April 2018 340Buzz

The 340Buzz: Changing seasons, but no change yet to 340B program

With spring upon us and new life blooming everywhere, efforts to reform 340B, or overturn the CMS reimbursement cut ruling, remain in hibernation.

New study proves value of 340B

On March 12, health policy research firm L&M Policy Research published a new study, commissioned by 340BHealth, titled “Analysis of 340B Disproportionate Share Hospital Services to Low Income Patients.” Study researchers examined Medicare data from fiscal year 2015 for 955 340B hospitals and 1,505 non-340B acute-care hospitals. High-level findings include:

  • 340B disproportionate share hospitals (DSH) treat significantly more low-income patients than non-340B hospitals, with the average low-income patient load for 340B DSHs being 41.8%, compared to 27.2% for non-340B hospitals.
  • 340B DSH hospitals represented 38% of hospitals in our study, but were responsible for 60% of total unreimbursed and uncompensated care.
  • On average, 340B DSH facilities provided 27.4% more unreimbursed and uncompensated care than the comparison acute-care hospitals (ACH).
  • When compared to non-340B ACHs of similar size, 340B DSHs provided more unreimbursed and uncompensated care, including charity care, bad debt, and public payer shortfall amounts.

Overall, according to the survey, “340B DSHs provided in excess of $26 billion in unreimbursed and uncompensated services, compared to $17 billion provided in total by all non-340B hospitals studied, for a difference of $8.9 billion, despite fewer 340B hospitals. This translates to an average additional cost for unreimbursed and uncompensated care of $9.3 million for each 340B DSH.”

In addition, the study cites data from the American Hospital Association that “indicates that 340B hospitals provide community health and other specialized services at a proportionally higher rate than do non-340B hospitals, further enhancing these facilities’ contributions as safety net facilities, as they provide a wide range of services to low-income and otherwise vulnerable patient populations.”

These findings are consistent with what Sentry has been hearing from its 340B customers for many months. As political debates rage on about the future of the 340B program, Sentry continues to support safety net hospitals as they continue the crucial, life-saving work highlighted in this study. We applaud the work of organizations like 340B Health and L&M Policy Research in bringing these important issues to light.

Senate 340B oversight hearing

In recent 340B legal updates, the Senate Health, Education, Labor and Pensions Committee held a hearing with hospital and pharmaceutical representatives on the topic of 340B program oversight on March 15.

During the hearing, American Society of Hospital Pharmacists (ASHP) Government Relations Director Joseph Hill gave a statement that “emphasized that the program helps maximize scarce federal resources while providing low-income and uninsured patients access to lifesaving medications,” ASHP reports. “Hill’s testimony noted that savings from the 340B program fund critical pharmacist-provided care services such as treatment for opioid abuse, medication management services, and disease management for chronic diseases. Hill also stressed the importance of program compliance and highlighted ASHP’s efforts to ensure that covered entities use the program in a manner consistent with its purpose.”

Other guests at the hearing included America’s Essential Hospital CEO Bruce Siegel, MD; Carolinas Health Centers CEO Sue Veer, representing the National Association of Community Health Centers; and policy and research vice president Lori Reilly, of the Pharmaceutical Research and Manufacturers of America (PhRMA).

Senator Alexander (TN) opened the hearing with comments about the intent of the program and emphasized recent studies providing examples of patients seeing the direct benefit of 340B. It was clear from the various senators that spoke that there is a divide amongst the committee regarding how 340B is seen.

Senators Cassidy (LA), Jones (AL), and Young (IN) aligned their comments with six studies from various groups (both government and non-government) that have been conducted since 2012, each wanting to better understand hospital benefit from the program. Senators Murray (WA), Hassan (NH), Smith (MN), Kaine (VA), and Warren (MA) all were concerned with the rationale for making seemingly unnecessary program changes to 340B. Their comments centered around the impact the program has had on their respective states, and shifted focus to the responsibility of drug manufacturers.

Senator Alexander, as hearing chair, was both sympathetic and eager to find a balance. He ended the hearing by noting that an additional hearing would take place, though a date has not been set. Sentry will continue to monitor the committees with 340B jurisdiction.

More HHS delays

On March 28, it was announced that HHS had made a fifth request to delay the 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation, which would penalize drug manufacturers for intentionally overcharging participating safety net hospitals for 340B drugs.

As noted in a previous edition of the 340Buzz, the regulation was originally frozen by the incoming White House administration on January 20, 2017, and was then delayed until March 21, then May 22, then October 1 of 2017. A fourth delay postponed the effective date of the rule until July of 2018.

At the time of the fourth delay, HRSA said such a delay would allow time to “continue to examine important substantive issues,” and that “requiring manufacturers to make targeted and potentially costly changes to pricing systems and business procedures in order to comply with a rule that is under further consideration and for which substantive questions have been raised would be disruptive,” as reported by K&L Gates.

The most recent HHS request for this fifth and latest delay did not include a new date for the rule to go into effect, reports Modern Healthcare.

A 340B champion is honored

 West Virginia Republican Congressman David McKinley has been honored with the America’s Essential Hospitals Congressional Leadership Award for his work on pro-340B House Bill H.R. 4392, reports local Vest Virginia news website WTRF.com.

On November 14 of last year, McKinley and Rep. Mike Thompson (D-CA) introduced H.R. 4392. The bill, which has 194 cosponsors as of publication time, asks HHS to maintain current 340B rates, rather than implement the recently announced ruling, but does not seek to change the claim modifier requirement to track which drugs are obtained under the 340B program. McKinley said in a statement at the time of the bill’s introduction, “CMS’ misguided rule jeopardizes the ability of rural hospitals to provide vital services. This bill ensures that hospitals are able to continue providing affordable services, and gives rural families peace of mind.”

H.R.4392 continues to gain support. The bill will continue to rest at this time, until the U.S. Court of Appeals in the District of Columbia hearing (see below). Dependent upon the outcome, we could see additional activity with this bill later in the year.  Sentry continues to monitor congressional activity on this bill and others, in order to engage our development teams in preparation for the future.

Spring forward

The next big milestone for 340B is expected May 4, when arguments will be heard on the appeal of the December 29 decision, by the U.S. District Court for the District of Columbia, to dismiss the American Hospital Association lawsuit that had been filed against CMS to prevent the 340B program reimbursement cuts from taking effect. Additionally, the congressional appropriations meetings will also begin to review report language that will indicate the barometer for the next quarter. With the speaker of the house announcement and elections approaching, these actions will be a leading indicator for congressional interests. The current White House administration’s interest in drug pricing will continue to be monitored.

Until that time, and no matter the outcome of the appeal or other needs that arise, Sentry remains steadfast in its support for safety net hospitals. We will continue to provide our 340B customers with the tools and support necessary to maintain compliance and maximize savings under the 340B program. Our most recent product launch, this April, provided additional enhancements to support the Medicare Part B modifier requirements.