sentry blog featured image 1 - November 340Buzz: Part B hospital payments rise, HRSA goes back on offense

November 340Buzz: Part B hospital payments rise, HRSA goes back on offense

It’s been a long and grueling slog for hospitals of all stripes in recent years, but 340B hospitals are getting some long-overdue treats for Halloween this year.

I’m referring, of course, to Medicare Part B reimbursements. On Oct. 20, the American Hospital Association announced that Medicare Administrative Contractors will return to paying average sales price plus 6% for all claims submitted with the “JG” modifier, reversing a nearly 30% cut in Part B reimbursements that began in 2018. This follows a federal judge’s Sept. 28 ruling ordering CMS to resume paying the higher rate and the Supreme Court ruling in June knocking down the cuts. The new ASP plus 6% rate will be retroactive to Sept. 28, CMS said.

Of note, CMS in an Oct. 13 newsletter said it was barred from applying the ASP minus 22.5% payments “for the rest of the year.” It said nothing about what the final 2023 OPPS payment rule, which comes out in November, will propose for next year (though it previously said it expects to pay ASP plus 6% in 2023). Does this mean CMS plans to survey hospitals in the spring as the basis for another reimbursement-rate change? Hopefully we’re just being needlessly paranoid here, but this will be something to watch.

Contract pharmacy brouhaha

The Health Resources and Service Administration (HRSA) sent letters dated Oct. 17 to AbbVie and Amgen warning the drugmakers they are in violation of the statute by restricting access to 340B drugs prices at contract pharmacies. These are the 10th and 11th such enforcement letters to manufacturers. The agency is giving both companies until Nov. 18 to return to 340B pricing at contract pharmacies.

Meanwhile, HRSA has referred Merck to the HHS Office of Inspector General, which will weigh whether to impose civil fines of up to $6,323 for each instance of overcharging for its contract pharmacy policy.

Merck is the eighth manufacturer to be referred to OIG, making it important symbolically, if nothing else. The OIG told lawmakers late last month it would not issue any fines against the seven manufacturers previously referred while it awaits rulings in the federal appeals cases. This new referral suggests that HRSA remains focused on flexing its limited enforcement muscle with the remaining drugmakers.

Two other developments:

  • UCB became the ninth manufacturer to sue HHS over its letters alleging the company was in violation of the 340B statute.
  • Oral arguments were scheduled for Oct. 31 for Eli Lilly in Chicago and Nov. 15 in the AstraZeneca, Novo Nordisk and Sanofi cases in a federal appeals court in Philadelphia. Meanwhile, 340B Report writes that oral arguments in the consolidated Novartis and United Therapeutics case strongly suggested that two of three judges on an appeals panel may side with the drugmakers.

More on drug costs

President Biden issued an executive order directing the Center for Medicare and Medicaid Innovation to find new payment and delivery models that would lower the cost of drugs for beneficiaries. The Center is to issue a report within 90 days, and it’s not hard to imagine that 340B could be cited as a prominent example of a program that lowers costs.

Third-party platforms

Claims-submission platform 340B ESP has provided another update on usage. The company now has more than 1,000 covered entities submitting claims, more than double the number from May, with more than 2,200 registered. Those users submitted 790,000 claims in September.

That usage of the platform is growing is hardly a surprise, considering that covered entities are feeling the financial pinch as the contract pharmacy dispute drags on. Still, 790,000 claims per month isn’t a lot in the larger picture.

I recently met with a 340B ESP representative and asked about why so many people who use the site tell me they see alarming numbers of claims rejected for no stated reason. Many users seem confused, understandably, about the terms of retroactive look-back periods manufacturers are enforcing to limit claims eligibility. Also, many users are discovering that manufacturers are changing their lists on 340B ESP of drugs that are subject to the exclusions and claims-submission requirements and are not communicating those changes to covered entities.

Speaking of third-party platforms, Kalderosremember them? — is back. The company unveiled its new Discount Hub solution, which it says was developed following “unprecedented demand and extensive input from the provider community.” Kalderos contracts with drugmakers to find claims where they may have paid duplicate discounts and asks providers, using the platform, to determine whether a 340B drug was dispensed for those claims as part of a “good faith effort.”

Kalderos also claims the platform, which replaces its Review tool, now has more than 4,200 unique covered entities with accounts.

The company had previously introduced a product called 340B Pay, designed to let manufacturers provide rebates on 340B-eligible drugs as opposed to the standard up-front discount. It has no known customers for that service. Kalderos sued the government last year over its position that manufacturers cannot impose conditions on 340B, and the case is currently on hold pending the outcome of the Novartis and United Therapeutics case.


The organization Advocates for Community Health is out with draft legislation that would create a separate discount drug program called 340C for community health centers, rural hospitals and federal grantees. The proposal seeks to distinguish those categories of covered entities from 340B hospitals to protect them from any changes made to the program.

“There is no defensible reason to sweep FQHCs into the ‘reform’ of the 340B program, particularly given that health centers are already required to reinvest any program revenue into patient services,” its website explains.

The proposal faces long odds to gain traction in a Congress that hasn’t been eager to wade into the contract pharmacy issue. It’s understandable why community health centers would want to preserve the discount drug program; 340B has proven itself highly effective for community health centers. But this is a potentially divisive move at a time when the healthcare safety net needs to stand strong together.

Make your voice heard

One way we can all stand together is to make our voices heard at the ballot box on Nov. 8, when state governorships and the balance of power in Congress are up for grabs. We’ve got a blog post that explores what’s at stake for 340B in this year’s midterm election.

Change is in the air, cooler temperatures are coming, and Turkey Day is mere weeks away. Let’s maintain the momentum to keep 340B on strong footing for the future!  It’s not a sprint to the finish, it’s a marathon, and we are only at the beginning mile-marker come January 1, 2023.


If you’d like to continue the conversation with me, schedule a time that works for you and I’ll be in touch!

Want to learn more?