Senate Bill Aims to Preserve 340B Eligibility for Hospitals Affected by COVID-19 Pandemic

Fierce Healthcare, by Robert King |

A group of bipartisan senators introduced legislation to ensure that a hospital doesn’t fall out of the 340B drug discount program due to a rapid change in patient volume sparked by COVID-19. The bill comes as hospitals continue to grapple with a financial crisis sparked by the pandemic. It also centers on a controversial program that the Trump administration has sought to cut by more than a third.

“As the ongoing pandemic disrupts our health care system, we must ensure that programs like the 340B program can be there to support our hospitals and our communities,” said Sen. Rob Portman, R-Ohio, one of the co-sponsors of the bill, in a statement.

340B hospitals get a discount on drugs if they meet certain requirements, including providing a certain amount of charity care. Pharmaceutical manufacturers agree to provide the discounts in exchange for their products getting reimbursed by Medicaid.  But a critical metric for determining if a hospital is eligible for 340B is the inpatient hospital admissions of low-income Medicare and Medicaid patients.

However, patient volumes have plummeted at hospitals across the country as the pandemic forced facilities to shutter elective surgical procedures and patients have been afraid of entering a facility for fear of contracting the virus.

“Though hospitals have started resuming elective procedures, and patients have begun returning to seek care, there is concern that as a result of this year’s slowdown, some hospitals may not meet the required inpatient admission threshold to remain in the program for the following year,” according to a release on the bill.

The legislation would ensure any previously eligible 340B hospital would still be eligible for any cost reporting period during the COVID-19 public health emergency.

The current public health emergency period expires July 25. However, Department of Health and Human Services spokesman Michael Caputo tweeted last week that the agency is expected to extend the period again, although no final announcement has been made.

The other co-sponsors of the legislation are Sens. John Thune, R-South Dakota; Debbie Stabenow, D-Michigan; Tammy Baldwin, D-Wisconsin; Ben Cardin, D-Maryland; and Shelley Moore Capito, R-West Virginia.

House lawmakers have also written to leadership asking for similar protections for eligibility for hospitals.

The 340B program has been the focal point of intense opposition from the pharmaceutical industry, which charges the program has gotten too large and that hospitals are not using the savings from discounts on improving patient care. Hospitals shoot back that the discount program is needed for safety-net hospitals already struggling to meet ever-increasing drug prices.

The program has been the center of a major legal fight between hospitals and the Trump administration. Hospitals have sued to halt a nearly 30% cut to payments that the administration instituted in 2018 and 2019. A federal judge sided with the hospital industry that the administration doesn’t have the authority to install the cuts.

However, hospital groups have lately started to battle with the Centers for Medicare & Medicaid Services (CMS) over a survey sent by the agency to 340B hospitals on the acquisition costs for certain outpatient covered drugs. The agency said the survey is intended to help determine payment amounts for drugs acquired by 340B hospitals in order to repay such facilities for the payment cuts.

But hospitals have charged that CMS should instead repay hospitals in full for the payment cuts instead of creating a new solution via the survey.