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AHA wants HHS to issue waivers to 340B hospitals

The number of Medicare and Medicaid patients declined during the pandemic, changing the 340B hospital payer mix.

Susan Morse, Managing Editor

(Photo by Westend61\Getty Images)(Photo by Westend61\Getty Images)

The American Hospital Association is asking Health and Human Services Secretary Xavier Becerra to ensure that hospitals participating in the 340B drug pricing program continue to have access to the program despite changes in their payer mix as a result of COVID-19.

The AHA specifically requests a Section 1135 waiver of the Social Security Act for certain 340B program eligibility criteria for 340B hospitals enrolled during the public health emergency that may have experienced a temporary change in payer mix due to the COVID-19 pandemic.

The public health emergency resulted in hospitals suspending nonurgent services and shifting resources to treat COVID-19 patients. These actions, combined with a slow resurgence of patient volumes, lowered the proportion of hospital patients paying through Medicaid or Medicare. 

One of the primary eligibility criteria for hospitals in the 340B program is the Medicare disproportionate share hospital patient percentage adjustment, which is based on the volume of inpatient Medicaid and Medicare Supplemental Security Income patients.


The potential loss of access to the 340B program is an unfortunate consequence of COVID-19-related changes in payer mix over the past year, the AHA said. Many of its 2,000 340B member hospitals have already endured financial and operational challenges and are now facing the possible loss of access to the 340B program.

Some 340B hospitals filing their Medicare cost reports that reflect their 2020 patient services will be at risk of losing their 340B eligibility. Without a waiver, these hospitals will be forced out of the 340B program, losing access to discounted drugs and program savings used to help provide care to the vulnerable communities they serve, the AHA said.


HHS has already taken action in exercising regulatory flexibilities to help healthcare providers address COVID-19 by enacting a series of waivers using the 1135 authority, retroactive to March 1, 2020 through the end of the PHE.

Two of these waivers grant eligibility flexibility for Sole Community Hospitals and Medicare Dependent Hospitals. Specifically they include a waiver of distance, market share, and bed requirements for SCHs and inpatient days or discharge criteria for MDHs. This same flexibility should be applied to 340B hospitals, the AHA said. 

340B hospitals in recent months have also faced a lack of 340B pricing from certain drugmakers. This is because in August 2020 a federal appeals court ruled that 340B hospitals would be subject to Medicare cuts in outpatient drug payments by nearly 30%, which was a reversal of an earlier court ruling calling those cuts illegal.

In December 2020, hospital groups filed a lawsuit over drug companies' refusal to give 340B discounts.

In February, the AHA and other groups asked the Supreme Court to reverse the decision.

Twitter: @SusanJMorse
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