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NAUH Seeks Action on Medicaid DSH, 340B

The National Association of Urban Hospitals has written to leaders of the House and Senate asking them to reverse implementation of Affordable Care Act-mandated cuts in Medicaid disproportionate share hospital (Medicaid DSH) allotments to state and to block implementation of a federal regulation that would reduce Medicare payments to qualified participants in the section 340B prescription drug discount program by 28 percent.

See NAUH’s letter here.

E&C Calls for Action on 340B

The section 340B prescription drug program has flaws and needs change, a report by the House Energy and Commerce Committee has concluded.

The program, which requires pharmaceutical companies to provide discounts on prescription drugs to be dispensed on an outpatient basis to qualified providers that serve large numbers of low-income patients, has been controversial in recent years.  As the number of providers eligible for the program has grown, pharmaceutical companies have claimed that the program is expensive, is being abused, and is responsible for driving up prescription drug costs while providers insist that 340B is a vital tool in helping them serve low-income patients.  Congress, meanwhile, has questioned the program’s growth and sought accountability for how providers use the savings the program generates to serve their low-income patients.

The controversy moved into a new area in the fall when the Centers for Medicare & Medicaid Services adopted a regulation greatly reducing 340B payments to providers – even though the federal government does not pay for the drug discounts – and seeking to move savings elsewhere in the federal budget.  A coalition of providers sued unsuccessfully to delay implementation of the regulation.

Now, the House Energy and Commerce Committee has issued a report on the program.  The following findings are taken directly from the committee’s report:

  • Congress did not clearly identify the intent of the program, nor its parameters.
  • HRSA lacks sufficient regulatory authority to adequately oversee the program and clarify requirements.
  • HRSA has started but still has not completed the process to issue and enforce regulations in the areas in which it has regulatory authority.
  • Although HRSA has increased the number of covered entity audits it conducts each year, the audit process still needs improvement.
  • The 340B statute does not require covered entities to report program savings or how they are used. As a result, there is a lack of reliable data on how program savings are used, and covered entities may use these savings in a variety of ways.

While asserting strong bipartisan support for the program among committee members, the 79-page report offers the following recommendations (again, taken directly from the report):

  • HRSA [the Health Resources and Services Administration] should finalize and begin enforcing regulations in the three areas in which it currently has regulatory authority.
  • Congress should give HRSA sufficient regulatory authority and resources to adequately administer and oversee the 340B program.
  • Congress should clarify the intent of the 340B program to ensure that HRSA administers and oversees the 340B program in a way that is consistent with that intent.
  • Congress, or HRSA where HRSA already has authority to make such changes, should promote transparency in the 340B program, including ensuring that covered entities and other relevant stakeholders have access to ceiling prices, and requiring covered entities to disclose information about annual 340B program savings and/or revenue.
  • Congress should establish a mechanism to monitor the level of charity care provided by covered entities.

The committee is expected to pursue legislation implementing its regulations in the near future.

Most private safety-net hospitals qualify to participate in the 340B program, consider it a vital tool in serving their communities, and support the program’s preservation.  NAUH has conveyed its position on the program, and the recent changes in program, in separate letters to the administration and Congress.

Go here to see the full House Energy and Commerce Committee report on the 340B program.

Senators Seek 340B Reprieve

A bipartisan group of senators has written to Senate majority leader Mitch McConnell and Senate minority leader Chuck Schumer expressing concern about cuts in Medicare Medicare prescription drug payments to qualified providers as a result of new regulations governing the section 340B prescription drug discount program.  Those cuts have been adopted by regulation by the Centers for Medicare & Medicaid Services and will take effect beginning on January 1, 2018.

Under the regulation adopted by CMS, Medicare payments for prescription drugs dispensed on an outpatient basis to low-income patients will be reduced to qualified providers by $1.6 billion in the coming year.  While acknowledging problems with how the 340B program has evolved over the years, the senators ask their leaders to partner “…with CMS and other stakeholders to ensure the 340B program continues to support safety-net providers in helping low-income individuals access quality health care services with proper oversight and transparency.”

Most private safety-net hospitals participate in the 340B program and NAUH has communicated its opposition to the reduction in payments to both CMS and Congress.

See the letter here.

NAUH Asks Congress to Block 340B and Medicaid DSH Cuts

Pass legislation blocking cuts in Medicaid disproportionate share payments (Medicaid DSH) and Medicare payments made to qualified providers for prescription drugs under the section 340B prescription drug discount program, NAUH has asked the leaders of the House and Senate.

The 340B cut in question was adopted recently by the Centers for Medicare & Medicaid Services in a Medicare new regulation adopted in the fall.  The Medicaid DSH cut is mandated by the Affordable Care Act but has twice been delayed by Congress.

See NAUH’s letter to congressional leaders here.

The Battle Over 340B

Hospitals and other health care providers say it is an essential tool in ensuring access to care, and to prescription drugs, for their low-income patients.

Pharmaceutical companies say it has expanded beyond its original purpose and is being used by hospitals to pad their profits.

Members of Congress are divided:  some are supportive and some are skeptical.

The section 340B program that requires drug companies to provide discounts to selected hospitals and other providers that serve large numbers of low-income patients has been the subject of controversy in recent years.  During that time, the administration has generally sided with hospitals and maintained the program.

That support was tempered recently when the Centers for Medicare & Medicaid Services proposed a 28 percent cut in Medicare payments to hospitals for drugs provided to low-income patients through the 340B program.  Hospital industry groups responded by suing the federal government and will have their day in court later this month.

Most private safety-net hospitals participate in the 340B program and consider it essential to their ability to serve their communities.  NAUH conveyed this view to CMS recently in response to its proposed regulation calling for reduced 340B payments to hospitals.  See that letter here.

What are the issues?  Why do hospitals and other providers consider 340B so essential to their well-being while pharmaceutical companies and now, CMS, view the program with increasing skepticism?

Kaiser Health News has taken a look at these and other 340B questions.  Read its story here.

Bill Seeks to Block 340B Cut

Legislation introduced in Congress would block the attempt by the Centers for Medicare & Medicaid Services to slash $1.6 billion in annual payments to hospitals for prescription drugs for outpatients prescribed through the federal section 340B prescription drug discount program.

Earlier this month CMS finalized its plan to reduce controversial 340B payments and shift $1.6 billion in savings into Medicare provider payments.  If adopted, the bipartisan legislation co-sponsored by Representatives David McKinley (R-WV) and Mike Thompson (D-CA) would prevent the reduction of 340B payments, which are made to hospitals that care for especially large proportions of low-income patients.

The 340B program is an essential source of resources for the nation’s private safety-net hospitals and many stand to lose hundreds of thousands of dollars, or even millions of dollars a year, if the payment cut is not reversed.

Go here to see Rep. McKinley’s news release on the bill and here to see the bill itself, which is H.R. 4392, “To provide that the provision of the Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs final regulation relating to changes in the payment amount for certain drugs and biologicals purchased under the 340B drug discount program shall have no force or effect, and for other purposes.”

340B Changes Would Hurt Hospital Margins

Proposed changes in the federal section 340B prescription drug discount program would hurt hospital margins.

So says Moody’s Investors Service, the credit rating agency.

According to Moody’s, the margins of non-profit hospitals are already under pressure because revenue increases are not keeping pace with prescription drug costs.  Reductions of payments under the 340B program recently proposed by the Centers for Medicare & Medicaid Services would make a challenging situation worse, Moody’s speculates.

Under the 340B program, eligible hospitals purchase prescription drugs at a discount, supply them to eligible outpatients, and use the savings they gain to provide additional services and outreach to the low-income residents of their communities.

Skeptics maintain that hospitals simply pocket the savings.

Under the regulation proposed by CMS, federal payments to 340B-eligible hospitals would be greatly reduced.

Most private safety-net hospitals participate in the 340B program and benefit considerably for it.  NAUH has asked CMS  to withdraw the proposed regulation and has urged members of Congress to contact CMS to make the same request.

Learn more about the issue and Moody’s report on the potential impact of changes in the program in this Healthcare Finance News article.

House Members to CMS: Don’t Cut 340B Payments

More than half of the members of the House of Representatives have written to CMS administrator Seema Verma asking her to withdraw a controversial proposal that would greatly reduce Medicare reimbursement for prescription drugs for urban safety-net hospitals and other safety-net providers that serve large numbers of low-income patients..

At issue are proposed changes in the federal section 340B prescription drug discount program – changes that would drastically reduce payments to participating hospitals for the prescription drugs they provide to low-income outpatients.  Savings from the program help underwrite services and outreach for low-income patients.

The letter to CMS administrator Verma expresses concern that

…this misguided policy will directly limit the ability of hospitals to offer necessary services to vulnerable patients and their communities, especially low-income individuals and rural communities.

The letter goes on to point out that the proposed change in 340B program policy does not address the high cost of prescription drugs and “…would not benefit many Medicare beneficiaries, including dually eligible Medicare beneficiaries.”

A majority of the members of the House – 228 of them – signed the letter.  NAUH recently sent a message to all House members asking them to sign.  Most safety-net hospitals participate in the 340B program.

Go here to see the congressional letter to Administrator Verma and go here to see NAUH’s letter to House members asking them to sign the letter.

House Committee Looks at 340B

Are hospitals using the savings generated by their participation in the section 340B prescription drug discount program to help their low-income and uninsured patients?

That’s what the House Energy and Commerce Committee’s Health Subcommittee is asking.

Earlier this year the committee requested such information from the Health Services and Resources Administration, which runs the 340B program, and now it’s asking hospitals as well.

Specifically, the subcommittee sent five-page letters to 19 providers that participate in the 340B program asking them about:

  • the quantity of 340B-purchased drugs they dispense to Medicare beneficiaries, Medicaid beneficiaries, and those with private insurance
  • the quantity of 340B-purchased drugs they dispense to uninsured patients
  • their savings from the 340B program and how they calculate those savings
  • how much charity care they provide
  • how they use 340B savings to serve vulnerable populations

The letters address many other 340B-related issues as well.

Most private safety-net hospitals participate in the 340B program and view it as a critical tool in their ability to meet the needs of their many low-income patients.

Learn more about the Health Subcommittee’s letter by reading this press release describing this initiative and go here to view the letters the subcommittee sent to selected 340B providers.

NAUH Urges Medicare to Withdraw 340B Proposal

The National Association of Urban Hospitals has urged the Centers for Medicare & Medicaid Services to withdraw its proposal to significantly reduce Medicare payments for prescription drugs to hospitals that qualify for the federal section 340B prescription drug discount program.

The plan, part of Medicare’s proposed outpatient prospective payment system for outpatient services for 2018, would reduce 340B payments to qualified hospitals approximately 28 percent.

 In its formal comment letter to CMS, NAUH argues that the 340B program is appropriately serving the purpose for which it was created – putting additional resources in the hands of hospitals that serve especially large numbers of low-income patients – and that the proposed changes would detract from the ability of urban safety-net hospitals and other safety-net providers to continue delivering many of the services the residents of their low-income communities need that are currently made possible only through savings derived from the 340B program.

Most private safety-net hospitals participate in the 340B program.

See NAUH’s letter to CMS here.