HRSA rolls out drug pricing site for 340B hospitals

https://www.fiercehealthcare.com/hospitals-health-systems/hrsa-rolls-out-drug-pricing-site-for-340b-hospitals?mkt_tok=eyJpIjoiWldVeU5HSmtZek5oT1dSaiIsInQiOiJYUXRUNlZ3dGc2aVBWOVdtZ1BGb3Y2bUZNOFowbFwvQ2Y3SzZBcTB6aWswRFJtSEZ5eWFFVStCWmt1TFprZ2V4bDIzS29idkZoZ2dcL1dPbDhQV3NuV0dZXC9cL1M4XC9rc0hKMkNvY3JFa1B6OHlHeWFRZm5YcjdZa1hCdEl0bU9sdkgxIn0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Drug prices

After multiple delays, the Health Resources & Services Administration (HRSA) has finally launched an online tool that 340B hospitals can use to determine the maximum that pharmaceutical companies can charge for drugs.

HRSA’s new pricing site went live on Monday morning and is one of the elements mandated in the long-delayed final rule for the 340B drug discount program. That rule, which took effect on Jan. 1, also adds monetary penalties for drug companies that overcharge hospitals in the program.

The final rule was first issued in January 2017 and was delayed five times by the Trump administration before going into effect this year. HRSA finally rolled out the rule as it determined the provisions would not interfere with the administration’s broader drug pricing policy

Provider groups and 340B advocates cheered the website’s launch. Maureen Testoni, CEO of 340B health, a group that represents more than 1,300 providers participating in the program, said in a statement that the new tool’s release “marks a positive milestone in the history of the 340B program.” 

“Today’s launch of a secure website listing the maximum allowable prices for all 340B covered drugs brings a healthy dose of sunshine into a marketplace that has, for far too long, been a black box,” Testoni said. “Until today, hospitals, clinics and health centers participating in 340B had no way to be sure they were paying the correct amount for the drugs they purchase.” 

340B Health was joined by the American Hospital Association (AHA), America’s Essential Hospitals and the Association of American Medical Colleges on a lawsuit filed in September with the goal of pushing HRSA to implement the rule.

Tom Nickels, executive vice president at AHA, said in a statement that the group was “pleased” that its lawsuit led to the site’s launch.

“As prescription drug prices continue to skyrocket, the 340B program is as crucial as ever in helping hospitals provide access to healthcare services for patients in vulnerable communities,” Nickels said. 

Amid the drug price debate, the 340B program has been under the microscope. The program has enjoyed traditionally bipartisan support, but intense lobbying from the pharmaceutical industry has led to criticism that it has grown too large.

The Centers for Medicare & Medicaid Services also slashed the program’s payment rate in 2017, a shift in a longstanding Medicare policy that culled $1.6 billion in payments from the program. Hospital groups are currently battling the payment changes in court

 

 

Federal judge says HHS overstepped authority in cutting 340B payments

https://www.fiercehealthcare.com/hospitals-health-systems/federal-judge-says-hhs-overstepped-authority-cutting-340b-payments?mkt_tok=eyJpIjoiTnpBNE1HTmtObUl3WVRkayIsInQiOiJFOU1xMDRPMGtzMCtnWXU4MExUVFAzZ3Jrdm5cL2s3S1dMRkVldTRWS2QyNmJZU255UWRIWW14QmtXVkJ2T2VTeGpYTVBvQXZWWW1JVnB0S0crTXV3aFhDS0wrY3NzTmtEYmJEMHdvSG03bGkxS2ZlREdiaWZydFZkbkdlXC9tTHE1In0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Drug prices

A federal judge has sided with hospitals in the ongoing battle over cuts to 340B drug discount payments, saying the Department of Health and Human Services’ rule slashing money to the program overstepped the agency’s authority.

District Judge Rudolph Contreras from the District of Columbia has issued an injunction (PDF) on the final rule, as requested by the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals.

Contreras also denied HHS’ request for the hospital groups’ ongoing litigation against the 340B payment cuts to be dismissed.

The Centers for Medicare & Medicaid Services finalized the payment changes late last year, cutting the rate in 340B from up to 6% more than the average sales price for a drug to 22.5% less than the average sales price of a drug, slashing $1.6 billion in payments.

Hospital groups have warned that the cuts could substantially hurt their bottom lines, especially for providers with large populations of low-income patients. Higher cost for drugs in 340B could also lead to access problems for these patients.

Contreras said in his opinion (PDF) that the payment changes overstepped HHS’ authority.

Because the payment changes affect many drugs—any in the 340B program—and the payment cuts are a significant decrease, the agency bypassed Congress’ power to set those reimbursement rates with the rule, Contreras said.

But simply siding with the hospital groups could prove disruptive, he said, as retroactively adjusting payments and reimbursing hospitals for lost money over the past year would impact budget neutrality, requiring cuts elsewhere to offset the payments. So both parties will have to reconvene to determine the best way forward, Contreras said.

The AHA, AAMC and AEH issued a joint statement praising the ruling.

“America’s 340B hospitals are immeasurably pleased with the ruling that the Department of Health and Human Services unlawfully cut 2018 payment rates for certain outpatient drugs,” the groups said.

“The court’s carefully reasoned decision will allow hospitals and health systems in the 340B Drug Pricing Program to serve their vulnerable patients and communities without being hampered by deep cuts to the program.”

The case marks the groups’ second attempt at a legal challenge of the 340B cuts. A federal court rejected their initial appeal in July. 

An HHS spokesperson said in a statement emailed to FierceHealthcare that the agency is “disappointed” in Contreras’ ruling, but said it looks forward to addressing the judge’s concerns about potential disruption to payments.

“As the court correctly recognized, its judgment has the potential to wreak havoc on the system,” the agency said. “Importantly, it could have the effect of reducing payments for other important services and increasing beneficiary cost-sharing.”

Chip Kahn, president of the Federation of American Hospitals, said Contreras’ ruling puts lowered drug costs, that benefit all hospitals, at risk.

“The DC Federal District Court’s ruling to stop reforms to Medicare payment for drugs acquired under the 340B drug discount program is unfortunate because it undermines HHS efforts to cut drug costs and promote fairer payments,” Kahn said in a statement.

 

 

 

 

Hospital Revenue Unstable Despite Outpatient Volume Growth

https://revcycleintelligence.com/news/hospital-revenue-unstable-despite-outpatient-volume-growth?eid=CXTEL000000093912

Image result for hospital revenue

Payer mix shifts, increases in self-pay, and lower Medicaid revenue per case are troubling hospital revenue despite a 2.4 percent boost in outpatient volume.

Hospitals recently saw increases in national inpatient and outpatient volumes. However, net hospital revenue continues to be unstable for non-profit organizations, according to a new analysis from the public accounting, consulting, and technology firm Crowe.

“As many health systems expand their portfolio of services (more outpatient facilities, entrees into insurance products, and other ancillary investments), stability of hospital-based net revenue becomes more important to financial decisions,” the analysis stated. “Unfortunately, instability appears to be the current trend, forcing many CFOs of not-for-profit healthcare systems to study operations and budget them on a monthly or quarterly financial performance basis, in the same manner that their peers in for-profit organizations do.”

The consulting firm analyzed data from its revenue cycle analytics solution for 622 hospitals in Medicaid expansion states and 389 hospitals in non-expansion states. The analysis of data from January through September of 2017 and 2018 revealed some positive results for 2018.

Inpatient volume is up 0.6 percent in 2018, and gross revenue per case also increased 5.3 percent during the period.

At the same time, outpatient volume rose 2.4 percent and gross revenue per case increased 7.1 percent on the outpatient side.

Hospitals may be reaping the benefits of higher volumes. However, net revenue per case demonstrated greater volatility on the inpatient and outpatient sides, the firm pointed out. Net revenue per inpatient case only increased 1.6 percent between 2017 and 2018 and net revenue per outpatient case rose 5.5 percent during the same period.

“It is important to consider that these trends do not hold true across all payers. As a result, some hospitals may be more exposed to diminishing growth in net revenue per case,” the analysis stated. “Although an increase in net revenue appears to be good news for hospitals, the manner in which revenue is increasing follows some troublesome trends.”

The “troublesome trends” identified by Crower researchers included a significant shift in payer mix. Medicare managed care, self-pay, and other payers (i.e., third-party liability and worker’s compensation) increased by 1.6 percent for inpatient and 1.1 percent for outpatient overall, the firm reported.

“In addition to these payer classes having a lower net realization overall, they also challenge finance leadership’s ability to forecast net revenue, as seasonality and patient engagement vary by facility,” the analysis explained.

Increases in self-pay accounts particularly contributed to hospital revenue instability, Crowe added. Self-pay increased 16.1 percent by 2018, representing six percent of the average hospital’s payer mix. Self-pay accounts continue to be the most difficult to collect, suggesting a growing obstacle for hospital revenue.

Medicaid net revenue also fell from 2017 to 2018, the analysis showed. Net revenue per case for both traditional and managed care Medicaid decreased 6.9 percent for inpatient and 1.1 percent for outpatient.

Hospitals that treated a greater number of Medicaid beneficiaries will continue to see their Medicaid revenue drop under new regulatory changes, researchers predicted.

For example, CMS finalized a new policy that will change the methodology for determining Medicaid Disproportionate Share Hospital (DSH) payments. Medicaid offers DSH payments to hospitals that treat a greater proportion of low-income and vulnerable patients and bases the payment amount on the hospital’s uncompensated care costs.

The new policy will clarify that uncompensated care costs include only the costs for Medicaid-eligible patients with payments remaining after accounting for the reimbursement to the hospital by or on behalf of Medicaid-eligible individuals, including Medicare and third-party payments.

A federal judge vacated the new policy’s implementation on a national level in March 2018, arguing that changing the policy exceeded CMS’ authority because the Medicaid Act specifically identifies what constitutes uncompensated care costs. Several states have also challenged the policy in court.

CMS is currently challenging the rulings.

New rules for the 340B Drug Pricing Program could also further decrease Medicaid revenue for hospitals, the analysis stated. CMS recently finalized $1.6 billion in hospital payment reductions for 340B covered drugs.

The American Hospital Association (AHA) and several other groups sued CMS over the payment cuts. But a federal judge ruled that CMS can enforce the billions of dollars in payment reductions.

Additionally, the Crowe analysis uncovered a decrease in final denial write-offs, or patient bills that were not paid by payers. Final denial write-offs for outpatient services fell by almost 15 percent from 2017 to 2018, the data showed.

While a drop in final denial write-offs indicates business office improvements, researchers noted that recent changes in managed care contracting may challenge denial rates going forward. Contracts for outpatient diagnostic imaging are likely to see the greatest challenge to denial rates, they reported.

AHA, AAMC sue Trump administration over site-neutral payment rule

https://www.fiercehealthcare.com/hospitals-health-systems/aha-aamc-file-suit?mkt_tok=eyJpIjoiTjJNNFpUVTJPR0UwT1dRMyIsInQiOiJ5ZEdxMWV6aFZESWlcL2lJdUw1WG4yMkNTS3B5VFY5cmRxNVFYS3lGVmh0VkZmSDdVUlhFTGZVRllpVm1sdkFBZWU2QmhXbndMZFdOK0cxQjkzRUVHTk5pYkEwNVdncWVYUlh2cFYwMEp3S3d2dEJyOGg4NnFcL1NjeVpRSmY5YWxnIn0%3D&mrkid=959610

Wooden gavel and gold legal scale that appear to have sunlight falling on them

Two of the nation’s largest healthcare groups are suing the Trump administration over a final rule to institute site-neutral payments for clinic visits, saying the policy would hurt patients.

Last month, the Centers for Medicare & Medicaid Services (CMS) finalized the 2019 Outpatient Prospective Payment System (OPPS) rule (PDF), which will gradually institute site-neutral payments in the Medicare program over the next two years. Agency officials said site-neutral payments for clinic visits will lower out-of-pocket costs for beneficiaries and save the program as much as $380 million in 2019.

In a complaint filed in the U.S. District Court for the District of Columbia, the American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC) said the rule would lead to access problems as hospitals cut services, hurting vulnerable patients. The associations claimed the administration is overstepping its legal bounds  and were joined in the legal action by Olympic Medical Center in Port Angeles, Washington; Mercy Health in Muskegon, Michigan; and York Hospital in York, Maine.

“These cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care,” said Rick Pollack, president and CEO of the AHA, in a statement.

AHA said it was planning legal action shortly after the rule was finalized.

Physician groups, including the American Association of Family Physicians (AAFP) and the American College of Physicians (ACP) as well as groups like the Cancer Oncology Alliance, have supported site-neutral payments for some time. AAFP has said site-neutral payments can also help community clinics stay open at a time many have had to close due to vertical integration, consequently advancing patient choice and reducing costs.

But hospital groups oppose the rule, which also expands a CMS policy limiting how much drug companies can charge hospitals for their products in the 340B program.

“Patients who receive care in a hospital outpatient department are more likely to be poorer and have more severe chronic conditions than patients treated in an independent physician office,” Pollack said. “In addition, only hospitals provide 24/7 access to care for patients, regardless of their ability to pay, hospitals are held to far higher regulatory requirements, and hospital outpatient departments in inner cities and rural areas are often the only sites of care that provide the services they do.”

Most recently, AHA had sued CMS over the 340B program changes before HHS bumped up the implementation date last month for changes that would set price ceilings and add civil monetary penalties for manufacturers—two changes the AHA supported.

 

Kaufman Hall: Hospitals saw profitability bump in October, boosted by rise in volume

https://www.fiercehealthcare.com/hospitals-health-systems/kaufman-hall-hospitals-saw-profitability-surge-october-boosted-by-rise?mkt_tok=eyJpIjoiTVdGaU5XVmlZelZsTVRNMSIsInQiOiI4Umh2ZWxjOExQVFBIM1RxT2RuRHM5RUFBOGhmUjVncU0zTitQUGtYVjhzd2ltZkpYT05Zd1plUElBNlh5OXlwYWpLeXViM2pxWHJJMVpQbEo5aGpNdklNVFdzaFJLa1B3XC9pejgxTVJGNUJjRng3cHlYUzBiMERDNnE5ODRTXC96In0%3D&mrkid=959610

A bar chart showing positive business growth

Hospitals saw a profitable October, spurred by a boost in volume and length of stays, according to a new report. 

Kaufman Hall’s latest flash report, based on financial data from 600 hospitals in October, showed improved performance in both operating margin and EBITDA compared to September and to October 2017.

Year-over-year EBITDA margin improvements were reported across the country, aside from the Northeast and mid-Atlantic, with the greatest gains reported in the Midwest. Midsized hospitals with between 200 and 300 beds made the greatest profitability gains, while large hospitals with 500 or more beds struggled to manage costs as effectively, according to the report.

“For Halloween, October delivered a treat rather than a trick for hospitals,” Jim Blake, managing director and publisher at Kaufman Hall, wrote in the report.

A major source of the improvement, according to the report, was a 15.8% month-over-month increase in operating room minutes. Kaufman Hall’s team found a 5.2% increase in discharges and a 3.6% increase in emergency department visits. 

Though October’s results were positive, the analysts say it’s hard to determine whether one month of gains portends a longer-term rebound. But in the short term, Kaufman Hall does predict a strong December compared to the year before, though it could trail October and November’s figures.

As increased volume also means increased labor and supply costs, the report additionally spotlights the role the Centers for Medicare & Medicaid Service’s expansion of cuts to 340B discounts could play in the profitability discussion for 2019.  

In late 2017, the agency finalized changes to the drug discount program’s payment rate, cutting it to 22.5% less than the average sales price for a drug. For 2019, CMS will expand those changes from hospitals to off-campus provider facilities, which will naturally tighten belts further, according to the report. 

The decrease in payments is likely to be less than the $1.6 billion culled from the program in 2018, according to the report, but it does mean hospitals should be paying close attention to how their outpatient and ambulatory facilities prescribe 340B drugs. 

It’s especially crucial to be vigilant, according to the report, as it’s likely CMS is considering other changes in this vein, and commercial payers follow the feds’ lead.

“The new CMS rule on 340B drugs is a sign of things to come, and healthcare leaders should be alert to such changes,” according to the report. “The federal government is likely to challenge any lines of business in which hospitals and health systems make significant margins.” 

 

 

 

340B FINAL RULE WILL LAUNCH ON JANUARY 1, 2019

https://www.healthleadersmedia.com/340b-final-rule-will-launch-january-1-2019

HHS shortens the 340B final rule implantation by six months after determining that it would not ‘interfere’ with the departments ‘comprehensive policies’ to address high drug costs.


KEY TAKEAWAYS

PhRMA says the ‘overly burdensome’ final rule fails to address hospital abuse of the program.

The new rule provides drug pricing information to 340B participants through a closed website.  

Proponents scoff at drug makers’ claims that more time is needed before the oft-delayed final rule is implemented.

After several delays, hundreds of public comments, a lawsuit, and an eight-year-old Congressional mandate, the federal government on Thursday bumped up the starting date of its 340B drug pricing final rule by six months.

In a notice published this week in the Federal Register, the Department of Health and Human Services said the final rule—which is designed to protect hospitals from being overcharged by drug manufacturers—would take effect on January 1, 2019, instead of July 1, 2019.

The final rule was supposed to take effect on January. 5, 2017, but HHS delayed implementation because it said it was in the midst of “developing new comprehensive policies to address the rising costs of prescription drugs.”

Hospitals got tired of waiting and filed suit, asking a federal judge to order the Trump Administration to launch the final rule on January 1, 2019. The hospitals allege that the delays are causing significant financial harm to the nearly 2,500 hospitals nationwide that participate in the 340B Drug Pricing Program.

In late October, the Trump Administration said it was considering accelerating implementation.

In bumping up the final rule implantation by six months, HHS said it “has determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with HHS’s development of these comprehensive policies.”

Under the new rule, federal regulators will provide pricing information to 340B hospitals through a closed website, which proponents of the rule say is essential for ceiling price enforcement.

As expected, hospitals praised the action, and drug makers expressed disappointment.

“This rule is good for patients and for essential hospitals, which rely on 340B savings to make affordable drugs and health care services available to vulnerable people and underserved communities,” said America’s Essential Hospitals President and CEO Bruce Siegel, MD.

“It also ends years of delay for much-needed measures to hold drug companies accountable for knowingly overcharging covered entities in the 340B program,” Siegel said.

Maureen Testoni, interim president and CEO of 340B Health, called the announcement “a big step toward stopping drug companies from overcharging 340B hospitals, clinics, and health centers.”

“The next step toward ensuring true 340B drug maker transparency is for the administration to launch its ceiling price website so hospitals, clinics, and health centers can ascertain that they are paying the correct amounts for 340B medications,” Testoni said.

“We are encouraged that HHS says it will release that pricing reporting system shortly and that the department will communicate additional updates through its website,” she said.

PhRMA said it was “disappointed the Administration did not issue new proposals for this rule as it repeatedly stated it would.”

The pharmaceutical industry advocates said HHS “ignored the numerous concerns raised by stakeholders on the proposed ceiling price calculations, offset policy and civil monetary penalty provisions.”

Drug makers allege that hospitals have been scamming the 340B program, and PhRMA said Thursday that the final rule’s “flawed policies are not in line with the 340B statute and fail to address root problems in the 340B program that have enabled private 340B hospitals to generate record profit without commensurate benefit to patients.”

“Not only is the final rule itself overly burdensome in its requirements, but moving up its effective date also leaves manufacturers with very little time to make operational changes to systems and procedures,” PhRMA said.

Testoni scoffed at claims that more time was needed.

“The regulation now will be going into effect more than eight years after Congress mandated it—and only after a lawsuit filed by 340B Health and other hospital organizations to stop repeated administrative delays to the effective date,” Testoni said.

“As today’s final rule notes, these delays have given drug makers ‘more than enough time to prepare for its requirements.'”

“THESE DELAYS HAVE GIVEN DRUG MAKERS MORE THAN ENOUGH TIME TO PREPARE FOR ITS REQUIREMENTS.”

 

 

HHS set to implement long-delayed 340B final rule in January

https://www.fiercehealthcare.com/finance/hhs-set-to-implement-long-delayed-340b-final-rule-jan-1?mkt_tok=eyJpIjoiTkdKbFptRXdPV1pqTnpJMCIsInQiOiJ2ZjdFZXBBODZKcnQ3R2h2bnJTWHB0cFFcL013WTQrSlljK1A5V1YxUWxreSt2M0ZLUU1qV2ZaaUM4M3J1N3o3RVpJdlJGVlpjb1dNeGExejk3TE00RVVaYTl5NVwvaCt4YVNnTXFmYUliSVBhbTQyaHhQc0x1ZTZlTjRmVnBpWXYxIn0%3D&mrkid=959610

Image result for 340b drug pricing program

Editor’s note: This story has been updated to include a response from 340B Health and the American Hospital Association.

HHS is planning an about-face on the long-delayed rule that would set price ceilings and monetary penalties in the 340B program, moving up its start date by several months. 

The Department of Health and Human Services issued a notice (PDF) saying that it intended to finally implement the rule on Jan. 1, cutting off seven months of time from a previously announced July 1 start date.

The rule—which would set price ceilings for drugs and punish pharmaceutical companies that knowingly overcharge 340B hospitals—has been delayed five times by the Trump administration, most recently in June. The final rule was first issued in January 2017. 

The Health Resources and Services Administration (HRSA) said the delays were necessary as it needed more time to implement the rule properly and wanted to fully explore possible alternatives or supplemental regulations.

The most recent delay was fueled in part because HHS has made addressing the rising cost of drugs a key priority, and officials were concerned that implementing the rule could impact actions taken under the “American Patients First” plan.

The start date was moved up to Jan. 1, HRSA said in the notice, because it “determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with the department’s development of these comprehensive policies.” 

Four national healthcare organizations sued HHS in September over the delays to the final rule. The American Hospital Association (AHA), America’s Essential Hospitals (AEH), the Association of American Medical Colleges (AAMC) and 340B Health all signed on to the suit, which claims that the repeated delays violate the Administrative Procedure Act. 

Since the rule was first proposed in 2015, there has been ample time to notify stakeholders and tweak the plan, the groups argued.

“The department’s proffered rationales for their successive delays have shifted and been inconsistent,” according to the lawsuit. 

340B Health said in a statement emailed to FierceHealthcare that the group is “encouraged” to see HHS responding to the suit.

“These rules were ordered by Congress more than eight years ago based on clear, documented evidence of overcharging by drug companies of 340B hospitals, clinics, and health centers,” interim CEO Maureen Testoni said. “The time for delay is over and now it is time for action.”

AHA echoed the sentiment, saying it hopes HHS “sticks by the commitment” to roll out the rule.

“The rule also requires that HHS make pricing information available online to 340B hospitals and other providers,” General Counsel Melinda Hatton said in a statement. “We strongly encourage HHS to publish that website promptly, which is critical to enforcement of the 340B program, as soon as possible after January 1.”

HHS has also taken aim at the 340B program by significantly slashing its payment rate. In a rule that took effect at the beginning of fiscal year 2018, the Centers for Medicare & Medicaid Services cut the rate from up to 6% above the average sales price for a drug to 22.5% less than the average sales price.

All told, the change will cut $1.6 billion in drug discount payments. AHA, AEH and AAMC are also challenging that policy in court