February 340Buzz

The 340Buzz: New studies condemning 340B program miss the mark

In late January, two studies were released that claim to either “prove” that the 340B Drug Pricing program is not helping patients the way it was intended, and/or that the Medicare reimbursement cuts recently implemented by CMS will be beneficial to hospitals and patients. But Sentry, along with the American Hospital Association and hospitals across the country, recognizes that these studies do not paint a full picture.

NEJM study

A study published in the New England Journal of Medicine (NEJM) on January 24 draws the conclusion that 340B reimbursement incentives are motivating hospitals to buy private physician practices, especially in oncology, to reap the benefits of reimbursement for high-cost oncology drugs. The study also claims there is no evidence that participation in the 340B program actually expands care for low-income populations.

However, upon closer look, flaws in both the design and conclusions of this study can be found. The study’s authors, using a regression-discontinuity design, reach the conclusion that 340B is not resulting in care for vulnerable populations based on the fact that 340B eligibility was not associated with mortality differences among Medicare patients. Sentry understands that the 340B hospitals it serves work to improve mortality and offer them the best quality of care, and is concerned with the fact that the study did not consider additional metrics beyond mortality differences, including readmission rates, prescription adherence (340B enables disadvantaged patients to receive necessary prescriptions regardless of their ability to pay), and number of acute adverse events in 340B-eligible patients with chronic diseases. All of these factors, had they been considered in the study, could help point to areas where 340B is making a significant impact.

340B Health also took issue with the NEJM study. The organization said in a statement that the study’s implications were “misleading,” because the study excluded 340B hospitals with a disproportionate share hospital (DSH) adjustment percentage greater than 21.75 percent. “According to data from 2015 Medicare cost reports, this narrow study population excludes roughly one-third of 340B DSH hospitals, including many large institutions that treat very high volumes of low-income patients,” the statement notes.

The American Hospital Association (AHA), in its response to the study, echoed these concerns. “The authors examined a sliver of 340B hospitals – just 20 percent – yet made expansive statements about the implications of the program. Regression-discontinuity analyses may have strong internal validity but weak external validity – that is, the results may not be extrapolated to program participants not included in the analysis,” the AHA said.

Perhaps most alarming, it seems that the NEJM study’s authors have overlooked a large portion of the vulnerable population in their research—the very population the 340B program was intended to serve. As the AHA points out, “The study relies on fee-for-service Medicare data only to make claims about the impact of the 340B program on low-income individuals, ignoring that the vast majority of low-income people are not enrolled in Medicare.” The AHA goes on to note that the largest subgroup of low-income individuals in the country—35 percent—are children; only 23 percent of low-income individuals are elderly or disabled and therefore potentially eligible for Medicare. By considering only fee-for-service Medicare claims, the NEJM authors have—intentionally or unintentionally—overlooked the impact of the 340B program on some of the people who need it most.

COA study

On January 29, Avalere Health released a study commissioned by the Community Oncology Alliance (COA). The study concludes that as a result of the recent 340B program changes, 85% of hospitals would receive higher Part B payouts, which, in theory, would minimize the reductions from cuts to 340B discounts.

However, Tom Nickels, the AHA’s executive vice president for government relations and public policy, spoke out against the study to FierceHealthcare. Nickels called the study “an attempt to again justify the industry’s agenda to misdirect and mislead.” He continued, “The dramatic reduction to 340B drug payments is not permitted by the Medicare statute and the agency cannot concoct its own reimbursement rules that effectively eviscerate the benefits and intent of the 340B program. That’s why we continue to pursue our legislative and legal strategies, and expect to prevail in holding the agency accountable for its overstepping.”

As far as the “legal strategies” Nickels is referring to, on January 30, the US Court of Appeals accepted a request by the AHA and the five other healthcare groups involved in the suit against CMS for an expedited brief. A court date has not yet been set, but all briefs and replies must be received by April 2.

As Modern Healthcare reports, the new CMS ruling cuts drug reimbursement to 340B providers by almost 30%, and “while beneficiaries will pay less for their share of the drug, their cost-sharing for other Part B services will go up, because the CMS is implementing the payment cut in a way that doesn’t change aggregate costs.” Joanna Hiatt Kim, AHA’s vice president of payment policy, told Modern Healthcare, “The funds are meant to expand access to care, so this cut will hurt those people who need the care; it completely undermines the intent of program. The pharmaceutical industry has an agenda to mislead the public and policymakers about what’s really going on with 340B.”

While COA has previously claimed that oncologists at hospital-owned 340B sites prescribe more costly drugs and regimens due to the financial incentives involved, the COA’s recently expressed criticism of the current administration’s budget seems to conflict with their earlier statement. “COA completely disagrees with the White House proposal to cut provider reimbursement for new drugs in Medicare Part B. For community oncology practices this would put reimbursement for many drugs below acquisition cost, jeopardizing the ability of oncologists to deliver the therapies and causing the practices to close their doors,” the statement reads. “it is insulting to suggest that oncologists paid under Medicare Part B practice medicine based on financial profit incentives, not the best interests of their patients.” It seems that the very argument that 340B hospitals have been using in objecting to the new program cuts that took effect January 1, is now the argument COA is using to object to reimbursement cuts that will affect the COA.

Missing the big picture

As 340B Health’s statement noted, there is a fundamental misunderstanding of the program’s intent at the root of these misguided studies. When narrowly (incorrectly) defined as a program intended solely to pass discounts on prescription medications directly to patients, it’s easy to overlook the many other ways in with 340B-eligible hospitals use the savings to help vulnerable populations. “The metrics used in the study to evaluate 340B hospitals do not fully measure the many ways hospitals use their savings to treat low-income patients through the provision of uncompensated care and unreimbursed services,” reads the 340B Health statement. “In a 2016 survey of 340B hospitals, administrators reported utilizing savings for a variety of patient services including medication therapy management, discharge planning, and patient assistance and counseling programs.”

It is clear from listening to these statements and to hospital associations, such as Texas Hospital Association, that there are many downstream effects on how charity care calculations will be done in the future that need to be understood. With the 340B program taking the spotlight with this year’s administration and Congress, covered entities will need to measure their patient success stories and voice their concerns.

Sentry continues to support its 340B-eligible hospital customers as they work tirelessly to help vulnerable patients in a myriad of ways.