Groups whose members include 340B hospitals yesterday slammed CMS for proposing to continue deep drug payment cuts to 340B hospitals.

Biden Administration’s Proposal to Retain 340B Hospital Drug Payment Cuts Draws More Fire

Several groups whose members include 340B hospitals yesterday slammed the Biden administration’s proposal to continue the Trump administration’s huge cut in Medicare Part B reimbursement for hospitals’ 340B purchased drugs.

The new administration yesterday announced its proposed plans for payments to hospitals for 340B-purchased drugs in its hospital outpatient prospective payment system (OPPS) proposed rule for 2022. Comments on the proposed OPPS rule are due Sept. 17.

“We are disappointed that CMS [the U.S. Centers for Medicare & Medicaid Services] proposes to continue to deeply cut OPPS payments to 340B hospitals and we will urge CMS to reverse this punitive policy in the final rule,” the American Hospital Association (AHA) said.

“These cuts directly harm 340B hospitals and their ability to care for their patients, contravening Congress’ intent in establishing the 340B program,” AHA continued. “These cuts are enabled by a lower court’s deference to the government’s inaccurate interpretation of the law, which is the crux of the legal issue the Supreme Court will review in its upcoming term. For more than 25 years, the 340B program has helped hospitals stretch scarce federal resources to reach more patients and provide more comprehensive services. This proposal would undoubtedly result in the continued loss of resources for 340B hospitals and exacerbate the strain on these hospitals, especially as the COVID-19 pandemic continues.”

The AHA is the nation’s largest hospital association, and is one of three jointly suing the government over the cuts. The U.S. Supreme Court earlier this month agreed to hear the case.

America’s Essential Hospitals, one of AHA’s co-plaintiffs in the case now before the Supreme Court, yesterday said it was disappointed by the Biden administration’s decision “to stand by its predecessor’s bad policy on Part B drug payments and to continue damaging cuts to outpatient care—choices that jeopardize health care access for marginalized patients.”

“The ill-conceived cut to hospitals in the 340B Drug Pricing Program ignores congressional intent for the program, undermines savings for hospitals that operate with little or no margin, and jeopardizes access to care in underserved communities,”  said Bruce Siegel, the group’s president and CEO. “This policy, coupled with continued cuts to outpatient clinics, would drain essential hospitals of vital resources as they continue to combat a worsening COVID-19 pandemic.”

“Rather than maintain these cuts, the Centers for Medicare & Medicaid Services (CMS) should immediately rescind these deeply damaging policies and work with essential hospitals to ensure they can meet their safety-net mission,” Siegel said.

The Association of American Medical Colleges (AAMC), the third hospital association co-plaintiff, acknowledged our request for comment this morning and said it would get back to us. When the Supreme Court accepted its case on July 2, AAMC said reversing the cuts “will ensure that low-income, rural, and other underserved patients and communities are able to access the vital services they need.”

ASHP (American Society of Health-System Pharmacists) tweeted last night that it “will continue to vigorously oppose the cuts, which threaten patient access to critical services that would otherwise be unavailable.”

As we reported yesterday, hospital group 340B Health said it was “deeply disappointed that CMS has proposed perpetuating this inequitable payment policy that originated during the previous administration.”

Group purchasing organization Premier yesterday said it is “disappointed that CMS continues its misguided 340B drug pricing policy, eliminating savings that hospitals use to provide support in underserved areas.”

The Federation of American Hospitals (FAH), which represents for-profit hospitals, has not responded for a request for comment. In 2019, when the lawsuit challenging the cuts was before a federal appeals court, FAH filed a brief arguing that CMS acted appropriately and within its authority when it reduced Part B drug payment rates to 340B hospitals.

Pharmaceutical Research and Manufacturers of America (PhRMA) also has not responded for a request for comment. In comments to CMS on previous OPPS rules, PhRMA has supported the Part B cuts as sound policy that aligns payments for drugs “more closely with hospitals’ acquisition costs for drugs purchased under the 340B program.”