Hos­pi­tals ques­tion de­ci­sion to re­dis­tribute $900 mil­lion in 340B funds

Modern Healthcare - - NEWS - By Vir­gil Dick­son

Hos­pi­tal of­fi­cials say that a pro­posed $900 mil­lion re­duc­tion in pay­ments through the 340B drug dis­count pro­gram will cut into char­ity care and may not be re­dis­tributed fairly by the CMS as in­tended.

The $900 mil­lion cut would be en­acted by the CMS through a sharp re­duc­tion in the rate paid to hos­pi­tals in the pro­gram, which aims to re­duce op­er­at­ing costs for hos­pi­tals that see a dis­pro­por­tion­ate share of low-in­come pa­tients. The CMS sug­gested that hos­pi­tals in the fed­eral pro­gram be paid 22.5% less than the av­er­age sales price for drugs, rather than the cur­rent rate of 6% above the av­er­age sales price. Un­der the pro­posed changes, if a drug costs $84,000, the CMS would pay just over $65,000, in­stead of the cur­rent $89,000.

The re­duc­tion is in­tended to be bud­get-neu­tral, so the CMS said it would re­dis­tribute the sav­ings by in­creas­ing Medi­care pay­ments to hos­pi­tals by 1.4% next year.

“You’re tak­ing funds from hos­pi­tals that treat the most frag­ile pop­u­la­tions and spread­ing it across all hos­pi­tals,” said Karen Fisher, chief pub­lic pol­icy of­fi­cer at the As­so­ci­a­tion of Amer­i­can Med­i­cal Col­leges.

Providers now use sav­ings from the 340B pro­gram to pro­vide on­go­ing care man­age­ment for con­di­tions rang­ing from HIV to di­a­betes, ac­cord­ing to Ted Slaf­sky, CEO of 340B Health, an as­so­ci­a­tion of more than 1,300 340B hos­pi­tals.

For in­stance, Mon­roe County (Ala.) Hos­pi­tal, uses the $1.1 mil­lion it gets from the 340B pro­gram to fund can­cer care for pa­tients with no in­sur­ance cov­er­age. The Univer­sity of Rochester (N.Y.) Med­i­cal Cen­ter saves more than $4 mil­lion and uses the money to of­fer pa­tients free med­i­ca­tions.

Ap­prox­i­mately 45% of all acute-care hos­pi­tals par­tic­i­pate in the 340B pro­gram. The Medi­care Pay­ment Ad­vi­sory Com­mis­sion es­ti­mates that 2,140 were re­ly­ing on the pro­gram in 2014, up from 583 in 2005. Spend­ing dur­ing that pe­riod jumped from $2.4 bil­lion to $14 bil­lion, ac­cord­ing to fed­eral data.

One of the on­go­ing crit­i­cisms of the 340B pro­gram is that hos­pi­tals with mostly high-in­come pa­tients have taken ad­van­tage of the pro­gram, some­times turn­ing it into a mon­ey­mak­ing op­por­tu­nity. MedPAC wrote in 2015 that “cov­ered en­ti­ties can pur­chase 340B drugs for all el­i­gi­ble pa­tients, in­clud­ing pa­tients with Medi­care or pri­vate in­sur­ance, and gen­er­ate rev­enue if the re­im­burse­ments for the drugs from pay­ers ex­ceed the dis­counted prices they pay for the drugs.”

Plus, the Af­ford­able Care Act made new cat­e­gories of hos­pi­tals el­i­gi­ble for 340B dis­counts, in­clud­ing some chil­dren’s hos­pi­tals, free-stand­ing can­cer hos­pi­tals and sole com­mu­nity hos­pi­tals.

A CMS spokesman said the agency wants feed­back on ways to en­sure the sav­ings re­turn to hos­pi­tals that serve unin­sured and un­der­in­sured pa­tients. The agency is tak­ing com­ments through Sept. 11. If fi­nal­ized, the change would be­come ef­fec­tive Jan. 1, 2018.

One of the on­go­ing crit­i­cisms of the 340B pro­gram is that hos­pi­tals with mostly high-in­come pa­tients have taken ad­van­tage of the pro­gram, some­times turn­ing it into a mon­ey­mak­ing op­por­tu­nity.

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