May has been a busy time in the battle over the future of the 340B program.
In November of last year, the American Hospital Association filed a lawsuit against CMS to prevent the 340B program reimbursement cuts from taking effect. On December 29, the U.S. District Court for the District of Columbia dismissed the lawsuit, calling it premature, as the new price ruling had not yet gone into effect.
May 4th saw the beginning of the arguments on the appeal of that December 29 decision.
According to Modern Healthcare, those making arguments on behalf of the AHA said the new price cuts “fundamentally distorted the congressionally created system” in order to advance CMS’ “questionable policy agenda.” HHS, on the other hand, argued that the new reimbursement rates are “simply an adjustment to account for expansion” of the 340B program. There was also discussion of whether CMS had the legal right to implement such price cuts at all, Modern Healthcare notes, saying that the three judges hearing arguments “probed the Justice Department’s claims over when the agency’s authority is immune from outside challenge.”
The three D.C. circuit judges now have the option of resurrecting the AHA lawsuit and sending it back to a district judge, or ruling on the case themselves. As of the time of publication, no decision on the appeal had been reached. Review of the legal arguments could take additional time, with the possibility of an additional appeal based on the decision. This case will continue into the summer months, and entities are encouraged to pursue the administrative appeals process. In the meantime, entities should continue to bill claims utilizing the appropriate modifiers. States have begun to post guidance on utilizing both modifiers for Medicaid and Medicare simultaneously, as noted by North Carolina.
Ceiling price rule delayed another year
In last month’s 340Buzz, we noted 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. This is a fifth proposed delay to a regulation that had been originally frozen by the incoming White House administration on January 20, 2017.
On May 4th, HHS released the proposal for this latest postponement, which would “further delay the effective date of the final rule published in the Federal Register from July 1, 2018, to July 1, 2019.”
“HHS intends to engage in additional or alternative rulemaking on these issues,” according to the proposal, “and the Department believes it would be counterproductive to effectuate the final rule prior to issuance of additional or alternative rulemaking on these issues. HHS is in the process of developing new comprehensive policies to address the rising costs of prescription drugs. Those policies will address drug pricing in government programs, such as Medicare Parts B & D, Medicaid, and the 340B discount drug program.”
The announcement was formally published in the May 7 Federal Register, with a 15-day comment period ending May 22.
“There is a clear history of manufacturers overcharging 340B providers. Delaying enforcement of this rule will have a tremendous adverse impact on hospitals, clinics and health systems caring for low-income and rural patients,” said Maureen Testoni, Interim President and Chief Executive Officer of 340B Health, in a statement. “We are calling on the administration to enforce the law as written and make sure manufacturers aren’t overcharging for their products.”
On May 9, HHS mistakenly released a unified agenda that said that HRSA would be releasing “340B Drug Pricing Program Omnibus Guidelines.” By May 10 that information had been pulled from the unified agenda, and HRSA has reportedly said that it should never have been posted.
Senate hearings and a new House bill
Also on May 4th, the U.S. Senate Health, Education, Labor, and Pensions committee announced a second hearing on the 340B program scheduled for Tuesday, May 15. That hearing ended up focusing a great deal on the delayed ceiling price ruling and on concern over a 2005 OIG report, which showed $3.9 million in overcharges for the month of June 2005, and estimated that 14% of all drug purchases by 340B providers in one month were over the mandated ceiling price. During the hearing, “members of the Senate health committee asked government watchdogs why the Trump administration has delayed for the fifth time a rule that would set ceiling prices and why 340B hospitals don’t know what they ought to be paying for the discounted drugs,” according to Modern Healthcare. “Ann Maxwell, HHS OIG’s assistant inspector general for evaluation and inspections, said the office believes the Health Resources and Services Administration (HRSA) needs to share 340B drug ceiling prices directly with providers and states to make the 340B program more transparent.”
In news out of the House of Representatives, yet another new bill aimed at increasing 340B program oversight has been introduced, reports Modern Healthcare. Announced April 24th, the “340B Optimization Act” from Republican representatives Buddy Carter and Chris Collins “would require hospitals participating in the 340B drug discount program to disclose how much care they provide to low-income patients,” says Modern Healthcare.
The bill “would require 340B hospitals to report their low-income utilization rates for outpatient services and inpatient services, in the main hospital and at pediatric sites,” adds Becker’s Hospital Review.
“We strongly support transparency in federal programs, but it’s not clear this bill would help reach that goal,” said Beth Feldpush, senior vice president for policy and advocacy for America’s Essential Hospitals. “The bill also would widen the disparity between audits and other oversight for hospitals versus that for drugmakers in the 340B program, which puts hospitals and their vulnerable patients at a disadvantage and undermines the program’s value as a hedge against high drug prices.”
Following these congressional activities, Vizient, the parent company to Apexus, held a congressional briefing “340B: A Vital Part of America’s Safety Net.” The panel included four health care executives who provided insight into their 340B programs, and how they provide community programs to serve patients in part through the savings from the drug discount program. This illustrates the point that while the 340B program does not provide entities with direct payment, it allows them to spend less on needed drugs to help offset other costs the hospitals incur to take care of vulnerable patient populations—both insured (high-deductible plan patients that can’t afford their copays or coinsurance) and uninsured patients.
HHS asks 340B stakeholders for feedback
On May 11, the white house unveiled a blueprint aimed at reducing drug prices, which “focused mainly on the plan to merge Medicare Part B and Part D and let more players negotiate prices with drug companies,” according to an article in Modern Healthcare. The theme centered on manufacturer list price and the impact to both commercial and government programs.
The blueprint also directly addressed 340B as it relates to Medicare Part B savings to patients, and more specifically, a focus on charity care. “Some hospitals that receive drug discounts under the 340B program, designed to help safety net facilities, do not provide meaningful levels of charity care to low-income and vulnerable patients, ultimately pushing up drug prices for patients with private health insurance,” it reads. “Reforms would ensure hospitals paid under Medicare Part B that provide more than one percent of their patient costs in charity care could retain a discount under the 340B program.”
While charity care has been a focus, there is a missing part of the equation that the blueprint does not consider—uncompensated care incurred as bad debt. As the American Hospital Association notes, “Uncompensated care is an overall measure of hospital care provided for which no payment was received from the patient or insurer. It is the sum of a hospital’s bad debt and the financial assistance it provides. Financial assistance includes care for which hospitals never expected to be reimbursed and care provided at a reduced cost for those in need.” Uncompensated care excludes underpayment form Medicaid and Medicare. As a result of the recent Medicare Part B cuts, hospitals have noted they do not receive reimbursement to cover the cost of the drug purchased at 340B.
Additionally, on Monday, May 14, HHS released a request for information (RFI), asking “340B stakeholders to weigh in on measures that have been floated in Congress, including a ‘patient definition’ that would specify who qualifies for the drug discount, and increasing 340B regulatory authority of HHS. The agency also wants feedback on whether 340B’s growth has raised list prices in the commercial market and ultimately affected payers, including Part D plans,” Modern Healthcare reports. The three key areas in the 340B section of the RFI focus on program growth, patient eligibility, and duplicate discounts. Additionally, the RFI touches on value-based purchasing and the impact of discount programs like 340B, or rebates of other government programs, such as Medicaid and Medicare. Sentry encourages all covered entities and stakeholders to submit comment before the July 16, 2018 deadline.