Payment Reimbursement and Managed Care

Federal funding bill addresses 340B eligibility concerns but not some other points of interest for hospitals

March 12, 2022 1:23 am

Among the disappointing omissions for hospitals is that the Medicare payment sequester remains on track to be reinstated in April.

Legislation to fund the federal government through the remainder of FY22 includes provisions that were sought by hospitals, but the bill doesn’t address several short-term areas of concern.

The House of Representatives passed the $1.5 trillion bill on March 9, sending it to the Senate, where it remained under consideration March 10 (March 11 update: the Senate passed the bill on the evening of March 10).

For hospitals, a key item in the legislation is temporary relief on eligibility criteria for the 340B Drug Pricing Program. The provision could be worth millions of dollars in savings for certain participants.

Some hospitals have been dropped from the program because of payer-mix changes triggered by the COVID-19 pandemic. The falloff in Medicaid inpatient days relative to total inpatient days at those hospitals has taken DSH patient percentages below the threshold needed to qualify for 340B.

The legislation provides a temporary fix to the eligibility quandary, ensuring that hospitals can stay in the program if they otherwise would lose eligibility based on patient data included in Medicare cost reports spanning 2020 through 2022. To obtain the exemption, hospitals must attest that the loss of eligibility stemmed from the clinical and operational impact of COVID-19.

The provision is limited, however, in that it lasts only through Dec. 31, 2022, and does not apply retrospectively. Hospitals that missed out on savings over the last year thus won’t be compensated accordingly.

What’s not in the bill

Hospitals didn’t get some of what advocacy groups such as the American Hospital Association and Federation of American Hospitals had requested from Congress. Among the wish-list items that were left out:

  • Additional money to be distributed through the Provider Relief Fund, which has no funding left as the Phase 4 general distribution wraps up
  • Relief on the Medicare payment sequester, which remains scheduled to kick in at 1% starting April 1 before increasing to 2% on July 1
  • Relief on the repayment terms for Medicare advance payments

Congress also didn’t pass funding to combat COVID-19 after Republicans and Democrats couldn’t agree on how to pay for the White House’s $15.6 billion requested allocation. The Biden administration says the money will be needed in upcoming months to ensure a steady supply of vaccines, tests and treatments. As of March 10, the House was looking to pass stand-alone funding, but the prospects of getting the required 60 votes in the Senate are murky.

Administration officials have projected that without the funding, a program that covers COVID-19-related services for the uninsured would have to cease operating in April and the U.S. would run out of monoclonal antibody treatments in May.

Other provisions affect telehealth and more

The appropriations bill ensures that Medicare telehealth coverage flexibilities will continue for five months after the end of the COVID-19 public health emergency, which is scheduled to expire April 16 but could be prolonged by at least 90 days.

The flexibilities have allowed for coverage of telehealth visits that take place in a patient’s home. Among other provisions, they’ve also permitted coverage of audio-only telehealth services for evaluation and management services and behavioral healthcare.

The legislation also seeks to boost maternal healthcare quality through funding for dissemination of best practices and accreditation for schools that offer education on how perceptions and biases affect care.

About $108 billion — $11 billion more than is FY21 — is being allocated for the U.S. Department of Health and Human Services. The largest share, $45 billion, will go to the National Institutes of Health for its research.


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