BREAKING: CMS Begins Controversial 340B Hospital Drug Cost Survey

Not a Subscriber? Sign Up Now!

CMS Begins Controversial 340B Hospital Drug Cost Survey

The White House Office of Management and Budget (OMB) yesterday approved the Centers for Medicare & Medicaid Services’ (CMS) plan to survey 340B hospitals for their net costs for 340B-purchased drugs billed to Medicare Part B, including sub-340B ceiling price discounts and 340B penny prices.

CMS this morning announced on its hospital outpatient prospective payment system (OPPS) webpage “340B Survey Now Available through May, 15th 2020.” A revised survey instruction sheet accessible from the webpage says the response period is April 24, 2020 through May 15, 2020—a time when many hospitals are struggling to respond to the human and financial toll of the COVID-19 pandemic.

According to the new instruction sheet, the survey is of hospitals’ “average acquisition costs for specified covered outpatient drugs” bought by hospitals during the fourth quarter of 2018 and the first quarter of 2019.

The instruction sheet says CMS seeks the following information:

For each applicable hospital, the survey shall reflect the net acquisition cost for each SCOD [specified covered outpatient drug] acquired under the 340B program (that is, the sub-ceiling price after all applicable discounts). Acquisition cost refers to the price that hospitals pay upon receiving the product (that is, the sub-ceiling price after all applicable discounts); this includes, but is not limited to, 340B drugs purchased via a replenishment model under the 340B program, or under penny pricing. Applicable discounts are any discounts below the discounted ceiling price. The 340B drug acquisition cost should be reported regardless of whether or not the drug was dispensed at all, or whether the drug was dispensed in multiple settings. We are only requesting the acquisition cost of the drugs acquired under the 340B program during the specified timeframe listed below. Acquisition costs for drugs acquired by 340 hospitals outside of the 340B drug program should not be included on the survey.

Hospital group 340B Health last month asked Health and Human Services Secretary Alex Azar to delay the survey’s implementation. “Hospitals have expressed concern that, because of the public health emergency and the challenge they face meeting patient needs, they will not have the bandwidth to respond,” it wrote. “To respond to the survey, 340B hospitals would need to expend significant time, money, and effort well beyond the 48 hours per hospital and total cost of five million dollars to 340B hospitals that CMS estimates. Hospitals have expressed significant concerns that the survey will divert hospital staff away from patients at a time when they must dedicate their full attention to diagnosing, isolating, and treating patients infected with COVID-19.”

As we reported yesterday, CMS earlier this week sent OMB its 2021 hospital outpatient prospective payment system proposed rule for review and approval to be published in the Federal Register. CMS plans to publish the proposed rule in June and a final rule by Nov. 1.

Since 2018, CMS’s OPPS rules have reduced hospitals’ Medicare Part B reimbursement for 340B purchased drugs by almost 30 percent. A federal district judge struck down the Part B payment reductions for 340B drugs in late 2018, in part because CMS did not collect data needed to base payments on acquisition costs. A federal appeals court could rule in the case at any time. CMS has indicated that if the appeals court rules against it, it wants to start basing Part B payments to hospitals for 340B drugs on “amounts that approximate what hospitals actually pay to acquire the drugs.”

In light of today’s developments, it is possible CMS will announce in its OPPS proposed rule in June that it intends to base Part B reimbursement for 340B purchased drugs next year on the OMB-approved survey’s acquisition cost findings.

“I think it is disappointing for hospitals that CMS is moving ahead with this at a time when hospitals are struggling with COVID-19,” said Barbara Straub Williams, an attorney at Powers Law, a 340B Report sponsor.