CMS advisory panel: Don't cut 340B payments next year

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An advisory panel says CMS should delay a proposed rule that would cut 340B drug discounts to hospitals.

After listening to testimony from providers on Monday, an advisory panel recommended against finalizing a proposed rule by the Centers for Medicare & Medicaid Services that would make significant cuts to 340B payment rates to hospitals in 2018.

CMS’ Advisory Panel on Hospital Outpatient Payment said the agency should not implement the proposed rule, which would cut Medicare payments next year for drugs acquired under the 340B Drug Discount Program.

CMS issued a proposed Outpatient Prospective Payment rule last month that would pay hospitals 22.5% less than the average sales price for some drugs purchased under the 340B program, which requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and covered entities at significantly reduced prices.

Industry groups quickly opposed the proposal, saying it may harm safety-net hospitals' ability to treat low-income patients. At present, CMS pays up to 6% more than the average sales price in the 340B program, and the rate is a longstanding Medicare policy.

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The advisory panel heard testimony Monday urging CMS not to finalize the proposal and recommended the agency collect further data about the impact and how CMS should shift the savings if a cut were put in place.

Among those testifying at the one-day hearing were MedStar Health officials Peegan Townsend, vice president of government affairs, and Kathy Talbot, vice president for rates and reimbursement, who testified on behalf of the American Hospital Association, which opposes the plan.

Seven of the 10 MedStar hospitals that operate in the Maryland and District of Columbia area participate in the 340B program, which generates almost $60 million in drug cost savings each year, they said.

Nationwide, 340B hospitals use the savings they receive on discounted drugs and reinvent them in programs that enhance patient services and access to care, as well as provide free or reduced priced prescription drugs to vulnerable patient populations, Townsend and Talbot said in their presentation, according to the AHA.

MedStar, for example, offers in-home services to more than 3,000 elderly patients, runs an after-hours clinic that provides free healthcare at a homeless shelter, places a nurse at four area elementary/middle schools and runs a no-charge clinic in Baltimore for uninsured patients.

The cuts in the proposed rule would harm the hospitals that serve the most vulnerable patients, undermine the purpose of the program and misdirect funds intended for indigent care, the MedStar officials testified.

CMS is accepting comments on the proposed rule until Sept. 11.