Hospitals blast CMS' proposed 340B survey

Woman paying for a prescription at a pharmacy
Hospitals are livid with the Centers for Medicare & Medicaid Services' proposal to survey certain facilities on their 340B acquisition costs. (Getty/Tom Merton)

Hospitals are blasting the Trump administration’s move to survey them about drugs covered under the 340B discount program, saying the survey request will cost too much and is flawed.

The comments from hospital groups and facilities are the latest in a fight over the 340B drug discount program, which the Centers for Medicare & Medicaid Services (CMS) has sought to cut for the past several years.

The survey request is in response to a court decision in December 2018 that ruled CMS didn’t have the authority to change the payment rates for 340B. CMS had instituted nearly 30% in cuts in 2018 and 2019 to the program, which requires drug companies to offer discounts to safety-net hospitals in exchange for access to Medicaid markets.

Webinar

Curating a Higher Level of Personalized Care: Digital Health + Mom

A long-term digital health strategy is needed to respond to the technology demands of the modern patient while thriving as an independent hospital in a fiercely competitive market. In this webinar, Overlake and one of its digital health partners, Wildflower Health, will discuss how Overlake has approached digital health and why it chose to focus early efforts on expectant moms within its patient population.

RELATED: 340B allies rally Congress to ensure Pelosi drug plan doesn't imperil discounts

The ruling said that CMS hadn’t collected the necessary data to set the payment rates based on acquisition costs.

So CMS released a proposal back in September to survey hospitals for their acquisition costs for certain covered outpatient drugs. The results will be used to help determine payment amounts for each drug acquired by 340B hospitals.

Hospital groups charged in comments due last week that the premise for the survey—to determine acquisition costs—was flawed.

“Congress did not design the 340B program to pay hospitals at acquisition costs,” said the Association of American Medical Colleges (AAMC). “Congress designed the program so that eligible hospitals could purchase covered drugs at a discounted rate below the Medicare reimbursement rate and use the difference to reach more eligible patients and provide more comprehensive services.”

RELATED: GAO: 340B hospitals, outside pharmacies need more oversight

Hospitals also said CMS should instead just repay all hospitals in full for the payment cuts instead of creating a new remedy based on the survey.

“We believe that CMS has grossly underestimated the expenditure of time and resources hospitals will incur in order to collect and submit the data,” the AAMC said.

Major hospital chain Ascension added that it also has significant concerns about the cost.

“In addition to creating significant new burden on providers with already limited resources, asking covered entities to complete calculations factoring tens of thousands of units of data will undoubtedly result in human error that may contribute to inaccuracies in the data reported, despite best efforts,” the hospital chain said.

RELATED: CMS retains 340B site-neutral payment cuts in final hospital payment rule

Advocacy group 340B Health also questioned why children’s and free-standing cancer hospitals had to be included in the survey, even though such facilities are exempt from the original 340B cuts.

The American Hospital Association (AHA) added that CMS must base payment rates on average acquisition costs but only if the hospital acquisition cost survey data meets certain requirements.

While the federal statute said that CMS can vary hospital payments by hospital groups, the requirement is that the survey include all hospitals and not just a subset of hospitals.

“In other words, for purposes of surveying hospitals, Congress does not distinguish between hospitals paid under the [Outpatient Prospective Payment System] based on their 340B status and those that are not,” the AHA said.

Therefore, CMS’ survey design doesn’t meet federal requirements because it only requires 340B hospitals to complete it.

AHA added that CMS instructions were confusing. The Federal Register notice and supporting statement say that all 340B hospitals are required to complete the survey. But another part of the supporting statement said that only 340B hospitals paid under the Outpatient Prospective Payment System are required to do so.

“The inconsistency between the published notice and the supporting documentation is confusing and may lead to less meaningful responses,” the AHA said.

But some advocacy groups charged that hospitals are being unfair by fighting basic transparency provisions.

“They are fighting CMS in the courts to stop the agency from moving Medicare drug payments somewhat closer to what hospitals actually pay for drugs. Now, they are fighting attempts by CMS to collect data to shed light on those payments,” said Ted Okon, executive director of the Community Oncology Alliance, which represents community oncology practices.

Suggested Articles

Average list prices for the most common specialties associated with surprise medical bills outpaced growth for all other specialties, analysis finds.

Medicare Advantage rebates to plans are expected to reach historic highs next year, MedPAC analysis finds.

The VA launched the National Artificial Intelligence Institute to prioritize AI R&D to improve veterans' health and public health initiatives.