Federal 340B program cuts loom for systems treating needy patients

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Hospitals sued CMS and want Congress to pass legislation to prevent cuts from taking effect January 1

A drastic reduction in reimbursement for medication and services provided by Medicare to hospitals participating in the federal 340B program could soon jeopardize care for patients who are uninsured, underinsured, or low income. The Trump administration has announced that it will cut Medicare Part B payments to these hospitals by $1.6 billion beginning January 1, 2018.

The hospitals facing drastic reductions to their funding are pursuing two avenues to prevent the cuts from taking effect January 1. “One is the legal route where they’ve sued CMS. That process is taking place in the court system,” said Ted Slafsky, president and CEO of 340B Health. The hospital-group complainants seeking injunction will be heard by a federal judge on December 21, 2017.

“There’s also a legislative route. A number of hospital groups are working hard to try to get H.R. 4392 passed. That is a bipartisan bill that would block the cuts from going into effect,” he added.

The 340B drug pricing program, created in 1992, requires drug manufacturers to provide as much as 50% discounts to covered entities—including federally qualified health centers, clinics, safety net and disproportionate share hospitals, and pharmacies contracted with any of these entities.

CMS says the final Medicare rule enacting the cuts is budget neutral, since the funds will be redistributed to the hospital system at large. The cuts, which reduce reimbursements from 6% above the average sales price to 22.5% below that average sales price, will take effect January 1.

All 340B hospitals will be subject to the drug payment reductions in 2018 except children’s hospitals, certain cancer hospitals, and rural sole community hospitals. “But while they’re not going to get the reduced payment, they have the new burden of applying a new modifier for any 340B drug,” said Lisa Scholz, PharmD, MBA, senior vice president and chief customer engagement officer at Sentry Data Systems in Florida.

Critics of 340B say there is a lack of oversight on whether discounts are used appropriately, and that because manufacturers are required to offer steep discounts, the covered entities make a profit—particularly if they provide the most expensive medication options.

Scholz and Slafsky disagree with critics’ characterization of the program. “Hospitals have been very good stewards of the 340B program. We think that’s misinformation coming from the pharmaceutical industry that has a vested interest in trying to shrink this program,” Slafsky said. “It’s not supposed to be tied to a particular patient.”

“You’ll hear some of the opposition say, ‘Hospitals aren’t putting this money to the patient directly.’ But 340B was designed to help hospitals stretch scarce resources,” Scholz said.

Savings are invested in integrating pharmacists into care, among other things. “Pharmacists are able to be involved in patient care, from medication therapy management to meds-to-beds programs,” Slafsky said. “Pharmacists care deeply about this program, they understand its value and importance, and [they] are passionate about providing care to all patients regardless of ability to pay.”

“My strong word of advice is for hospital pharmacy leadership to continue to have compliance at its center and to utilize the program for how it was intended, which was to help them provide more-comprehensive services,” Scholz said.

“I would urge all pharmacists to contact their Members of Congress to support H.R. 4392 as well as to encourage the Senate to push for a legislative fix. Time is of the essence, and everyone will suffer if this [rule] goes into effect,” Slafsky added.

For the full article, please visit www.pharmacytoday.org for the upcoming January 2018 issue of Pharmacy Today’s Health-System Edition.

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