CMS finalizes changes to payment policy under the 340B drug discount program

The Centers for Medicare and Medicaid Services (CMS) on November 1, 2017, released the 2018 Hospital Outpatient Prospective Payment System (OPPS) final rule, moving forward with a significant change in payment policy under the 340B drug discount program that was included in the proposed rule earlier released in July.

Beginning January 1, 2018, CMS will no longer reimburse most 340B-purchased drugs at the standard Part B rate of Average Sales Price (ASP) plus 6 percent, and instead will pay a rate of ASP minus 22.5 percent. The change in payment policy has drawn sharp criticism from hospital organizations, including litigation by the American Hospital Association, the Association of American Medical Colleges, America’s Essential Hospitals and member hospitals to block the change in payment policy.

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Health care looms over final months of 2017 legislative, regulatory agenda; Latest executive order could kick off period of heavy regulatory activity

Repeal and replace of the Affordable Care Act (ACA) has dominated the headlines for much of 2017, but the expiration of the fiscal year 2017 budget resolution on September 30, 2017, has functionally moved that effort off the top-tier of near-term legislative priorities. That said, health care legislation remains on the congressional agenda this year, and a host of regulations are due to be released before December 31, 2017.

These legislative and regulatory developments will have a significant impact on the health care industry and should be taken into account by health care providers, health plans, health information technology firms, investors and other industry stakeholders as they evaluate their strategies and plan for 2018 and the years ahead.

Below are select highlights of the health care legislative and regulatory agenda for the remainder of 2017.

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A renewed focus on the future of the 340B program

On Thursday, July 13, 2017, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that updates the payment rates and policy changes in the Hospital Outpatient Prospective Payment System (OPPS). In the provisions, CMS proposes to change the payment rate for certain Medicare Part B drugs purchased by hospitals through the 340B program.

The proposed changes include adjusting the applicable payment rate for drugs acquired under the 340B program from average sales prices (ASP) plus 6 percent to ASP minus 22.5 percent. This potentially represents a significant reduction to how much Medicare pays 340B hospitals for Part B drugs under OPPS.

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New budget agreement includes health care policy changes, but generally shifts attention to regulatory activity through 2016 elections

Posted by Anne Phelps, on November 2, 2015.

President Obama on Monday, November 2, 2015 signed into law a two-year budget deal that sets federal spending levels through September 2017 and suspends the federal debt limit until March 2017. The House and Senate passed the bill last week. The legislation generally clears the decks of any must-pass legislation until after the 2016 elections, shifting the life sciences and health care sectors’ focus in Washington largely to regulatory activity on issues such as the 340B drug discount program, the new Medicare payment law (MACRA), and the so-called Cadillac tax on high-cost employer-sponsored health coverage.

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Long-awaited release of drug discount rule mega-guidance means hospitals need to act quickly—but think long-term

Long-awaited release of drug discount rule mega-guidance means hospitals need to act quickly—but think long-term

On August 27, the Health Resources and Services Administration (HRSA), one of the federal public health agencies within the Department of Health and Human Services, released a long-awaited draft guidance intended to clarify eligibility requirements for the 340B Drug Pricing Program. The publication of this guidance marks the beginning of a 60-day public comment period before the agency releases a final rule.

The “340B Drug Discount Program”, named for the authorizing section of the Public Health Service Act, is a US federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities at significantly reduced prices. Pharmaceutical companies must adhere to the program’s price discount rules as a condition of their participation in Medicaid. Over the past several years, Congress, the Administration, and health care stakeholders have been attempting to balance the program’s goals of providing drug discounts to entities that serve lower income populations, while maintaining some parameters about the definitions of qualified drugs, patients, and eligible entities to limit the expansion of the program.

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HRSA Withdraws 340B “Mega-Reg”

HRSA Withdraws 340B Mega-Reg

On November 13, 2014, the Department of Health and Human Services (HHS) announced that it is withdrawing the highly-anticipated and comprehensive 340B drug pricing program (340B program) regulation (also known as the “mega-reg”) and will replace it with program guidance issued early next year through the Health Resources and Services Administration (HRSA). The “mega-reg” was designed to address key topics not fully defined in the original legislation. It was drafted earlier this year and given to the White House Office of Management and Budget in April; however, it stagnated amidst controversy and legal proceedings surrounding the HRSA-proposed orphan drug policy issued in 2013. The withdrawal of the “mega-reg” now leaves more questions than answers for covered entities as we enter into what will likely be a formative year for the 340B program.

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