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Bipartisan bill would reverse CMS rule slashing 340B drug payments

Bill would negate a CMS rule cutting $1.6 billion for drugs purchased by certain hospitals under the 340B program.

Susan Morse, Managing Editor

Provider organizations have voiced support for a bipartisan House bill that would reverse a rule cutting 340B drug payments to hospitals.

On Wednesday, Representative Mike Thompson of California, a Democrat, and Republican David B. McKinley of West Virginia, introduced H.R. 4392 to negate a Centers for Medicare and Medicaid Services rule that would cut $1.6 billion for drugs purchased by certain hospitals covered under the 340B program, according to a statement by Thompson.

[Also: UPDATED: Hospital groups to sue CMS over $1.6 billion cut to 340B payments]

The rule goes into effect on January 1, 2018.

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The 340B program uses mandated discounts by drug manufacturers to help hospitals that serve populations with a high uninsured rate to cover the cost of uncompensated care.

[Also: Proposed changes to 340B program would hurt nonprofit hospital margins, Moody's says]

Opponents have said hospitals have benefitted in a way not intended by the program, by pocketing the profits and in steering cancer treatment to 340B settings.

340B discounts reduce drug costs by $6.1 billion annually.

[Also: Community Oncology Alliance backs hospital payment cuts in 340B rule]

On Nov. 1, CMS cut the reimbursement rate for Medicare Part
B drugs purchased by 340B hospitals by about $1.6 billion.

The rule cuts Medicare Part B payments to 340B hospitals by nearly 30 percent and redistributes those dollars to hospitals that do not participate in the program, including for-profit facilities, said the representatives and supporters.

The bill has the support of the American Hospital Association, America's Essential Hospitals, 340B Health and the Association of American Medical Colleges.

"For 25 years, the 340B Drug Pricing program has been critical in helping hospitals expand access to lifesaving prescription drugs and comprehensive healthcare to low-income patients and other vulnerable populations in communities across the country," said AHA Executive Vice President Tom Nickels.

"This program provides savings to many teaching hospitals, allowing them to maintain vital services for patients at no cost to taxpayers," said Atul Grover, MD, executive vice president of the Association of American Medical Colleges.

Bruce Siegel, MD, president and CEO of America's Essential Hospitals said, "We urge all House members to support access to affordable drugs by supporting this critical legislation."

"These rules make Draconian cuts in payments to hospitals that care for low-income Americans," said 340B Health CEO Ted Slafsky. "Sadly, they would not reduce the price of drugs and would not reduce costs for seniors or Medicare."

340B savings make the difference between keeping services and cutting them, said David Ramsey, president and CEO of Charleston Area Medical Center in Charleston, West Virginia.

"The loss of funds under the CMS regulation would force us to consider further staff reductions at a time when our communities need the services we offer most," Ramsey said.

Certain hospital groups have said they would sue the government over the decision to cut the payments.

The bill also has the support of Republican Bill Johnson of Ohio, Republican David Kustoff of Tennessee, Democrat Joe Courtney of Connecticut and Democrat Kathy Castor of Florida.

On September 28, 228 bipartisan members of Congress signed a letter sent to CMS Administrator Seema Verma urging the administration to withdraw its proposal to cut the 340B program.

"I'm disappointed that CMS did not listen to hospitals, nor a majority of members in the House and Senate, and approved a rule that puts both hospitals and patients at risk," Thompson said.

Twitter: @SusanJMorse
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