In an attempt to bring down out-of-pocket drug costs for Medicare patients, the Centersfor Medicare & Medicaid Services has proposed cutting Medicaredrug payments to hospitals serving low-income and otherdisadvantaged communities in the government’s so-called 340Bprogram. But an advocacy group for hospitals and other providersthat participate in the program contend that CMS’s proposal wouldactually backfire and cause those hospitals to serve less patientsand provide fewer services.

|

The 340B program, established by Congress in 1992, requires drugmanufacturers to sell certain outpatient drugs at discounts tohealth care providers that serve low-income and other disadvantagedpopulations. The providers, in turn, use their 340B drug savings toserve more patients and provide more services at no cost to thegovernment, according to 340B Health, which represents more than1,300 hospitals and other providers participating in theprogram.

|

Related: 5 controversial ways to shore up the aACA

|

In July, CMS published in the Federal Register its proposal topay 340B participants a discount on certain drugs at an averagesales price (ASP) minus 22.5 percent, rather than ASP plus 6percent. The proposed reduction would go into effect on Jan. 1,2018.

|

On its website, the agency states that ASP minus 22.5 percentwas the Medicare Payment Advisory Commission’s estimate of theaverage minimum discount eligible hospitals received for drugsacquired under the 340B program. Applicable drugs not purchasedunder the 340B drug program would continue to receive ASP plus 6percent payment.

|

Related: CVS, Walgreens sued for overcharging pharmacycustomers

|

“CMS seeks comment on implementing this proposal in a mannerthat will bring down out-of-pocket drug costs for Medicare patientsand allows providers to best meet their patients’ needs,” theagency writes.

|

However, 340B Health and its members submitted comments stronglyopposing the almost 30 percent proposed payment reduction,contending it would be counterproductive and would actually reduceaccess to care.

|

“CMS’s proposal would contravene 340B’s purpose by significantlyreducing the savings that hospitals currently receive through theprogram and, in turn, severely hamper their ability to care forlow-income patients,” writes Jeff Davis, 340B Health’s legislativeand policy counsel. “Moreover, the proposal would harm patient carewithout reducing patient costs or Medicare spending.”

|

The advocacy group conducted a survey of 340B hospitals toevaluate the impact the proposal would have on their ability totreat their low-income patients, and found that the majority wouldbe hampered in a number of ways:

  • 86 percent say they would have to close clinics or limit chemoinfusion and other oncology services for low-income patients.

  • 74 percent say it would impact their ability to provide pharmacyservices, including staffing, offering discounted drugs, andoperating programs such as medication therapy management.

  • More than two-thirds say it would affect their ability toprovide uncompensated care, which would directly impact access tocare for low-income and rural individuals.

  • Nearly half say the proposal would impact quality of care andpatient outcomes.

One hospital respondent says: “Our system would likely eliminateor significantly cut back on the extra programs and services itoffers, such as providing drugs to our community ambulance serviceproviders, providing an anticoagulation clinic that deeplydiscounts Coumadin, providing a respiratory clinic that covers theout-of-pocket medication expenses for 227 patients, providing $2.4million in community benefit services, and $1.3 million in charitycare.”

|

Moreover, the advocacy group contends that CMS’s proposal wouldviolate the 340B statute and the Medicare statute; the proposal“relies on a faulty premise” that fails to recognize that 340Bhospitals serve patients with more expensive medical needs; andthat CMS’s proposed modifier for non- 340B drugs billed under theOutpatient Prospective Payment System (OPPS) would pose operationaland financial challenges for 340B hospitals.

|

“While we share the administration’s concern about high drugprices, we don’t believe that dramatically cutting payments tohealth care providers is the way to go," says Ted Slafsky,president and chief executive of 340B Health. “The administrationintends for the proposal to be consumer friendly but the reality isthat it will do nothing to reduce high drug prices or reduce costsfor Medicare or seniors.”

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.