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340B Insight provides members and supporters of 340B Health with timely updates and discussions about the 340B drug pricing program. The podcast helps listeners stay current with and learn more about 340B to help them serve their patients and communities and remain compliant. We publish new episodes twice a month, with news reports and in-depth interviews with leading health care practitioners, policy and legal experts, public policymakers, and our expert staff.
Speaker 1 (00:04):
Welcome to 340B Insight from 340B Health.
David Glendinning (00:13):
Hello from Washington DC and welcome back to 340B Insight, the podcast about the 340B drug pricing program. I'm your host, David Glendinning, with 340B Health. Listeners of this podcast enjoyed our listener mailbag episode last season, where we devoted time to fielding your 340B questions and sharing the answers from 340B Health's expert, government relations, legal and policy staff. With so many 340B developments in 2023 and several more anticipated this year, we decided to bring this special episode back into the lineup. And there is no better time to put out this episode than while we are currently joining the more than 1500 340B professionals and other stakeholders from across the nation here at the 340B Coalition Winter Conference in San Diego.
(01:04):
If you happen to be at the conference and are listening to this episode on the Monday we released it, be sure to come visit us on Tuesday or Wednesday at the 340B Health and 340B Insight booths in the exhibit hall during breaks between sessions. You might even catch us recording some interviews for upcoming episodes. And now we will dig into the virtual listener mailbag for your 340B questions. I am joined today by our own Monica Forero. Our staff have decades of combined experience with 340B and health policy. So Monica consulted with them and is reporting back with the answers. Monica, thank you for being with us today and welcome to 340B Insight.
Monica Forero (01:46):
Thank you so much, David. I'm happy to be here.
David Glendinning (01:49):
So Monica, our first listener question focuses on the courts which have been busy in recent months when it comes to 340B. And it is about the recent federal court decision in the Genesis patient definition case. Our listener asks, "HRSA had until January 2nd to decide whether to appeal the Genesis decision. So did they appeal or not?"
Monica Forero (02:15):
Thank you, David. And yes, this is a super important question on the minds of all of us in the 340B space. For the answer, I went to our senior council, Amanda Nagrotsky, for her wisdom. And she let me know that HRSA did not appeal the decision. So the South Carolina court's ruling will stand. The judge said that an aspect of HRSA's interpretation of the term patient in the 340B statute is unlawful. And that interpretation had said that Genesis, a community health center, had to have initiated the healthcare service that led to the prescription in order to use 340B. But the court said that the plain wording of the 340B statute does not require that initiation. It's important to note that even without an appeal, this decision legally only applies to Genesis and does not apply to any other covered entities.
(03:09):
Also worth noting, that the judge did not strike down HRSA's 1996 patient definition guidance and he did not block the agency from publishing new 340B guidance. The 1996 guidance includes a requirement that responsibility for the care provided to a patient receiving 340B drugs must remain with the covered entity, including for care related to referrals. And ultimately, HRSA indicated after the decision that it fully intends to continue auditing entities based on those guidelines. And we know this to be true because the agency recently put out a new compilation of resources on its website to confirm its ongoing expectations for covered entities, these resources include the requirement that responsibility for the care of a patient receiving a 340B drug remain with the entity, including for referral care. We covered this in our most recent bulletin article and in a webinar late last year. So we encourage 340B Health members to reference those and learn more about these important developments.
David Glendinning (04:16):
Excellent. So we will make sure the show notes include those links and any other 340B health resources we share today. Our next question moves us from the halls of justice to the halls of Capitol Hill. Our listener simply asks, "What can we expect to happen on 340B in Congress this year?"
Monica Forero (04:38):
Yes, 2023 was eventful for 340B. And so to learn what we can expect for this year, I went to Tom O'Donnell, our senior vice president of government relations for his insight. We are about one month into the second session of the 118th Congress. And while nobody knows for sure what Congress will do, I would bet that 340B will come up on Capitol Hill this year. As we know, that was the case last session when 340B came up as part of congressional hearings and in a few pieces of the legislation. In December, for instance, the House of Representatives passed a price transparency and PBM reform package that also included some 340B provisions, that would require annual reports to the government from certain entities on the amounts they from Medicaid Managed care plans for 340B drugs.
(05:32):
The Senate is currently working on its own version of a PBM reform bill that has its own 340B reporting provisions. So our government relations team is on it, working with congressional offices to educate them on how these reporting mandates might affect hospitals. We should note that for any healthcare or other major legislation to be enacted, it must be bipartisan. And we are in a presidential election year and many members of Congress are focusing on their campaigns. So all this can make it more difficult for any legislation to pass unless there's broad support.
David Glendinning (06:10):
Yes, those of us who live and work in Washington are girding ourselves for an intense election year. I know folks are doing the same in election battlegrounds across the country. And speaking of looking across the country, our next question contemplates state legislatures, many of which just started their 2024 sessions. The question is, what is the latest on state legislation involving 340B?
Monica Forero (06:37):
Typically, for the answer to this question, I would've gone to Amanda Sellers Smith, but she's on maternity leave. However, our senior director of policy, Matthew Snyder gave me the download. And even though this year has just started, we are already seeing a flurry of 340B activity in state houses. Much of this activity looks promising for 340B hospitals in those states. For instance, there are more than a half dozen states that will consider bans on drug company restrictions on 340B contract pharmacies during the current legislative sessions. So if any of these states enact these bills, they would follow the lead of Arkansas and Louisiana, which already have contract pharmacy protection laws on their books. Matthew indicated that several other states are also considering bills to ban payment discrimination by PBMs and insurers against covered entities. If these states enact those bills, they would join a majority of states that already have non-discrimination laws in place.
(07:39):
And I hate to be the bearer of bad news, but not all the proposed bills would be positive developments for 340B hospitals. For example, we have already seen in the first state this year to introduce a 340B reporting bill. This would require hospitals to send state health officials substantial data on how much they receive in 340B savings and how they use those savings. Our legal and policy team works with member hospitals to monitor these developments. And we provide technical assistance and other support to members who are advocating for or against proposed 340B bills in the states. If listeners want to learn more about that, they can visit our state policy and advocacy resource center on our website.
David Glendinning (08:23):
I know it is often said that states are the laboratories of democracy, so it's always exciting for us when these 340B issues come up in those state houses. We turn to some more operational and financial issues for 340B covered entities in our next question. Our listener wants to know when hospitals will be receiving their repayments for all the Medicare cuts from recent years.
Monica Forero (08:49):
Yes, the five years worth of cuts. For more, I went to Chris Crosswhite, 340B Health's counsel. And as a refresher, this question refers to the remedy to 340B hospitals for Medicare Part B payment cuts that were in place from 2018 through most of 2022. It took years of litigation and a Supreme Court decision finding the reductions to be illegal, but hospitals are starting to be paid back for those cuts. We were happy to see notices posted just after the new year by several of the Medicare administrative contractors that are processing nine billion in remedy payments. They noted that lump sum repayments to hospitals started January 8th and should be complete within 30 days, which means by February 7th. But there are few caveats that hospitals should be aware of. One is that hospitals that requested corrections from CNS of their lump sum amount could see those payments come later, after the agency has approved or denied those revisions.
(09:51):
Finally, there is still significant uncertainty about repayments by Medicare private plans, known as Medicare Advantage plans, that followed CMS's payment cuts. CMS has noted Medicare Advantage plans must pay non-contract providers at least what they would have received under original Medicare, and that CMS cannot interfere in the payment rates these plans set in their contracts with providers. But that statement does not settle the issue of whether or how these plans are going to make hospitals whole for reduced Medicare advantage rates that were based on CMS's unlawful policy. Our legal and policy department has some analysis and other resources for our members to consult on Medicare repayments.
David Glendinning (10:36):
Excellent. I know our members are appreciative that we have our crack team of attorneys on the case when it comes to these important payment issues. Sticking with the payment theme for now, our next listener asks, "Why did so many drug manufacturers have to provide refunds to covered entities last year?"
Monica Forero (10:56):
I know our vice president of pharmacy services, Steve Miller, tracks these notices very closely. So I went to him for the answer. Drug companies that are found to have charged too much for 340B drugs published notices about those overcharges on the HRSA website. And we mentioned in a recent episode that drug makers had posted 40 of these notices last year. And since then, another belated notice showed up in the 2023 lists. So the current count is actually 41. And that is well more than the 33 overcharge notices that companies filed for all of 2022, and the number has gone up significantly each year since 2019.
(11:36):
A big part of the reason why this has been happening is because since 2019, HRSA has been collecting quarterly pricing data from drug makers. The agency uses this information to maintain the government's 340B ceiling price website, which 340B hospital officials can also access. So when the agency looks at this data and notices a company charged too much, that can lead to a refund announcement for affected hospitals. 340B Health played an instrumental role in pushing the government to get that ceiling price website up and running. So we are glad to see that the system is working to flag overcharges and that is leading to refunds for our hospitals.
David Glendinning (12:17):
Yes, and I know we've already seen our first overcharge notice on that website for the new year. So surely, that is a sign that the ceiling price website continues to be effective. And now that we are in a new year, one of our listeners is looking back at the 340B compliance scene for 2023. And that listener asks, "How did the previous round of audits turn out for covered entities?"
Monica Forero (12:44):
So Rebecca Swartz is our senior manager of policy and compliance, but I think of her as our audit extraordinaire. So I went to her for the scoop. She let me know that HRSA conducts 200 audits of covered entities per fiscal year to make sure these providers comply with 340B requirements. So far, HRSA has published results for just more than half of those audits for fiscal year 2023, which ended in October. So we are still waiting on a bunch of results, but the ones that we have observed on the audit results webpage so far can give us some helpful data. We have seen only two audits that cited hospitals for diversion, which is when an ineligible patient receives a 340B drug. The percentage of hospitals receiving findings for duplicate discounts, which is when a drug maker pays a Medicaid rebate on a 340B discounted drug is higher relative to the last several audit cycles, but that percentage could change.
(13:44):
After all those findings are all reviewed by the state Medicaid agencies. We already have seen at least two hospitals with such findings for which HRSA later noted that the state Medicaid agencies had determined duplicate discounts did not occur. And at least so far, we are seeing a lower percentage of hospitals being cited for having incorrect records filed with HRSA. Our analysis shows that drop is partly due to hospitals having fewer errors related to their Medicare cost reports. 340B Health frequently speaks with our member hospitals about their audit results and educates other hospitals on what they might expect if audited. And we can provide technical assistance to hospitals that receive audit notices so that they can be best prepared for that review. Lastly, I want to note that HRSA also audits five drug companies a year to ensure they're falling all the 340B rules. For the five drug maker audits in fiscal year 2023, HRSA issued findings in four of them, including for charging entities more than the 340B ceiling price for their drugs.
David Glendinning (14:51):
Okay. We will include a link to HRSA's program integrity page so people can see the drug company and covered entity audit reports for themselves. But I know our members are appreciative of our staff combing through all those reports to pick up on any trends they might show. And our final question for the day comes from a listener who is curious about whether there is any more news about the Inflation Reduction Act and how that might affect 340B hospitals.
Monica Forero (15:23):
So our vice president of research and policy analytics, Caroline Steinberg, is usually knee-deep in research and reports, but I managed to snag some time from her to ask her this question. And Caroline indicated that one of the biggest elements of the Inflation Reduction Act, or IRA, is the new price caps on Medicare drugs. As we've reported before, those caps won't kick in until 2026, but they could have a significant effect on 340B savings for hospitals once they do take effect.
(15:58):
The administration's implementation plans for the price setting are well underway, and CMS has announced the first 10 drugs that will be subject to Medicare Part D caps starting in 2026. Those drugs are expected to undergo price reductions of somewhere between 25 and 60%. CMS also needs to be able to identify 340B purchases, in part so it can accurately calculate the maximum prices Medicare will pay under the price setting law. The agency recently asked for stakeholder input on how to best do that. And 340B Health submitted comments on ways to avoid placing too many burdens on 340B hospitals with that claims identification. There are many moving parts and more to come. But we are starting to know enough to help hospitals begin projecting the effects all this will have on their 340B savings and their 340B operations. And we will discuss all this with members during our February 13th webinar on the IRA.
David Glendinning (17:03):
Well, thank you, Monica. I appreciate you taking the time to track down all of those experts in the office and getting those answers for us. So thank you for being with us today.
Monica Forero (17:12):
Thank you, David. It was great to have this conversation and answer these important questions for our listeners,
David Glendinning (17:18):
And we thank Amanda, Tom, Matthew, Chris, Steve, Rebecca, and Caroline, for taking the time to provide us and all our listeners with their expertise. Do you have additional questions about 340B or episode ideas you'd like to see come to life? Our mailbag is always open at podcast@340BHealth.org, so please don't be shy with your suggestions. We will be back in a few weeks with our next episode. In the meantime, as always, thanks for listening and be well.
Speaker 1 (17:57):
Thanks for listening to 340B Insight. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at 340Bpodcast.org. You can also follow us on Twitter at 340B Health, and submit a question or idea to the show by emailing us at podcast@340Bhealth.org.
Speaker 4 (18:19):
Voxtopica.