While a federal judge squashed earlier plans for a 340B rebate pilot program, HHS appears poised to relaunch its attempts to transform the drug pricing program.
Less than two weeks after the federal government scrapped plans for a 340B rebate pilot, HHS is signaling it hasn't given up on the concept.
On February 17, HHS issued a Request for Information (RFI) seeking data on how a potential new rebate model might be structured and what its impact would be on stakeholders.
This move indicates that while an earlier version of a 340B rebate program may be dead, the current administration’s intent to shift 340B from upfront discounts to backend rebates remains very much alive.
The previous pilot, which was scheduled to go live January 1, was blocked by a federal court in Maine just days before implementation. The court said that HHS had failed to adequately consider the financial and operational strain the change would place on safety-net providers, criticizing the agency’s "threadbare administrative record.”
The new RFI appears to be a direct attempt to fix that procedural flaw.
HHS is now asking stakeholders, including covered entities, manufacturers, and wholesalers, to provide specific data on how a rebate model would affect cash flow, administrative costs, and integrity safeguards. The agency stated it is undertaking a "methodical and deliberate approach" to assess whether a new pilot would be consistent with its statutory authority.
A Lingering Threat to Cash Flow
For revenue cycle leaders, the core concern remains the float. Since the program’s inception 30 years ago, 340B providers have received discounts at the point of purchase. Shifting to a rebate model requires hospitals to purchase drugs at much higher wholesale acquisition costs and wait for reimbursement.
This change effectively forces safety-net hospitals to provide interest-free loans to drug manufacturers. For organizations operating on thin margins, the liquidity required to float these costs could be prohibitive. The AHA has previously argued that this model would impose hundreds of millions of dollars in added costs on hospitals.
AHA Rails Against the Rebate Model
In a statement regarding the new RFI, the AHA expressed cautious engagement while reiterating its opposition to the rebate mechanism itself.
"The AHA welcomes HRSA's attempt to gather detailed information about the impact of a rebate model," said Aimee Kuhlman, AHA vice president of advocacy and grassroots. "We look forward to working with the agency to answer the many specific questions it has posed... We hope that after careful consideration... HRSA will recognize that imposing hundreds of millions of dollars in costs on hospitals serving rural and underserved communities is not a sound policy."
What This Means for Providers
While the immediate threat of a January 1 implementation has passed, the RFI suggests that revenue cycle leaders should not dismantle their preparations entirely. HHS is actively building the legal and administrative justification to try again.
Hospitals and health systems have until March 19 to submit comments. Revenue cycle leaders should consider working with their government relations teams to provide the specific financial data requested, particularly regarding the cost of capital and the administrative burden of reconciling rebates.
Luke Gale is the revenue cycle editor for HealthLeaders.
KEY TAKEAWAYS
HHS has issued a Request for Information (RFI) to gather data on a potential 340B rebate model, indicating the administration still intends to pursue the transition despite recent legal setbacks.
The RFI appears designed to cure the procedural flaws of the previous attempt, specifically addressing the court's concern that the HRSA failed to consider the financial impact on safety-net providers.
The AHA is urging providers to engage, noting that hospitals have until March 19 to submit data demonstrating the "hundreds of millions of dollars" in costs the rebate model would impose.