Rep. Larry Bucshon (R-IN) pictured at house hearing
“I don't think there's any anything hospitals should be afraid of when it comes to 340B transparency," Rep. Larry Bucshon (R-Ind.) said during a hearing last week.

Hospitals Shouldn’t Fear 340B Reporting Requirements, House E&C Republicans Say; Democrat Matsui Raises Concern About Scapegoating

Requiring hospitals to report what they make from 340B drug discounts versus what they spend on charity care could be a first step toward tackling full-scale 340B program reform later, a senior Republican on the U.S. House committee with jurisdiction over 340B said last week.

Vice Chair Larry Bucshon (R-Ind.) of the Energy & Commerce Subcommittee on Health made that suggestion during a March 28 hearing on ways to foster transparency and competition in health care. (Editor’s note: This is a follow-up to our news alert about the hearing.)

“I hope to eventually work on broad, large-scale reforms to the [340B] program,” Bucshon said. “But in the short term, consistent with this hearing, I’m calling for members of Congress to join me in advocating for more transparency. Just on the discounts, can we not agree that entities benefiting from the discounts need to show the American people what they’re doing with the savings? For that matter, what the savings are?”

Bucshon asked hearing witness Matthew Forge, CEO of Pullman Regional Hospital, a 340B critical access hospital in Washington state, if Congress required 340B hospitals to report their aggregate 340B savings, charity care expenses, and “payer shortfall,” would it be feasible to comply? Forge said it would.

“If a small critical access hospital like yours has the ability to collect and submit data, I have no doubt that other entities do as well,” Bucshon said. “I don’t think there’s any anything hospitals should be afraid of when it comes to 340B transparency. Honestly, if an institution needs this benefit to keep continue helping patients, let them show us so we can support those efforts and make sure we have a strong program.”

During a E&C health subcommittee hearing the next day on the Biden administration’s health care budget request, Bucshon asked U.S. Health and Human Services Secretary Xavier Becerra if legislation was needed to grant HHS’s wish for general rulemaking authority over 340B. The department has said that it would use the power to require covered entities to annually report how they use 340B savings to benefit the communities they serve,” to “strengthen compliance and transparency related to the utilization of contract pharmacies,” and to “define necessary terms.”

During his dialogue with Bucshon, Becerra cautioned that any 340B reform efforts “not drive pharmacists out of business.”  Nonetheless, he concurred that “a great deal” of legislation was needed. 

“Yeah, well, I’m working on that,” Bucshon said.

In late 2017, Republican Bucshon and Democrat Scott Peters (Calif.) introduced bipartisan legislation, the 340B PAUSE Act, that would have:

  • halted enrollment of disproportionate share hospitals and their child sites in 340B for two years
  • required these hospitals to report the insurance status of patients who receive 340B drugs; charity care costs incurred; gross reimbursement for 340B drugs; identities of 340B third party vendors; and for private nonprofit hospitals, their contracts with state or local governments to provide health care services to low-income individuals who are not eligible for Medicare or Medicaid.

Hospitals strongly opposed the bill and it died when the 115th Congress ended.

E&C health subcommittee chair Brett Guthrie (R-Ky.) has made it clear that passing health care transparency and competition legislation is his top priority, and has indicated that he wants to address 340B in any such bill. Full committee chair Cathy McMorris Rodgers (R-Wash.) said in her opening statement at the hearing that her priorities include making hospitals comply fully with price transparency rules and tamping down consolidation in the hospital, physician, and health insurance markets.

340B hospital acquisitions of physician practices and turning them into 340B-eligible hospital outpatient locations is a frequent talking point for the drug industry and others who think 340B is too big and should be cut back. Hospital/physician practice consolidation came up often during last week’s hearing. Mergers among insurance companies, pharmacy benefit managers, pharmacies, and health care providers came up often too.

During the hearing, Rep. John Joyce (R-Pa.), a dermatologist from a rural district in Pennsylvania, echoed Bucshon about 340B hospitals not needing to fear reporting requirements.

“I don’t think there is anything that hospitals should be afraid of when it comes to 340B transparency,” Joyce said. “If a hospital needs that support, it should be obvious, and it should be transparent…. But I do wonder whether the same story would be clear for every hospital.”

During his time to speak and ask witnesses questions, Joyce called 340B “one of the biggest drivers in increasing spending over the last 10 years.  Joyce raised concerns that 340B “is contributing to the overall trend of increased costs for patients,” and asked if hospitals abuse their 340B program earnings or use them “for the patients who need it.” Joyce said he sees great benefits from 340B in his home district but shares concerns that the program is “being overutilized and abused.” Like Bucshon, he asked Pullman Regional Hospital CEO Forge about Congress possibly requiring hospitals to report “current metrics” on their charity care and total 340B savings.

Rep. Gus Bilirakis (R-Fla.), a senior member of the committee, spoke favorably about community health centers using sliding fee scales “to through the 340B rebates to their patients to lower their prescription drug costs. This allows health centers to meet the unique needs of their communities and they do an outstanding job.” But, he said, “when they utilize contract pharmacies, we’ve seen instances where these pharmacies will take these rebates and not pass them on to patients.” Bilirakis also asked “if the way that Medicare reimburses for physician administer drugs has contributed to the consolidation trend of hospitals purchasing local physician practices.”

Concerns About Undue Burdens

Democrat Doris Matsui (Calif.), who is not on the E&C health subcommittee but whom Guthrie allowed to speak as a member of the full committee, was the strongest advocate of leaving 340B alone. Last month, Matsui was the first lawmaker to denounce the 340B alliance between the National Association of Community Health Centers and Pharmaceutical Research and Manufacturers of America.

“There has been a lot of criticisms about this program lately, and I’m concerned about some of the conversation around 340B happening today,” Matsui said. “340B is first and foremost a program to provide discounted drugs to low-income patients. But some of the critics of this program seem to forget that 340B has another critical purpose—to help safety-net providers provide critical services to underserved patients and to empower them to stay open.”

Matsui asked Pullman Regional Hospital CEO Forge about programs and services that 340B enables the hospital to provide “and what would happen if the hospital is no longer able to participate in the 340B program?” Forge mentioned Pullman’s “access to high-quality board-certified physicians in our emergency room” and “24-hour access to obstetric care.”

Matsui asked Forge why Pullman’s contract pharmacy relationships are “so important to your hospital and the patients you serve” (he answered that Pullman’s relations with local independent pharmacies have been more positive than those with national chains). She also asked about existing 340B data submission and recordkeeping requirements that Pullman already faces (“We have multiple audits per year that really stress our [finance] team outside of normal operations,” he said).

Matsui said she was concerned about proposals that would “unnecessarily burden” 340B hospitals. “I don’t want this program to be a scapegoat of high drug pricing and other problems that we know exist with the health care system,” she said. 

Rep. Bob Latta (R-Ohio) made a similar point. “We’ve heard much about transparency in the 340B program. And while I believe in the importance of transparency, I want to ensure that the steps we take do not deny the resources from the hospitals that need them,” he said.

He asked witness Ben Ippolito, senior fellow in economic policy studies at the free market think tank American Enterprise Institute, “do you believe we can increase transparency over the 340B program without serious consequences for our hospitals that use the program?”

Ippolito said yes. He said Congress should ask two questions: “Is [340B] functioning the way that we expect it to function?” and “How are the hospitals actually using that that money?”

“The answers to those questions should inform any potential reform efforts that people have in mind,” Ippolito said.

“If you have a hospital that is genuinely delivering a lot of uncompensated care … you want to make sure you protect that kind of institution,” he said.  Ippolito has been a long-time critic of 340B hospitals and has called on the government to lower Medicare payments to 340B hospitals.

Rep. Ann Kuster (D-N.H.) cautioned the subcommittee against making “decisions that only further harm a patient’s health and burden the medical system.”

“Patients rely on supports like the 340B program,” she said. Without programs like it in vulnerable communities, healthcare would simply be out of reach for too many. We can and must do better by our constituents.”

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