In the weeks since our last 340Buzz, hospitals and industry associations have begun to speak out, making their voices heard in response to CMS’ proposed ruling issued in July to cut reimbursement rates for drugs acquired under the 340B program. The proposed rule would cut reimbursement from the current ‘6% on top of the average sales price’ to ‘22.5% less than the average sales price.’ In short, CMS and pharmaceutical manufacturers and advocates believe the proposed rule would go a long way towards controlling the rising cost of pharmaceutical products and curbing perceived misuse of the savings resulting from the program, whereas the rule’s critics (hospitals and hospital advocates and associations) claim that it doesn’t directly address the rising drug cost problem and puts safety net patients at risk of losing access to drugs and services. Additional new updates include a further delay on the Civil Monetary Penalties Regulation and a Senate vote to fund the 340B program at $10.2 million for FY 2018.

Industry urges CMS to reconsider

On Monday, August 21, the CMS Advisory Panel on Hospital Outpatient Payment (HOP) held a public meeting in which the ruling was discussed. According to the CMS website, panel members are voluntary, “full-time employees of hospitals, hospital systems, or other Medicare providers,” who “are representative of providers.” The panel requested that CMS rescind the proposal entirely.

An article from the American Hospital Association reports that HOP “recommended that CMS collect data from public comment and other sources about the proposal’s impact and how CMS should shift the savings if such a cut were implemented. In addition, the HOP Panel urged CMS to assess the proposal’s regulatory burden, especially from a proposed CMS modifier that differs from some state Medicaid program methodology.”

Representatives from MedStar Health, a non-profit, community-based health system serving the Baltimore/Washington region, spoke during the meeting about how it uses 340B savings “to help fund a no-charge clinic for uninsured patients in Baltimore; an after-hours clinic that provides free health care at a Washington, D.C. homeless shelter; and subsidies for discharge prescriptions and transportation for underserved populations in southern Maryland,” according to the AHA article.

Emily Cook, a partner with McDermott Will and Emery, said that “the panel’s recommendation tracks with many of the concerns expressed by 340B hospitals. But she added that CMS has not consistently adopted the panel’s recommendations,” according to an article from Inside Health Policy.

HRSA proposes 340B penalty rule delay (again)

In late August, HRSA announced that it would delay, yet again, 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.

The regulation was originally frozen by the incoming White House administration on January 20 of this year, and has since been delayed until March 21, then May 22, then October 1. This fourth, most recent delay postpones the effective date of the rule until July of 2018. HRSA says the delay will 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.

Senate appropriators vote to fund 340B program at $10.2 million for FY 2018

Finally, on September 7, a recent blog post from 340B Health, an association of hospitals and health systems in the 340B program, reported that the Senate Appropriations Committee approved legislation that includes $10.2 million to run the 340B drug discount program in the new fiscal year that begins October 1. The blog post notes, “It is unclear if Congress will ultimately pass a freestanding healthcare appropriations bill for fiscal 2018 or provide funding through an omnibus spending bill.”

Covered entity inquiry by Congress – a sign for what is ahead in the new FY2018

All 340B stakeholders must continue to be vigilant in monitoring their 340B program. Recently, the House Energy & Commerce Committee Chairman and Oversight Subcommittee chairman asked a small group of covered entities for financial and clinical information regarding their participation in the 340B program to better understand how they are using their savings. Sentry prepared a guide to help our affected customers collect the data, which was due September 22nd. 340B program management and reporting is essential to the future of 340B. From covered entities to vendors that support the day to day operations, we must continue to work together to strengthen the program and identify challenges and opportunities to preserve the program for the future of our nation’s most vulnerable. Understanding your operations, the policy implications, and the software tools that are utilized must go hand in hand to maintain compliance and assurance to foster outstanding stewardship.