ProMedica Memorial Hospital in Ohio had to leave the 340B program last year when it lost eligibility due to fallout from COVID-19.

Hospitals Say the Three Confirmed to Have Left 340B Due to Fallout from COVID Are the Tip of the Iceberg

The U.S. Health Resources and Services Administration’s (HRSA) recent statement that only three hospitals so far have said on a federal form that they lost their 340B eligibility due to fallout from COVID-19 does not reflect the problem’s much bigger size, hospital advocates and individual health systems say.

“HRSA’s number represents an absolute floor in terms of the number of hospitals affected by this issue,” said Marie Johnson, the American Hospital Association vice president of media relations. “As hospitals begin to finalize their Medicare cost reports and the requisite calculations, more hospitals will likely be affected by this issue. Couple this with ambiguity in the de-registration process (which clearly some hospitals have already pointed out) and HRSA’s number certainly undercounts the true impact of this issue on 340B hospitals.”

Hospitals whose fiscal years end on Sept. 30 must file their cost reports by Feb. 28. Those whose fiscal years end on Dec. 31 have May 31 due dates.

After 340B Report published an article earlier this month about HRSA’s statement, health systems with facilities in Ohio, South Dakota, and Illinois told us that they too have hospitals whose admission patterns were so disrupted by COVID-19 that their Medicare disproportionate share (DSH) adjustment percentage fell below the level needed to qualify for 340B.

None of these hospitals were among the three that HRSA said self-reported that they had to disenroll from 340B because COVID caused their DSH to fall below the eligibility threshold.

No Requirement to Give Details for Termination

340B OPAIS, the 340B program database, includes an optional comment field for covered entities to use if they wish to elaborate on why they left 340B. Hospital lobbyists say about two dozen hospitals had to leave 340B in 2021 because their DSH percentage fell below the statutory minimum. The three that HRSA identified left notes in OPAIS saying that COVID caused their DSH to fall, forcing them out of 340B.

Others might have had to quit 340B during 2021 because COVID caused their DSH to fall too, but none told HRSA so in the optional comment field in OPAIS.

ProMedica Memorial Hospital in Freemont, Ohio, is one of them.

A relatively small DSH hospital (31 staffed beds), it stopped buying drugs through 340B and asked to be terminated from the program on July 30, 2021, the day it filed its new Medicare cost report showing that its DSH percentage was below the 340B eligibility level. Its official 340B termination date was Oct. 1, 2021.

“When you go to deregister a covered entity, there is so much information that has to be noted on this, we never thought to put a reason in the notes section as to why it lost 340B eligibility,” a ProMedica pharmacy official said. The official said the health system expects to lose about $2.7 million in 340B savings due to the hospital’s de-registration. He says he wishes that HRSA “had given us a box” in OPAIS and a directive to use it if a hospital leaves 340B for reasons related to COVID.

“I do not believe HRSA truly understands the impact that COVID had on hospitals,” the official said. He advises others in the same boat, “Make sure that you get the word out to your elected officials that COVID is the reason you lost eligibility in the 340B program. Show what that means for your hospitals.”

“A Devastating Blow”

Monument Health Spearfish Hospital in South Dakota, a sole community hospital (SCH) with just 27 staffed beds, stopped buying drugs through 340B on Jan. 28 and asked to be terminated from the program on Feb. 1. It will be officially terminated on April 1.

“Due to payer mix changes from the public health emergency, our DSH % has dropped below the 8% threshold,” the health system noted in the optional termination comments field in OPAIS.

“This is such a devastating blow to our community,” a Monument pharmacy official said. “We cared for our COVID patients in the best way possible and are now suffering this unforeseen consequence.”

“We have the feeling that some hospitals may be unpleasantly surprised during their Medicare cost report preparation by how drastically the DSH percentage was affected by COVID,” the official said. “Some may not realize they are in danger of losing their 340B eligibility.” She said Monument has “received overwhelming support” on the issue from U.S. Senate Republican Whip John Thune (R-S.D.) and Rep. Dusty Johnson (R-S.D.).

Bipartisan bills have been introduced in the House and Senate to waive the DSH minimum percentage requirement for hospitals that began participating in the program during or prior to the COVID-19 emergency. Neither bill has advanced, though. Thune is one the Senate bill’s six original sponsors and Johnson is one of the House’s bill’s original six.

Big Loss in Rural Areas

Avera St. Mary’s, an SCH with 25 staffed beds in Hughes County, S.D., and Avera Sacred Heart, a 99-bed SCH in Yankton County, S.D., both stopped 340B purchases on Jan. 27 and asked to be terminated from 340B on Feb. 3. Their last official days in 340B will be April 1. Neither hospital’s OPAIS file notes that COVID played a role in its exit from 340B.

The closest hospital to Avera St. Mary’s with similar service is more than 150 miles away, an Avera pharmacy business official said. Seventeen percent of its patients identify as Native American but have limited access to Indian Service Hospitals, she said. The hospital stands to lose $10 million in 340B savings.

Avera Sacred Heart serves more than 120,000 residents in a 15-county area in southeastern South Dakota and northeastern Nebraska, the official noted.

Losing 340B eligibility will be “a devastating blow” for both hospitals “still trying to fight the COVID-19 pandemic,” she said.

“A Very Tough Pill to Swallow”

OSF Saint Anthony’s Health Center, a 50-bed DSH hospital in Alton, Ill., stopped purchasing drugs through 340B early during the pandemic, on April 30, 2021, and asked to be terminated from the program on May 3 because its DSH percentage had fallen below the statutory minimum. Like the Ohio and South Dakota hospitals’ OPAIS files, Saint Anthony’s does not include an optional comment about COVID’s role in its exit from 340B.

“What we saw with the pandemic is, it was the straw that broke the camel’s back” regarding the hospital’s 340B eligibility, said Christopher Manson, OSF HealthCare vice president of government relations.

In 2019, the health system opened Moeller Cancer Center at Saint Anthony’s in recognition that its patients with cancer were having to travel great distances for care, Manson said. Availability of 340B discounts on oncology drugs is part of what makes having the center feasible, he said. “With us losing the 340B drug discount, we’re not going to peel back what we are doing at the cancer care center, but we’ve got to close that gap elsewhere,” Manson said. “To lose that 340B designation will result in millions of dollars in additional costs. It just adds stress to the entire health system in that area and it limits our ability to do more of what we’d want to do.”

340B “helped us finance that cancer center,” Manson said. “For us to lose that incredible component, that’s a very tough pill to swallow.”

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