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5 Things to Know About the Proposed 340B Changes

The 340B program is a Federal drug discount program established in 1992, enabling qualified hospitals and healthcare facilities to purchase outpatient drugs at VA prices (average 60% of GPO pricing). The classifications for facilities capable of participating in 340B are Disproportionate share, Critical Access, Rural Referral, Sole Community, freestanding Cancer, and freestanding Children’s hospitals. The program is highly effective when implemented properly in a qualified facility. Sadly, due to the intricacies of its rules and regulations, it can also be difficult to retain compliance, which results in legal and financial penalties for an inadequately managed program. Last August, the Health Resources and Services Administration presented a proposal with the intention to clarify the compliance issues, address the concerns of the drug companies, and provide simplified guidance in other areas. Earlier this year, a survey was released by 340B Health, an advocacy group made up of more than 1,200 hospitals. The survey displayed the results from 523 healthcare facilities on how the proposed changes would effect their application of the program. These are some of the findings:

1. Looking at the proposed changes as a whole, the 523 facilities surveyed found less than 3 percent said it would either help or not effect their operation of the program. 76 percent said it would hurt their hospital, while forcing 28 percent to consider having to drop the program all together. The Survey points out that Rural Hospitals would take the heaviest hit.

2. Currently, 340B allows hospitals to purchase and provide reduced cost drugs to patients ending an inpatient stay. This is seen as a way to eliminate gaps in care and decrease readmissions. The proposed changes would ban this practice of using 340B for discharge prescriptions. The survey showed 81 percent would lose discounts, and more than half would struggle to implement these changes due to the financial strain, ultimately forcing between 11 and 22 percent to drop the program.

3. Currently, a cancer patient can be diagnosed at one location and be treated with infusions closer to home, where that facility can purchase the infusions at 340B pricing. The proposed changes would end this practice, and require that in order to receive the 340B discounts, the initial diagnosing hospital would be required to provide the infusion to the patient. This would force facilities to pay full price for the outside infusion orders. The study suggests this could leave patients without treatment nearby and close infusion centers. 85 percent of hospitals surveyed said they would lose 340B discounts if this occurred.

4. Currently, the “Three-day rule” means outpatient services performed within three days of admission will be billed as part of inpatient services. The “Three-day rule” does not change the patients’ prior outpatient status, enabling hospitals to use 340B pricing for their medications, because the patient is classified as an outpatient at the time of care. An example being a patient who visits the emergency room of a 340B facility and receives treatment before being admitted. Any medications used on this patient while in the emergency room would qualify for 340B pricing. Another proposed change would be to classify any patient who receives care within 72 hours of admittance as an inpatient. Therefore, any drugs they received before admittance would be billed as part of inpatient services. This survey says changing the classification would limit the use of the 340B program and raise the cost of care all the while creating severe compliance hurdles for administrations surrounding the medication utilization in emergency rooms.

5. Currently, the 340B program is designed to be used by hospitals that serve a large proportion of Medicaid patients. The proposed changes would place restrictions on the use of 340B discounts for the drugs paid for by Medicaid. The survey states these limitations could significantly limit the scope of the program and its benefits.

In all, the survey shows that while the program’s changes are meant to be beneficial to facilities by clarifying and simplifying the rules and regulations, it may be seen as significantly damaging. While each individual change has its own negative impact, the survey says the cumulative effect would be devastating. The results show that current users and patients would suffer due to the increased financial costs and the decreased levels of care they can provide.The changes have been delayed, and as of May 2016, the HRSA has stated that it is unlikely there will be any more movement until the end of the year.Follow this link to view the survey, http://www.340bhealth.org/files/HRSA_Guidance_Survey_Report.pdf

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