Policy Watch

New legislation would reverse Medicare cuts to 340B and expand eligibility for the program, among other provisions.  

June 14—Members of a congressional  panel will dive into ways to change the regulatory oversight of a major discount drug program, including steps that could have big hospital impacts.

On June 19, the Senate Health, Education, Labor and Pensions (HELP) Committee will hold its third hearing of this Congress on the 340B Drug Pricing Program, which gives hospitals that serve high percentages of low-income patients access to discounted prescription drugs. The hearing was billed as an opportunity to discuss the future of the program with leaders from the Health Resources and Services Administration (HRSA), which administers the program.

“I hear often that hospitals and clinics are using the 340B program to benefit low-income patients and serve other worthy public objectives, but we have also heard at our previous hearings that [HRSA] may lack the authority to properly oversee the 340B program,” Sen. Lamar Alexander (R-Tenn.), chairman of the HELP Committee, said in a written statement. “I look forward to hearing directly from HRSA if they need more oversight authority in order to make sure that 340B is adequately serving patients.”

HRSA had proposed an omnibus 340B regulation clarifying many rules, but withdrew it in January 2017—prior to publication—after a federal court ruling established limits on HRSA’s rulemaking authority for the 340B program.

The House Energy and Commerce Committee concluded in a January report that “HRSA lacks sufficient regulatory authority to adequately oversee the program and clarify program requirements.” That committee concluded that Congress should bolster HRSA’s regulatory authority, such as by improving its ability to tighten program integrity, clarify program requirements, monitor and track program use, and ensure that low-income and uninsured patients directly benefit from 340B.

Alexander said at a May 14 hearing on the program that he was trying to gain insight into 340B, including how much revenue hospitals garner from the program and how much of the savings they use to help low-income patients.

“It very well may be that most are using the savings to benefit low-income patients, as intended, or it may be that the other activities meet an important public objective,” Alexander said at the hearing. “It’s hard to know until we have more information.”

Hospital advocates have underscored the extensive oversight to which HRSA already subjects providers. For instance, the 340B program has subjected participating providers to nearly 900 program audits since 2012, compared with only 11 for drugmakers since audits for the latter began in 2015.

“Since its inception, the 340B program has incorporated rigorous requirements for how hospitals and other covered entities qualify for and use the program,” Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals, told the HELP Committee at a March 15 hearing. “In short, the 340B program is subject to substantial oversight and monitoring.”

Reversing a 340B Cut

The hearing comes the week after the introduction of the Stretching Entity Resources for Vulnerable (SERV) Communities Act by Rep. Doris Matsui (D-Calif.). That measure would make changes to the 340B program, including by reversing a 340B cut that began Jan. 1, when the Centers for Medicare & Medicaid Services reduced Medicare payment for drugs acquired through the 340B program from the average sales price (ASP) plus 6 percent to ASP minus 22.5 percent.

“Hospitals and clinics doing life-saving work rely on the 340B program to help them provide inclusive and affordable care in their communities,” Matsui said in a release. “This legislation makes clear the importance of preserving the program so safety net providers can continue to serve low-income and vulnerable patients, while expanding it to help address the opioid crisis.”

Last year, 273 members of the House of Representatives and 57 senators wrote to CMS asking that the 340B cut be withdrawn before it took effect. Hospitals and advocates also continue with legal challenges to the cut.

The SERV Communities Act followed the introduction last year of a narrower bill, which would have reversed only the 340B Medicare Part B cuts and which drew 198 cosponsors.

Additional provisions of the SERV Communities Act include:

  • Adding program integrity requirements for drug manufacturers participating in the program
  • Requiring implementation of the long-delayed methodology for calculating the 340B ceiling price
  • Applying monetary penalties for manufacturers that violate the ceiling price
  • Codifying the definition of patient under the 340B Program
  • Requiring more parity between provider and manufacturer audits
  • Extending 340B eligibility to SAMHSA grantees that provide behavioral health and substance-use disorder services

340B Health, which represents more than 1,300 hospitals in the program, hailed the bill for requiring greater transparency amid evidence that drugmakers are overcharging for 340B-covered drugs.

“The Congresswoman’s legislation says ‘enough is enough’ and requires the administration to move forward with assessing civil monetary penalties against manufacturers that overcharge providers and to share 340B prices with providers so they can see when they are being overcharged,” Maureen Testoni, interim president and CEO of 340B Health, said in a written statement.

Monday, June 18

Web conference by the Advisory Board titled “Five Must-Have Characteristics of the Consumer-Focused Physician.” Learn more.

Tuesday, June 19

Webinar by HFMA titled “Transforming the Patient Financial Experience Through Patient Financing.” Learn more.

Webinar by the Centers for Medicare & Medicaid Services (CMS) titled “National Emergency Preparedness (EP) for Providers.” Learn more.

Webcast summit by the Health Resources & Services Administration titled “Maternal Mortality Summit is Promising Global Practices to Improve Maternal Health Outcomes” (through June 21). Learn more.

Web conference by the Advisory Board titled “How to Optimize Roll Out of New Care Standards.” Learn more.

Wednesday, June 20

Webinar by HFMA titled “Bridging Silos for Value-Based Care: Data Interoperability and the Management of a Medicare Advantage Population.” Learn more.

Hearing by the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee titled “Examination of the GAO Audit Series of HHS Cybersecurity.” Learn more.

Webinar by CMS for the Hospital Outpatient Quality Reporting (OQR) Program titled “The Abstraction Challenge Show: Real Questions, Real Answers.” Learn more.

Call by CMS titled “ Medicare Diabetes Prevention Program: Supplier Enrollment Call.” Learn more.

Meeting by the CMS Advisory Panel on Outreach and Education. Learn more.

Deadline to comment on draft 2019 CMS Quality Reporting Document Architecture (QRDA) Category III Implementation Guide (IG) for Eligible Clinicians and Eligible Professionals. Learn more.

Web briefing by Mercer Select Intelligence Health & Benefits titled “Top 10 compliance issues.” Learn more.

America's Health Insurance Plans Institute and Expo 2018 (through June 22). Learn more.

American Hospital Association’s Team Training National Conference (through June 22). Learn more.

Thursday, June 21

Call by CMS titled “IMPACT Act: Frequently Asked Questions.” Learn more.

Webinar by the Advisory Board titled “Clinical Innovations in Surgical and Interventional Oncology.” Learn more.

Friday, June 22

Deadline for CAHPS Health Plan Survey users who administered the survey between October 2017 and June 2018 to submit data to CMS. Learn more.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, June 14, 2018