340B Potential Changes and Mark Twain

Friday, May 26, 2017 8:23:26 AM
  • Quotes from intelligent people make less stellar authors sound better (by association)

Mark Twain (a.k.a. Two Fathoms, a.k.a. twelve feet) said:

I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's.
- Autobiographical dictation, 12 September 1907. Published in Autobiography of Mark Twain, Volume 3 (University of California Press, 2015)

Unfortunately, this seems to be the case in the ongoing pressure to modify 340B.

Prologue

My apologies in advance for not injecting the normal level of humor into this blog. Those curmudgeons out there, and you know who you are, are without a doubt, saying "What Humor?"

Regardless I promise I’ll make up for it next time when I relate 340B and the Twelve Essential Elements for Contract Pharmacies to Tolkien’s novel The Hobbit. That will be something.  John Ronald Reuel  (JRR) Tolkien  may pivot table in his grave.

What?

Dont't be alarmed yet, but today 340B Health reported that a three-page document is circulating in Washington with proposed changes to 340B.  These might include:

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  • Creating a 340B patient definition for all hospitals
  • Limiting all hospitals to five contract pharmacies and freezing all new hospital contract pharmacies until regulations on contract pharmacy compliance are issued
  • Requiring all hospitals to have sliding fee scales for 340B drugs provided through contract pharmacies to low-income patients
  • Requiring new regulations for all 340B covered entities (including grantees) on preventing duplicate discounts
  • Developing new charity-care-based eligibility criteria for private, nonprofit DSH hospitals
  • Freezing private, nonprofit DSH hospital enrollment (including child sites) until Congress passes legislation or HHS issues regulations establishing new charity-care-based eligibility criteria
  • Requiring all hospital child sites to follow their parent’s charity care policy
  • Requiring hospitals to report information on patients’ insurance status, charity care levels, drug reimbursement and acquisition costs, fees paid to contractors, and drug volume
  • Requiring all hospitals to pay user fees not exceeding 0.1 percent of total 340B drug purchases the prior year to finance 340B oversight and administration
  • Letting HRSA hire more staff

When?

IF in fact any of these changes go through, it will take some time, but not a lot, depending on how hard lobbyists push.  I suspect any changes pushed through will be seen as early as third quarter of 2018. But for those alarmists out there, it could be anytime,

Why?

Ongoing anti-340B campaigns by several agencies and lobby groups drive an increasing perception that Covered Entities abuse 340B program savings, and do not use the savings for the original intent of the program.  Although this is contentious, controversial and just wrong, a number of our elected officials believe that 340B savings should go to the indigent patients receiving care, not to the facility providing that care.

Consider that part of this is due to the general lack of positive publicity from CE's on how many patients 340B programs help.  I'm not going to get on a soapbox and remind everyone to do this. Not yet. The curmudgeons out there warned me if I said to do that one more time this quarter, I'd Rue The Day I Was Born.  I'm not exactly sure what 'rue' means, but it sounds rueful so I'll hold off. 

Who?

This could affect every 340B CE.  It could cause some CE's to decide 340B is not worth the trouble.  One neglected key element to this line of thought is how 340B eligible entities would afford to manage 340B programs, if the savings pass through to the patients, and do not benefit the facility

I do not understand why so many people seem to forget that a health care institution, even not-for-profit, needs a net positive bottom line to function. Additional savings from 340B allows the CE to expand services and provide care that would otherwise NOT be available to low income/indigent patients.  That is likely more important than saving those patients a few dollars on a prescrition. Especially if they do not have access to care to get the Script in the first place.

There is a potential that many current covered entities would determine that 340B without savings is too expensive, and would eliminate the program.  Of course, this also eliminates any potential savings to the indigent care patients.

How?

Let’s look at each proposal and consider possible impact(s) of the potential change:

  • Creating a 340B patient definition for all hospitals. Funny, I thought we had one.  The assumption might be that a new one would be more restrictive on use of 340B.  Net effect: reduced savings.
  • Limiting all hospitals to five contract pharmacies and freezing all new hospital contract pharmacies until regulations on contract pharmacy compliance are issued. Again, funny, we already have regulations on contract pharmacy, and again, a change, outside of the obvious reduction to no more than five contract pharmacies, would result in reduced savings.
  • Requiring all hospitals to have sliding fee scales for 340B drugs provided through contract pharmacies to low-income patients. OK, a new one for some Covered Entities, but a lot of CE’s provide discount cards to patients. However, with a few exceptions, contract pharmacies do not know that a patient is 340B eligible: this is done after the fact by the TPA software. This change would require significant restructuring of contract pharmacy programs. alternative. Net effect: Reduced Savings
  • Requiring new regulations for all 340B covered entities (including grantees) on preventing duplicate discounts. We have regulations on preventing duplicate discounts.  The larger issue seems to be consistency in managing the process across state lines.  So far few SPA’s submitted by states to CMS are similar.  Net effect: Unknown.
  • Developing new charity-care-based eligibility criteria for private, nonprofit DSH hospitals. I’m not certain what the objective would be on this, except it’s possible better managed nonprofit DSH hospitals may be excluded if they ‘make too much money’.   Net Effect: Fewer 340B Covered Entities.
  • Freezing private, nonprofit DSH hospital enrollment (including child sites) until Congress passes legislation or HHS issues regulations establishing new charity-care-based eligibility criteria. This probably would affect DSH hospitals with a marginal DSH percentage. If someone dropped out of 340B eligibility for too low of a DSH last year, then regained the magical 11.75% this year, they’ll have to wait on Congress.  The child site restriction is another thing altogether.  Net Effect: Reduced Savings
  • Requiring all hospital child sites to follow their parent’s charity care policy. Not bad: I never reviewed this before, and don’t know if it is a large issue or not. I’d love to get email feedback on this one!
  • Requiring hospitals to report information on patients’ insurance status, charity care levels, drug reimbursement and acquisition costs, fees paid to contractors, and drug volume. Wow: this could become expensive and potentially cost prohibitive to some current 340B eligible entities. And what would the information be used for? . Net Effect: Increased work, reduced net savings.
  • Requiring all hospitals to pay user fees not exceeding 0.1 percent of total 340B drug purchases the prior year to finance 340B oversight and administration. Maybe this is not too bad. A facility with a total of $5,000,000 in 340B savings would pay a $5,000 per year fee for 340B.  I think that most of the entities I know would be OK with that. Net Effect: 0.1% reduction in savings.
  • Letting HRSA hire more staff. I’m not going to get into the controversial more/fewer governmental employees debate.  Net Effect: TBD

And at the End of the Day

The cumulative impact of these potential changes on 340B might be more than additive.  A fair number of existing 340B entities may elect to just drop out of 340B, especially those facilities most in need of the savings. 

Perhaps a better approach would be a summit meeting between AHA, ASHP, HRSA and PhRMA along with a few key members of Congress.  Find out what each group’s top concern might be, and work to resolve those.

PhRMA did not seem to become overly concerned about 340B until contract pharmacies grew so prolifically. Added to that concern was a concern that some of the contract pharmacies, especially some of the larger chains, were reportedly benefiting from 340B more than the very Entities it was designed to help.  So perhaps starting with a new look at Contract Pharmacies is a decent ‘square one’. This one step alone could be enough to lower PhRMA’s concern to the point where they focus on something else to bolster their inadequate profits (I may get into trouble for such a snide comment).

There are certainly other areas for consideration as well.  It has to be a better approach (at least for healthcare) to try a step-wise plan to changing such a complex program.  After all, too many changes to a complex program could result in unexpected consequences. Which might be the goal of those pushing for so much change.

Apologies and a Request for Feedback

Again, I apologize for not injecting a lot of humor into this blog. I don’t care for alarmist views on potential change, and it is very likely that a significant number of the possible changes noted above will not be made, or may not have as much of a negative impact as imagined. 

I suggest we work with ASHP, AHA and 340B Health to continue to paint the picture of the benefits each of our 340B programs bring not just to the covered entity, but to their patients. And if you get a chance, speak with your own senators and congressmen about the benefits of 340B.

Come back next time when we’ll show the similarities between The Hobbit and contract pharmacy agreement’s 12 essential elements.

And until then, please email back your comments, or add them to the space below the blog!