Nation’s Biggest Hospital Group Asks HHS to Waive 340B Requirements and Suspend Audits During Pandemic

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Nation’s Biggest Hospital Group Asks HHS to Waive 340B Requirements and Suspend Audits During Pandemic

The American Hospital Association asked U.S. Health and Human Services (HHS) Secretary Alex Azar in a letter this week to waive some 340B program requirements and suspend 340B covered entity audits to make it easier for hospitals “to serve their communities during the COVID-19 national emergency.”

Specifically, AHA asked Azar

  • to let 340B disproportionate share (DSH), children’s, and free-standing cancer hospitals buy covered outpatient drugs through group purchasing organizations during the pandemic
  • to stop requiring DSH, children’s, and free-standing cancer hospitals during the pandemic to maintain a Medicare disproportionate share adjustment percentage greater than 11.75 percent, and rural referral centers and sole community hospitals to keep a Medicare DSH percentage equal to or greater than 8 percent, to stay eligible for the 340B program
  • to suspend 340B hospital audits during the COVID-19 emergency.

Hospital groups America’s Essential Hospitals and 340B Health previously asked HHS for the same 340B program flexibilities during the pandemic.

In its letter, AHA said waiving the GPO prohibition “would allow all 340B hospitals more timely access to critical outpatient drugs. In addition, with the prohibition waived, these hospitals could purchase certain drugs at a lower price, which is desperately needed as hospital expenses have increased significantly to build new infrastructure and surge their workforce to meet the demands created by COVID-19 while simultaneously losing revenue from canceled non-emergency procedures.”

“Many of our 340B hospital members have raised concerns that they may be at risk of losing their 340B eligibility because of a change in patient mix as they meet the challenge of treating COVID-19 patients,” AHA told Azar. By waiving the 340B Medicare DSH threshold percentage for hospitals during the emergency, it said, “a hospital’s status would not be at risk due to these time-limited changes in their patient mix and would help ensure that these hospitals will be able to continue to rely on the 340B program to stretch scarce resources to provide care to vulnerable communities.”

In asking HHS to suspend 340B covered entity audits, AHA said, “340B hospitals in the throes of this health crisis need every able staff resource to enable them to meet and manage new demands.”

Since the pandemic began, HHS’s Health Resources and Services Administration has relaxed GPO prohibition reporting requirements for 340B hospitals during the emergency. It also says it is monitoring and assessing the impact of its decision to continue auditing 340B providers virtually during the pandemic.

Some 340B providers chosen for audits since the pandemic began say being audited has been challenging and stressful. Some have received time extensions or postponements. Others say their audits have gone smoothly. 340B Report wants to hear from 340B providers being audited by HRSA now or from providers’ audit consultants about providers’ experiences. We will shield your identity if you wish. Contact us at

CMS Cues Medicare Payment Annual Rule That’s Expected to Extend—or Deepen—340B Drug Reimbursement Cuts

The Centers for Medicare & Medicaid Services (CMS) this week sent the White House Office of Management and Budget 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. CMS wanted to require hospitals to track their net costs for all 340B-purchased drugs billed to Part B between March 23 and April 10, saying it might start to use the acquisition cost data to set future Part B payments rates. The COVID-19 pandemic apparently put those plans on hold. If CMS follows through with the 340B drug net cost survey plan, hospitals could suffer even deeper Part B reimbursement cuts than now. That’s because payments would be pegged to all discounts hospitals get on 340B purchased drugs, including 340B sub-ceiling discounts and the additional 340B discounts hospitals get on drugs whose prices rise faster than the inflation rate.

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.”

The Latest on Federal COVID-19 Relief for Health Care Providers

House to Vote Today on Fourth Stimulus Bill

The U.S. House is voting today on a $484 billion COVID-19 relief bill that the Senate passed Tuesday. President Trump has signaled he will sign it. The bill would give hospitals and health care providers $75 billion for COVID-19 related expenses and lost revenue. It also includes $25 billion to expand COVID-19 testing capacity. This part of the bill includes $600 million for health centers, $225 million for rural health clinics, and up to $1 billion to cover costs of testing the uninsured for the virus that causes COVID-19. It is unclear if the money for health centers and rural clinics can be used for COVID-19 response generally, or must be used more narrowly for testing-related purposes.

The bill also injects $300 billion into the Small Business Administration Paycheck Protection Program. On April 8,  the American Hospital Association asked the SBA to clarify that public and private nonprofit hospitals qualify for the loans. On April 2, it asked SBA to interpret PPP rules in a way that ensures that rural hospitals qualify for PPP loans. There are concerns small rural hospitals might be disqualified if they are deemed affiliates of other hospitals or health systems and thus exceed the 500 employee size standard for PPP loan eligibility. The National Association of Community Health Centers on April 8 asked congressional leaders to ensure that any future COVID-19 relief bill would let about 100 health centers with more than 500 employees qualify for the loan program. Its request apparently did not make it into the bill.

HHS Announces How It Is Allocating Remaining $70 Billion in CARES Act Provider Relief

The Health and Human Services Department announced yesterday how it is allocating the remaining $70 billion out of the $100 billion in CARES Act relief to health care providers battling COVID-19.

Earlier this month, HHS distributed $30 billion from the CARES Act’s Provider Relief Fund on the basis of providers’ shares of Medicare fee for service reimbursements in 2019. In the coming days, it says it will distribute another $20 billion using a revised formula “so that the whole $50 billion general distribution is allocated proportional to providers’ share of 2018 net patient revenue.”

HHS is allocating $10 billion “for a targeted distribution to hospitals in areas that have been particularly impacted by the COVID-19 outbreak.” Hospitals have until before midnight Pacific Time tonight to apply for funding via an authentication portal. “Hospitals have already been contacted directly to provide this information,” HHS said. The department is asking for:

  • Tax Identification Number
  • National Provider Identifier
  • Total number of Intensive Care Unit beds as of April 10, 2020
  • Total number of admissions with a positive diagnosis for COVID-19 from January 1, 2020 to April 10, 2020.

Another $10 billion will go to rural health clinics and hospitals based on operating expenses “using a methodology that distributes payments proportionately to each facility and clinic.” Indian Health Services facilities will get $400 million, also based on operating expenses. “There are some providers who will receive further, separate funding, including skilled nursing facilities, dentists, and providers that solely take Medicaid,” HHS said. On April 3, NACHC asked Azar to allocate at least $3.1 billion from the Provider Relief Fund to partially help federal qualified health centers make up for losses due to the pandemic.

That leaves about $29.6 billion. On April 3, HHS Secretary Azar said part of the $100 billion would be used to reimburse providers at Medicare rates for the costs of delivering COVID-19 care to the uninsured. In yesterday’s announcement, HHS said:

  • Every health care provider who has provided treatment for uninsured COVID-19 patients on or after February 4, 2020, can request claims reimbursement through the program and will be reimbursed at Medicare rates, subject to available funding.
  • Steps will involve: enrolling as a provider participant, checking patient eligibility and benefits, submitting patient information, submitting claims, and receiving payment via direct deposit.
  • Providers can register for the program on April 27, 2020, and begin submitting claims in early May 2020. For more information, visit

HRSA Awards Nearly $165 Million in COVID-19 Rural Relief

HHS’s Health Resources and Services Administration announced yesterday it awarded over $160 million under the CARES Act “to combat the COVID-19 pandemic in rural communities.”

Forty-six state health departments, universities, and others received about $150 million to help hospitals funded through the Small Rural Hospital Improvement Program (SHIP) respond to the pandemic. Fourteen HRSA-funded Telehealth Resource Centers received $11.6 million “to provide technical assistance on telehealth to help rural and underserved areas combat COVID-19.”

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Apexus Picks Ex-HHS OIG Veterans to Help Update its Advanced 340B Certification Offering

Apexus, which operates the 340B Prime Vendor program, has chosen Rx|X Consulting “to contribute to Apexus’ 2020 update module for its Advanced 340B Operations Certificate Program,” the consulting firm’s founders Madeline Wallack and Suzanne Herzog say.

Apexus runs the 340B certificate program independent of its agreement with HRSA to be the 340B prime vendor. For a fee, enrollees receive in-depth 340B program administration training from Apexus in self-paced online courses.

Rx|X worked with Apexus in 2016 on the initial development of the ACE program, Wallack and Herzog say. “Our approach at Rx|X has always been to share our lessons from the field with all entities—clients or not. Working with Apexus on this module gives us the opportunity to contribute our years of experience to an audience invested in continuing 340B education,” says Wallack.

The two business partners formerly worked at the HHS Office of Inspector General, where they led and contributed to reports on shortcomings in 340B oversight, particularly over manufacturer compliance with drug pricing rules. Some of their recommendations became law in the Affordable Care Act.

Tweets of Note

Logan Yoho @rx76onu

Reminder: During this time all state legislation other than #COVID19 has paused. #PBMs continue to steal the #340B savings intended for health centers to provide vital patient care to the most vulnerable Ohioians. #SB263 #HB482 @SusanManchester @RandiClites @bobdhackett @Ohiochc

Rep Randi Clites @RandiClites

#340B designated health centers are on the front lines of the #COVIDー19 pandemic serving vulnerable patients who often can’t afford to go to the doctor. To stick them with extra fees and carve them out of health plans just because they serve vulnerable patients is reprehensible

Logan Yoho @rx76onu

Reminder: During this time all state legislation other than #COVID19 has paused. #PBMs continue to steal the #340B savings intended for health centers to provide vital patient care to the most vulnerable Ohioians. #SB263 #HB482 @SusanManchester @RandiClites @bobdhackett @Ohiochc

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