would be additive and not result in lower inpatient payments elsewhere.

The CMS said it also considered establishing new Medicare Conditions of Participation around the procurement requirements but that the approach was considered overly burdensome “because the only statutorily available penalty for noncompliance … is termination from the Medicare program.”

Hospitals that meet the “Secure American Medical Supplies” friendly designation could be featured on a public website, the CMS wrote in the ANPRM, giving Medicare and other payers an easy look at which hospitals are incurring higher costs due to domestic purchasing. The designation “might initially” be given based on hospitals’ cost report attestations, though that bar “might change over time as we gain experience with the program and additional domestic manufacturing capacity develops,” the CMS wrote.

“The COVID-19 public health emergency exposed the dangers of depending on foreign countries for critical PPE and essential medicines, highlighting the need for domestic emergency preparedness,” CMS Administrator Mehmet Oz, M.D., said in a release. “Under the Trump Administration, we are committed to rebuilding American resilience by empowering providers and suppliers that invest in U.S.-made medical products. This ANPRM is an important step toward securing the nation’s health and safety, preparing for future emergencies, and promoting American jobs and manufacturing.”

https://www.fiercehealthcare.com/providers/trump-administration-wants-reward-hospitals-buy-american