Sept. 9, 2021– Calls are increasing for the Biden administration to stop deep Medicare Part B payment cuts to many hospitals participating in the 340B drug pricing program. The reductions, which have been in place since January 2018, have been harmful for many safety-net hospitals and their patients. Earlier this summer, the administration issued proposed rules that would continue the lower payment rates into 2022.
So far this year, two congressional letters have gone to the Centers for Medicare & Medicaid Services (CMS) calling on the agency to abandon its proposed Medicare payment reductions for many 340B hospitals next calendar year. The first letter is from a group of 12 House Democrats representing swing districts who are planning to seek reelection in high-profile, competitive races. The second letter came from 15 Democrats serving on the influential House Energy and Commerce Committee, including Rep. Diana DeGette (D-Colo.), who chairs the committee’s Oversight Subcommittee, and Rep. Anna Eshoo (D-Calif.), who chairs the Health Subcommittee.
The letters spell out the lawmakers’ opposition to the CMS proposal to continue reducing outpatient drug payment rates to most 340B hospitals (with exceptions for certain rural, cancer, and children’s hospitals) while continuing to pay non-340B hospitals the full rates. These reductions total nearly 30% and have caused some hospitals to curtail care for patients in need that they otherwise would have been able to fund through 340B program savings.
“Continuing these harmful cuts will reduce the already limited financial resources available to 340B hospitals to treat their low-income and rural patients,” states the letter from the 12 House swing district members. “It would also further harm 340B hospitals’ ability to serve their patients at a critical time for safety-net hospitals serving on the front line of defense against COVID-19.”
The letter from the Energy and Commerce members states: “Since the cuts began, 340B hospitals, subject to the cuts, have collectively lost hundreds of millions of dollars, harming their ability to fund critical services for low-income and rural patients.”
Cuts That Save No Money
340B Health President and CEO Maureen Testoni expressed the association’s deep disappointment that the Biden administration is proposing to perpetuate a harmful payment policy that first went into effect during the Trump administration. Numerous health systems and hospitals have reported that the cuts have forced them to pull back on health services they had been funding in part through 340B savings. In other cases, hospitals have canceled care expansion plans because of the payment reductions.
“We strongly urge CMS to abandon these ill-conceived payment cuts when it finalizes 2022 rates later this year,” Testoni said in a statement. “Four years of reductions already have taken a substantial toll on our nation’s health care safety net, and 340B hospitals and the patients who rely on them can ill afford another year of harm.”
Because of Medicare budget-neutrality rules, the dollars that are cut from 340B hospitals for outpatient drugs are put toward higher payments for all non-drug outpatient services under the program. For this reason, the cuts in the aggregate do not save Medicare seniors or the federal government any money, a point that the letter from the Energy and Commerce Committee members makes clear.
“These draconian cuts have not saved money for the Medicare program or beneficiaries, as every dollar cut for 340B hospitals is redistributed to increase payments for other services, even when furnished by providers that do not meet 340B’s strict requirements for providing care to patients with low income,” the letter states.
CMS will review public comments before issuing a final payment rule for calendar year 2022 sometime this fall. 340B Health and many of its member hospitals are submitting comments that will echo the concerns expressed by the congressional leaders. With a new administration in place, 340B hospital proponents are hopeful for a change of heart and direction.