As we move from summer into fall, there’s still quite a bit up in the air in the world of healthcare. Congress returned from recess earlier this month and has since been focused on negotiations to avoid a government shutdown (passing a stopgap just days before the September 30 deadline). This time around, much of what needed to be agreed upon was healthcare related and has the potential to impact covered entities directly. This month, we cover the many issues that we hope to see progress on before the end of the calendar year.
Congress back in session; from drug pricing to government funding
Congress returned from its summer recess on Monday September 9, and its first priority since then has been working to approve and agree upon a series of spending bills before existing government appropriations could expire on September 30.
With the House having passed 10 of its 12 appropriations bills and the Senate Appropriations Committee having advanced 10 of its 12 out of committee (but none reaching the floor), the Senate passed a stopgap spending bill on September 26 that will keep the government open through November 21.
Two of the bills up for debate were healthcare related and could have a direct impact on covered entities.
The first issue at hand is funding for federally qualified health centers (FQHCs), which was set to expire September 30. In February 2018, a spending bill was approved that included provisions for FQHC funding, providing $3.8 billion for FY 2018 and $4 billion for FY 2019.
A recent blog post from Theresa Berger, President and CEO of Ocean Health Initiatives, Inc., an FQHC in New Jersey, captures the importance of this issue. “I am gravely concerned for the future of our health care institutions. We are looking for support to help educate Congress about this dire situation, assuring that Health Centers can overcome this potentially catastrophic funding loss and remain safety net providers for underinsured and uninsured Americans,” writes Berger, who is also Board Chairwoman of the New Jersey Primary Care Association, which represents all 23 Health Centers throughout the state of New Jersey. “We are all part of a mighty voice that can be generated with the aid of patients and supporters, pushing forward our message urging Congress and our leaders to fix this funding cliff before it is too late.”
Berger continues, “If this funding cliff is not addressed, Health Centers across the country are looking at their programs being reduced by potentially 70 percent.” Because many FQHCs are participants in the 340B program, this potential funding loss, if not resolved, could negatively affect many covered entities across the country.
No decision on this issue has been reached as of the time of publication, and it will be up for debate again when the continuing resolution expires on November 21.
The second healthcare issue Congress was grappling with was potential Medicaid cuts to disproportionate share (DSH) hospitals. “Faced with $4 billion in cuts to Medicaid uncompensated care payments, starting in October, some hospitals warn they may have to close,” explains an article from HFMA. “The Medicaid DSH cuts, which were required as a funding mechanism under the Affordable Care Act (ACA), have been delayed four times but also inflated each time they were delayed. They are scheduled to total $43 billion by 2025.”
The planned cut of one-third of total Medicaid DSH funding in FY 2020 would be enough to reduce average safety-net hospital margins from 1.6% to -3%, Bruce Siegel, MD, President and CEO of America’s Essential Hospitals (AEH), said at a Capitol Hill briefing in May of this year.
HFMA reported, “AEH is pushing Congress for another two-year delay,” and a bipartisan group of more than 300 members of Congress have signed a letter supporting the delay.
“If Medicaid DSH cuts were implemented, it would have a devasting impact on these critical facilities, potentially leading many to close their doors. We have a moral imperative to ensure that doesn’t happen,” the letter reads.
On September 23, CMS finalized the rule that would put these cuts into effect, but with the passing of the continuing resolution on September 26, the Senate approved the two-year delay.
Much like FQHCs, DSH hospitals make up a large group of the covered entities that rely on the 340B program, and this cut would significantly impact those hospitals’ ability to deliver quality care to vulnerable populations.
With another Congressional recess beginning September 30 and running through October 14, only five legislative weeks remain before the continuing resolution expires on November 21.
HRSA Publishes 340B “Information Collection Request”
On September 6, HRSA submitted an Information Collection Request (ICR) titled, “340B Drug Pricing Program Reporting Requirements,” to the Office of Management and Budget (OMB) for review and approval. The request was submitted in compliance with the requirement for opportunity for public comment on proposed data collection in the Paperwork Reduction Act of 1995.
With the release of this ICR, “HRSA is proposing the collection of information related to the manufacturer audit guidelines” of covered entities that participate in the 340B program. HRSA identifies “drug manufacturers and 340B covered entities” as the likely respondents to the request.
Comments on the ICR are being accepted through October 7 and may be submitted to OIRA_submission@omb.eop.gov, or by fax, to 202.395.5806.
No word on Part B or Part D cuts, but states continue to be key
As we discussed last month, HHS has filed an appeal against a judge’s most recent decision that ruled the part B reimbursement cuts that took effect in January 2018 unlawful. And while HHS waits for a decision on that appeal, they’ve released the 2020 OPPS proposed rule, which once again pushes for Part B 340B cuts. This time CMS is proposing to continue the current reduced payment model as it stands, while simultaneously soliciting comments from the public and industry stakeholders about what to do regarding the cuts already in place, should they lose the current appeal.
On September 26, CMS issued a notice that it will collect information from covered entities about the prices they pay for eligible drugs. “Although a federal judge tossed the CMS’ planned 340B reimbursement cuts in December, the agency hopes that it will win an appeal and move forward with the changes,” explains an article from Modern Healthcare. “If that happens, the 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.”
On the Part D side, back in July, OIG released a report in which they found that in 2014, pharmacy benefit managers (PBMs) missed out on potential rebates of up to $74.7 million on Medicare Part D prescriptions because those drugs were filled through the 340B program.
The OIG report found that “tens of millions of dollars in rebates could have been generated had manufacturers and sponsors agreed that eligible prescriptions filled at 340B contract pharmacies would receive rebates.” In other words, if the prescriptions had been filled at non-340B pharmacies, the rebates provided to the PBMs would have been upwards of $74 million in 2014 alone.
The report’s “factual conclusions suggest that the Medicare program could see significant savings if manufacturers did not include the 340B pharmacy carve-out provisions in their Part D contracts with sponsors or if coding was used for Part D beneficiaries’ prescription drugs to identify 340B-eligible claims,” according to an article from JD SUPRA. The article also suggests that one possible result of the OIG report might be that, “in order to maximize Part D rebates, all Part D prescription drug fulfillment could be shifted away from 340B-associated pharmacies, which would rob 340B covered entities of a portion of the financial benefit of their contract pharmacies.” Sentry agrees with the conclusion the JD SUPRA article reaches, which is that “340B covered entities, Part D program sponsors and drug manufacturers should monitor the effects the OIG’s report has on their operations.”
No further updates regarding these Part B or Part D issues were available as of the time of this publication.
While we await more news on the federal front, states continue to demonstrate the importance of 340B in serving their communities. As we have seen since the begin of this year, states are enacting language to protect covered entities as well as the states’ ability to protect drug pricing.
North Carolina is now added to this list, with the enactment of House bill 106 to support prison inmate healthcare through the use of 340B. The bill also calls for use of telemedicine as well as collaboration with the University of North Carolina Health System for provider visits to reduce the costs of HIV, hepatitis, and other STD-related healthcare services. The statute takes effect October 1.
Lastly, California Department of Health Care Services Director Jennifer Kent announced on September 10 that she would be resigning as head of the state’s largest agency, which provides healthcare benefits for 13.2 million low-income people. This position will be integral in California Governor Newsom’s proposed plans for 340B and in overseeing Medi-Cal, the state’s healthcare program that serves 13 million low-income and vulnerable residents. At the time of publication, Kent’s successor was unknown.
More to come
Yet another issue still in limbo is the forthcoming International Pricing Index (IPI) model for Medicare Part B drug reimbursement. The proposed new payment model would encourage private-sector vendors (such as specialty pharmacies, co-op groups of hospitals or health systems, or GPOs) to negotiate with pharmaceutical manufacturers for the purchase of Medicare Part B drugs, including specialty drugs, infusion drugs and biologics. Hospitals would then purchase drugs from whichever private vendor they choose as opposed to buying directly from manufacturers.
CMS originally said that the next step following the advance notice it released in October of last year would be a proposed ruling, to be released in June 2019; that date was then pushed to August, but no further updates have come so far.
It remains to be seen how much progress will be made on any of the issues discussed here before the end of the calendar year. With additional recesses planned for half of October, some time away in November for the Thanksgiving holiday, and again the last two weeks in December, there’s not much time left this year for Congress to achieve significant momentum on these fronts. And as we move into the new year, the presidential election will certainly take center stage, with healthcare remaining a key focus.
Sentry will continue to advocate for its 340B customers and provide updates as they become available. In such a volatile landscape, it’s good to know we’re all in this together.