MedPAC Meets

Last week the Medicare Payment Advisory Commission met in Washington, D.C. to discuss a number of Medicare payment issues.

The issues on MedPAC’s January agenda were:

  • The Medicare prescription drug program (Part D):  status report and options for restructuring
  • Redesigning the Medicare Advantage quality program:  initial modeling of a value incentive program
  • Hospital inpatient and outpatient payments
  • Physician payments
  • Outpatient dialysis payments
  • Skilled nursing facility, home health, inpatient rehabilitation facility, and long-term-care hospital payments
  • Hospice and ambulatory surgery center payments
  • The 340B program
  • ACO beneficiary assignment

MedPAC is an independent congressional agency that advises Congress on issues involving the Medicare program.  While its recommendations are not binding on either Congress or the administration, MedPAC is highly influential in governing circles and its recommendations often find their way into legislation, regulations, and new public policy.

Go here for links to the policy briefs and presentations that supported MedPAC’s discussion of these issues.

GAO: Feds Need Better Oversight of 340B Eligibility

The federal government needs to do a better job of ensuring that non-government hospital participants in the 340B prescription drug discount program are eligible for that program, the U.S. Government Accountability Office concluded in a recent report.

With growing numbers of non-government hospitals now participating in the 340B program, the GAO found that the federal Health Resources and Services Administration, which oversees the program, is not doing enough to ensure that these hospitals meet the criteria for inclusion in the program.  In particular, the GAO found, HRSA needs to do more to ensure that such hospitals have valid contracts with state or local governments to care for low-income patients who qualify for 340B assistance with the cost of prescription drugs.  In particular, the GAO believes HRSA relies too much on hospitals’ own attestations that they have such contracts.

The GAO recommended a number of steps to ensure that hospitals truly are eligible to participate in the 340B program, including better and more frequent review of hospitals’ contracts with state or local governments.

Most private safety-net hospitals participate in the 340B program and consider it an essential tool in serving the low-income residents of the communities in which they are located.

Learn more about the problems the GAO found with HRSA’s management of non-government hospitals’ eligibility for the 340B program and how it recommends that HRSA address those problems in the GAO report “340B Drug Discount Program:  Increased Oversight Needed to Ensure Nongovernmental Hospitals Meet Eligibility Requirements

NASH Conveys End-of-Year Priorities to Congress

Preventing Medicaid DSH cuts, a fair approach to protecting patients from surprise medical bills, and reducing prescription drug costs are among the policy positions that the National Alliance of Safety-Net Hospitals recently shared with Congress.

In its message to Congress, NASH also asked lawmakers to protect 340B prescription drug discounts for private safety-net hospitals and to preserve dedicated funding for community health centers, the National Health Service Corps, and the Teaching Health Center Graduate Medical Education.

Learn more about NASH’s end-of-year policy priorities from the message “Protect Safety-Net Hospitals and the Communities They Serve in Upcoming Budget and Legislative Deliberations” that NASH delivered yesterday to all 535 members of Congress.

Hospital Groups Critical of CMS 340B Proposal

The federal government should not survey providers to determine their costs for drugs covered by the section 340B prescription drug discount program, hospitals and hospital groups have told the Centers for Medicare & Medicaid Services.

Their comments came in response to a regulation CMS proposed in September that would require hospitals to report their acquisition costs for 340B-covered drugs.  CMS proposed such data collection after federal courts ruled against its attempt to reduce 340B reimbursement to hospitals that participate in the program.  Among the court’s objections were CMS’s lack of data about those drug acquisition costs.

Among the reasons hospitals conveyed in expressing their opposition were the cost of reporting the data in question; the design of the survey; the flawed premise underlying the survey; and the proposed rule’s requirement that all hospitals complete the survey and not just those that participate in the 340B program.

Among the groups criticizing the proposed regulation were the Association of American Medical Colleges, which wrote in its comment letter that

Congress did not design the 340B program to pay hospitals at acquisition costs…Congress designed the program so that eligible hospitals could purchase covered drugs at a discounted rate below the Medicare reimbursement rate and use the difference to reach more eligible patients and provide more comprehensive services.

The National Alliance of Safety-Net Hospitals was among the groups commenting on the proposed regulation.  Writing on behalf of private safety-net hospitals, NASH observed in its November 27, 2019 formal comment letter that

The 340B program was created by Congress to enable hospitals (and other providers) that serve low-income communities to maximize their resources when working to serve those communities.  The program helps improve access to high-cost prescription drugs for low-income patients and helps put additional resources into the hands of qualified providers so those providers can do more for their low-income patients:  provide more care that their patients might otherwise not be able to afford, offer more services that might otherwise be unavailable to such patients, and do more outreach into communities consisting primarily of low-income residents.  This was the purpose of the 340B program when Congress created it in 1992 and Congress has done nothing to modify that purpose since that time:  it has not directed that special assistance to qualified providers be reduced; it has not insisted that participating providers document the expenditure of their savings in service to their communities; and it most certainly has not dictated that 340B payments to eligible providers be reduced so that payments to non-340B providers could be increased.  NASH believes that through this proposed data collection CMS is seeking to exert authority it does not have to demand of providers information to which the agency is not entitled.

Learn more about hospital industry opposition to the proposed 340B regulation in the Fierce Healthcare article “Hospitals blast CMS’ proposed 340B survey.”

Back Off 340B Data Collection, NASH Tells CMS

The federal government should not impose a new, major data reporting requirement on 340B-eligible hospitals to support the implementation of a new policy that federal courts twice have rejected, NASH told the Centers for Medicare & Medicaid Services last week.

In formal comments in response to a CMS proposal to require hospitals that participate in the section 340B prescription drug discount program to provide CMS with extensive data on their acquisition costs for 340B drugs, NASH wrote that such data collection would be burdensome; that CMS should not be reducing 340B payments to providers because such a policy decision falls solely within the purview of Congress, which created the program; and that instead of focusing on just this one aspect of the court’s rejection of its attempts to reduce 340B payments, CMS should instead focus on the court’s order that the agency develop a means of reimbursing hospitals for the lost 340B payments Medicare has withheld from providers for the past two years.

Most private safety-net hospitals participate in the 340B program and count on the resources the program generates to help them provide additional services to the low-income residents of the communities in which they are located.

Learn more about why NASH objects to CMS’s planned data reporting requirement in NASH’s formal comment letter to CMS.

NASH Comments on Proposed Medicare Outpatient Payment Regulation (part 2 of 4)

The National Alliance of Safety-Net Hospitals has submitted extensive comments to the Centers for Medicare & Medicaid Services about its proposed changes in the Medicare outpatient prospective payment system for 2020.

In its letter to CMS, NASH focuses on four issues:

  • CMS’s price transparency proposal
  • Reimbursement for 340B-covered prescription drugs
  • Medicare site-neutral payment policy
  • Proposed updates of the inpatient-only list of medical procedures

Today this blog features NASH’s comments about reimbursement for 340B-covered prescription drugs.  Yesterday we presented NASH’s views on CNN’s price transparency proposal; on Friday we present NASH’s views on Medicare site-neutral payment policy; and on Monday we present NASH’s perspective on CMS’s proposal to permit Medicare to pay for certain medical services on an outpatient basis rather than limiting them to being performed only on patients admitted to a hospital.

See the complete NASH letter to CMS here.

Reimbursement for 340B-Covered Prescription Drugs

The 340B prescription drug discount program helps improve access to high-cost prescription drugs for low-income patients and helps put additional resources into the hands of qualified providers so those providers can do more for such patients:  provide more care that their patients might otherwise not be able to afford, offer more services that might otherwise by unavailable to such patients, and do more outreach into communities consisting primarily of low-income residents.  Only providers that care for especially large numbers of low-income patients qualify to participate in the 340B program.

In this year’s proposed rule, CMS calls for reimbursing 340B-eligible providers at average sale price less 22.5 percent for 340B-covered prescription drugs.  NASH strongly opposes this proposal.

For the past two years CMS also has reimbursed 340B-eligible providers at average sale price less 22.5 percent for 340B-covered prescription drugs, a break from past policy, which reimbursed eligible providers at average sale price plus six percent.  This policy change was implemented even though Congress, which created the program, did not direct CMS to reduce payments to 340B providers that serve especially large numbers of low-income patients just to save money and certainly did not direct CMS to introduce new policies that seek to reduce the federal government’s commitment to serving low-income Americans.

Shortly after implementation of the reimbursement reduction that took effect in calendar year 2018, various stakeholders sued CMS over the payment cut and the courts agreed with the stakeholders and rejected the cut.  Despite the court’s ruling, CMS did not restore payments to average sale price plus six percent but continued to pay average sale price less 22.5 percent even though the court rejected this payment.

Despite the court’s rejection, CMS proposed the same payment cut for calendar year 2019:  average sale price minus 22.5 percent.  The stakeholders again sued and the courts again sided with stakeholders and rejected the payment cut.  Despite this, CMS again did not restore payments to average sale price plus six percent but continues to pay average sale price less 22.5 percent even though the court had now twice rejected this payment.

In light of these continued rejections by the courts, NASH encourages CMS to restore 340B payments to their previous level of average sale price plus six percent.  The courts have spoken and it is time to respect their verdict.

This leaves the question of how to reimburse providers for the revenue they lost when CMS continued to make essentially illegal underpayments for two full years, refusing to adjust its payments in the face of its losses in court – a question posed in the proposed regulation.  NASH believes the best way, the only way, to repair the damage done to safety-net providers by two years of underpayments is to restore those payments retroactively through a one-time, lump-sum payment that compensates them for every underpaid claim, every under-reimbursed prescription drug during the two-year period during which CMS continued to pay eligible providers average sale price less 22.5 percent despite not one but two court rulings that it must not do so.  These lump-sum payments, NASH believes, should be made in their entirety to all affected hospitals by the end of calendar year 2020.  To do this, NASH urges CMS to identify the amount of individual hospitals’ underpayments based on data hospitals have already submitted rather than requiring additional action by the injured parties.

As explained by the web site of the Health Resources and Services Administration, which operates the 340B program,

The 340B Program enables covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.

Federal policy should enhance this program and help it achieve its objectives, not make it harder for low-income patients and the providers that serve them.  NASH urges CMS to heed the federal government’s own rationale for the program and restore 340B payments to their previous level

See the complete NASH letter to CMS here.

Tomorrow:  NASH addresses CMS’s proposed changes in site-neutral payment policy

New Web Site Shows Maximum 340B Prices

Providers can now see the maximum prices for 340B-covered drugs on a new web site established by the federal Health Resources & Services Administration.

The web site, mandated by Congress after the U.S. Department of Health and Services’ Inspector General found that some providers are being overcharged, will enable 340B-eligible providers to identify the maximum price they can be charged for covered drugs.  This, HRSA believes, will help providers avoid being overcharged in the future.

Most private safety-net hospitals participate in the 340B program and consider it a vital tool in helping them serve their low-income communities.

Learn more in the Becker’s Hospital Review article “HRSA launches 340B ceiling price website” and visit the new web site itself (registration required).

Pressure Off 340B?

Two key House subcommittees will not hold hearings on the controversial 340B prescription drug discount program in the near future.

The chairs of the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee and its Health Committee have both suggested that House Democrats understand the importance and value of the 340B program and see other health care issues as greater priorities.

This marks a serious departure from the last session of Congress, which saw a number of hearings on the 340B program and doubts cast about the program’s objectives and future.

Most private safety-net hospitals participate in the 340B program and consider it a vital resource in their efforts to serve their communities.  NASH has long advocated for the protection of the program, including in this 2018 letter to congressional leaders.

Learn more from the Lexology article “340B Program Gets Relief from Congressional Scrutiny.”

 

Court Rejects 340B Cuts

A federal court has ruled that the Centers for Medicare & Medicaid Services overstepped its authority in reducing Medicare payments for prescription drugs covered by the section 340B prescription drug discount program.

While the court conceded that CMS has the authority to address 340B payments, it found that CMS’s drastic payment cuts, introduced in FY 2018, “…fundamentally altered the statutory scheme established by Congress…” for determining 340B payment rates.

The court suggested that CMS either change its methodology for determining 340B payments to justify the specific cuts it proposes or raise its objections with Congress, which created the program and has the authority to change it.

According to documents submitted to the court by the parties that filed the suit, eligible hospitals have seen their 340B payments reduced $1.6 billion since the cuts began in FY 2018.  The court asked the federal government and those who filed the suit to suggest remedies for compensating participating hospitals for their losses.

The ruling has major implications for the country’s private safety-net hospitals, most of which participate in the 340B program.

Learn more about the 340B litigation, the court’s ruling, and its impact in the New York Times story “Court Rejects Trump’s Cuts in Payments for Prescription Drugs.”

Hospitals Ask Congress to Protect 340B Program

The leaders of more than 700 hospitals and health systems have written to congressional leaders to ask them to protect the section 340B prescription drug discount program.

The letter states that

 We are concerned about recent regulatory actions that have reduced the reach of this vital program and by legislative proposals that would undo more than two decades of bipartisan work to preserve the health care safety net.

The letter explains that

 In 2015, 340B hospitals provided $26 billion in uncompensated and unreimbursed care to low-income and rural patients in need. That represented 60 percent of all such care delivered in the U.S. even though our hospitals comprise only 38 percent of all acute care hospitals operating in our country. Because of the savings from 340B, we are able to offer vital but often money-losing services including obstetrics, trauma care, opioid addiction treatment, and HIV/AIDS care. In many rural communities, 340B savings are the difference between hospitals staying open and closing. We do all of this without using taxpayer dollars.

And

Efforts to reduce the scope of the 340B program would not reduce the cost of prescription drugs in the U.S. and would weaken nonprofit hospitals’ ability to serve patients who often have nowhere else to turn.

NAUH has long advocated protecting the 340B program, writing to Congress to express this view on many occasions, and most recently, earlier this year.

Go here to see the complete letter from the more than 700 hospitals and health systems.