The 340Buzz: In battle to maintain 340B program, rural hospitals hang in the balance

Last month, the Subcommittee on Oversight and Investigations held a hearing entitled “Examining HRSA’s Oversight of the 340B Drug Pricing Program.” During this hearing, Diana Degette, U.S. Representative for Colorado’s 1st congressional district, said, “I’m troubled by the rule that the Centers for Medicare and Medicaid Services proposed, which would dramatically reduce reimbursements to Medicare Part B drugs for 340B hospitals…the proposed rule will do nothing to achieve the goal of making prescription drugs more affordable to the general population. Reducing the repayment rate that 340B hospitals receive for Medicare Part B drugs does nothing to get to the root of high drug prices.”

There’s been no further word yet on whether CMS or the White House will move forward on any plan to modify the 340B program (CMS is accepting comments on its proposed ruling until September 11 of this year—submit yours here), but one thing is for certain—rural hospitals are among the organizations poised to take the biggest hit if 340B is restricted.

At the American Hospital Association Rural Hospital Policy Forum in Washington, DC, last month, George Sigounas, Health Resources and Services Administration administrator, addressed the 340B Drug Pricing Plan at the opening meeting, stressing that hospitals in rural areas need the plan.

Indeed, rural hospitals all over the country are feeling the stress of potential impending legislation to the 340B program. In a recently published article, Terri Funk Sypolt, (R-Preston), who represents District 52 in the West Virginia House of Delegates, said, “Rural hospitals play a major role in ensuring isolated and underserved communities have access to health services. Across the country, almost 60 million people live in a considerable distance from major population centers, and without community hospitals would be forced to travel a long way for basic care…The 340B program is essential to keeping rural hospitals operating and providing needed access to care.” Sypolt notes that there are 34 hospitals in West Virginia that participate in the 340B program. She continues, “The 340B program not only improves access to medicine, but it frees up rural hospitals to be able to afford more charitable care, and expand operations further into remote locations. And most importantly to some, it saves taxpayers money, as many 340B medications are paid for by Medicaid or PEIA. Government should be getting the best bang for its buck, and the 340B program helps meet that goal.”

As another example, rural hospitals in Ohio are also feeling the pressure as the debate around 340B heats up. “Rural hospitals across Ohio face a crisis in care and funding. Many feared that proposed cuts to health care funding in Washington would have pushed them to cut vital services, or go out of business entirely. But even with repeal and replace seemingly out of the equation, they still worry about their future in an increasingly difficult industry,” writes reporter Ginger Christ in a recent article.

The article notes that 41 percent of all rural hospitals in the nation operate at a loss. Nationally, 80 rural hospitals have closed since 2010, according to The Chartis Center for Rural Health. And another 273 are at risk. Alan Morgan, CEO of National Rural Health Association (NRHA), told Christ, “Unless something changes for the better, the country is on pace to lose a quarter of its rural hospitals in the next decade. And that means rural residents, who statistically are older and sicker, could see even greater barriers to healthcare access. It is a tough time for rural hospitals out there right now. We are in the middle of a rural healthcare closure crisis,” Morgan said.

Many hospitals in rural areas serve as the lifeline of their communities, and Sentry is proud to provide 340B software and compliance services to more than 300 such facilities to help them serve their patients. In addition to the possible legislative threats hanging over 340B in 2017-2018, we are deeply concerned over an even more immediate challenge, namely, the impact that a recent, ill-conceived CMS proposal to drastically cut reimbursement for Part B drugs would have on the ability of hospitals to serve their rural patients. Furthermore, the Part B proposal does nothing to address the problem of inflated prices charged by drug manufacturers.

In short, the attempt of scaling back the 340B program in this fashion would only hurt rural hospitals and the vulnerable patients they serve, and would likely raise costs to the federal government in light of the fiscal challenges rural hospitals already face. Sentry strongly encourages all potentially impacted hospitals, including rural facilities, to provide public comments to CMS that detail the financial impact this proposal would have, as well as whether any hospital or pharmacy services would need to be reduced or eliminated altogether.

The Part B proposal is one of the most serious attacks on 340B that we have witnessed thus far. We stand ready to assist our rural customers in responding to the CMS proposal, along with any forthcoming legislation that would adversely impact the ability of hospitals to serve their patients and their communities.

PLEASE NOTE: The Health Resources and Services Administration (HRSA) announced that the 340B Office of Pharmacy Affairs Information System (340B OPAIS) will be unavailable from August 15, 2017, until mid-September 2017. During this time, covered entities will not be able to submit change requests or terminations, but will be able to verify participation and contract pharmacy locations. For more information, click here.