20190820 August 340Buzz - August 340Buzz: HHS continues to pursue Medicare Part B cuts

August 340Buzz: HHS continues to pursue Medicare Part B cuts

It’s hard to believe that this month marks our 24th consecutive 340Buzz. We started back in August 2017 with a discussion of how rural hospitals depend on the 340B program to keep their doors open (a fact that remains true today), and have since shared all the ups and downs with our customers, from program cuts to ceiling prices to legal battles to legislation. These past two years have been the most active and volatile in the program’s 27-year history, and we continue to be 340B advocates, working side by side with covered entities to help you make the most of the program and ensure your continued success.

This month, we cover the recently released 2020 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule and move through the dog days of summer and the Congressional recess while we anticipate the uptick in buzz around healthcare as we move into election season.

340B reimbursement cuts just won’t go away

Despite judges having ruled—twice—that CMS’ (under HHS) proposed reimbursement cuts to hospitals purchasing Medicare Part B drugs through the 340B program were outside the government’s purview, the administration is not giving up on the idea.

The cuts were originally proposed in the OPPS Rule in July 2017, and the American Hospital Association and other hospital groups filed the first lawsuit attempting to halt the cuts two months later, in November of that year.

After the lawsuit was tossed out, a decision which the AHA appealed, a federal judge in Washington, DC finally ruled in December 2018 that the cuts had exceeded the HHS secretary’s authority.

HHS appealed that decision in February 2019, and in May, U.S. District Judge Rudolph Contreras of the U.S. District Court for the District of Columbia ruled yet again that the cuts were unlawful. The judge ordered HHS to come up with a plan for how to undo the damage since he felt reimbursing covered entities for all the money lost due to the unlawful cuts and unbreaking the egg would be too much of a financial burden on the government. HHS was expected to deliver that plan to the judge by August 5.

Instead, the government appealed yet again. And while they wait for a decision on that appeal, they’ve released the 2020 OPPS proposed rule, which once again pushes for 340B program cuts. This time, CMS is proposing to continue the current reduced payment model, while simultaneously soliciting comments from the public and industry stakeholders about what to do regarding the cuts already in place, should they lose the current appeal.

“With its proposed rule, CMS ignores a federal court’s unequivocal and explicit finding that the agency acted unlawfully when it imposed deeply damaging cuts to hospitals in the 340B Drug Pricing Program,” America’s Essential Hospitals said in a statement. “This is unacceptable. This proposed rule needlessly prolongs the uncertainty, confusion, and harm CMS created with these Part B cuts, which went beyond its statutory authority and continue to threaten access to care in communities nationwide.”

The American Hospital Association shared similar concerns in its own statement. “This proposed rule’s continuation of cuts in payments for 340B drugs only exacerbates the strain placed on hospitals serving vulnerable communities,” the organization said. “Now that the court has ruled that those cuts are illegal and exceeded the Administration’s authority, we urge CMS to refrain from doing more damage to impacted hospitals with another year of illegal cuts. Instead, as a remedy, CMS should be offering a plan to promptly restore funds to those affected by the illegal cuts.”

Sentry strongly encourages our customers to exercise their ability to comment before the September 27 deadline and let CMS know the importance of protecting the integrity of the 340B program.

Changes in pharmacy benefit management at the state level

Many states took legal action this year to combat pharmacy benefit managers (PBMs) discriminating against 340B covered entities; now, Oregon is the latest state added to that list. A trailblazer in general when it comes to 340B, from their innovative state Medicaid policy to avoiding duplicate discounts, Oregon now takes the stage once again with the introduction of House Bill 2185. The bill states that a PBM “may not reimburse a 340B pharmacy differently than any other network pharmacy based on its status as a 340B pharmacy.”

In related news, we continue to see the PBM market shift as networks make decisions on whom to partner with for pharmacy management. For example, Network Health, a Wisconsin-based company owned by Froedert Health and Ministry Health Care, part of Ascension Wisconsin, recently announced that it will switch from its current PBM (CVS/Caremark) to Express Scripts, effective January 1, 2020.

We can only speculate, based on PMB activities that are reflective of verticalization and channel conflicts, that hospitals are increasingly making decisions on how to best navigate an evolving marketplace.

Congress at a standstill

We expect the rest of the summer to be relatively quiet, with the House and the Senate both in recess until September 9. They’ll be back in session for most of September, with additional recesses planned for half of October, some time away in November for the Thanksgiving holiday, and again the last two weeks in December. All told, this means there aren’t a large number of days left in-session for the remainder of this year.

Covered entities can take advantage of the time congressional representatives take in their home state by calling, writing letters, and even inviting their elected officials to visit hospitals and see the true value of the 340B program in person.

While the past 12 months may have been a flurry of newly introduced bills on both the House and Senate side, those efforts have quieted down lately. It seems the government has decided to take a more holistic approach to lowering drug prices, with efforts such as the administration’s recent plan to allow prescription drug importation from Canada, and has realized that the 340B program is a very small piece of the pie.

What we expect to hear increased buzz about in the 14 months leading up to the next presidential election are the hot-button healthcare issues that have become political talking points, such as Medicare for All and the ongoing lawsuit aimed at repealing the Affordable Care Act. We will, of course, continue to keep an ear the ground to see whether—and how—these larger issues might affect the 340B program and covered entities, and we encourage our customers to do the same.

We’ll be back in September when temperatures start to cool down and healthcare debates begin to heat back up.