August 340Buzz: When it rains, it pours

August 340Buzz: When it rains, it pours

After several months of hearing almost nothing regarding 340B on the legislative, judicial, or regulatory front – as hospitals and government agencies focused their resources on the COVID-19 crisis – it seems as though the efforts around curtailing and disrupting the 340B program have picked up right where they left off. This month, as we mark the three-year milestone of bringing you our monthly 340Buzz, we take a deeper dive into the moves pharma has been making and the executive order affecting FQHCs that we mentioned in previous blogs last month, discuss the long-awaited court decision about the Medicare part B reimbursement cuts, and we also take a look at HRSA’s new registration and recertification requirements.

Court rules on Medicare part B reimbursement cuts

On July 31, the U.S. Court of Appeals for the District of Columbia made its ruling on the 340B Medicare part B reimbursement cuts that were first proposed by CMS in July of 2017 and took effect in January of 2018.

The court ruled in favor of CMS, stating that the cuts – which changed the rate at which covered entities could be reimbursed via the 340B program for Medicare part B drugs from average sales price (ASP) plus 6% to ASP minus 22.5% – could stand.

“The 2-1 ruling overturns a district court decision that HHS overstepped its bounds,” according to an article from Healthcare Dive, which called the ruling “another major blow for hospitals.”

The American Hospital Association has already said they will seek to have the ruling overturned. They told Healthcare Dive, “The ruling fails to account for the fundamental differences between hospital outpatient departments and other sites of care. Hospitals are open 24/7, held to higher regulatory standards and are often the only point of access for patients with the most severe chronic conditions, all of whom receive treatment regardless of ability to pay.”

“Keeping these cuts in place will only deepen the damage of forced cutbacks in patient services and cancellations of planned care expansions. These effects will be especially detrimental during a global pandemic,” 340B Health said in a statement. “The 340B program enables safety-net hospitals, health centers, and clinics to stretch their scarce resources to serve more patients and provide more needed services. These hospitals provide 60% of all uncompensated care in the U.S. and account for 75% of all Medicaid hospital services. 340B discounts help cover some of these costs without using a single taxpayer dollar.”

Despite advocates’ continued objections to the cuts, just four days after the court ruling, CMS proposed reducing the reimbursement rate for Medicare part B cuts even further in 2021 – by an additional 6.2% – for a new reimbursement rate of ASP minus 28.7%. The proposal is part of CMS’ 2021 Hospital Outpatient Prospective Payment System (OPPS) proposed rule. The agency is relying on data collected through a recent 340B acquisition cost survey to justify the additional reimbursement reduction, according to the National Law Review.

CMS is accepting comments regarding the proposed 2021 cuts until October 5. Sentry urges its covered entity customers to use this opportunity to tell CMS how valuable the 340B program is to your operations and let them know how further cuts will impact the communities you serve.

Pharma pushes the envelope

As we mentioned in a recent blog, Merck and Sanofi began sending letters directly to covered entities demanding that the hospitals provide pharmacy claims data directly to the manufacturers, ostensibly to help avoid Medicaid duplicate discounts – however, the request for data goes beyond Medicaid information; a move the manufacturers have no legal precedent to require. Meanwhile, Eli Lilly put out a manufacturer notice via HRSA stating that the pharma company would stop offering 340B pricing for Cialis (tadalafil) when the drug is purchased by a 340B covered entity to be dispensed through a contract pharmacy, only allowing the 340B discount if the prescription is filled at a hospital’s on-site pharmacy – again, a move for which there is no legal precedent.

340B Health and the 340B Coalition, as well as several law firms representing covered entities, have spoken out against these moves by pharma. Among hospitals’ concerns regarding Merck and Sanofi’s demands is the lack of staff, time, and resources to pull this information together – especially as much of the country is still in the grip of the COVID-19 crisis – as well as potential HIPAA violation concerns regarding the requested data. Merck’s deadline for hospitals to submit the claims data was August 14, while Sanofi’s is October 1. It remains to be seen how many covered entities will comply. We know that each of the pharma companies has painted the consequences of non-compliance as burdensome, up to and including not offering 340B pricing to covered entities’ contracted pharmacies.

Will executive order impacting FQHCs actually take shape?

In another issue we touched upon last month, one of the recent healthcare-related executive orders President Trump signed specifically targeted how FQHCs use their 340B program savings. The order requires Federally Qualified Health Centers to pass on the discounted 340B price they pay for insulin and EpiPen directly to patients, ensuring patients receive the drugs at this discounted rate plus a nominal administrative fee.

“The community health centers targeted in the order already sell discounted drugs to patients, and the Trump administration may not have the legal power to force deeper discounts at enough pharmacies to make a difference,” according to an article from Bloomberg Law. “Steve Carey, chief strategy officer for the National Association of Community Health Centers, said the group doesn’t plan on suing the federal government over the order because ‘it’s not enforceable anyway.’”

“The 340B order would address only a narrow portion of the 340B providers, about 1,000,” added Politico. “President Donald Trump promised that his set of new executive orders would ‘completely restructure the prescription drug market.’ But industry experts say that’s not so certain — and that any changes that do come could take several years.”

In fact, executive orders are typically subject to public comment periods of 60-90 days, so the chances of this and the President’s other recent executive orders taking effect before the November election are slim.

New 340B registration and recertification requirements from HRSA

On July 20, HRSA’s Office of Pharmacy Affairs (OPA) issued a new program update with new covered entity registration and recertification requirements, as well as enhancements to the 340B Office of Pharmacy Affairs Information System (OPAIS), reports The National Law Review. “The Program Update focuses on the documentation necessary for covered entities to demonstrate compliance with statutory 340B Program requirements. Covered entities should familiarize themselves with the Program Update in order to reduce risks of future registration delays, eligibility lapses due to missing documentation during the annual recertification process, or repayment obligations resulting from Medicaid duplicate discounts.” Recertification began August 17 and will be open until September 14, 2020.

Fall is around the corner

It’s hard to believe that summer is already on its way out. Our next 340Buzz will put us only a few days away from the first day of Autumn, and that much closer to Election Day, with less than 30 days that Congress will be in session.

As always, healthcare is a hot-button issue on both sides of the aisle, and the way the pendulum swings could have a big impact on everything from health insurance to drug prices to 340B. Come what may, Sentry will be on the front lines to speak out for covered entities and bring you the information and technology you need to continue serving vulnerable populations. For now, we urge you to work on comment letters and stay abreast of recertification requirements, and keep your eye on the buzz—we certainly will.