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Have a 340B Dispute? Prepare For Possible Changes

Analysis  |  By Amanda Norris  
   November 30, 2022

HHS released a proposed rule outlining changes it wishes to make to the 340B administrative dispute resolution process.

HHS issued a new proposed rule revising the 2020 final rule that established the 340B administrative dispute resolution (ADR) process to better align with requirements found within the Affordable Care Act.

For background, the 340B program requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and other covered entities at significantly reduced prices. The ADR process is an administrative process designed to assist these organizations and manufacturers in resolving disputes regarding overcharging, duplicate discounts, or diversion.

340B payments are a lifeline for some organizations, making the ADR process that much more important as hospitals need to ensure fair and accurate payment.

Robin Damschroder, the CFO for Henry Ford Health, recently shared with HealthLeaders the impact that these payments have on hospitals.

"Henry Ford Health system and a lot of folks rely on 340B discounts and other mechanisms like disproportionate share payments. We're a big teaching institution, so a lot of these special payments that we do in order to teach the healthcare leaders of the future or make sure that we can take care of vulnerable patients are extremely important," Damschroder said.

"So that is an area that we and others are actively—in our advocacy—ensuring that these programs stay intact or evolve to a place that enhances the programs for the people that were trying to care for," said Damschroder.

According to the proposed rule, there are a few major proposed changes to the ADR process:

  • Establish a more conventional administrative process for disputes and move away from the current “trial-like” proceedings
  • Include 340B program subject matter experts from the Health Resources and Services Administration’s Office of Pharmacy Affairs on the ADR panel
  • Align the ADR process to statutory provisions on overcharges, duplicate discounts, and diversion
  • Offer a reconsideration process for parties dissatisfied with the 340B ADR panel decision

Historically, HHS has encouraged manufacturers and covered entities to work with each other to attempt to resolve disputes in good faith, it said in the proposed rule. The ADR process is not intended to replace these good faith efforts, HHS says, and the ADR process should be considered only when good faith efforts to resolve disputes have been exhausted and failed.

This proposed rule comes on the heels of a troublesome year for the 340B program.

In July, the Supreme Court unanimously ruled that cuts to hospital reimbursement under the 340B drug discount program were unlawful.

In the recent OPPS final rule, CMS solidified the payment policy for 2023 of average sales price of 6% for drugs and biologicals acquired through the 340B program because of that unanimous Supreme Court decision.

Hospitals and health systems can send comments on the rule to HHS by January 30, 2023.

Amanda Norris is the Revenue Cycle Editor for HealthLeaders.

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