Dec 2017 CMS Ruling

The 340Buzz: Industry and lawmakers work to prevent 340B cuts

On November 1, CMS issued a final ruling on the 340B Drug Pricing Program reimbursement cuts, which will reduce the reimbursements CMS offers to hospitals for drugs that qualify under the 340B program from 6 percent above sale price to 22.5 percent below. The cut will go into effect January 1 of next year.

FAQ adds confusion, not clarity

On December 13, CMS released an FAQ document to clarify how hospitals should use modifiers to identify 340B-acquired drugs furnished to Medicare beneficiaries and paid for under the hospital Outpatient Prospective Payment System (OPPS) starting Jan. 1. However, as the organization 340B Health noted in a statement, “several of the FAQs … outline requirements that CMS did not articulate in the final rule.” Specifically, as 340B Health reports, “The FAQs indicate that all 340B hospitals paid under the OPPS must use the informational “TB” modifier to identify 340B-acquired drugs in two particular instances where drugs are not subject to reduced payments, contrary to what hospitals understood based on the final rule.”

Industry still fighting

Currently, there are two main avenues being taken to stop the January 1 ruling from going into effect:

Industry/providers lawsuit

Industry groups have repeatedly voiced their concern over the ruling, to no avail. Now, the American Hospital Association, the Association of the American Medical Colleges, America’s Essential Hospitals are and some providers are collectively suing HHS in an effort to stop the cuts. “The lawsuit argues that the 340B provisions of the Centers for Medicare & Medicaid Services’ (CMS) outpatient prospective payment system (OPPS) final rule violate the Social Security Act and, therefore, should be set aside under the Administrative Procedure Act as unlawful and in excess of the HHS Secretary’s statutory authority,” according to an American Hospital Association press release.

On December 21, in Washington, DC, US District Judge Rudolph Contreras held a hearing in the lawsuit. The judge said he would issue a ruling before Jan. 1. It was not clear as of press time whether he will rule on the hospitals’ request for an injunction to stop the cuts while the lawsuit continues, or on the underlying question as to whether CMS has the authority to issue the cuts. Each representative was provided time for argument. The attorney representing CMS made the case that no harm would come to patients from the new 340B ruling, arguing that the ruling is purely economic. The plaintiff attorney, representing the hospitals, argued the opposite, arguing that the cuts would result in the elimination of valuable patient services.

Bipartisan house bill

In addition to the lawsuit, the US House of Representatives is pushing to pass a bill that would block CMS from enforcing the payment cuts. On November 14, Reps. David McKinley (R-WV) and Mike Thompson (D-CA) introduced the bill, H.R. 4392. The bill, which currently has 160 cosponsors, asks HHS to maintain current 340B rates, rather than implement the recently announced ruling, but does not seek to change the claim modifier requirement to track which drugs are obtained under the 340B program. David McKinley said in a statement, “CMS’ misguided rule jeopardizes the ability of rural hospitals to provide vital services. This bill ensures that hospitals are able to continue providing affordable services, and gives rural families peace of mind.”

“There is tremendous concern among hospitals about the cut and how it is going to impact patient care,” 340B Health CEO Ted Slafsky told FierceHealthcare.

The bill is not the first bipartisan support the 340B Program has received. As Sentry noted in a previous post, there has already been a letter of support signed by 228 of the 435 members of the House of Representatives, and another letter signed by 57 of the 100 members of the Senate. Rep. Mike Burgess (R-Texas) told Modern Healthcare that he “doubts Congress will enact any legislation on the rule before the end of the year.” As Congress awaits passing a continuing resolution (CR) before they recess on December 22, the bill is currently not included in the CR.

Support for your 340B compliance requirements

We will be keeping a careful eye out for both further legal developments and response from CMS about the questions the FAQ has raised. We recognize that the original ruling and ensuing developments could have a significant impact on your 340B program. Rest assured knowing our solutions have accommodated the addition of claim modifiers for years, and we are prepared to do the same for Medicare. We are currently considering all aspects of the new regulation to ensure that our solutions will help you continue meeting any and all new requirements, and we plan to have additional information on our product solutions distributed before the new year.