Your 340B Report for Thursday March 19, 2020

If OMB Says Yes, CMS Is on Track to Launch its 340B Drug Cost Survey on Monday

Editor’s note, March 20, 2020: When we published Tweets of Note yesterday, we were unaware of health care economist’s Rena Conti’s March 14 reply to a critic’s tweet the same day. We have added it to this web version of the article.


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All indications are CMS’s 340B hospital drug acquisition cost survey is still “go” for liftoff on Monday as planned, assuming OMB says yes. Source: NASA

All Indications Are CMS Plans to Launch its 340B Drug Acquisition Survey on Monday

As of press time (about 5:00 p.m. Eastern), the Centers for Medicare & Medicaid Services (CMS) had not yet received the green light from the White House to require hospitals, starting this coming Monday March 23, to track their net costs through April 10 for all 340B-purchased drugs billed to Medicare Part B.

No one outside of the Office of Management and Budget (OMB) knows if CMS will get OMB’s go-ahead before Monday, and it’s unclear if CMS would have to start over if approval comes on or after March 23. (CMS is asking OMB to bless survey forms and instruction sheets that say the survey is to run March 23 through April 10.)

One thing’s for sure, however: Affected hospitals are very unhappy about the prospect of having to collect this data for CMS during one of the worst public health crises in U.S. history.

340B Report asked CMS on March 16, in light of the COVID-19 pandemic, what its plans for the 340B drug pricing survey were. CMS acknowledged receiving our question but has not yet responded. All indications are the survey is still “go” for liftoff as planned, assuming OMB says yes.

CMS wants the data as a hedge against losing in the courts again over whether federal law allowed it in 2018 to start cutting 340B hospitals’ Part B drug reimbursement by nearly 30 percent. The agency has said that, if it loses its appeal of a December 2018 federal district court decision, it might start basing 340B hospitals’ Part B reimbursement on their net costs—including any wholesaler discounts or sub-340B-ceiling-price discounts obtained through the 340B Prime Vendor program.

As previously reported, hospital group 340B Health warned OMB earlier this month that “CMS’s survey proposal comes at a time when hospitals must dedicate their full attention to diagnosing, isolating, and treating patients potentially infected with COVID-19. CMS should not divert hospital staff away from patients during this critical time, which is precisely what CMS’s survey would do.”

A pharmacy director at a major U.S. 340B hospital elaborated on those points in an email exchange with us this week.

This just should not happen now given the dire situation facing our most vulnerable hospitals. We are dealing with a day-to-day evolving situation and are razor focused on patient care and keeping health care workers safe. It's patient care only and survival of our health care workers during the influx of patients.

This is an exercise in futility.

This Just In…

Health care economists Sayah Nikpay, Melinda Buntin, and Rena Conti have just published a paper in Health Services Research, funded by the Commonwealth Fund, that concludes that, among hospitals that enrolled in 340B from 2011 to 2015, participation in 340B was associated with:

  • a 28.9 percent increase in charity care spending, or about $880,000 per hospital

  • a 4.3 percentage point increase in the probability of offering discounted care, from 84 to 88 percent

  • an 18.9 percentage point increase in the income eligibility limit for discounted care, from 294 to 313 percent.

Participation in 340B, they said, was not associated with an increase in uncompensated care, nor with the probability of offering low-profit medical care services, they found.

The researchers say:

While we did not find that participating in 340B was associated with increased safety‐net engagement as measured by uncompensated care, we did find that hospitals spent more on charity care, offering more discounted care, and at higher‐income eligibility levels through charity care policies. However, the increase in charity care likely did not represent an increase in safety‐net care for two reasons. First, the 21.8 percent increase in charity care identified in this paper translates to a miniscule increase in charity care: about $0.88 M, relative to an average of $4.4 M of charity care spending in the year before participation. Second, the increase in charity care appeared to be offset by reductions in other types of community benefit spending. Our results are partially consistent with anecdotal reports suggesting increased safety‐net engagement, yet we found no support for the claims that 340B results in the offer of high‐value, low‐profit services, at least in the first several years after participation. They are partially consistent with [a 2018 study published in the New England Journal of Medicine, which] found no effect on uncompensated care. Our results also lend support to recent evidence that hospitals may manipulate the DSH patient percentage in order to qualify for 340B.

The authors also say their findings “cast doubts on hospitals’ predictions” that CMS’s nearly 30 percent reduction in 340B hospitals’ Medicare Part B drug reimbursement would force service cutbacks, layoffs, and/or emergency room closures. “We did not find that 340B led hospitals to expand the community services provided,” they said. The authors added that their finding that 340B participation leads to “a very small” increase in charity care is small relative to “a recent analysis of Medicare payments for 340B hospitals [that] found that hospitals generated between $550 M and $1.2 B in profit from administering Medicare Part B drugs in 2013.”

Tweets of Note

Health care economist Rena Conti (see above) was involved in the following Twitter exchange March 12 through 15:


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Could Health Centers Get Stable Long-Term Funding in Stimulus Bill?

Community health centers depend heavily on the 340B program to generate dollars that pay for vital patient services. They are also highly dependent on the federal Community Health Center Fund (CHCF), which currently provides centers $4 billion annually—70 percent of all their federal funding. Congress has been providing the money through a series of short-term spending bills. The latest of these is due to expire on May 22. No one knows what trajectory the COVID-19 outbreak will take, but it isn’t a stretch to say the funding cliff couldn’t come at a worse time.

Help for the centers could be on the way, however. The Washington Post’s Health 202 blog reports today that “surprise billing” language that House and Senate leaders want to attach to the $1 trillion economic stimulus measure being negotiated between the White House and Congress “could help pay for extending dollars for community health centers.”

The National Association of Community Health Centers (NACHC) asked congressional leaders in a March 16 letter to extend CHCF for five years and provide an additional $4.1 billion to expand access to care to 10 million people; to provide an extra $5.1 billion over five years to hire an additional 34,000 health center clinicians; to provide $7.5 billion over five years for telehealth and other health center capital improvements; the creation of a $1 billion annual fund for emergency response; and “an immediate injection of an additional $320 million…to address the staffing, supply and other needs to address the Coronavirus pandemic.”

Read Our Publisher & CEO’s Latest Column

In his latest monthly column for our sponsor Pharmaceutical Strategies Group, 340B Report Publisher & CEO Ted Slafsky explores how the COVID-19 outbreak is likely to influence “what we can expect on drug pricing and 340B legislation.” Slafsky says he is skeptical that Congress will pass Senate Finance Committee leaders Chuck Grassley (R-Iowa) and Ron Wyden’s (D-Ore.) bipartisan drug pricing bill, S. 2543, in light of strong opposition by the drug industry and reservations expressed by key Republicans. Bottom line? “While we could see some additional drug pricing and 340B bills introduced, they are likely to be message bills that won’t become reality this year,” Slafsky says.

Slafsky’s column also touches on continued congressional interest in 340B, news coverage (including our own) on the Health Resources and Services Administration’s recent statements about its limited ability to enforce 340B program guidance, and CMS’s efforts to continue its 30 percent reimbursement cut to 340B hospitals.