The New Year has brought new changes in reimbursement to the 340B Drug Discount Program—changes that some fear could have significant negative impacts on hospitals.
On January 1, a ruling from the Centers for Medicare and Medicaid Services went into effect that reduces reimbursement rates on 340B qualified drugs from 6% above the sales price to 22.5% less than the sales price.
According to Kenneth Maxik, BS, MBA, Director of Patient Safety and Compliance for CompleteRx, the cuts—estimated to be $1.6 billion—will only impact certain hospitals.
“This rule really sets up some financial winners and losers,” said Maxik. The advantage goes to non-covered entities, because the payment reduction will only apply to 340B hospitals that are designated as disproportionate hospitals or rural referral centers.
The reimbursement cuts could mean the affected hospitals no longer have the funds to pay for certain patient-driven initiatives or chronic disease programs, according to Jillanne Schulte Wall, Director of Federal Regulatory Affairs for the ASHP. Hospitals across the country have previously used these drug margins to help pay for services such as chronic disease treatments or for transportation services for patients, she said. Some provide drugs at low or no cost to patients in need.
“It’s essentially a 30% cut to drug reimbursement to hospitals who are purchasing under 340B, so that margin goes away and it really will impact a lot of hospitals,” she said.
In an open letter released this month, Alexander Mansour, MBA, Director of Finance and Contracts at Henry Ford Health System, said the Michigan health system relied on the 340B program to help fund its charity care program. This program serves more than 2,050 patients and offers prescription medications at no cost to the program’s patients.
“Our margins are negligible and any restriction on the 340B discount program will result in our having to close pharmacies and reduce the life-saving assistance we provide to our patients and the community,” he wrote. “I am not exaggerating when I say lives will be lost.”
Schulte Wall said hospital administrators have already looked into various ways to use resources appropriately, and are reaching the end of where they can stretch dollars.
“We’re not looking at being able to expand to more innovative care models or being able to provide for your low-cost meds, we’re just looking at what we can do to ensure folks can still access their medications,” she said. “I think that’s really where we are with the hospital pharmacy side.”
Maxik said hospitals must now evaluate whether the 340B program continues to be a viable option for them.