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Latest 340B Reform Bill Unlikely to Fix Core Problems, Say Analysts

By Jack O'Brien  
   January 23, 2018

New analysis by McDermott Will and Emery throws cold water on the HELP ACT, Sen. Bill Cassidy’s proposal to improve the maligned 340B drug program. 

A recent legislative proposal to increase transparency and accountability for the 340B Drug Discount Pricing program would not effect much meaningful change, according to an analysis published by National Law Review.

Sen. Bill Cassidy, R-La., proposed the Helping Ensure Low-income Patients have Access to Care and Treatment (HELP ACT) last Tuesday, which would institute a two-year moratorium on registering “new non-rural section 340B hospitals and associated sites.” The bill would also install four new regulations to determine the eligibility of outpatient locations for disproportionate share hospitals (DSH), better known as “child sites.”

Emily J. Cook, JD, MSPH, a partner at McDermott Will and Emery in Boston, co-authored the report, “HELP ACT Would Do Little to Help Ease Concerns of 340B-Participating Hospitals,” with fellow partner Eric Zimmerman, JD, MBA.

While the report states the bill aims to address concerns about wasteful spending, a lack of oversight, and rampant abuse associated with 340B, the authors argue the focus is primarily on regulating providers rather than drug manufacturers.

In an interview with HealthLeaders Media, Cook said data access remains one of the most significant challenges facing the 340B program, which the HELP ACT attempts to solve through the proposed expansion of claim-level drug identification and reporting requirements.

“For every drug reported on a claim and submitted to a payer, the HELP ACT would require specific modifiers to identify those drugs,” Cook said. “In most cases, that type of claim-level identification is not currently required, so putting in place the mechanisms to apply modifiers to the claims would likely represent a significant cost to the providers.”

Cook and Zimmerman wrote that extending requirements for 340B hospitals goes beyond current regulations, which could do more harm than good. The report states the regulations on hospitals servicing large low-income populations could create “operational and administrative costs that outweigh the benefit of participation in the program.”

The 340B program totalled $16 billion in outpatient drug purchases in 2016, which are dispensed through federal Medicare payments to qualified DSHs.

The bill would also impose new restrictions on contracts between non-profit DSHs and local governments, specifically clarifying what it means for non-profits to avoid contractual requirements by receiving “formally granted governmental powers.” The Department of Health and Human Services (HHS), which oversees the 340B program, would have responsibility to confirm the certifications of these non-profits.

The HELP ACT proposes new provisions dealing with claim modifier reporting requirements introduced in the 2018 Medicare Outpatient Prospective Payment System (OPPS) final rule. HHS would require participating hospitals to report the net aggregate revenue from 340B drugs, the percentage of total revenue from physician-administered injections, and the names of third-party drug distributors to qualified hospitals and child sites.

This is the third 340B-related bill released this month and is the most comprehensive legislation yet, according to Cook. Stakeholders and analysts expect more proposals addressing different aspects of the program to be released in the coming months.  

The proposal comes less than two weeks after the House Committee on Energy and Commerce issued its two-year review of the program, complete with recommendations to improve transparency and accountability.

Related: 340B Drug Program Sees Massive Changes on the Horizon

 

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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