20200318 March 340Buzz - March 340Buzz: A different kind of March madness

March 340Buzz: A different kind of March madness

This month, we take a look at the bracket, which includes the latest MedPAC committee meeting, state legislation that impacts drug prices and 340B, the Supreme Court takes up the ACA case and CMS’ planned survey for covered entities regarding how 340B savings are spent.

MedPAC discusses Medicare part B

The Medicare Payment Advisory Commission (MedPAC) held a committee meeting March 5-6 on the topic of separately payable drugs in the hospital outpatient prospective payment system.

“In the OPPS system, the cost of most drugs is packaged into the payment rate for the related service. However, the OPPS also has two policies for paying relatively costly drugs separately. Drugs must meet requirements to qualify for these programs, but these requirements could be modified to better target drugs for which separately payable status is beneficial,” according to the meeting brief.

With that in mind, the meeting was intended to evaluate the requirements that CMS has developed for both pass-through drugs and separately payable non-pass-through drugs and compare these requirements to the requirements in other programs for separately payable drugs and medical devices as well as requirements discussed in the relevant literature. There was no mention of 340B during the meeting.

“The commission also looked at the effects of the 340B drug discount program on health system acquisition of physician practices,” reported Healthcare Dive. “It found there could be a small influence, but the effect was overwhelmed by more general trends in the prices for 340B drugs.”

States attempt to tackle high drug prices

Two states, Minnesota and Vermont, have recently announced initiatives aimed at lowering drug prices. While both states include mention of 340B in those efforts, the approaches they suggest are very different.


In mid-February, Minnesota Attorney General Keith Ellison unveiled a task force report “that makes 14 separate recommendations for lowering prescription drug prices ranging from new legislation to stronger enforcement action,” reports Minnesota ABC affiliate KSTP.

“The recommendations from the bipartisan task force include proposals to make the markets work better for people, to use the government’s purchasing power to make drugs more affordable and accessible, and to require more transparency and accountability in the market,” KSTP reports.

Among the task force’s recommendations is, “Optimize and expand Minnesota’s use of the federal 340B Drug Pricing Program, which allows health care providers to purchase drugs at dramatically reduced prices.”


“When the state’s two major insurance companies asked for rate hikes of more than 10%, they blamed prescription drug costs, which are determined by private pharmaceutical companies. So did hospitals, when they sought budget increases from regulators last summer,” according to Valley News. “In response, lawmakers, advocates and insurance companies are calling for more aggressive tactics to keep costs in check.”

At first glance, this effort seems to mirror the initiatives in Minnesota. Some of Vermont’s proposed statutory requirements include placing a cap on out-of-pocket insulin costs, asking regulators to consider setting limits on drug prices, importing drugs from Canada, and increasing the use of generic drugs.

Like Minnesota, Vermont’s plan also includes mention of the 340B program, but with a much different approach. “Legislation in front of the House Health Care Committee, H.B. 787, would require hospitals to report the money they make through the 340B program and explain how that money was used,” Valley News reports. “That bill is up in the air, according to Sen. Chris Pearson, P/D-Chittenden, a sponsor of the Senate version. Sharing and limiting hospital revenue from the program makes sense” at some locations, “but it could undermine the financial stability of a smaller hospital.”

Supreme Court to take up ACA case

On March 2, the Supreme Court said it will hear the case attempting to overturn the Affordable Care Act.

“The decision means the justices will add the case to their schedule for the next term, which starts in October,” reports Healthcare Dive.

As we’ve mentioned previously, The ACA expanded the types of hospitals that were eligible to participate in the 340B program to include critical access hospitals, rural referral centers, and sole community hospitals, so If the entire ACA is repealed, this could impact these health centers and have a ripple effect that would be detrimental to patients.

CMS’ covered entity survey moves forward

While CMS continues to wait on the outcomes of various lawsuits and appeals related to the Medicare part B cuts that first took effect in 2018, The agency is preparing for the best-case scenario, seeking to implement a survey that would collect information from covered entities on the acquisition costs of 340B drugs. As of the time of this publication, the survey is currently under review by the Office of Management and Budget (OMB).

If the OMB approves the survey, CMS plans to distribute it to covered entities on March 23 and close the data collection period on April 10.

“340B Health urges OMB to reject CMS’ survey proposal to collect drug acquisition cost data from 340B hospitals,” said Maureen Testoni, President and CEO of 340B Health in a letter to the OMB on March 9. The letter also said that the survey would harm safety net hospitals and their patients, would not produce useful data to accurately calculate average drug acquisition costs for 340B, would fail to generate a statistically significant estimate of hospitals’ average acquisition costs, and would place a massive burden on 340B hospitals.

Sentry echoes these concerns and believes that the time period allotted between March 23 and April 10 is not nearly sufficient for covered entities to gather and report the required data, given that many safety-net hospitals operate with lean resources and may only have one staff member on-hand devoted to 340B program management.

Covered entities and COVID-19

While we normally would be preparing for college basketball final four and baseball season beginning, our nation faces a pandemic that will change the course of Congress in the coming months and 340B will be more crucial than ever. Click here for additional information on the role covered entities play in dealing with the COVID-19 pandemic.