20191217 December 340Buzz - December 340Buzz: The future is anyone’s guess

December 340Buzz: The future is anyone’s guess

This month is all about wrapping up 2019 and looking ahead to what’s next in the new year. When it comes to the legal battles surrounding the 340B program, the year will finish out with many issues still up in the air.

Medicare Part B cuts

Last month, the finalized 2020 OPPS ruling revealed that CMS planned to push ahead with both site-neutral payments and the 22.5% payment rate cuts to 340B drugs, despite court rulings that vacated the former and declared the latter unlawful. The American Hospital Association asked the court to reach a final decision on the Part B cuts before the new year, but there has been no movement in that direction at the time of this publication.

The agency is preparing for the best-case scenario, seeking to devise a survey that would collect information from covered entities on the acquisition costs of 340B drugs.

If the agency wins its appeal, an article from Modern Healthcare explains, “CMS will need information on the actual prices that hospitals pay for drugs under the 340B program to calculate average sales prices and make the cuts.”

Unsurprisingly, hospital groups did not speak favorably of the idea during the comments period. As FierceHealthcare reports, the Association of American Medical Colleges said, “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.”

And Ascension said, “In addition to creating significant new burden on providers with already limited resources, asking covered entities to complete calculations factoring tens of thousands of units of data will undoubtedly result in human error that may contribute to inaccuracies in the data reported, despite best efforts.”

“Hospitals also said CMS should instead just repay all hospitals in full for the payment cuts instead of creating a new remedy based on the survey,” FierceHealthcare reports.

Sentry echoes these concerns, and we will continue to advocate for covered entities on the hill and offer support to our customers in the event that changes to the 340B program, new regulations or new reporting requirements arise.

From the White House

Pelosi drug pricing plan

The drug price bill championed by House Speaker Nancy Pelosi was sent to the full House for a vote in late November. The House passed the bill, 230-192, on December 12. Likely next steps include potential veto by the President; Senate majority leader Mitch McConnell (R-KY) is not likely to bring to the Senate for a full vote. House Republicans offered their own substitute bill, which failed.

Covered entities should be aware that any major shift in drug pricing models or drug prices could potentially change the amount of 340B savings received and/or how those savings are calculated.

Another continuing resolution

Late last month, Congress passed a continuing resolution (CR) extending government funding through December 20. It included continued funding of Federally Qualified Health Centers (FQHCs) as well as a delay in the expected $4 billion payment cuts to disproportionate share hospitals (DSH). Hospitals are hoping another year-long delay of the DSH cuts will be part of the next continuing resolution as well.

We do not anticipate any further legislative action to occur related to 340B prior to Congress adjourning on December 20. Leadership has reached an agreement to fund the government through the current fiscal year, and Congress is scheduled to take up the funding measures in several small incremental ‘minibus’ packages during the week of December 16. In the event that the process breaks down at the last minute, which is unlikely, we expect another short-term CR to pass in order to avert a government shutdown when the current stop-gap funding measure expires December 20.

Price transparency initiative

On November 15, the White House finalized a ruling that will “compel hospitals in 2021 to publicize the rates they negotiate with individual insurers for all services, including drugs, supplies, facility fees and care by doctors who work for the facility,” The Wall Street Journal reports. The administration also proposed extending the rule to payers.

On December 3, hospital groups filed suit, claiming that the rule “violates the First Amendment and goes beyond the statutory intent of the Affordable Care Act,” according to another WSJ article.

“The burden of compliance with the rule is enormous and way out of line with any projected benefits associated with the rule,” according to the suit, filed by the American Hospital Association and other industry groups.

While nothing in the rule pertains directly to the 340B program, transparency has certainly been a trending topic in 340B throughout 2019, and Sentry remains keenly aware that any debate over transparency can quickly turn to a focus on 340B. We will continue to report as this topic develops.

Noteworthy reports

Unified Fall Agenda

In late November, the White House published the Fall 2019 Unified Agenda of Regulatory and Deregulatory Actions, a document that “reports on the actions administrative agencies plan to issue in the near and long term.”

Sentry keeps a close eye on this twice-annual publication to look for any upcoming regulations from CMS or HRSA that might impact the 340B program or our covered entity customers.

In this most recent Agenda, the areas that will impact 340B include:

  • International Pricing Index Model, which the Agenda said would be forthcoming in November, but has not yet been released as of the time of this publication
  • 2020 OPPS ruling, which the Agenda lists as in “final rule stage”
  • 2020 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Medicare Part B, which the Agenda lists as in “final rule stage”

Sentry anticipated these activities and we are assured that HRSA does not have plans for regulatory actions until the Spring agenda posts. Our attention will focus on these specific 340B areas of potential actions and congressional activities in the meantime.


The Medicare Payment Advisory Commission (MedPAC), an independent group of healthcare experts whose purpose is to advise Congress on issues related to Medicare, publishes two annual reports in March and June. Sources predict that the upcoming March report will focus on physician practice integration. It’s likely that the forthcoming MedPAC report will discuss the financial implications that such integration will have on the Medicare program.

2019 and beyond

2019 has been a milestone year for the 340B program, and things don’t seem likely to slow down anytime soon. For now, we wish you a very happy holiday season and look forward to continuing to serve as your trusted 340B partner in the new year.