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Jeff Davis, a partner in the Washington, D.C. law office of Bass, Berry & Sims, advises healthcare organizations on Medicare and Medicaid billing and reimbursement issues, with a special focus on the federal 340B Drug Pricing Program.
Lately there’s been much debate about the 340B, a federal program that for 30 years has allowed hospitals that treat a large number of uninsured and low income populations to buy drugs from manufacturers at a discounted price while getting reimbursed at a higher, non-discounted rate. The savings are used for hospital operations to reinvest in patient care and help keep these safety net providers afloat financially.
Last year, several drugmakers, some of whom claimed abuse in the system, took issue with the upfront payments and sued to turn 340B into a backend, rebate model. The upshot was a federal court order demanding the drugmakers wait for a decision from the Health Resources & Services Administration.
In July HRSA’s Office of Pharmacy Affairs came out with a decision for a pilot model that appears to represent a compromise for all involved. The voluntary 340B Rebate Model Pilot Program replaces upfront provider discounts with a post-purchase payment from the drugmaker, but with several caveats.
For drugmakers, this means restrictions on reimbursement decisions.
Providers, said Davis, “don’t want to see rebate models, period.”
The pilot program is set to begin on Jan. 1.
In early August, seven hospital associations representing more than 2,000 hospitals, sent HRSA a letter asking for more time to comment on the program.
HRSA extended the comment deadline to Sept. 8.
For more about the new model and what it means, listen to the conversation between Davis and Susan Morse, executive editor of Healthcare Finance News.
Talking Points:
Five drug manufacturers proposed converting 340B to a rebate model.
Providers were concerned about increased costs from buying drugs upfront at the higher price and then having limited cash flow as they waited an unknown period of time to get a rebate.
Another concern was the administrative burden.
The biggest concern was that drug manufacturers would have more control, using their own definition of 340B eligibility.
HRSA guidance allows manufacturers to provide rebates under a narrow set of circumstances.
It allows for 340B pricing for the 10 drugs selected for Medicare drug pricing negotiations scheduled to go into effect next year.
Drugmakers are not permitted to deny rebate requests based on compliance concerns.
Manufacturers must pay rebates within 10 calendar days.
HRSA reserves the right to make adjustments.
More About this Episode:
Hospitals want more time to comment on the 340B rebate pilot program
Court rejects drugmakers replacing 340B upfront payments with rebates
AAMC throws support behind 340B access bill
Feds seeking public input on drug price transparency
How one safety net health system is preparing for Medicaid cuts
Email the writer: SMorse@himss.org