Legal and Regulatory Compliance

6 Tips for Rural Hospital 340B Drug Pricing Participation

November 7, 2017 2:00 pm

CMS finalized a rule that lowers Medicare Part B drug payments for 340B hospitals from 6 percent above the average sales price down to 22.5 percent less than the average sales price.

Hospitals in rural communities, and the patients they serve, face a myriad of healthcare challenges that are unlike larger, urban hospitals. For patients, difficulties can include geographic and financial access to care. For the hospitals, challenges stem from serving a community with disproportionate levels of chronic disease, while at the same time trying to earn enough revenue to remain open.

“Rural healthcare providers serve populations which are not only socioeconomically disadvantaged but also suffer from numerous health disparities and poorer outcomes than non-rural communities,” according to Rural Relevance 2017: Assessing the State of Rural Healthcare in America , a recent report from the Chartis Center for Rural Health (CCRH).

The report notes that the U.S. Census Bureau found adults in rural areas are older, on average, than those living in non-rural areas; and it’s no secret that hospitalization rates, length of stay, and other health concerns increase among older adults. In addition, rural communities are home to a disproportionate number of the nation’s veterans, and these populations face unique health challenges, including mental health needs and service-related disabilities. Finally, the report says, rural areas have higher rates of patients with diabetes, because factors that contribute to the diseases, such as obesity, physical activity, and lack of exercise, are “more prevalent in rural communities.”

Combine this higher burden of disease with a physician workforce shortage (the patient-to-primary care physician ratio in rural areas is 39.8 physicians per 100,000 people, compared to 53.3 physicians per 100,000 in non-rural areas, according to the CCRH report); the ever-rising cost of drugs, diagnostics, and other treatment options; and the “geographic isolation, limited public transportation, fewer employment opportunities and limited health insurance coverage,” of rural populations, and rural hospitals’ struggles to remain open are understandable. The CCRH report notes that 80 rural hospitals have closed since 2010 and many more struggle to remain open, and that “41 percent of rural hospitals operate at a negative margin.”

Knowing the Stakes

This bleak landscape makes the 340B Drug Pricing Program, a federal initiative in which pharmaceutical companies participating in the Medicaid program are required to offer certain drugs at discounted rates to qualifying safety net hospitals more important than ever for all hospitals, and for rural hospitals in particular.

Reduced costs on lifesaving prescription drugs and treatments like chemotherapy make healthcare more affordable for rural populations already facing the insurance and employment barriers mentioned above. In addition, savings from the 340B program can be used to fund advanced diagnostic tests and equipment, cancer and AIDS treatment centers, mental healthcare facilities, addiction treatment centers, and other vital healthcare services that rural populations may not otherwise have geographic access to. In short, the cost savings from the 340B program are essential to help rural hospitals continue serving their communities in a number of meaningful ways.


Taking Action

As hospitals continue to face the recent attention and legislative changes surrounding the 340B program, there are proactive steps that rural hospital and health system leaders can take to understand the changes, stay focused on 340B program compliance, and get the most out of their 340B plan participation.

Engage with associations. Keep in close contact with rural state associations, the National Rural Hospital Association,  and the National Association of State Offices of Rural Health, an organization that focuses on “supporting the development of state and community rural health leaders; creating and facilitating state, regional, and national partnerships that foster information sharing and spur rural health-related programs/activities; and enhancing access to quality healthcare services in rural communities.”

Be an advocate. Speak out at every opportunity, on behalf of your hospital and for rural hospitals across the nation. Remain abreast of federal calls for comment. Many quiet voices can band together and become one voice loud enough to be heard.

Get educated. Potential changes to the 340B program are much more possible now than at any time since the program’s implementation in 1992. Attend relevant meetings and conferences, read information from reputable news sources, and learn as much as you can. There are no-cost options, such as 340B University, which is offered by one of the Health Resources and Services Administration Office of Pharmacy Affairs federal government contractors. 

340B Health, a not-for-profit membership organization of public and private not-for-profit hospitals and health systems that participate in 340B, is another useful resource. Members participate in group forums and peer-to-peer discussions. The organization “monitors, educates, and serves as an advocate on federal legislative and regulatory issues related to drug pricing and other pharmacy matters affecting safety net providers.”

Know your story. Have an elevator pitch ready for anyone who asks, either formally or informally. Know your patient population and what their specific and unique healthcare needs are. Be able to explain concisely how your organization uses its 340B savings and what kind of results you’ve had—from access to life-saving drugs to the development of new hospital wings or treatment facilities.

Be prepared. Set up an internal 340B steering committee at your organization, made up of your 340B program manager, director of pharmacy, a representative from finance and a representative from compliance. Meet at least once a month to share questions, concerns, ideas, and strategies as circumstances—on both an organization-wide and nationwide scale—regarding 340B continue to evolve.

See related video:  340B Audits Require Team Effort

Be compliant. Participating in the 340B program means that you have many federal regulations and compliance requirements to maintain, and that audits are possible at any time. You can manage this pressure by having mock audits a few times a year, as well as having a 340B compliance and data management software provider that makes the process simple and intuitive—one that has experts on hand to work in partnership with your team at every turn.

Understanding Recent Changes

The world of 340B is changing rapidly. The Centers for Medicare and Medicaid Services (CMS) recently finalized a rule that lowers its payment rates to 340B hospitals for Medicare Part B drugs from 6 percent on top of the average sales price down to 22.5 percent less than the average sales price. The Civil Monetary Penalty Regulation, which would penalize drug manufacturers for intentionally overcharging participating safety net hospitals for 340B drugs, has been postponed by HRSA four times since January 2017. There’s heated debate across bipartisan lines about whether regulation and oversight to the 340B program could help rein in rising drug prices. And in September 2017, The Senate Appropriations Committee approved legislation that includes $10.2 million to run the 340B drug discount program in the new fiscal year.

With so much potentially changing so quickly, and so much at stake for rural hospitals and the communities they serve, the onus is on hospital and health system staff to stay ahead of the curve. Knowledge is power. Stay informed.

Lidia Rodriguez-Hupp is senior vice president, chief of corporate initiatives and 340B compliance officer, Sentry Data Systems.

Lisa Scholz is senior vice president and chief customer engagement officer, Sentry Data Systems.


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