Medicaid Payment and Reimbursement

Congress Pushes 340B Bills to Cut Eligibility, Increase Reporting

July 12, 2018 8:59 am

Legislators are considering as many at 15 proposals to increase reporting requirements, require hospitals to pass discounts to 340B patients and to fund more oversight, create a 340B patient definition, and expand 340B discounts to so-called orphan drugs.

July 11—Members of Congress this week pushed emerging legislation to restrict the ability of hospitals and other providers to qualify for the 340B discount drug program and to increase their reporting requirements.

“It’s obvious to me anyway that this program is being abused,” said Rep. Joe Barton (R-Texas), who has drafted legislation to raise the bar for hospitals to qualify for the 340B program. His bill would increase a qualifying hospital’s minimum share of Disproportionate Share Hospital (DSH) patients from 11.75 percent to 18 percent. The legislation also would allow some of the remaining hospitals and other providers to garner a 5 percent greater discount on certain drugs.

The proposed tightening of participation requirements would disqualify 573 of the 1,115 DSH organizations from the program, according to a new analysis by 340B Health, which represents more than 1,300 hospitals and health systems in the 340B program.

“This proposal would decimate the 340B drug pricing program and leave millions of low-income Americans with higher costs and less access to care,” said Maureen Testoni, interim president and CEO of 340B Health. “Such a drastic change would put enormous pressure on safety net hospitals, clinics, and health centers.”

The legislation planned by Barton was among the bills that received the most discussion at a July 11 hearing by the House Energy and Commerce Committee’s Health Subcommittee. Barton, who is vice chairman of the full committee, said the program’s rapid growth to 12,722 “covered entities”—including about 6,000 hospitals—indicated the restriction was needed.

But that view was sharply countered by some Democrats. For instance, Kurt Schrader (D-Ore.) said the rapid growth of the program is “a success.”

“We don’t have the money in our system right now to give these folks the opportunity to develop this wrap-around service” for patients, Schrader said, referring to the adjunctive services that many hospitals fund with 340B revenue. “It’s paid for largely—or at least some of it—out of the 340B discount program.”

In addition to the Barton proposal to tighten 340B eligibility, legislators are considering as many as 14 other legislative proposals to increase reporting requirements, require hospitals to pass discounts to 340B patients, create a 340B patient definition, require 340B hospitals to fund more oversight, and expand 340B discounts to so-called orphan drugs.

Debra Patt, MD, executive vice president of Dallas-based Texas Oncology, testified to the panel that action specifically is needed to tighten patient definitions, increase reporting requirements, and increase “accountability” in the program to reduce the incentive it provides for hospitals to purchase physician groups. She said 700 independent oncology practices have been purchased by hospitals in recent years.

The concern that 340B incentivizes consolidation was the only issue highlighted by the panel’s chairman, Rep. Michael Burgess (R-Texas.).

“I am concerned about the consolidation and that we are driving the consolidation with some of our activities,” Burgess said.

New draft legislation sponsored by Burgess would require 340B providers to pass along discounts to low-income or uninsured patients. The measure also would require hospitals to limit those patients’ charges to what the provider paid for the drug.

Reversing the CMS Cut

One of the few bipartisan bills under consideration Wednesday, sponsored by Rep. David B. McKinley (R-W.Va.), would reverse a cut that started in 2018 for Medicare payments to 340B hospitals. The bill has 191 cosponsors.

“We want to put a moratorium on that rule because there are consequences for that rule as it goes forward,” McKinley said. “Unless this rule is modified quickly, it is going to cut $1.6 billion from healthcare providers across America and there are going to be consequences of that.”

He cited a West Virginia hospital’s expectation that the Medicare cut will cost it $10 million, some of which funds a bus that provides mobile mammograms throughout the state.

“The cancer rate in West Virginia is the highest in the country, and they are trying to reach that using the 340B program with it,” McKinley said. “We can continue to debate the 340B program, but all the while people aren’t getting health care because of the $1.6 billion in cuts.”

McKinley said he hoped the bill would force Republicans and Democrats to “come the table” and advance 340B legislation.

“The change in the Medicare reimbursement definitely has an impact on us,” Frederick Cerise, MD, president and CEO of Dallas-based Parkland Hospital, testified to the committee. “I would suggest that [given] the concerns about the growth of the program or the oversight of the program, that we address it that way and not by reduction in the Medicare reimbursement for eligible providers who are using that saving.”

Increased Reporting

Rep. Larry Bucshon, MD (R-Ind.), has issued draft legislation to require 340B providers to report what they are doing with the savings they generate from the program.

“In health care in general—not only in 340B—the only way that we are going to get healthcare costs down and insure all of our citizens is if everyone in this industry is completely open and transparent to the people I represent and to the people of America,” Bucshon said.

But several Democrats pushed back on the idea that move oversight and reporting in the 340B program are needed.

Federal audits show “that program is being used appropriately, that the discounts are [applied to] drugs for those people who are eligible,” Schrader said. “Since we do have a lack of resources—a fairly significant lack of resources—here in Washington, D.C., to help our hospitals deal with our Medicaid population and those other low-income folks, with wrap-around services [that]…actually costs the system and the taxpayer a lot more.”

Rep. Buddy Carter (R-Ga.) said he planned legislation to expand the eligibility criteria regarding a hospital’s low-income utilization rate so that it is applied to outpatient care, as well as inpatient care.

“One of the abuses—it’s not illegal, just what some of us consider to be abuses—is a lot of the hospitals are using this [discount] in outpatient clinics and outpatient settings when it was intended to be used and based on the inpatient” setting, Carter said.

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


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