20200121 January 340Buzz - January 340Buzz Part I: 340B in the new decade – what can we expect?

January 340Buzz Part I: 340B in the new decade – what can we expect?

This month, we ring in the new year with updates from CMS on site-neutral payments, another 340B-related lawsuit, and new recommendations from GAO. There’s been so much happening in the news since our December post, now that government employees are back to work after holiday recesses, that we’ll be splitting the January 340Buzz into two parts.

OPPS ruling and more legal battles to come

As we’ve previously reported, 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.

Now, yet another new lawsuit has cropped up. As the National Law Review reports, “While the industry waits for the Court of Appeals for the D.C. Circuit to rule on CMS’s appeal of the district court’s injunction of the 2018 and 2019 340B reimbursement cuts, a large group of hospitals has moved to enjoin identical reimbursement cuts for 2020 before they take effect in Advocate Bromenn Regional Medical Center v. Azar. The new complaint was filed in the U.S. District Court for D.C., which previously held that the 2018 and 2019 cuts are unlawful.”

As the National Law review notes, “Given that the 2020 reimbursement cuts are identical to those previously enjoined by the same district judge, an injunction of the 2020 OPPS reimbursement cuts seems likely, assuming plaintiffs have standing to sue at this time … For now, the 2018 and 2019 reimbursement rates remain subject to a stay, and barring an injunction from the district court, the 2020 reimbursement rates went into effect January 1, 2020.”

Update on site-neutral payments

Last September, a federal judge ruled that CMS overstepped its authority when it finalized a plan to extend a site-neutral payment policy to clinic visits, with the goal of paying the same reimbursement rates for evaluation and management services at physician offices as is paid at hospitals. As FierceHealthcare reported at the time, “CMS argues that the payment change would save Medicare beneficiaries $150 million per year, lowering average copays from $23 to $9. Those savings, however, are coupled with significant payment cuts to hospitals; the AHA estimated losses of $380 million in 2019 and $760 million in 2020.”

Then, on October 21, a federal judge reaffirmed her previous order for CMS to vacate the cuts. And yet, when the 2020 OPPS rule was finalized just 11 days later, on November 1, it revealed that the second year of CMS’ two-year phase-in of the site-neutral cuts will continue, despite the judge having vacated those very same cuts for the previous year.

Now, in a new development, National Law Review reports, “almost buried in an obscure December 12, 2019 MLNConnects CMS newsletter, CMS signaled that it would be repaying all hospitals for the 2019 OPPS payments that had been withheld.”

The CMS newsletter states, “CMS installed a revised Hospital Outpatient Prospective Payment System Pricer to update the rates being applied to claim lines. The revised Pricer went into production on November 4, 2019, and applies to claims with a line item date of service of January 1, 2019, and after. Starting January 1, 2020, and over the next few months, the Medicare Administrative Contractors will automatically reprocess claims paid at the reduced rate; no provider action needed.”

Based on this information, it looks as though CMS will repay the site-neutral payment cuts for 2019 while still moving ahead with implementing those same cuts in 2020. Sentry will continue to provide updates as this story develops.

GAO report recommends HRSA increase oversight of 340B

A new report from the Government Accountability Office (GAO) has “found weaknesses in HRSA’s oversight” of the 340B program “that may result in some hospitals receiving discounts for which they are not eligible,” GAO said.

GAO reviewed contract documentation for 258 of the approximately 1,700 nongovernmental (private, nonprofit) hospitals that currently participate in the program. Their findings included:

  • HRSA primarily relies on hospitals’ self-attestations to verify the existence of contracts with state and local governments (rather than directly reviewing the contract documentation).
  • HRSA does not conduct reviews to determine whether the documents submitted by nongovernmental hospitals are actual contracts. GAO found that 18 of the 258 hospitals reviewed submitted documents that did not appear to be contracts, such as descriptions of community programs, yet all of these hospitals were permitted to participate in the program.
  • When audits have identified hospitals that did not have contracts in place throughout the audits’ periods of review, HRSA has allowed hospitals to avoid audit findings by, for example, entering into new contracts with retroactive start dates.
  • HRSA’s contract reviews do not always include assessments of whether contracts are consistent with the statutory requirement to provide healthcare services to the 340B-specified low-income population.

The GAO report concluded that, “Given these weaknesses, some nongovernmental hospitals that do not appear to meet the statutory requirements for program eligibility are participating in the 340B Program and receiving discounted prices for drugs for which they may not be eligible.”

In an email alert to stakeholders, 340B Health said, “340B Health has several concerns about the analysis GAO used to generate its conclusions. For instance, the agency evaluated whether hospitals included certain elements in their contracts that are not required by the 340B statute,” the organization said. “In addition, GAO questioned HRSA’s use of certain data sources to determine eligibility that in fact are reliable measures of whether hospitals should be allowed to participate and that are widely used by other federal agencies.”

The 340B Health email continued, “HHS disagreed with GAO’s recommendation for HRSA to verify that every nongovernmental 340B hospital has a statutorily required contract with a state or local government. The department also disputed GAO’s finding that HRSA allows hospitals to avoid 340B audit findings by entering into new contracts while audits are being conducted. 340B Health … will be monitoring whether any new hospital documentation requirements emerge as a result of the recommendations. We recommend that all private hospitals take this opportunity to review their contracts with state and local governments to ensure compliance with these important eligibility criteria.”

Check back next week for part two of our January 340Buzz, which will take a closer look on a recent PhRMA report and the industry’s response, a bulletin from CMS for states on how to avoid Medicare duplicate discounts, updates on the ongoing battle to preserve the Affordable Care Act, and more.