HRSA: 340B Dispute Resolution Will Stay on Hold Until We Get Broader Regulatory Authority

Editor’s note: The Medicare Payment Advisory Commission (MedPAC) is expected to report to Congress tomorrow that 340B’s effects on Medicare Part B beneficiaries’ cost sharing is likely small and varied across patients. We’ll publish an article about the findings and what they mean tomorrow.

HRSA says it won’t move forward on setting up a binding dispute resolution process for 340B until it gets broad regulatory authority over the drug discount program. Source: Shutterstock

HRSA: 340B Dispute Resolution Will Stay on Hold Until We Get Broader Regulatory Authority

The Health Resources and Services Administration does not plan to create a binding dispute-resolution process for 340B—something Congress ordered almost exactly 10 years ago—“until such time that HRSA receives regulatory authority for the issues that would be addressed” in such a process, HRSA told 340B Report this week.

In what appears to be its first public pronouncement on its plans, HRSA told us: “It would be challenging to put forth rulemaking on a dispute resolution process when many of the issues that would arise for dispute are only outlined in guidance….HRSA does not plan to move forward on issuing a regulation due to the challenges with enforcement of guidance.”

We asked HRSA about the long-delayed dispute resolution process as a follow-up to its statement in Inside Health Policy (subscription required) March 6 that it has limited power to enforce its 340B program guidance “unless there is a clear violation” of the 340B statute.

“Without comprehensive regulatory authority, HRSA is unable to develop enforceable policy that ensures program requirements across all the interdependent aspects of the Program are met,” HRSA told IHP. “While HRSA believes that its program policies are sound, guidance does not provide HRSA appropriate enforcement capability.”

HRSA has been authorized by Congress since March 2010 to issue regulations creating a 340B dispute resolution system for claims brought by covered entities against drug manufacturers and vice versa. The Department of Health and Human Services Office of Inspector General in 2005 and the Government Accountability Office in 2012 found that HRSA’s existing informal dispute resolution process is ineffectual and has rarely been invoked. HRSA, late in the Obama administration, published a proposed notice of rulemaking in August 2016 to set up the mandatory and binding process but never a final rule. The Trump administration withdrew the proposed rule in August 2017.

HRSA’s recent remarks to 340B Report and IHP are consistent with what federal health care officials have been saying publicly about the frailty of HRSA’s enforcement power since the start of this year.

In its comments on the Government Accountability Office’s Jan. 10, 2020 recommendations on increasing oversight of 340B private, nonprofit hospitals, HHS said it “is not pursuing new guidance under the [340B] program at this time.” It said:

HRSA…is currently evaluating its audit process and other program integrity efforts as they relate to HRSA’s ability to enforce and require corrective action in a program that is primarily administered by guidance. Guidance does not provide HRSA appropriate enforcement capability, which is why HRSA has requested regulatory authority in the President’s budget each year since fiscal year (FY) 2017. Binding and enforceable regulations for all aspects of the 340B Program would provide HRSA the ability to more clearly define and enforce policy and would significantly strengthen HRSA’s oversight of the Program.

HHS made the same points almost word for word in its comments on GAO’s Jan. 27 recommendations for improving oversight of controls to prevent duplication of 340B discounts and Medicaid rebates on the same drugs. It added, “HRSA notes that it does not have regulatory authority related to the prevention of duplicate discounts for covered entities.”

HRSA repeated most of the same points in its Feb. 10 fiscal year 2021 budget justification to Congress, as did HRSA Office of Pharmacy Affairs Director Adm. Krista Pedley in her livestreamed remarks the next day during the 340B Coalition winter conference. Then, in Feb. 26 testimony before Congress about his department’s budget request, Health and Human Services Secretary Alex Azar said HRSA needed full regulatory authority over 340B “so we can actually do audits in an enforceable way.”

HRSA, however, is batting is 0 for 5 with its annual requests for broad regulatory authority over 340B, and Congress has given no sign of acting on the request this year.

In the meantime, providers now know that if they interpret 340B program guidance differently than HRSA and believe they are following the rules, there is less chance of enforcement action. Drug manufacturers are bound to be unhappy about that and probably will ask Congress and the Trump administration to do something about it.

White House Lays Down Five Markers for Drug Pricing Legislation

The Trump administration this week laid down its markers for drug pricing reform legislation. In a March 10 statement, the White House urged Republicans and Democrats to pass a bill that would:

  • “Cap Medicare Part D beneficiary annual out-of-pocket pharmacy expenses”

  • “Provide an option to cap Medicare Part D beneficiary monthly out-of-pocket pharmacy expenses”

  • “Offer protection for seniors against the out-of-pocket cost cliff created by ObamaCare”

  • “Give insurance companies an incentive to negotiate better prices for costly drugs”

  • “Limit drugmakers’ price increases.”

“As the country confronts a public health challenge, the Administration recognizes the importance of pharmaceutical innovation,” the administration said. “The Trump administration’s goal, as it has always been, is to help America’s seniors and patients afford the drugs they need, not destroy this vital industry.”

In a Wall Street Journal op-ed the same day, White House Domestic Policy Council Director Joe Grogan bashed the idea of expanding government power to negotiate drug prices with manufacturers, a key element of the H.R. 3, the drug pricing bill passed by the Democratic-controlled House.

“We have already seen proposals that would effectively set prices under the guise of ‘negotiation,’” Grogan said. “There will likely be efforts to add unrelated new benefits to Medicare when the program can’t meet its current promises. Congress must ignore these partisan distractions.”

Grogan said elements of the White House’s five principles are reflected in Senate Finance Committee leaders Chuck Grassley (R-Iowa) and Ron Wyden’s (D-Ore.) bill S. 2543, House Energy & Commerce Ranking Member Greg Walden’s bill H.R. 19, and even H.R. 3, which he pointedly noted “the White House opposes.” Grogan, a former executive for Gilead Sciences, has been the administration’s most vocal critic of the 340B program, particularly what he perceives as program abuse by hospitals and health systems. reported March 9 that Grassley said he has rounded up more than a dozen GOP senators to back his and Wyden’s bill and is “looking for even more support to be able to convince Senate Majority Leader Mitch McConnell to put his bill on the floor and force [House Speaker Nancy] Pelosi’s hand by passing it out of the Senate.”

AHA Urges Trump to Declare COVID-19 a National Disaster or Emergency

The American Hospital Association yesterday asked the Trump administration to declare the COVID-19 pandemic a disaster or national emergency to let federal health officials issue waivers and otherwise give providers flexibilities to respond to the outbreak.

AHA said during the outbreak physicians and other health professionals might need waivers of requirements that they be licensed in a state in which they provide services. Critical access hospitals might need waivers of the 25 inpatient bed and 96-hour length of stay limitations, it said.

HRSA guidance to 340B providers participating in relief efforts during declared public health emergencies says:

HRSA recognizes that the circumstances surrounding disaster relief efforts warrant additional flexibility to affected 340B entities. An individual receiving 340B drugs must be a patient of the covered entity as defined by HRSA. However, the context of the situation may be taken into account in determining whether an individual can qualify to receive 340B drugs during an emergency and meet the patient definition as outlined by HRSA. In a declared emergency, an abbreviated health record may be adequate for purposes of the 340B Program. The record must identify the patient, record the medical evaluation (including any testing, diagnosis or clinical impressions) and the treatment provided or prescribed. For purposes of 340B Program eligibility, the record may be a single form or note page. It is the recorded information that creates a record. For example, under these circumstances the patient may be without insurance cards or identity papers and providers may not have access to documented medical histories. In the event of a declared emergency, self-reporting of identity, condition and history are adequate for purposes of 340B recordkeeping requirements. In the event of a declared emergency, where volunteer health professionals are providing health care, emergency documentation should be generated to make the relationship between the provider and the covered entity clear and to make clear the covered entity’s responsibility for providing care. This documentation should recognize the emergency nature of the situation, the name and address of the volunteer, and his/her relationship to the clinic, and should be kept on file by the covered entity. A covered entity in an emergency situation should continue to ensure it has policies and procedures in place to address the situation and it must continue to keep auditable records.

Tweets of Note

@MaureenTestoni: It’s been great to see so many of @340BHealth’s members here in D.C. for our Policy Workshop and Hill Day event. It was a successful full day of discussing important updates on #340B and #drugpricing as well as best practices for advocacy. #Protect340B

@AIR340B: When the #340B program works as intended, it helps improve public health outcomes. This is why we need to get the program back on track, so it works for patients everywhere. Click through #APatientsJourney to learn more about ways to #Fix340B:

@OurHospitals:  #340B is key for #essentialhospitals to tailor services & programs to the unique challenges in their communities. Threats to this program will put at risk hospitals’ ability to innovate both within and outside their walls.

@340BMatters: New study: Drug prices spiked 60% over a decade. Even after rebates and discounts are included! Big Pharma’s greed knows no bounds.  #protect340B

@340BHealth: The vast majority of #ruralhospitals in the U.S. today are relying on #340B to help them keep their doors open. Learn more:  #ruralhealth #Protect340B

@oncologyCOA: ICYMI a recent @NEJM study finds patient experiences worsen after hospitals acquire practices. #340B drives consolidation, esp. of #communityoncology, reducing choice & raising costs. It is time to #Fix340B. Learn more:

@OurHospitals: What is going on in policy and legislation right now in Washington DC? A lot that will impact #essentialhospitals. @bcfeldpush & @CarlosJAEH giving leaders a deep dive into #MFAR, #340B, #MedicaidDSH, and more. #PolicyAssembly

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