House lawmakers want new flexibility to ensure hospitals don't lose 340B eligibility due to COVID-19 response

Capitol building in Washington
A bipartisan duo of lawmakers is pressing House leadership to preserve 340B eligibility for hospitals fighting the coronavirus pandemic. (rarrarorro/iStock/Getty Images Plus/Getty Images)

Some House lawmakers want to ensure safety net hospitals wouldn’t lose eligibility to participate in the 340B drug discount program due to their response to COVID-19.

Reps. Doris Matsui, D-California, and Chris Stewart, R-Utah, wrote to House leadership (PDF) Tuesday outlining concerns that hospitals will be cut off from the program because they have to expand capacity to fight COVID-19.

“To support our safety net hospitals through this crisis, we write to ask that any future supplemental relief bill include policies to temporarily protect these hospitals from losing 340B eligibility,” the lawmakers wrote.

The 340B program requires drug companies to provide discounts to disproportionate share hospitals (DSHs) as a condition to participate in Medicaid.

RELATED: Hospitals blast CMS' proposed 340B survey

But for a DSH hospital to maintain eligibility, there are several requirements, including that they care for a certain number of DSH patients.

Hospitals, however, are boosting their bed capacity and shifting care to outpatient settings to reserve care for the most critical cases, the letter said.

“While such operational changes are essential to build capacity for crisis response at this time, ensuing shifts in payer mix could potentially reduce a hospital's DSH adjustment percentage and jeopardize their eligibility for the 340B program,” the lawmakers added.

Lawmakers were also worried about requirements that restrict hospitals from using a group purchasing organization for covered outpatient drugs.

While the Health Resources and Services Administration has given guidance to 340B hospitals on this issue, the agency said it cannot waive the prohibition.

The 340B program has been the focal point of a legal battle between the Trump administration and hospitals.

Hospital groups challenged a nearly 30% cut to the 340B program and prevailed in court.

Pharmaceutical companies charge that the program has gotten too unwieldy and large and that the discounts are not helping hospitals that need them. But hospital groups and 340B advocates charge that drug companies are seeking to avoid offering much-needed discounts to high-cost products and that the program helps hospitals operating on thin margins.

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