08 Jan Modern Healthcare: All harm, no help in 340B cuts
“Now that a U.S. District Court has postponed the hospital industry’s legal challenge to cutbacks in the 340B drug discount program, it falls to Congress to reverse the Trump administration’s egregious new rules.
Believe it or not, there’s hope, since the new rules benefit no one—quite literally. Legislation reversing them has even gained bipartisan backing in Congress.
Some background: The pharmaceutical industry has had the 340B program in its crosshairs since its inception. The program requires companies to sell drugs to safety-net hospitals at prices well below the Medicare reimbursement rate.
The hospitals, in turn, are allowed to collect the standard rate (average sales price plus 6%) from the CMS. The 340B program’s goal is to channel additional resources to safety-net providers so they can offer much-needed services (often not reimbursed) to their low-income clientele. These can include medication adherence programs and paying for individual case managers, which help keep people out of the hospital.
Drug industry opposition to 340B intensified after passage of the Affordable Care Act, which offered the discounts to children’s hospitals, critical-access hospitals, free-standing cancer hospitals and sole community hospitals. By 2015, the program provided about $6 billion in additional revenue to over 37,000 340B provider sites. The program has since expanded to 38,396 sites.
The Trump administration’s first Outpatient Prospective Payment System rule, which went into effect Jan. 1, takes direct aim at the program. While drug companies still have to offer the same discounts to 340B providers, the CMS scaled back the Medicare reimbursement rate by about $1.6 billion.
Taxpayers will not benefit from the cutback, which will inevitably eliminate some 340B-enabled programs that help the poor. Under government rules requiring budget neutrality, the CMS must pass along those “savings” to all providers in the form of higher rates for any and all services that come under the OPPS rule.
In other words, the Trump administration is taking money from hospitals serving the poor and giving it to any hospital that serves Medicare beneficiaries, including those in the wealthiest communities. I denote a pattern.”