340B Health


in 340B Health News Releases

WASHINGTON, D.C.— A Centers for Medicare & Medicaid Services (CMS) plan to limit Medicare drug payments to 340B hospitals to their acquisition costs would harm safety-net hospitals and their patients and would violate federal law, 340B Health stated in a comment letter submitted today that calls for the proposal to be rejected.

The letter to the White House Office of Management & Budget (OMB) regards the OMB review of a proposed CMS survey of 340B hospitals on what it costs the hospitals to obtain covered outpatient drugs. CMS has indicated that it intends to use the acquisition cost data to set Medicare Part B drug payment rates. That strategy would perpetuate pay cuts that the agency implemented for many 340B hospitals starting in 2018 – reductions that a federal court has ruled unlawful in a case that is under appeal.

The survey and the related pay cuts would harm 340B hospitals by eliminating the savings that hospitals can obtain through the 340B program’s drug discounts. That would reduce the ability of those hospitals to stretch their resources to provide more care to patients with low incomes and those living in rural areas, as Congress intended when it created the 340B program. Such cuts would be particularly harmful to safety-net hospitals that were exempted from the nearly 30 percent pay reductions that started in 2018. Those hospitals serve a unique set of safety-net patients and would be unable to absorb such pay cuts while still meeting those patients’ health needs, 340B Health says.

The proposed acquisition cost survey is contrary to federal law in several ways. Medicare statute does not give CMS the authority to conduct this survey with only a subset of hospitals, such as 340B hospitals, or a subset of drugs, such as 340B-eligible medications. The survey also will not create a sufficiently large sample of hospitals to generate a statistically significant estimate of acquisition costs, violating another requirement of the Medicare statute. In addition, the survey plan is contrary to federal paperwork reduction requirements because it contains serious flaws that would prevent it from producing useful data, places a massive burden on 340B hospitals that CMS has failed to minimize, and provides unclear instructions to hospitals.

For the multiple reasons cited in the letter, 340B Health requests that OMB reject the CMS proposed survey.

Contact: Richard Sorian at richard.sorian@340bhealth.org or 202-536-2285.