In its January 14, 2016 meeting, the Medicare Payment Advisory Commission (MedPAC) voted to approve the submission to Congress of its recommendation to decrease Medicare Part B reimbursement payments to 340B eligible facilities (“Covered Entities”) by 10%. The recommendation also proposes that savings from this payment cut be redistributed to hospitals based on the amount of uncompensated care they report on Worksheet S-10 of the Medicare cost report, a change that would significantly reduce the cost savings realized by Covered Entities.
Section 340B of the Public Health Service Act provides access to prescription drugs at significantly discounted prices (approximately 50% of the average wholesale price) for Covered Entities. Currently, Medicare reimburses Part B drugs at the same rate whether or not a hospital is enrolled as a 340B covered entity, resulting in significant cost savings to Covered Entities. Covered Entities are able to retain the difference between the acquisition cost and Medicare reimbursement, to provide more comprehensive services to low-income, special need, and indigent patients. A 10% cut in reimbursement could be devastating to the quality of care Covered Entities are currently able to provide under the program. As significant would be the harm the recommendation to redistribute program savings resulting from the decreased reimbursement based on Worksheet S-10 would have on hospitals that provide high levels of care to Medicaid patients.
Opponents of MedPAC’s recommendation question MedPAC’s jurisdiction over the 340B program, claiming that the Health Resources and Services Administration oversees the 340B program, not the Centers for Medicare & Medicaid. Nonetheless, the report comes in response to Congress’s request to MedPAC last year. The MedPAC recommendation comes at the heels of a recent OIG report concluding that the Medicare program could realize savings by entering into shares savings arrangements with Covered Entities.
The complexity of maintaining and managing a 340B program in light of an ever-changing landscape is driving demand for experts specializing in serving the needs of Covered Entities. Frier Levitt has extensive experience in 340B and is able to help Covered Entities navigate the 340B program regulatory background, and implement efficient, and compliant 340B programs. Contact us today to speak to an attorney.
