CMS last week proposed a $9 billion lump-sum reimbursement to safety-net hospitals for Medicare 340B payment cuts, in today's bite-sized hospital and health industry news from California, Maryland, and Minnesota/Wisconsin.

• California: California state lawmakers are considering new legislation that would establish a minimum wage for healthcare workers, which would be the first of its kind in the United States. Last month, the state senate approved the bill, which would set the minimum wage for healthcare workers at an inflation-adjusted rate of $25 by 2025. On Wednesday, the Labor and Employment Committee also approved the bill, sending it to the Appropriations Committee. According to a brief from the UC Berkeley Labor Center, the legislation would primarily benefit workers in home health, skilled nursing facilities, and outpatient clinics. "Raising the minimum wage for healthcare workers will help California hospitals retain staff who were considering leaving due to the skyrocketing cost of living and ongoing emotional toll of the pandemic," said Renèe Saldaña, spokesperson for SEIU California. However, the legislation has been opposed by providers, hospitals, and a nurses union. "Our health centers are concerned that [the bill] will lead to a reduction of services and losing staff," Dennis Cuevas-Romero, vice president of government affairs at the California Primary Care Association. (Dreher, Axios, 7/13)
• Maryland: CMS last week proposed a new rule that would reimburse safety net hospitals around $9 billion in Medicare 340B payment cuts. Between 2018 and Sept. 27, 2022, CMS cut 340B payments by around 30% for most outpatient drugs. In June 2022, the U.S. Supreme Court ruled that these cuts were "unlawful" and that CMS did not have the authority to reduce reimbursement rates. In the proposed rule, CMS would disperse a $9 billion lump-sum payment to around 1,600 affected hospitals by the end of 2023 or early 2024. Because the proposed rule needs to be budget-neutral, CMS plans to decrease reimbursements for other services and products, including a 0.5% reduction in outpatient payment rates from 2025 to 2041. So far, hospital groups have had mixed reactions to the proposed rule, largely due to potential clawbacks. "We are disappointed the remedy payments would include no interest and be budget neutral," said Bruce Siegel, president of America's Essential Hospitals. "The administration's plan to cut non–drug payments to hospitals to achieve budget neutrality unnecessarily blunts the impact of the remedy by ensuring years of future underpayments." (Dreher, Axios, 7/10; Kacik, Modern Healthcare, 7/7)
• Minnesota/Wisconsin: St. Luke's Duluth, which is based in Minnesota, and Aspirus Health, which is based in Wisconsin, on Wednesday signed a letter of intent to combine their hospital systems through a member-substitution agreement. According to Modern Healthcare, the merger would allow Aspirus to expand its hospital network into Minnesota and provide St. Luke's Duluth with increased borrowing capacity and access to Aspirus' health plan. The new system would be headquartered in Wausau and have a corporate office in Duluth. The organizations expect the proposed merger to be finalized in early 2024. (Kacik, Modern Healthcare, 7/12)