Written by Jennifer Austin, PharmD and William Wood, RPh

The 2018 340B Coalition Winter Conference was the largest winter gathering to date with over 1,600 registrants, 88 exhibits and standing room only in many of the sessions. The theme of the event was Celebrating 25 Years of the 340B Program with the historic Hotel Del Coronado as a beautiful backdrop for the event. The conference agenda was packed with timely topics for everyone, from those new to the 340B space to experienced leaders in the field. Updates on recent regulatory and legal developments took center stage at the opening session and continued throughout the event. The recent Energy and Commerce Committee Report, proposed legislation, the 340B Hospital Medicare Part B payment cut with ensuing lawsuit, and the President’s 2019 Budget Proposal all signal the likelihood of significant changes and resulting impact on the 340B program. With unprecedented attention to the 340B Program on Capitol Hill, the only certainties are that we can expect additional legislation to be introduced very soon and that the need for stakeholders to remain vigilant in their program oversight is greater than ever.

Visante will continue to closely follow the legislative developments and provide updates via the Insider and website. Below is a summary of the current legislative activities with our comments and concerns:

House of Representative Energy & Commerce Committee Report issued January 10, 2018, includes recommendations that could limit the scope of the 340B Program such as re-evaluation of the program intent , DSH hospital eligibility rules, and measurement of covered entity charity care levels.

Report recommendations include:

Congress should establish a mechanism to monitor the level of charity care provided by covered entities. This should include a clear definition of charity care such that the data can be used to fairly compare care provided across entities.

Concerns: Charity care alone is not an adequate measure of a hospital’s services to the uninsured and under insured. Meaningful measures must also include uncompensated care and unreimbursed care, including not only charity care but also bad debt and underpayment.

Congress should give HRSA sufficient regulatory authority to adequately administer and oversee the 340B program.

Comments: The President’s budget proposal, referenced below, would provide for a 0.1% user fee on 340B purchases for all covered entities to fund program operating costs and provide regulatory authority to: “Improve 340B Program integrity and ensure that the benefits of the program are used to help low-income and uninsured patients rather than cross-subsidize the care they provide.”

If the above request is approved by Congress, the user fee would apply to all 340B covered entities. Would grantees and specialty clinics complain that their 340B purchases are being assessed to increase HRSA’s ability to oversee and address concerns Congress has raised that deal almost exclusively with hospitals?

All covered entities should perform independent audits of their contract pharmacies at regular intervals to ensure 340B program compliance.

Comment: This is an interesting proposal since HRSA currently “expects” covered entities to perform annual independent audits. Would the above mentioned regulatory authority then be changed to this stronger wording?

Congress should equip HRSA with additional resources and staff to conduct more rigorous oversight and more effective management of the 340B program.

Comment: More audits? Is this necessarily bad?

HRSA should work toward ensuring that it audits covered entities and manufacturers at the same rate.

Comment: Does anyone really expect PhRMA to accept this?

2312, 340B Help Act

  • Introduced by Senator Cassidy (R-LA) – January 2018
  • If enacted, would be retroactively applied as of December 31, 2017
  • Two-year freeze on new DSH hospitals and new child site registrations for existing DSH hospitals
  • New eligibility criteria for DSH, children’s and cancer hospitals
    • Non-profit hospitals required to provide direct medical care to low-income patients ineligible for Medicare/Medicaid that represents at least 10% of costs
    • Hospitals formally granted governmental powers must have a power that is more than providing services on behalf of the government
  • New child site eligibility criteria for DSH, children’s and cancer hospitals
    • Facility must adhere to the parent hospital’s charity care policy and any sliding fee scale policy
    • Secretary must have made a provider-based determination
  • Reporting requirements for DSH, children’s and cancer hospitals
    • Patient mix by payment source
    • Charity care costs
    • Difference between 340B drug revenue and acquisition costs
    • Percent of revenue from physician-administered drugs
    • Modifier submission to identify 340B drugs for public and private payers
  • Claims modifier for all covered entities when billing to
    • Medicaid FFS or MCOs
    • Medicare Part B
    • Medicare Advantage
    • Medicare Part D

Comments: Again we see a proposed law affecting only hospitals, and only three types- DSH, children’s, and cancer hospitals. What is the rationale for this? Would the requirement for claims modifiers apply to those hospitals currently exempted from the Medicare Part B reimbursement reductions?

The proposal says all covered entities, so what about Critical Access hospitals that are not reimbursed under OPPS and therefore not covered by the Part B reductions?

The reporting requirements would create an additional burden for hospitals already dealing with increased 340B compliance requirements.

Question: Could this proposed law really be an attempt to drive hospitals out of the 340B Program?

2312, Ensuring the Value of the 340B Program Act of 2018

  • Introduced by Senator Grassley (R-IA) – March 2018
  • Reporting requirements for hospitals to report their aggregate acquisition costs and revenues from all payers for drugs in which they received a 340B discount
  • Referred to the Finance Committee
  • Senate Health, Education, Labor and Pensions Committee (HELP) plans to hold a hearing on the 340B Program in early spring

Comments & Questions: More reporting requirements aimed solely at hospitals. Why the requirement to report revenue from all payers? It is the revenue from these payers that allows covered entities to meet the intent of the program: ”to stretch scare federal resources as far as possible reaching more eligible patients and providing more comprehensive services.”

2019 Budget Proposal submitted by Administration to Congress February 12, 2018

340B impacts include:

  • Collection of 0.1% user fee from 340B purchases for all covered entities to fund program operating costs
  • Regulatory Authority – “Improve 340B Program integrity and ensure that the benefits of the Program are used to help low-income and uninsured patients rather than cross-subsidize the care they provide.”
  • Enforcement – “Set enforceable standards of program and require all covered entities to report on use of program savings.”
  • Maintain Medicare payment reduction with modifications
    •  Request Congress to allow a non-budget neutral redistribution

– 340B hospitals providing uncompensated care equaling at least one percent of their patient care costs would receive a redistribution “based on their share of aggregate uncompensated care.”

– 340B hospitals not meeting that threshold would not receive a redistribution and would have their savings go to Medicare

Final thoughts:

In the January issue of Visante’s Point of View we stated that 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 above proposals from various members of Congress are among the “slings and arrows” being aimed at the 340B Program. Are they attempts to destroy the Program? Their sponsors say no. What do you say?



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