The Health Resources and Services Administration (HRSA), which manages the 340B program, told providers it doesn’t have the authority to waive the threshold requirements or adjust the percentages to account for the disruption the pandemic caused.
The American Hospital Association sent a letter to HHS in March, requesting that the agency temporarily allow 340B hospitals to participate in the program, even if they hadn’t served enough low-income or Medicaid patients during the pandemic.
But that’s probably not a viable option because HHS’ power to waive Medicare, Medicaid and Children’s Health Insurance Program requirements doesn’t extend to the 340B program, said Emily Cook, a former HHS official and partner at McDermott Will & Emery.
Congress tied hospitals’ eligibility for the 340B program to their DSH percentage, which is part of the Medicare program. So if HHS wanted to use its authority to address the issue, it would have to create a general waiver related to the DSH calculation, which would also affect Medicare payments.
“It’s really just being used by the 340B program as a proxy for identifying safety-net hospitals,” Cook said.
Another option AHA and providers are pushing is for Congress to pass a bipartisan bill introduced by Reps. Doris Masui (D-Calif.), Chris Stewart (R-Utah) and others that would temporarily waive 340B criteria through the public health emergency, allowing hospitals to remain in the program.
“We’re hoping for some legislative relief,” Walker said.
The prospects for the bill aren’t clear. A Democratic aide told Modern Healthcare Congress is unlikely to pass the bill until it’s more clear how widespread the issue is.
“In order to have a path forward here, we do need to have a more comprehensive understanding of the scope,” the aide said.
Additional information is expected in the coming months as more hospitals file their cost reports. Only about one-third of hospitals had filed cost reports as of April 2021, the latest release available.
“I think there’s many who are right on the cusp, and it’s hard to say one way or the other if they’ll remain in or fall out of the program,” Kuhlman said.
Congress might be willing to give providers a pass as part of a broader 340B package, said Helen Pfister, a partner at Manatt Health.
“There’s always been talk about giving HRSA more authority to regulate the 340B program. Given everything that’s going on, Congress might be more willing to act than it has in the past,” she said.
Providers and drugmakers have tussled over the 340B drug discount program since its inception. But the tension has risen in the past year, as manufacturers have fought the program’s recent growth by refusing to ship 340B drugs to contract pharmacies, leading to a host of lawsuits. CVS, Walgreens, Walmart, Rite-Aid and Kroger make up 60% of all contract pharmacies under the 340B program.
In addition, the AHA sued the federal government after the Trump administration slashed hospitals’ reimbursements for some 340B drugs. The Supreme Court will take up the case during its next session.