In his December 2017 Point of View Jim Jorgenson’s Top 10 for 2018,” Visante CEO James Jorgenson included thoughts about changes which may occur relative to the 340B Program in 2018. As 2018 has arrived, we would like to provide an overview of some changes that have already occurred as well as new threats to the 340B Program.

The Centers for Medicare & Medicaid Services (CMS) Outpatient Prospective Payment System (OPPS) rule that would reduce reimbursement for separately payable Medicare Part B drugs was challenged in federal court by several hospital groups. U.S. District Court Judge Rudolph Contreras dismissed the lawsuit to block the rule on procedural grounds on the basis that hospitals have not yet presented a specific claim for reimbursement that has received the reduced payment rate. It is important to note that while this means the court viewed the lawsuit as premature, it also means the judge did not look at the case’s merits. Furthermore, the decision leaves open the possibility of renewed litigation to reverse the cut at some future date, as the court has not yet ruled on whether CMS has the legal authority to reduce payments to 340B hospitals.

Taxpayers will not benefit from the cutback which will inevitably eliminate some 340B-enabled programs that help the poor. Under government rules requiring budget neutrality, CMS must pass along those “savings” to all providers in the form of higher rates for any and all services that come under the OPPS rule. In other words, money is being taken from hospitals serving the poor as those funds are given to any hospital that serves Medicare beneficiaries, including those in the wealthiest communities.  

After CMS announced its planned rule, Reps. David McKinley (R-WV) and Mike Thompson (D-CA) introduced legislation to stop CMS’ planned cuts last month. House Bill H.R. 4392 currently has 167 bipartisan cosponsors. Unfortunately, legislation funding the government through sometime in January did not include H.R. 4392. One hospital lobbyist stated that some type of spending bill will need to move once the short-term government funding runs out, and hospitals are hoping for a moratorium on the cuts to 340B hospital pay will be attached to that vehicle, but time will tell.

Just prior to Congress leaving for the holidays, legislation was introduced by Reps. Larry Bucshon (R-IN) and Scott Peters (D-CA) that would impose even more egregious restrictions on the 340B Program. That Bill, the 340B PAUSE Act, short for the 340B Protecting Access for the Underserved and Safety-Net Entities Act, includes a two-year moratorium on certain new hospitals and associated child sites entering the 340B program and data reporting for participating providers. It would require hospitals to report the type of insurance — or lack of insurance — that 340B patients have, as well as the number of 340B patients served by a provider, charity care costs at providers’ child sites, and gross reimbursement and acquisition costs for 340B drugs. It also would require HHS Office of Inspector General and Government Accountability Office reports on the program.

Reps. Bucshon and Peters’ bill would also reportedly require a study by the Department of Health and Human Services Office of Inspector General (OIG) on how much charity care is provided by 340B DSH hospitals and free-standing children’s and cancer hospitals. It would likewise reportedly require a study by the Government Accountability Office on nonprofit DSH hospitals and free-standing children’s and cancer hospitals’ contracts with state and local government and a study on 340B drug acquisition costs and reimbursement for these hospitals. Not surprisingly, PhRMA is backing this proposed legislation.

There are numerous “slings and arrows” being aimed at the 340B Program this year with hospitals as the primary target. As such, all 340B CEs are advised to make compliance primary focus of their 340B Program:

  • Do you have a structured 340B oversight program?
  • Who are its members and are their roles defined?
  • What type of education do you require of staff involved in 340B?
  • Are your 340B policies and procedures robust and current?
  • Are you conducting an annual external audit of your contract pharmacies?
  • Are you able to document the utilization of your 340B savings?

The 340B Program may see the greatest changes this year since its inception in 1992. Are you ready?


In late breaking news, the full House Energy & Commerce Committee released a report on Wednesday, January 10, calling on Congress to clarify the 340B Program’s intent, give the Health Resources and Services Administration (HRSA) more regulatory authority over the program, increase reporting requirements for hospitals, and revise hospital eligibility requirements.

This report was released after our Visante Insider had been completed. We will have a complete analysis of the report in next month’s Visante Insider.

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