The 340B program requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and other covered entities at significantly reduced prices.
340B payments are a lifeline for some organizations, so when payments were previously cut, hospital groups were not happy, to say the least.
What happened in 2022
Luckily for these organizations, in July, the Supreme Court unanimously ruled that cuts to hospital reimbursement under the 340B drug discount program were unlawful.
In the 2023 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.
By the time November rolled around, 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. The ADR process is an administrative process designed to assist these organizations and manufacturers in resolving disputes regarding overcharging, duplicate discounts, or diversion.
The most recent update however, came this week when a federal court ruled that HHS is able to determine how to repay hospitals enrolled in the 340B program--once again concerning hospital groups.
How it is affecting providers
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.
Cheryl Sadro, the CFO for UC Davis Health, and Tammy Trovatten, the director of government reimbursement for UC Davis Health, also connected with HealthLeaders to discuss the financial issues hospitals and health systems have been dealing with over the course of the pandemic, one key area being 340B payments.
“One of the things we've been watching and will continue to watch through this process is where we go from here with 340B. We're the only level one trauma center in a multicounty area, and between 340B trauma and transplant, we've garnered a large portion of our bottom line,” Sadro said.
What does the future hold?
“As we think about changes in policy and things of that nature, we are paying attention to policy and how it impacts us long term. 340B going away would not only be devastating for us but incredibly devastating to our patients because it does fund some other things that we can do in our organization to serve that indigent population,” Sadro said.
Trovatten added, “It's been this ongoing saga for many years. CMS implemented a cut to 340B hospitals, which just recently got overturned, but we still are unsure how that's going to be reimbursed because it's trying to be made budget neutral. It doesn't matter who's in charge, this is just an overall problem that is concerning. All non-340B hospitals got an average wholesale cost plus 6%, where we were cut to an average wholesale price minus 22%. So, it was a weird thing that happened that got overturned, but we [are unsure] where we go in the future.”
“CMS implemented a cut to 340B hospitals, which just recently got overturned, but we still are unsure how that's going to be reimbursed because it's trying to be made budget neutral. It doesn't matter who's in charge, this is just an overall problem that is concerning.”
Amanda Norris is the Associate Content Manager of Finance, Payer, Revenue Cycle, and Strategy for HealthLeaders.
The Supreme Court unanimously ruled that cuts to hospital reimbursement under the 340B drug discount program were unlawful.
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.
Leaders agree they will continue to watch what happens with 340B payments as they are a life line for most orginizations.