Largest Hospital Group Asks Congress to Reject Administration's "Harmful" 340B Policy Requests

Your 340B Report for Thursday May 28, 2020

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The American Hospital Association has asked Reps. Rosa DeLauro (D-Conn.), left, and Tom Cole (R-Okla.), the majority and minority leaders of the House health appropriations subcommittee, to reject “harmful proposals” in President Trump’s budget for fiscal year 2021 “that would diminish the value of the [340B] program.” The congressional appropriations process is slowly getting back on track after the COVID-19 pandemic’s initial shock.

Largest Hospital Group Asks Congress to Reject Administration's "Harmful" 340B Policy Requests

Congress should reject the Trump administration’s “harmful” requests to impose a 0.1 percent user fee on providers to help fund the 340B program, to make providers report how they use their 340B savings, and to give the Health Resources and Services Administration (HRSA) broad regulatory over 340B, the American Hospital Association (AHA) said in a letter last week to the top Democrat and Republican on the U.S. House health appropriations subcommittee.

AHA said the user fee would “redirect scare resources” away from services and programs for vulnerable patients. It said requiring providers to report how they use their 340B savings would duplicate voluntary efforts to expand transparency, such as AHA’s own 340B Good Stewardship Principles. “More than half of all eligible 340B hospitals have already voluntarily committed to annually sharing the value of their participation,” it said. Giving HRSA more regulatory authority over 340B is unnecessary, AHA said, because Congress has already given it “clear authority and resources to implement important safeguards.”

AHA sent the letter to Reps. Rosa DeLauro (D-Conn.) and Tom Cole (R-Okla.), the chair and ranking member on the House Appropriations Labor–Health and Human Services–Education subcommittee.

The Trump administration sent its budget request for fiscal year 2021 to Congress in February. The COVID-19 pandemic halted all work on appropriations for the fiscal year that starts Oct. 1. The first House Appropriations subcommittee hearing since mid-March, on veterans affairs, is being held today, with others expected to be scheduled soon. Hearings on health care appropriations likely will focus on pandemic response.

“Despite the 340B program’s critical support helping hospitals’ efforts to build healthy communities, the budget contains several harmful proposals that would diminish the value of this program,” AHA told DeLauro and Cole.

This is the ninth straight year a presidential administration’s proposed budget seeks a 340B user fee, the fifth year one seeks broad regulatory power over 340B, and the third year one seeks 340B provider reporting requirements. Congress granted none of the previous requests.

Regarding giving HRSA more power, HRSA has relaxed some 340B program requirements in response to the pandemic, but not nearly as many as the Centers for Medicare & Medicaid Services has relaxed for its programs, or as broadly as CMS has done. Nor has HRSA relaxed as many 340B requirements as providers want. AHA itself, for example, has asked U.S. Health and Human Services (HHS) Secretary Alex Azar to waive requirements in the 340B statute regarding hospital use of group purchasing organizations and hospital maintenance of specified Medicare disproportionate share adjustment percentages to stay eligible for 340B. A strong argument can be made these requests would require congressional action.

One big difference between CMS and HRSA is that CMS has binding regulatory authority over Medicare and Medicaid written into federal law, whereas HRSA lacks comparable binding authority over 340B written into law. HRSA has said publicly several times this year that this lack of clear regulatory authority over 340B hamstrings its ability to manage the program.


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Pandemic Forces Apexus to Cancel Another In-Person Event, Health Care Associations Starting to Feel the Pain

Apexus, the 340B prime vendor, has cancelled another 340B University due to the COVID-19 pandemic—an Oct. 18 session that was scheduled to be held before the American Society of Health-System Pharmacists’ (ASHP) Oct. 19-20 Conference for Pharmacy Leaders in Chicago.

ASHP is changing its Chicago conference from a live to virtual event due to the pandemic, ASHP Media Relations Director Aretha Hankinson said. In late March, ASHP cancelled its Summer Meetings & Exhibition that was set for June 6-10 in Seattle. Hankinson said details are not yet available for ASHP’s plans to deliver planned content from the cancelled summer meetings virtually, including ASHP’s House of Delegates meeting. Apexus also had to cancel a 340B University session in Seattle that was scheduled for June 6.

The 340B Coalition’s announcement that it was turning its scheduled July 20-22 summer conference in Washington, D.C. into a virtual event over five days between July 20-29 caused Apexus to cancel its 340B University that had been scheduled for July 19. The coalition summer conference website says Apexus is developing a 340B University virtual program to be “offered adjacent to 340B Coalition, as a standalone scheduled program,” with the date and registration details to be determined.

In related news, Modern Healthcare (subscription required) published an article yesterday about the big financial hit health care associations are taking from having to cancel in-person conferences or turn them into virtual events that draw “just a fraction of the revenue of an in-person event.” The 340B Coalition, for example, has reduced registration fees by 30 percent for its now-virtual summer conference. According to the article, “a recent survey of almost 900 association leaders found that 34 percent of health care associations each expects to lose $500,000 or more due to events being canceled because of COVID-19, compared with 21 percent for all other industries surveyed.”


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BuzzFeed News Runs a Deep Dive Story About CMS’s Big Drug Payment Cuts for 340B Hospitals

BuzzFeed News published a long article yesterday about the ongoing fight between 340B hospitals and the Centers for Medicare & Medicaid Services over CMS’s nearly 30 percent cut in Medicare Part B reimbursement for 340B-purchased drugs. Reporter Zoe Tillman notes that the COVID-19 pandemic has raised the stakes for hospitals.

“The COVID-19 pandemic has created the greatest financial crisis in history for America’s hospitals and health systems, with our field losing over $50 billion each month,” the American Hospital Association told Tillman. AHA is one of three national hospital groups suing CMS over the cuts. “While it is too soon to have precise data on the full impact of this pandemic, the unlawful Medicare cuts that we are contesting in federal court have added significantly to the financial pressure all hospitals face.”

The U.S. Justice Department did not return BuzzFeed’s request for comment.


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A Return to 340B Op-Ed Combat?

In 2016 and 2017, the White House and both chambers of Congress were under the same party’s control. Prospects for 340B legislation were never stronger, and it was common for there to be a host of op-eds practically every day representing both sides of the 340B divide. The 340B op-ed wars subsided after the 2018 midterm elections resulted in divided control of Congress again, dimming prospects for 340B legislation.

On May 21, there was a flare up of verbal combat over 340B. Dueling pro-340B hospital / anti-340B hospital commentaries ran that day in two online publications.

Writing in the Louisiana politics and culture website The Hayride, Joe Cunningham, a former editor at the conservative website RedState, applauded U.S. Sen. Ben Sasse (R-Neb.) for his bill to protect hospitals from losing their 340B eligibility due to changes in patient mix during the COVID-19 epidemic.

“This would be incredibly beneficial to states like ours, with a lot of rural hospitals that rely on this program to stay afloat and provide essential care,” Cunningham writes. “If there is a major outbreak of another disease or a rebound in COVID-19, then it is a terrible idea to bog busy doctors and nurses down with more federal paperwork.” Cunningham cited 340B Report’s May 19 item about Sasse’s bill, the push for companion legislation in the House, and efforts to pause the 340B hospital GPO exclusion and covered entity audits during the pandemic. “The pharmaceutical companies have a lot of lobbyists in Congress, and they will likely be very against this, but it’s a good idea that we should want to see move forward,” Cunningham said.

Meanwhile, on the news and opinion aggregation website RealClearHealth, editor Jerry Rogers wrote that that the 340B program “is a textbook example of how insiders, lobbyists, and influence-peddlers high-jacked an obscure provision of law and turned it into a profit-making racket.”

Rogers, also a Baltimore, Md., talk radio host, said the Affordable Care Act “distorted 340B into a money-making enterprise that hospitals and Wall Street investors now use to increase profits at the expense of patients…. Hospitals have been gaming the system. As we move into America’s recovery from the Coronavirus shutdowns, policymakers must keep hospital conglomerates in check.”

New York Times Story Questions Whether Some Health Systems Need COVID-19 Relief

Correction: The email version of this article stated incorrectly that The New York Times reported on May 25 that Providence Health System received about $5 billion in federal COVID-19 relief. The Times article actually stated that Providence received at least $509 million in government funds.

A New York Times article about 20 big hospital chains getting more than $5 billion in federal COVID-19 relief could become ammunition in the fight over hospital participation in the 340B program.

The deep dive bylined by three reporters notes that Providence Health System received about $500 million in government assistance while having about $12 billion in cash to invest, that the Cleveland Clinic got about $200 million while having $7 billion in cash, and that Ascension Health got about $211 million while having $15.5 billion in cash. All have 340B hospitals and contract pharmacies.

“So far, the riches are flowing in large part to hospitals that had already built up deep financial reserves to help them withstand an economic storm,” the article says. Meanwhile, it continues. “many hospitals that primarily serve low-income people have received federal grants that their executives say may not be enough to see them through the current crisis.”

According to the article, Providence and Cleveland Clinic spokespersons said the grants helped make up for losses from the coronavirus. A spokesperson for Ascension said the aid helped the system serve its communities during the pandemic without furloughing or laying off any workers.

The article already has the attention of one frequent critic of hospitals participating in 340B, pharmaceutical industry consultant Adam Fein:

American Hospital Association President and CEO Rick Pollack responded to the Times article in AHA’s blog yesterday. Hospitals across the board are reporting that their April revenue was the worst month ever and Providence announced May 25 it lost $1.1 billion in the first quarter alone.

“While some hospitals and health systems have reserve funds, the fact is that many of these organizations are maintaining their stability because of these funds … and they are now tapping into them to stay solvent given that federal funding thus far will not make up for these shortfalls,” Pollack said. “These reserves also often underwrite ongoing losses from patient care services, particularly given that government programs — which comprise a significant share of hospitals’ payer volume — pay less than the cost of providing the services.”

Bipartisan Group in U.S. House Wants Health Centers Prioritized for COVID-19 Relief

A bipartisan group of more than 150 U.S. House members has asked U.S. Health and Human Services (HHS) Secretary Alex Azar to provide funds specifically for community health centers in the next tranche of COVID-19 relief for health care providers.

Congress and the president have approved $175 billion in COVID-19 aid to health care providers, and HHS has disbursed $100 billion. $50 billion was allocated to Medicare facilities. Another $50 billion is being allocated for COVID-19 high impact areas, rural providers, the Indian Health Service, and to reimburse providers at Medicare rates for COVID-19 treatment of the uninsured.

The May 21 House sign-on letter notes that while Congress has separately appropriated $2 billion to help health centers cover their COVID-19 costs, “this amount only goes so far in covering the losses they are incurring.”

“We request that HHS prioritize funding specific to CHCs in any forthcoming release of funds” from the $75 billion that remains in the COVID-19 provider-assistance pool “so that these essential providers can continue to serve their communities,” the letter states.

Reps. Eliot L. Engel (D-N.Y.), Brian Fitzpatrick (R-Pa.), Diana DeGette (D-Colo.), and Jackie Walorksi (R-Ind.) led the effort to get colleagues to sign the letter.

“Health centers throughout the country are playing a critical role in medically underserved areas, ramping up operations to address COVID-19, launching testing sites and expanding telehealth to safely provide care to patients from their homes—but they are not immune to the financial challenges this crisis has brought,” said Steve Carey, Chief Strategy Officer of the National Association of Community Health Centers (NACHC). “We are deeply grateful for the leadership of Representatives Engel, Walorksi, DeGette, and Fitzpatrick to ensure additional support for health centers serving on the front lines of COVID-19 by specifically requesting that forthcoming funding from the Provider Relief Fund is directed to Community Health Centers.”

The House-passed HEROES Act would provide $7.6 billion to health centers and Ryan White HIV/AIDS clinics to increase testing and care for patients with or at greater risk of getting COVID-19.

Trump Still Expects Congress to Pass a Bill to Lower Drug Prices, Senior Senator Says

President Trump still expects Congress to put a bill on his desk to lower drug prices, U.S. Sen. Chuck Grassley (R-Iowa) said in a May 20 audio tweet.

Grassley said Trump made the comment during a private meeting with Republican senators on Capitol Hill. Grassley, the chair of the Senate Finance Committee, and Sen. Ron. Wyden (D-Ore.), the committee’s ranking Democrat, are the co-sponsors of S. 2543, which among other provisions would require drug manufacturers to give the Centers for Medicare & Medicaid Services rebates for certain drug covered under Medicare for which the average manufacturer price increases faster than inflation. Trump and Vice President Mike Pence have previously indicated they support for the bill, but Senate Majority Leader Mitch McConnell (R-Ky.) has declined to bring it to the floor for a vote.

Support for action to lower drug prices was strong in Congress earlier this year, but the COVID-19 pandemic has robbed the cause of its momentum. In December, the House passed H.R. 3, Democratic legislation that would require HHS to negotiate prices for certain drugs and, like the Grassley-Wyden bill, also require drug manufacturers to give CMS rebates when their prices rise faster than inflation. 

Despite Sen. Grassley’s optimism, it remain unlikely that drug pricing legislation will become reality prior to the November elections.

Tweets of Note