Shifting payer mix puts 340B hospitals at risk of losing eligibility

By | April 5, 2021

Dive Brief:

  • Hospitals enrolled in the 340B drug discount program may no longer be eligible after the pandemic shifted their payer mix, according to a Wednesday letter the American Hospital Association sent to HHS Secretary Xavier Becerra.
  • Depleted patient volumes and canceled elective surgeries lowered the proportion of hospital patients who are Medicaid and Medicare SSI patients in 2020, according to AHA. When hospitals file their Medicare cost reports reflecting those changes, they may no longer meet the criteria for the program and lose access.
  • AHA wants HHS to waive certain eligibility requirements for hospitals in the program to allow them continued access during the public health emergency, according to the letter.

Dive Insight:

Throughout the pandemic HHS has issued a number of regulatory flexibilities to help providers, and the hospital lobby is asking it to do so again by waiving the current eligibility requirements for the 340B drug discount program before providers experiencing a temporary shift in payer mix are kicked out.

The program requires drug companies to give discounts on outpatient drugs to providers serving a large share of low-income patients, particularly those in rural areas.

The discounts can range from 25% to 50% of the cost of the drugs, according to HRSA, which operates the program.

But many of those patients did not seek care last year, hampering hospitals’ finances and altering the mix of payers.

Hospitals currently qualify for the program based on their volume of inpatient Medicaid and Medicare SSI patients, reported through their most recently filed Medicare cost reports.

Losing access to 340B discounted drugs and program savings could jeopardize the ability of these hospitals to provide critical services for their communities, which would be particularly catastrophic at a time when they remain on the front lines of the ongoing pandemic,” AHA said in its letter.

This latest issue comes after several years of clashes over the 340B program. 

Last year, a federal appeals court sided against the hospital lobby, ruling that HHS’ significant rate cut for some 340B drugs could remain in place. HHS made the reimbursement cut arguing that the hospitals already received steep discounts for the drugs and could be incentivized to overuse them.

At the time, AHA said it was weighing its options over whether to appeal to the Supreme Court. 

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To head off other issues, HRSA finalized a rule late last year that created a dispute resolution process for when hospitals believed they were overcharged for 340B drugs. The drug manufacturers have a similar mechanism to raise concerns about whether hospitals received duplicate discounts. 

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