Tag: 340B

From: AHA News – 1/15/16

The AHA last week criticized as “misdirected” and a blow to patient care the Medicare Payment Assessment Commission’s (MedPAC) recommendation that Congress reduce Part B drug payment rates to hospitals participating in the 340B Drug Pricing Program.

At its Jan. 14 meeting, the commission voted 14 to 3 to reduce Part B drug payment rates to 340B hospitals by 10% of the average sales price of the drugs. The proposal would redistribute the estimated $300 million in savings to hospitals providing uncompensated care services.

Another recommendation would require Medicare to distribute uncompensated care payments made under the disproportionate share hospital program based on data from Schedule S-10 of the hospital’s Medicare cost report, where hospitals outline uncompensated-care spending. The change would be phased in over three years. The Centers for Medicare & Medicaid Services currently distributes the funds based on Medicaid and Medicare Supplemental Security Income data.

The AHA and many other hospital and health system leaders expressed strong disappointment in the recommendations, which will be formally submitted to Congress in March.   

“MedPAC is penalizing hospitals and the patients they serve instead of addressing the real issue, the skyrocketing cost of pharmaceuticals,” said AHA Executive Vice President Tom Nickels. “We are disappointed MedPAC has ventured so far afield from their mission.”

Before MedPAC’s vote, the AHA laid out its concerns about the proposals in a detailed Jan. 11 letter to the commission. The association urged MedPAC to withdraw its draft recommendation.

“This recommendation is outside of the scope of MedPAC’s mission, lacks a clear purpose and penalizes certain hospitals for their ability to obtain discounts on the items and services they purchase,” wrote Ashley Thompson, the AHA’s senior vice president for public policy analysis and development. She urged the commission to “undertake an analysis of the trend of rapidly increasing drug prices, which presents the Medicare program and its beneficiaries with remarkable challenges.

In its letter to MedPAC, the AHA noted that Congress created the 340B Drug Pricing Program 23 years ago to allow eligible entities to stretch limited resources to expand access to care for vulnerable patients. “The 340B program is crucial to helping provide low-cost pharmacy services to patients, and it remains a critical component of helping safety-net health care providers create healthier communities –especially in the face of rapidly increasing drug costs,” the AHA wrote MedPAC. “Many 340B hospitals treat a high number of low-income patients, face cuts to disproportionate share hospital payments and have negative operating margins.”

The association faulted the commission for “venturing beyond its scope” by seeming to question Congress’s design of the 340B program. The AHA also said it is unclear exactly what MedPAC’s proposal is meant to accomplish. At its December meeting, commissioners expressed concern about the growth of the program and suggested tying 340B savings to hospitals that provide more compensated care. Commissioners also indicated an interest in reducing the Part B drug copayments of Medicare beneficiaries.

But the commission offered no evidence that its proposal would result in better or more care for elderly patients, said the AHA. It also pointed out that 340B hospitals provide uncompensated care that is about 95% higher than other hospitals as a percent of their revenue.

And the AHA said MedPAC’s recommended policy changes “would not directly benefit many Medicare beneficiaries, dually eligible Medicare beneficiaries included, but would instead penalize 340B hospitals, including those serving high numbers of dually eligible beneficiaries,” the AHA stated.

The AHA said it was wrong for the commission to propose cutting hospital payments “as a back-door method of obtaining discounts on drugs,” and suggested it review alternatives that would let Medicare access discounts directly through Medicare Part D.

The association also pointed out that the Health Resources and Services Administration (HRSA) on Aug. 28 proposed comprehensive changes to the 340B program. HRSA’s proposed omnibus guidance, issued as a notice, covers entity eligibility; patient definition; Group Purchasing Organization prohibition; contract pharmacy; duplicate discounts; and covered entity audits. It also includes enhanced program integrity requirements for pharmaceutical manufacturers participating in the 340B program.

“MedPAC should refrain from considering any recommendations related to the 340B program until HRSA finalizes these programmatic changes,” the AHA told the commission. 

The AHA recently released an animated video detailing how hospitals use 340B savings to they receive from discounts on high prescription drug prices to reinvest in programs that enhance patient services and access to care. 

AHA Critical of MedPACS’s “misdirected” 340B Payment Proposal

From: Modern Healthcare – 10/15/15

Drugmakers do not have to sell orphan drugs to rural and cancer hospitals at a discount under the federal program known as 340B, a judge ruled Wednesday. The pharmaceutical industry’s victory in the case disappointed many hospitals.

Hospital groups say the decision could lead to higher prices for patients and affect the amount of uncompensated care the hospitals can provide. They also say the decision could limit access to some medications and harm already struggling rural hospitals.

The 340B program requires drug companies participating in Medicaid to discount outpatient medications for hospitals and clinics to help low-income patients.

The drug industry’s lobbying group, Pharmaceutical Research and Manufacturers of America, has twice sued the Obama administration over its attempts to extend the discounts to orphan drugs, which include some of the most expensive medications on the market, when they’re used for non-orphan indications.

The Affordable Care Act expanded access to 340B discounts but also excluded orphan drugs from the program. HHS’ Health Resources and Services Administration, however, interpreted the law to compel drugmakers to give certain hospitals discounts for those drugs when they’re used to treat something other than the rare diseases and conditions they were developed to target. The discounts applied to rural, cancer, critical-access and sole community hospitals.

Some orphan drugs are mostly used to treat common ailments despite being originally designed to treat rare ones. Prozac, for example, is widely used to treat depression but is designated as an orphan drug for the treatment of autism and body dysmorphic disorder in children and adolescents.

PhRMA has argued in court documents that the policy undermined incentives for drugmakers to continue to research and develop new orphan drugs. U.S. District Judge Rudolph Contreras in Washington, D.C., decided Wednesday to vacate an HHS interpretive rule that the administration issued to salvage the policy. He wrote that the rule was contrary to federal law. A previous court ruling invalidated the policy when it was in a different form.

“PhRMA supports the original intent of the 340B program and remains committed to working with the administration and Congress to reform the 340B program to ensure it reaches the vulnerable or uninsured patients it was intended to help,” Mit Spears, PhRMA executive vice president and general counsel, said in a statement. “To achieve this important objective, it is critical the program operates in a manner consistent with the clear and unambiguous direction of Congress.”

An HHS spokesman said HHS was reviewing the ruling Thursday but declined to comment further. HHS could appeal the decision. Hospital groups, however, roundly criticized the decision saying it will have troubling consequences for the nation’s poor and the hospitals that serve them.

“This decision comes at a steep cost for the vulnerable patients cared for by rural and cancer hospitals,” Tom Nickels, executive vice president of the American Hospital Association, said in a statement. “Sadly, the biggest beneficiary of this ruling is the pharmaceutical industry—it does nothing to help either patients or taxpayers.”

Rural hospitals will now have to pass the costs of the drugs to patients in some cases, and they might not always be able to keep certain drugs on hand because of the expense, said Diane Calmus, government affairs and policy manager with the National Rural Health Association.

The decision could also influence the amount of uncompensated care such hospitals provide. As part of the 340B program, hospitals are allowed to sell drugs they buy through 340B to insured patients for more than they paid and use the margin to fund uncompensated care.  Each year, hospitals purchase $7.5 billion worth of drugs through 340B and generate $3.8 billion for uncompensated care through the program, said Randy Barrett, a spokesman for 340B Health, which represents 1,000 hospitals that participate in the program.

“If they can no longer get 340B pricing and can no longer get that discount, they’re going to have less money available to pay for all these services,” Barrett said.

Hospitals have faced mounting criticism that the program has veered from its intended purpose and the money is not necessarily supporting the unreimbursed costs of caring for low-income patients.

A 2014 analysis released by Avalere Health and sponsored by pharmaceutical industry-backed group Alliance for Integrity and Reform, found that about two-thirds of 340B hospitals provide less charity care than the average U.S. hospital. A analysis conducted this year, however, by healthcare policy consulting firm Dobson DaVanzo and Associates came to a very different conclusion, saying 340B hospitals provided almost twice as much care to Medicaid and low-income Medicare beneficiaries than other hospitals.

Calmus said rural hospitals in particular rely on the 340B money to provide uncompensated care.

“If you look across (the country) at the crisis of rural hospital closures, rural hospitals are not hospitals that are wasting the resources that they have,” Calmus said. “These are hospitals using every last resource they have to help a very vulnerable population.”

Judge Sides with Drugmakers and Narrows 340B Drug Discounts