A new U.S. House bill would put a moratorium on 340B hospital growth and impose a host of reporting requirements on 340B hospitals. It would also make it much harder for private nonprofit hospitals to remain in the 340B program.
As 340B Report first broke the news earlier this month, Rep. Matt Rosendale (R-Mont.) introduced the Drug Pricing Transparency and Accountability Act (H.R. 198) on Jan. 9, the first 340B bill to be introduced in the new session of Congress. The text was released last week. Rosendale filed a bill with the same title in October 2021. The two appear to be the same.
Rosendale was not on the House Energy & Commerce Committee with jurisdiction over 340B last session and he was not among nine new Republican committee members announced Jan. 11. Not being on the panel lessens the bill’s chances of being passed. However, there is a good chance that a number of 340B bills will be introduced this year in the committee, including ones that would reduce 340B’s scope.
Rosendale was one of 21 House Republicans who originally voted against Kevin McCarthy (R-Calif.) for House Speaker earlier this month. He continued to refuse to vote for McCarthy for five days but finally switched his vote to present on the 15th vote to help pave the way for McCarthy’s election. Rosendale is reportedly considering challenging Sen. Jon Tester (D-Mont.) for election in 2024.
Moratorium and New Child Site Requirements
As we reported about Rosendale’s prior bill, his new one calls for a two-year moratorium on non-rural disproportionate share (DSH) hospital and child site registration in the 340B program.
During the moratorium, the U.S. Department of Health and Human Services (HHS) would have to issue regulations setting standards for 340B DSH, children’s, and free-standing cancer hospital child sites. For the first time, by regulation, these sites would have to be listed on a reimbursable line of the hospital’s most recently filed Medicare cost report, with associated outpatient costs and charges (340B children’s and cancer hospitals would have to attest their sites meet these standards).
Hospitals now must meet these 340B site eligibility requirements under 1994 program guidelines. The Health Resources and Services Administration (HRSA) said in 2021 that patients of a new hospital child site not yet on the hospital’s most recently filed cost report might still be 340B-eligible to the extent they are patients of the parent hospital. It is unclear if or how Rosendale’s bill would affect HRSA’s clarification.
Under the bill, 340B DSH, children’s, and cancer hospital sites also would have to be wholly owned by the parent hospital, provide a full range of services in addition to drugs, and adhere to the parent hospital’s charity care and sliding fee scale policies.
If an affected hospital site at any time no longer met any of these new standards, the parent site would have to de-register the facility from 340B.
Much Stricter Hospital Standards for 340B Eligibility
Under the bill, state and local governments would have certify to HHS that 340B private nonprofit DSH hospitals have been formally granted or delegated government powers or have contracts to provide care to low-income patients not covered by Medicare or Medicaid. HHS would have to determine that such contracts obligate hospitals to devote at least 15 percent of their total costs to providing direct medical care to low-income patients ineligible for Medicare or Medicaid. This could be a significant challenge in states that have expanded Medicaid or have low-insurance rates.
JG 340B Claims Modifier and Other Reporting Requirements
One section of the bill says DSH hospital claims for 340B purchased drugs would have to be submitted “to public and private payors” using the JG 340B modifier established by CMS under the hospital outpatient prospective payment system.
DSH hospitals would have to report their total annual 340B revenues to HHS broken down by child site, fees paid to contract pharmacies, patient mix data, revenues derived from infusion or injection of physician administered drugs, and the names of 340B vendors and contract pharmacies. The information would be made available on a public HHS website.
A different section of the bill says 340B claims submitted to Medicaid fee for service or a Medicaid managed care organization would have to include the JG modifier or the NCPDP 20 submission clarification code. States would have to make this new 340B claims data available to drug manufacturers for Medicaid fee for service or managed care rebate payment verification purposes. State Medicaid agencies would have to publish an annual report on Medicaid FFS and managed care use of 340B purchased drugs.
Another section of the bill says 340B claims submitted to Medicare Part B would have to include either a JG or TB modifier (depending on the hospital type involved). 340B claims submitted to Medicare Advantage or Part D plans would have to include the JG modifier or NCPDP submission clarification code 20. HHS would have to publish an annual report on Part B use of 340B purchased drugs.
OIG and GAO Reports
The HHS Office of Inspector General would have to issue a report no later than two years after the bill’s enactment on the level of charity care provided by 340B DSH hospitals and their child sites. 340B hospitals say that charity care is an improper metric to determine eligibility since it does not include underpayments from Medicaid and other government payors. They argue that uncompensated care and bad debt are more reflective of their commitment to the underserved.
Congress’s watchdog, the Government Accountability Office, within one year of the bill’s enactment, would have to report on 340B private nonprofit hospitals contracts with state and local government to serve low-income individuals. Within two years of the bill’s enactment, GAO would have to report on the difference between each 340B DSH hospitals’ total 340B acquisition costs and gross reimbursements, broken down by child site.
Medicare Cost Reports
Finally, the bill would require 340B hospitals that participate in Medicare to include their 340B drug acquisition costs and 340B drug revenues from all payors in their Medicare cost reports.
Likely Response
Hospital groups representing 340B hospitals are likely to strongly oppose the legislation while pharmaceutical manufacturers are expected to praise the bill and push for its passage.
