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Hospitals oppose cuts to 340B drug program, but oncology group says they're abusing the discount program

Hospitals say program helps provide uncompensated care for low-income patients while CMS estimates a cost savings of $180 million a year.

Susan Morse, Senior Editor

Hospital groups oppose a proposed federal rule to cut 340B drug payments, but a group representing oncologists applauds the effort it said will curb the abuse of the discount drug program.

The Centers for Medicare and Medicaid Services has released a proposed rule to cut payment by about 27 percent for certain Medicare Part B drugs purchased through the 340B program. The program is intended to help hospitals that serve a disproportionate number of low-income patients by lowering the cost of drugs.

Hospitals buy discounted 340B drugs and sell them to patients at full price. The idea is to allow hospitals that treat low-income patients the ability to serve that population. Hospitals in the program provide an estimated 60 percent of uncompensated care.

[Also: Biosimilar drugs often translate to lower provider profits, says Navigant analysis]

But the Community Oncology Alliance said hospitals are abusing the program's discount.

"Community oncology practices across the country will tell you that hospitals have been strong-arming them to sell or close because of the tremendous profits they make from the 340B program and higher billing rates," said Jeff Vacirca, MD, president of the alliance and CEO of NY Cancer and Blood Specialists in Long Island, New York. "I can tell you firsthand that 340B hospitals have been abusing the program to take over the cancer care system in this country. This is not only costing patients a lot more money, it is also hurting their care."
The Community Oncology Alliance said a 2016 study by the actuarial firm Milliman calculated that the shift of chemotherapy from community oncology practices to hospitals cost Medicare an extra $2 billion in 2014 alone.

CMS's proposed change has the potential to reduce drug costs for seniors by an estimated $180 million per year, according to.Department of Health and Human Services Secretary, Tom Price, MD.

On Tuesday at 10:15 a.m., the Energy and Commerce Committee will examine the 340B drug pricing program and its oversight by the Health Resources & Services Administration, an agency within the Department of Health and Human Services.

Bruce Siegel, MD, president and CEO, America's Essential Hospitals, spoke against the cuts.

[Also: Trump administration won't overhaul 340B program, providers to keep drug subsidies]

Essential hospitals, which operate with a margin less than half that of other hospitals, use savings from the 340B drug pricing program to care for low-income and other disadvantaged patients, Siegel said.

The 340B program provides a buffer for patients and taxpayers against skyrocketing drug prices, Siegel said.

"Given these hospitals' fragile financial position, today's Outpatient Prospective Payment System (OPPS) policy change--which would dramatically cut payments for most Part B drugs by 27 percent--threatens their ability to maintain critical services to patients and communities," Siegel said.

340B Health, a nonprofit membership organization of more than 1,300 hospitals and health systems, strongly opposes CMS's proposal to cut 340B hospitals' Medicare Part B drug reimbursement, saying it would harm hospitals and their ability to treat low-income patients.

[Also: AHIP: The role of payer and pharma in affordability of drugs]

Two studies confirm the 340B program helps hospitals serving low income and rural patients without raising drug prices, the organization said.

"We hope the Trump administration and Congress pay close attention to these important studies," said 340B Health President and CEO Ted Slafsky. "They show 340B discounts aren't burdening drug manufacturers, aren't pulling from taxpayer dollars or shifting costs to other payers, and are generating funds hospitals desperately need to cover unreimbursed costs, provide services to low-income and rural patients, and, in some cases, keep their doors open."

Roughly 60 percent of hospitals would likely withdraw from 340B as a result of a payment cut, 340B Health said.

Cutting payments to 340B hospitals would prevent them from treating low-income patients, 340B Health said.

Twitter: @SusanJMorse

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