Policy Issues: Federal 340B Legislation & Issues

November 18, 2009

Senate Releases Merged Healthcare Reform Bill, including 340B Provisions: On Nov. 18, the Senate released HR 3590, the Patient Protection and Affordable Health Care Act. This language is the combination of the Senate HELP and Finance Committee work on healthcare reform. Senate leaders chose to use a bill that the House had already passed (in this case tax shelters for military families) because of a Constitutional requirement that all revenue-raising bills originate in the House. The original language of the bill was struck, and the healthcare provisions were added as a substitute. The Senate may vote on this bill as soon as this weekend. Due to Senate rules, 60 votes will be required for passage, in order to overcome an expected filibuster of the bill.

The bill retains many of the 340B provisions from the Senate HELP committee language, including the expansion of 340B to Children’s hospital, freestanding cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals with a DSH percentage of 8% or higher. It expands 340B to inpatient drugs for all hospital covered entities and adds a new Medicaid credit requirement. However, unlike the Senate HELP bill, it does not create a new acute care class of trade, nor specify how the rebates are to be calculated.

The bill also keeps the Senate HELP Committee language that severely weakens the outpatient GPO exclusion. It permits exceptions for covered drugs that are unavailable from the manufacturer at 340B, to facilitate generic substitution, or to reduce the administrative burden as long as there are no duplicate discounts or diversion. The bill also includes language that the Secretary shall ensure that hospitals have multiple options for purchasing inpatient covered drugs, such as GPOs.

 The bill includes the same manufacturer and covered entity integrity requirements, and alternative dispute resolution process as the Senate HELP bill and the House bill.

 The bill also extends Medicaid rebates to drugs purchased by a Medicaid Managed Care Organization (MCO). However, like the House version, it states that covered drugs are not subject to the rebate if subject to the 340B discount.

 It no longer fixes the “freeze” provisions in the PHSA or the SSA. However, it includes a statement that manufacturers must comply with the new provisions in order to determine compliance with the PPA, notwithstanding any other provision of law.

Finally, the Senate bill directs the Government Accountability Office (GAO) to report to Congress within 18 months on whether individuals receiving care from 340B covered entities are receiving “optimal health care services.” Further, the GAO is asked to make recommendations regarding 1) whether the program should be expanded due to enhanced coverage due to HCR, 2) whether mandatory sales of certain products through 340B hinders access through other providers and 3) whether income from 340B is being used by covered entities to further program objectives. There is no corresponding House language on this.

If the suggested changes are enacted, it would mean a significant expansion of the program, both to new covered entities and to inpatients. The exceptions to the GPO exclusion would undermine the Prime Vendor. Additionally the new integrity requirements and the expanded covered entities could challenge OPA and PSSC's abilities to meet the needs of the program stakeholders without significant added resources.

Reports indicate that the Senate will proceed on health care reform as follows:

House Releases Merged Healthcare Reform Bill Including 340B Provisions: On November 7, the House of Representatives passed its new healthcare reform bill, HR 3962, the Affordable Health Care for America Act (H.R. 3962) This bill was the consolidation of the work done by three House Committees (Energy and Commerce, Ways and Means, Education and Labor) over the spring and summer.

This bill is more scaled back than the Senate version and the earlier House version. It includes: the expanded covered entity list,         integrity provisions for manufacturers and for covered entities (although the entity provisions are much lighter than for manufacturers), changes made to the manufacturer PPA,      authorization for appropriations to pay for all of the integrity provisions, a fix on some of the freeze provisions, a provision that Medicaid Managed Care Organizations will not be subject to rebates on 340B-purchased products, a comparable double dipping provision to what is found in the current 340B for Medicaid FFS.

It also contains the following it items that are not included in the other bills: weakens the GPO exclusion, expands of the program to inpatients, adjusts the entire Medicaid credit structure (which may change how it's scored) including the new pharmacy class of trade, presents  slimmed down alternative dispute resolution process,         adds multiple contract pharmacy.

It includes many pharmacy-related provisions, it: Creates PBM transparency requirements (p. 123),  Waives Medicare durable medical equipment, prosthetics, orthotics, and supplies accreditation for certain pharmacies (p. 432), Gives hospitals incentives to reduce hospital readmissions that include transitional care services, which may include ensuring patients receive a summary of medication orders upon discharge (p. 441), Eliminates the Medicare Part D coverage gap beginning in 2011 (p. 550), Discounts brand drugs for Medicare Part D beneficiaries within the coverage gap (p. 571), Repeals the Medicare 90-day claims submission deadline for long-term care pharmacies (p. 578), Requires Medicare Part D plan sponsors to have in place utilization management techniques to reduce the quantity of Part D drugs dispensed to beneficiaries in long-term care facilities (p. 584),  Authorizes payment for a community-based medical home model that employs health professionals that assist primary care providers in chronic care management activities, such as medication therapy management services (p. 681), Establishes an independence at home demonstration program, which defines medical practice as a team of health care providers, the definition of which includes pharmacists (p. 718), Establishes greater transparency related to "gifts" from manufacturers/distributors to "covered recipients," the definition of which includes pharmacies and pharmacists (p. 889),  and would define manufacturer to include compounding pharmacies, "Fixes" the average manufacturer's price definition used to calculate pharmacy reimbursement in the Medicaid program (p. 1092), Establishes a loan repayment program for frontline health care providers that include pharmacists (p. 1224), Conducts a medication therapy management (MTM) grant program (p. 1412), Directs the Secretary of Health and Human Services to convene an Institute of Medicine conference for pain, direct the National Institutes of Health to undertake research initiatives associated with the causes of and potential treatments of pain, and direct the Secretary to establish a national pain care education and awareness campaign (p. 1491).

August 7, 2009

HCR Update: Congress Continues Negotiations: Washington continues heavy negotiations on its health care reform (HCR) proposals. Despite previous commitments by both the House and Senate Democratic leaders to pass respective HCR legislation prior to the August Congressional recess, both chambers enter their summer recess with nothing passed.

In the House, the Democrats proposal, America's Affordable Health Choices Act (H.R. 3200), has passed through each of the three Committees needed to mark-up (vote on) the bill before bringing it to the House floor for a vote. Lengthy negotiations were needed for the bill to pass the third (Energy and Commerce) committee. A group of conservative Democrats, known as Blue Dogs, had worked with Republicans to prevent the bill from advancing through the committee until certain concessions were made.

In the Senate, the Senate Finance Committee still has not released its long-awaited health care reform proposal. Much of the delay has been attributed to the continuous negotiations between the Senate Finance Committee members to broker a bi-partisan proposal. Concerns about the Congressional Budget Office's (CBO) ability to score the health care reform proposal were somewhat allayed when the CBO released preliminary numbers were recently released. 

HHS Funding for 2010: On Friday, July 24, the House of Representatives passed the HHS/Labor Appropriations bill (HR 3293). It did include the line item funding for OPA, but the amount was cut from $2.97M to $1.74M. The Committee Report accompanying the bill included language urging HRSA to withdraw the proposed guidelines on patient definition and to re-propose any changes with another opportunity for stakeholder comments.

On July 30, the Senate Appropriations Committee approved HR 3293. The line item funding for OPA was intact, providing $2.97M for FY2010. The Senate Appropriations Committee Report also encouraged HRSA to reconsider the patient definition guidelines.

Assuming a typical budget process, and that the Senate passes their bill, the House and Senate would appoint a Conference Committee to iron out the differences between each chamber’s bills 

Health Policy Experts Predict Impact of House Reform Proposals and Health Center Capacity: The George Washington University (GWU) released a report on the effects of the House reform bill (H.R. 3200, as of July 23, 2009) on health centers, saying it could more than double their capacity. The report, Estimating the Effects of Health Reform on Health Centers' Capacity to Expand to New Medically Underserved Communities and Populations, attributes the increase to the proposed expansion of Medicaid included in the bill, and to increased community health center funds appropriated in the bill. H.R. 3200 would provide health centers with a funding increase of $1 billion in 2010, increasing to $4.4 billion by 2015 and $6.4 billion by 2019. These increases come on top of the current appropriations level of $2.2 billion per year. The funds address an expected increase in the number of patients health care centers would serve if the bill is passed. According to the report, health centers provided primary care to a total of 16.1 million people in 2007, and that number will double to an estimated 35.6 million in 2013 and increase to 39 million by 2019. The number of health care center sites also would likely double from 6,700 sites in 2007 to accommodate the increase in patients, the report said. GWU calls these estimates “conservative”. The report, which includes statistics on health center patient demographics from economic and insurance coverage standpoints, can be found at: http://tinyurl.com/n9oqzy.  

July 17, 2009

Senate HELP Committee Passes HCR Proposal: On July 15, the Senate Health, Education, Labor and Pensions (HELP) Committee passed their health care reform (HCR) proposal, the Affordable Health Choices Act, by a party-line vote (13 to 10). The final version of the bill that passed the Senate HELP Committee included two provisions that APhA advocated for and supported:

• Section 212: A community-care grant program that requires entities to provide "support necessary" for local primary care providers to "provide access to pharmacist-delivered medication therapy management services, including medication reconciliation"; and

• Section 213: A state grant program that is established to implement medication management services.

The bill also included amendments to the 340B program discussed below. 

House Tri-Committee Releases Amended Bill: On July 14, the House "Tri-Committee" (the House Energy & Commerce, House Ways & Means, and House Education & Labor Committees) introduced the House Democrats' amended health care reform proposal entitled, America's Affordable Health Choices Act of 2009 (H.R. 3200). Similar to the Senate HELP Committee‟s healthcare reform bill, HR 3200 has the following 340B provisions:

• Expands the list of covered entities to children‟s hospitals, critical access hospitals, Title V maternal and child health facilities, comprehensive mental health service entities, substance abuse treatment and prevention facilities, rural referral centers and sole community hospitals

• Extends the 340B discount to inpatient drugs.

• Alters the GPO prohibition to allow them to be used if a covered drug is unavailable through 340B, to facilitate generic substitution, and“to reduce . . . the administrative burdens of managing both inventories.”

• It also sets up a Medicaid credit mechanism for inpatient drugs.

While PSSC is still reviewing the bill's pharmacy-related provisions, the following are a few highlights:

• Waives the surety bond requirement for pharmacies that are suppliers for Medicare DMEPOS that has been issued a provider number in at least five years and for which a final adverse action has never been imposed.

• The current accreditation requirements for Medicare DMEPOS will not apply for purposes for supplying diabetic testing supplies, canes, and crutches.

• Suppliers for Medicare DMEPOS that have submitted an accreditation application before August 1, 2009 are deemed as meeting standards and the accreditation requirements until action is taken on their application.

• Phases in the elimination of the Medicare Part D "donut hole".

• Requires manufacturers to provide a 50% discount on drugs while patients are in the donut hole; while 100% of the cost of the drug counts towards the patients' out-of-pocket costs.

• Repeals the law that requires pharmacies serving long-term care facilities to submit Medicare Part D claims within 90 days.

• Established a community-base medical "home" pilot program that must assist the primary care provider in chronic care management activities such as medication therapy management services (MTMS).

• Includes pharmacies and pharmacists in the groups about which manufacturers and distributors must report "gifts".

• Appears to include pharmacists in a proposed health professions scholarship and loan repayment program for providers who work in "health professions needs areas".

•  Addresses elements of the AMP reimbursement formula for generic medications in the Medicaid program (pharmacy still has some concerns with the formula).

340B Entities Eligible to Apply for Latest HHS Funding Release for SCHIP Enrollment Outreach: On July 6, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced the release of up to $40 million in grants to enroll children in state Medicaid and Children's Health Insurance Program (CHIP) plans. The funds are part of the Children's Health Insurance Program Reauthorization Act, signed by President Obama in February. Sebelius said that currently 7 million children are enrolled in CHIP, but that through the new funds for grants, HHS would like to enroll up to 4 million more throughout the states. CHPRA lists specific types of entities that are eligible to apply to receive grants for outreach and enrollment activities. Federal health safety-net organizations, with a specific mention of 340B-eligible hospitals and health centers, are among the entities listed in the statute. Electronic applications must be submitted by August 6; other applications will be accepted until August 10. Grants of between $25,000 and $1 million will be awarded on September 30. More information is available at http://www.cms.hhs.gov/LowCostHealthInsFamChild/ by scrolling down to “Downloads,” and clicking on “2009 Cycle I Outreach Grant Announcement.”

July 3, 2009

HCR Update: House Dems Release HCR Proposal; HCR Hearings in House and Senate Committees: On June 19, the House "Tri-Committees" (the House Energy & Commerce, House Ways & Means, and House Education & Labor Committees) released the House Democrats' health care reform proposal. APhA has drafted an unofficial summary of the 852-page bill, and is still reviewing the full impact of the bill. The draft includes several proposed changes to the 340B program including:

• Includes children‟s hospitals, critical access hospitals, sole community hospitals, rural referral centers and rural hospitals in 340B. Also includes entities receiving funds for comprehensive mental health services and substance abuse centers as covered entities for 340B.

• Amends the 340B GPO exclusion to allow GPOs to be used for inpatient drugs, and sets up a process for GPOs to be used for outpatient as well (access due to mfg shortage, facilitate generic substitution, or to reduce administrative burden of maintaining dual inventories).

• Imposing Medicaid rebates on Medicaid managed care organizations; however, it has an exception for 340B covered entities.

General pharmacy provisions related to Medicaid:

• Makes changes to AMP to create a definition for retail community pharmacy to limit the retail class of tr

• Changes the FUL from 250% of AMP to 130% of AMP

• Increases the rebate for branded drugs to 22.1%.  

The following are some highlights of the pharmacy-related provisions:

• The community-based medical home (CBMH) pilot program definition requires a CBMH to employ community health workers to assist primary care providers in certain care management activities, including access to medication therapy management services.

• Attempts to address pharmacy's ongoing concerns with the reimbursement formula (AMP) for generic drug products in the Medicaid program.

•  Requires "medication management to prevent adverse drug events and to promote adherence" as a quality measurement benchmark to evaluate fully integrated dual eligible special needs plans.

• Requires manufacturers or distributors that provide a payment or other transfer of value (directly or indirectly) to a covered recipient to submit electronically to the Secretary information on the recipient, the value of the gift, etc. Defines "covered recipient" as a physician, a physician group practice, another prescriber, a pharmacy or pharmacist, etc. (Goal is to measure physician financial relationships with manufacturers and distributors of drugs, devices, or supplies covered by Medicare, Medicaid and CHIP).

• Repeals the law enacted last session (P. L. 110-275) that requires pharmacies located in or contracting with long-term care facilities to submit claims to Part D sponsors within no less than 30 days and no more than 90 days.

During the week of June 22-26, the House "Tri-Committees" and the Senate Health, Education, Labor and Pensions (HELP) Committee, held multiple hearings on their respective health care reform proposals. While most of these hearings focused on the public plan option and offering amendments to the health care reform proposals, the National Association of Chain Drug Stores and the National Community Pharmacists Association testified before the House Energy and Commerce Committee on June 24 and 25 (respectively) regarding health care reform issues, including: the role of pharmacists in a reformed health care system; the Medicaid Average Manufacturer Price (AMP) reimbursement formula for generic medications; support for Medicare Part D medication therapy management (MTM) services; and concerns with Medicare durable medical equipment competitive bidding, accreditation and surety bond requirements.

APhA, on behalf of the Health Care Reform Pharmacy Stakeholders, sent a letter to each of the three Tri-Committees and Senate Finance Committee in support of Sections 212 and 213 of the Senate HELP Committee health care reform proposal. Section 213 establishes a grant program to implement medication therapy management services and Section 212 creates a community-care grant program that would require entities to provide "support necessary" for local primary care providers to "provide access to pharmacist-delivered medication therapy management services, including medication reconciliation."

We continue to wait for the Senate Finance Committee to release its health care reform proposal. This proposal was originally planned to be released earlier this month, but Senate Finance Committee Chairman, Max Baucus (D-MT), has delayed release of its proposal as the Committee works to lower the proposal's cost. The delay is a result of the Congressional Budget Office's release of its initial estimate of the Senate HELP Committee's incomplete proposal which was "scored" to cost $1 Trillion over 10 years

Lawmakers Urge HRSA To Withdraw Proposed Patient Definition Guidelines: Safety Net Hospitals for Pharmaceutical Access (SNPhA) reports that eighteen members of the U.S. House of Representatives and 16 members of the U.S. Senate recently signed letters sent to HRSA Administrator Mary Wakefield, requesting that she withdraw the proposed clarifications of the definition of a patient under the 340B drug discount program. The letters, principally signed by Reps. Bobby Rush (D-Ill.) and Jo Ann Emerson (R-Mo.) in the House and Senators Bill Nelson (D-Fla.) and John Thune (R-S.D.), warned that implementation of the proposed guidance would prevent safety-net providers from offering care to the indigent populations that the 340B program was created to support. The letters ask HRSA to withdraw and reissue a 340B patient definition guidance that would be less limiting.

House letter

The Senate letter

Access to Frontline Health Care Act of 2009 (H.R. 2891) Introduced: On June 16, Reps. Braley (D-IA) and Space (D-OH) introduced the Access to Frontline Health Care Act of 2009 (H.R. 2891). This bill would establish a Frontline Providers Loan Repayment Program for frontline service providers including pharmacists; the program would be similar to the existing National Health Service Corps loan repayment program (which does not include pharmacists). This new program would make loan repayments available to an individual who agree to serve as a health professional for a period of not less than 2 years at a health care facility serving frontline care in a scarcity area. These scarcity areas would be Health Resources and Services Administration (HRSA) designated shortage areas or an area designated by the State as having a shortage of "frontline care services." 

June 19, 2009

New 340B Legislation Introduced in Senate: On June 11, Senator Bingaman (D – NM) introduced S 1239 340B Program Integrity and Improvement Act of 2009. Like its companion bill in the House (HR 444) and other legislation introduced in the last Congress, S1239 proposes sweeping changes to the 340B program. Comparable language was also included in Senator Kennedy‘s (D-MA) healthcare reform legislation currently being marked up by the Senate Health, Education, Labor and Pensions (HELP) Committee.

• S 1239 340B Program Integrity and Improvement Act of 2009: Expands entities that may receive access to discounted drug prices, including children‘s hospitals excluded from Medicare PPS; critical access hospitals; and rural referral center or sole community hospital that has a DSH payment of equal to or greater than 8%.

• Extends coverage to coverage of inpatient drugs. Allow for entities to use group purchasing organizations (GPOs) or other group purchasing arrangements to obtain drugs, including direct acquisition from the manufacturer. HHS may approve other means that account for the needs of rural hospitals.

• GPOs and other group purchasing may not be used to purchase outpatient 340B drugs except in the following circumstances:

  • Drugs unavailable because of a manufacturer shortage, manufacturer non-compliance or other circumstance beyond the hospital's control; facilitates generic substitution when the generic is available at a lower price; reduces administrative burdens associated inventory management of covered and non-covered drugs.

• Requires hospitals to issue state Medicaid programs a credit within 90 days after release of the cost report.

• Requires integrity improvements including manufacturer compliance to prevent overcharges. This will include the development of a system for HHS to verify the ceiling prices calculated by manufacturers and charged to covered entities. This will include developing and publishing pricing policy or regulatory issuance with precise standards and methodology for establishing ceiling prices, comparison of ceiling prices with quarterly data submitted by manufacturers; performing spot checks of transactions; inquiring into the cause of price discrepancies.

• Requires the establishment of a system for manufacturers to issue credits to covered entities for overcharges. Manufacturers must provide HHS with an explanation for the overcharge, the calculation of refunds, and to whom the refund will be issued. HHS must establish an oversight process to ensure that refunds are issued within a reasonable period of time with retroactive adjustment to relevant pricing data and exceptional circumstances.

• Allows covered entities password-protected access to ceiling prices in the HHS website.

• Develops mechanisms to report rebates and other discounts to HHS and to ensure that appropriate credits are issued if rebates and discounts lower the ceiling price. Includes selective auditing of manufacturers.

• CMPs for non-compliance will be assessed by HHS and shall not exceed $5K for each instance of an overcharging and shall apply to manufacturers that knowingly and intentionally charge a covered entity a price that exceeds the maximum acceptable price.

• Requires covered entities to meet certain compliance requirements to prevent diversion and violations of duplicate discounts. Improvements in this area include a requirement that covered entities update information on the HHS website at least annually that will be verified by a system developed by HHS and provides more detailed guidance regarding options and methodologies for avoiding duplicate discounts for covered entities that bill state Medicaid programs. Establish a single, universal, and standardized identification system that allows each covered entity site to be identified by manufacturers, distributors, and HHS for the purpose of facilitating the ordering, chargebacks, purchasing, and delivery of covered drugs.

• Requires a covered entity that knowingly and intentionally resells a drug to a person that is not eligible for the 340B program shall pay a monetary penalty plus interest to the manufacturer compounded monthly at the equivalent of the short-term interest rate by the Federal Reserve. If the violation is systemic and egregious, then the covered entity may be excluded from the program for a period of time established by HHS. The covered entity may also be referred to other agencies such as OIG which may enforce penalties under other statutes.

• Requires HHS to issue rules for an administrative process for resolution of claims by covered entities that have been overcharged and claims by manufacturers after audits. These rules will include appropriate enforcement and remedies that will require a decision-making body within HHS for reviewing and resolving claims; establishes deadlines to ensure fairness and efficiency; establish procedures covered entitles to discover information from manufacturers and third parties; may require that manufacturers conduct an audit of a covered entity as a prerequisite to initiating administrative disputes against an entity; permits consolidation of claims made by one or more manufacturer against the same covered entity; and include procedures to allow multiple associations to assert overcharges on behalf of covered entities. The administrative resolution will be final.

• Alters the definition of AMP if a drug is not traded to the retail class of trade, then it means the average price paid to the manufacturer of the drug by the wholesaler distributed to the acute care class of trade after deducting customary prompt pay discounts. HHS will establish a mechanism to collect this data.

Similar language is found in the Senate HELP Committee‘s healthcare reform package, so it is uncertain whether S1239 will move on its own.

The full text of S.1239 can be found here.

The full text of HR 444 can be found here.  

June 5, 2009

Health Care Reform Snapshot: Before heading home for the Memorial Day recess, the Senate Finance Committee met on May 20 for the third of three scheduled "walk through" sessions to discuss various aspects of health reform. Previous sessions focused on the care delivery system and coverage. Funding proposals outlined in a May 18 Financing Comprehensive Health Care Reform paper released by committee Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa) were the subject of the May 20 meeting. These included changes affecting pharmacy such as “improvements” to Medicare and Medicaid payment policies, charging higher-income seniors higher premiums for Medicare Part D, other changes like taxing sugary and alcoholic beverages, and limiting the current tax-exempt status of employer-provided health insurance. Changes to Medicaid prescription drug rebate policies discussed at the walk through are similar to those included in President Obama‟s proposed FY2010 budget, and include increasing rebates for brand-name and generic drugs, expanding rebates to managed care organizations, and applying rebates to new formulations of existing drugs.

• One option discussed was increasing Medicaid's basic rebate from 15.1 percent to as much as 23.1 percent for brand-name drugs, leaving the best price provision unchanged.

• Lawmakers also could choose to increase the basic Medicaid rebate for generic drugs from 11 percent to 13 percent of AMP, according to the paper.

• A change discussed that is of much concern to 340B entities is a proposal that manufacturers be required to pay a rebate on drugs purchased for beneficiaries in Medicaid managed care organization plans, following a structure similar to the one used in fee-for-service Medicaid. Because of the “double discount” prohibition in the 340B statute, this change would complicate reimbursement practices and reduce margins related to this significant payor category. 340B entity advocates are monitoring developments in this area as more detailed legislative proposals are offered.

• A final rebate option would change the rebate policy for new formulations of existing drugs, closing a current loophole under which manufacturers to avoid additional rebates based on inflation adjusted AMP figures. The policy paper also contains an option for Medicare prescription drug coverage under which beneficiaries whose incomes exceed certain thresholds would pay higher premiums for Part D drug coverage.

After the meeting, Chairman Baucus noted there was “convergence” on some issues, but that “more understanding” is needed on several issues. Nonetheless, at a press conference, he predicted a 75% to 80% percent chance that his panel will be able to create a bipartisan bill by the end of June. The Kaiser Family Foundation provides a podcast and video of the Chairman‟s press conference online. Meanwhile, the House Ways and Means Committee also met on May 20 to discuss health reform and focused on physician shortages and ways to change payment systems to emphasize quality. Ways and Means Chair Charles Rangel (D-N.Y.) said the panel will focus on completing work on health reform legislation “soon” before moving on to climate change initiatives. And, as discussed in more detail below, Republican House and Senate members also released a health reform plan on May 20 that focuses on tax credits and state insurance exchanges.

To stay up on all the health care reform developments affecting pharmacy, check out the APhA Health Reform Hub. 

Health Reform Financing Proposals Could Affect 340B Hospital Community: Policy options for Financing Comprehensive Health Care Reform discussed at the May 20 meeting also included a number of proposals that could specifically affect 340B-eligible hospitals. One policy area is aimed specifically at codifying the requirements for determining if a hospital is a charitable organization under tax code Section 501(c)(3). The proposals, described only in broad terms with no details, would require tax-exempt hospitals to: • regularly conduct a community needs analysis, • provide a minimum annual level of charitable patient care, • not refuse service based on patient inability to pay, and • follow certain procedures before instituting collection actions against patients. Under the proposal, excise taxes and other sanctions could be imposed to encourage compliance. Present law does not include sanctions short of revocation of tax-exempt status. Hospital representatives have said that determining the “minimum level” and “what is charitable care” are of most concern and would be difficult to assess.

Other changes proposed in the financing paper and discussed at the May 20 walk through that would affect 340B-eligible hospitals are revisions to graduate medical education and disproportionate share hospital payment policies. Lawmakers discussed adjusting these payment levels to “better reflect the actual costs hospitals currently incur in treating the low-income and uninsured and in training medical residents,” as a way to save the Medicaid program money that could be used to pay for other health care reform changes. Another option would be to adjust DSH payment levels as more individuals become insured under health reform legislation, because facilities receiving DSH payments would have less uncompensated care costs. A final option would consolidate Medicare and Medicaid hospital payments “to streamline and better account for and coordinate federal funding within the DSH and GME payment areas,” according to the paper. Few details are available so far on these proposals that are being discussed as health reform legislation is developed.

May 18, 2009

Health Care Reform Discussions Continue: On May 5, the Senate Finance Committee held the second of three „roundtable discussions‟ on health care reform, this one on options for expanding coverage to all Americans. Insurance company representatives testifying at the hearing said they would oppose including a new public insurance option as part of a health care reform overhaul, because rigorous regulation alone could improve the health insurance market and a government option would hurt their business. Insurers offered to stop charging women more for coverage, stop basing premiums on health status, and would guarantee coverage for people with pre-existing health conditions if the government requires all U.S. residents to obtain coverage. Observers believe these concessions and the industry's call for greater regulation could stem from concerns about growing support for national health care overhaul. Insurers and other health industry groups also met with Administration officials on May 11, pledging to voluntarily reduce $2 trillion in expected health care spending increases over the next 10 years, but offered no specifics on the measures they would take or how it would be enforced. The issue of whether to include a public health insurance option as part of comprehensive health care reform legislation was the main area of disagreement between Democratic and Republican lawmakers at the hearing. Sen. Charles Schumer (D-N.Y.) offered a compromise that aims to put a public plan option on a level playing field with private insurance by requiring a public option to be self-sustaining; accountable to the same rules and standards as private insurers; and regulated by an entity other than the one that operates it. The committee also heard testimony on possible changes to Medicare and Medicaid as a health care reform option, with some Republican members cautioning against increasing federal financial obligations under the programs. One proposal for Medicaid reform would expand the program to cover all people with incomes below 100 percent of the federal poverty level, rather than basing coverage on categorical eligibility. A representative of the National Governors Association said the costs associated with such an expansion would overwhelm states, and governors likely would oppose it as an unfunded mandate. Most of these options for change are included in “Expanding Health Care Coverage: Proposals to Provide Affordable Coverage to All Americans,” released on May 11 by leaders of the Senate Finance Committee. Many options are laid out in the paper, including creating a national health insurance exchange and options for creating four levels of standard benefits that insurers would be required to meet. The paper also addresses the possible creation of a new public plan that would be offered alongside private plans. Possibilities for the plan include one based on Medicare payment rates, one administered through third-party administrators, or one run by the states. The paper also includes as an option not creating a new public plan but instead relying on a reformed and well-regulated market to ensure coverage. The options outlined in the document were the focus of discussion at a May 14 Senate Finance Committee “walk-through” meeting. At the conclusion of the meeting, committee leaders said no consensus had been reached, but discussions on the controversial new public plan option and other issues will continue within the broader reform debate. While acknowledging that philosophical differences exist between Republicans and Democrats on the question of a public plan, Finance Chairman Max Baucus (D-Mont.) and Sen. Chuck Grassley (R-Iowa), ranking member of the panel, said members are still committed to working out their disagreements. The final “walk through” meeting is expected to take place on May 20 and will concern financing of reform legislation, with a markup of legislation expected in June.

The public can comment on the health coverage report options until May 22. The report is available at Senate Finance Committee: Expansion Options.

President Obama's HHS budget released: On May 7, the Obama administration released its budget proposal for FY 2010 for the Department of Health and Human Services (HHS). It included a $3 million line item for the HRSA Office of Pharmacy Affairs. The document also noted House and Senate Appropriations Committee reports commenting on OPA's ongoing efforts to issue guidance on the definition of a patient for 340B. In other funding news, the proposal included flat (same as last year) funding for the Poison Control Centers, and mentioned their partnership with the PSPC. Additionally, there was a mention of increased healthcare service expansion grants in pharmacy, and a new program to offer scholarships for disadvantaged students who want to go into health professions, such as pharmacy. The document also looked at raising Medicaid rebates from 15.1% to 22.1% on branded medications and permitting rebates on Medicaid managed care drugs, as ways to offset increased spending.

April 30, 2009

Congressional Conferees’ Final Budget Agreement Includes Reconciliation to Prevent Filibuster of Health Reform: On April 27, Congressional budget conference committee negotiators reached an agreement on a $3.5 trillion fiscal year 2010 budget resolution that includes budget reconciliation as a means of passing health reform legislation. Reconciliation language had been included in the House budget bill, but not in the Senate version. On April 28, the compromise bill passed the House and has been referred to the Senate for a vote. Under the agreement, Congress would have until Oct. 15 to pass deficit-neutral health care reform legislation. If no measure is passed, deficit-neutral health care overhaul legislation could be attached to the budget reconciliation bill and could pass with 51 votes. Sixty votes would likely be required without the reconciliation process. President Obama has expressed his support for using the reconciliation process if necessary to advance health reform initiatives. According to CQ Today, Conference Committee Chair Kent Conrad (D-N.D.) said that he believes Democrats will use reconciliation only as a last resort and that it is unlikely reconciliation will be needed to advance health care reform legislation. However, Republican leaders believe using the budget reconciliation process will shut out the minority from having input into the reform process. Senate Majority Leader Harry Reid (D-Nev) has called on congressional Republicans to help design bipartisan reform legislation so that the reconciliation process can be avoided.

Senate Health Care Delivery System Reform Paper Released: On April 29, Senate Finance Committee leaders held a closed-door, “walk through” meeting with fellow committee members to discuss the first of three reform option discussion papers to be released over the next several weeks. Committee Chairman Max Baucus (D-Mont.) and ranking minority member Chuck Grassley (R-Iowa) said there was “near unanimity” on health reform goals expressed at the meeting, but the process of developing reform legislation is “just beginning” and questions of implementation of various options remain. The first discussion paper was released by the committee April 28 and contains numerous policy options for reforming Medicare's delivery system, including shifting the program from volume-based to value-based purchasing and possibly instituting a Medicare managed care competitive bidding model. The next two papers will cover expanding coverage to millions of uninsured Americans and how to pay for reform, respectively and are expected to be more controversial than the delivery system paper. For example, the coverage paper likely will contain an option to include a public health care plan in reform legislation, while the paper on paying for reform could broach sensitive topics such as cutting Medicare and Medicaid to pay for reforms and capping the federal tax exclusion for employer-sponsored health care coverage to raise additional funding. Baucus said the committee remains on schedule to consider health care reform legislation by mid-June and vote on a reform package by the August congressional recess. The delivery system paper released April 28 is available here.

More on APhA activities and pharmacy issues central to health care reform debates can be found on the APhA Health Care Reform Hub at www.pharmacist.com, click on "Government Affairs.‟

Letter From Hospital Groups Urges Lawmakers to Continue DSH Support: A coalition of hospital organizations April 27 wrote letters to lawmakers in both the House and Senate, urging them not to reduce federal support for the Medicare and Medicaid disproportionate share hospital (DSH) programs as health care reform discussions go forward. The letters were sent by the American Hospital Association (AHA), the Association of American Medical Colleges (AAMC), Catholic Health Association of the United States, the Federation of American Hospitals, the National Association of Children's Hospitals, and the National Association of Public Hospitals and Health Systems. The groups said that DSH funds are necessary for hospitals to continue to care for low-income patients and provide the „essential community services‟ such as trauma and burn care, disaster response and emergency services that urban and rural hospitals currently provide. Even with DSH payments hospitals experience funding shortfalls, receiving, on average, payment of 91 cents for every dollar spent caring for Medicare patients and only 88 cents for every dollar spent caring for Medicaid patients. The hospital groups said the possibility that Congress could reduce or even eliminate the payments as a way to trim costs “is a real concern” and they wrote to remind Congress of the importance of DSH payments to safety-net facilities. The letter to the House can be found here.

The letter to the Senate can be found here.   

Senate Hearing Focuses on Community Health Centers in Health Reform; GAO Report Cited: At a Senate Health, Education, Labor, and Pensions Committee hearing on April 30, witnesses said community health centers offer the potential to provide quality care with great efficiency, but many underserved areas still lack access to the clinics and more providers are needed to staff them. Sen. Bernard Sanders (I-Vt.), a strong supporter of health centers, chaired the hearing said expanded use of health centers is critical to improving primary care and to reforming the health care system. Sanders and House Majority Whip James E. Clyburn (D-S.C.) are the lead sponsors of the Access for All America Act (S. 486, H.R. 1296), a bill that would “quadruple” the number of community health centers over the next several years, as well as boost support for the National Health Services Corps (NHSC). Despite health centers' successes, a study by the Government Accountability Office found that 43 percent of regions designated as “medically underserved areas” lacked a health center in 2007, a figure that has not improved significantly since the study, despite the expansion of the health center program under President Bush. A problem revealed in the GAO report is that the Health Resources and Services Administration (HRSA) does not collect the information from health center facilities necessary to distribute grant funding most effectively, to the places where greater access to services is needed. HRSA is concerned that additional data reporting requirements will burden health centers. More information on the hearing is available on the Web here. 

The GAO Report, Health Resources and Services Administration: Many Underserved Areas Lack a Health Center Site, and Data Are Needed on Service Provision at Sites is available through the GAO: GAO-09-667T, April 30 http://www.gao.gov/cgi-bin/getrpt?GAO-09-667T Highlights - http://www.gao.gov/highlights/d09667thigh.pdf

April 17, 2009

Congress Returns to Take on Health Care Reform: Congress returned from “spring break” this week and is expected to focus on developing health care reform legislation, which Democratic lawmakers have pledged to complete by the end of summer. The Senate Finance Committee will begin a series of three round tables that will serve as hearings for an overhaul bill being drafted by committee Chair Max Baucus (D-Mont.). The first, scheduled for April 21, will address health care delivery and how payment systems could emphasize coordinated care, greater use of preventive care and other initiatives. Two May sessions will focus on increasing access to health coverage and how to fund an overhaul bill. Baucus hopes to mark up legislation in June. The Senate Health, Education, Labor and Pensions Committee also hopes to mark up its bill in June, before combining the measure with the Finance Committee bill on the Senate floor. Three House committees (Education and Labor Committee, Energy and Commerce Committee, and Ways and Means Committee) have jurisdiction to work on health overhaul bills and plan to draft a proposal together after the Memorial Day recess. House Majority Leader Steny Hoyer (D-Md.) this week will meet with the committee chairmen to discuss details.

Several contentious issues regarding the reform measures will be taken up in the next few weeks. Republicans remain opposed to the introduction of a „public plan option‟ which they say would draw customers away from private insurers, and put “government in charge of our health care.” Republicans also oppose House plans to use the budget reconciliation process to pass health reform legislation in the Senate. Instructions for reconciliation were not included in the Senate's budget resolution, but the House-Senate conference is expected to include it in a final resolution. Using reconciliation would mean health care reform legislation could pass the Senate with as few as 51 votes. Without reconciliation, 60 votes would be needed to overcome a likely filibuster. Senate Democratic leaders have stated that using the reconciliation process is not their preference, but if bipartisan talks are not productive, “reconciliation would be an important measure to have.”

March 20, 2009

Bills Would „Quadruple‟ Health Centers in 10 Years, Change CHC, NHSC Programs: A bill introduced on February 26, 2009 by Sen. Bernie Sanders (I-Vt.) is intended “to achieve access to comprehensive primary health care services for all Americans and to reform the organization of primary care delivery through an expansion of the Community Health Center and National Health Service Corps programs.”

S 486 would increase the appropriation for health center grants under Section 330 of the Public Health Service Act from the current approximately $2.1 billion to over $8 billion by FY 2016, with increases based on costs and number of patients served in subsequent years. The bill also adds significant funding to the National Health Service Corps. In a statement introducing the bill, Sen. Sanders noted the funding would allow the number of health centers to “quadruple” and “revolutionize primary health care in America.” In addition to adding funds, the legislation would also make some significant changes to the health center grant program itself. One such change that would allow required services to be provided either at the health center or their facilities, or at “any other inpatient or outpatient settings determined appropriate by the center to meet the needs of its patents” could have significant impact on determining 340B patient eligibility and require new HRSA or OPA procedures to ensure compliance with the 340b Program. Another significant change would allow new health centers to be built in another health center‟s catchment area, creating competitive concerns for some centers. These and other provisions will be discussed in more detail at our San Antonio meeting. An identical bill (HR 1296) was introduced in the House by Rep. Clyburn (D-SC) on March 4, 2009. Both bills have been referred to Committee for further consideration. They can be viewed here.

Proposed Rule for Ensuring that HHS Funds Do Not Support Coercive or Discriminatory Policies or Practices in Violation of Federal Law
In September 2008, the Department of Health and Human Services (HHS) proposed a rule to ensure that HHS funds do not support coercive or discriminatory policies or practices in violation of federal law. This proposed rule restated previous Federal laws that protect religious freedoms by prohibiting recipients of federal funds from coercing individuals from participating in any action that they may find morally objectionable. This includes most HRSA grantees. The proposed rule would expand the application of these laws and would require these HHS fund recipients to certify that they are compliant with these laws. Read APhA's comments on the proposed rule.

On December 19, HHS released the final rule, which states that:

Non-discrimination protections apply to institutional health care providers as well as to individual employees working for recipients of certain funds from HHS;

Recipients of certain HHS funds must certify their compliance with laws protecting provider conscience rights; and

The HHS Office for Civil Rights is designated as the entity to receive complaints of discrimination addressed by the existing statutes and the regulation.

The regulation takes effect 30 days after its publication in the Federal Register.  However, HHS components have been given discretion to phase in the written certification requirement by October 1, 2009, the beginning of the 2010 federal fiscal year. 

340B Program Improvement and Integrity Act of 2007

On May 14, 2007, the “340B Program Improvement and Integrity Act of 2007” was introduced as S. 1376 in the U.S. Senate by Sen. Bingaman (D-NM) and Sen. Thune (R-SD).  S. 1376 would allow participating DSH to purchase drugs for their inpatient populations under the 340B Program and would remove the GPO exclusion that applies to outpatient drug purchases from applying to these inpatient procurements.  It would also add critical access hospitals, sole community hospitals, rural referral centers and children’s hospitals to the list of covered entities.  In addition, the bill would establish a new mechanism for state Medicaid programs to access some of the 340B savings from inpatient drug purchases.  The bill also includes a number of “integrity provisions” aimed at dispute resolution processes and mechanisms for entities to be refunded overcharged amounts.  A companion bill (H.R. 2606) was introduced in the House in early June.  Both bills will be referred to their respective Committees for consideration. 

Senate and House Support for Importation Growing

  Although activity around prescription drug importation diminished immediately after the creation of the new Medicare prescription drug benefit; recent events signal that importation is again a hot topic on Congress' agenda. On July 11 th , the Senate voted to amend the 2007 Homeland Security Appropriations bill (H.R. 5441) to prohibit the U.S. Customs and Border Protection from preventing any individual from importing an FDA-approved prescription drug from Canada . While limiting importation to FDA-approved drug products may appear safe, in reality rarely are drugs outside of the U.S. , including Canada , FDA-approved.

  This Senate action follows the adoption of similar legislation by the House in two separate House appropriations bills. The 2007 Agriculture Appropriations Bill (HR 5384) would prevent the FDA from using funds to prevent importation; and the House version of the 2007 Homeland Security Appropriations bill (H.R. 5441) includes a Customs prohibition similar to that passed by the Senate. In past years, language prohibiting the FDA from using its funds to prevent importation has been added to the Agriculture bill in one chamber and dropped in the conference committee process. But with the Customs language included in both the House and Senate versions of the Homeland Security appropriations legislation, there is a much greater chance of the provisions making it through the conference committee process and to the President's desk for him to sign into law.

Congressional Defense Bills Compromise Patient Choice of Pharmacist

  The House and Senate have passed their versions of legislation to authorize Fiscal Year 2007 appropriations for the Department of Defense (DOD). Because the two proposals differ, a conference committee has been appointed to negotiate the differences between the two bills. The conference committee report will go back to the House and Senate for a final vote before it is sent to the President for his signature. Both proposals include several items critical to pharmacists and require action.

  The Senate bill contains both good and bad provisions.

•  A good provision: Section 721 of the Senate bill (S. 2766) clarifies that the DOD may negotiate discounted federal pricing for prescriptions dispensed to TRICARE (the military's health care program) beneficiaries at pharmacies in the DOD's community pharmacy network. The DOD negotiates lower prices for medications dispensed at military treatment facilities (MTFs) and through the DOD's mail-service program.

•  A bad provision: Section 702 of the Senate bill requires all TRICARE beneficiaries to obtain refills of maintenance medications through their mail-service program and waives co-payments for certain medications that are obtained through the mail-service program. These provisions would prohibit patients from using their pharmacist and pharmacy of choice for maintenance medications and create coercive financial incentives to use one pharmacy provider over another.

  The House bill contains a ‘bad' provision: Section 731 of the House bill (H.R. 5122) increases co-payments for prescriptions obtained through the community pharmacy network but waives co-payments for prescriptions obtained through the mail-service program. This provision would create coercive financial incentives to use one pharmacy over another, compromising the patient's freedom of choice.

  One of the reasons the DOD is seeking this change is that the DOD currently receives rebates from manufacturers for prescription medications dispensed at MTFs and through the mail-service program. Not providing these same rebates for prescription drugs dispensed at pharmacies in the DOD's retail pharmacy network creates an economic disincentive to have patients obtain their pharmacy services through these community pharmacies.

  DOD believes existing law gives it the authority to negotiate with manufacturers for discounts for drugs dispensed at pharmacies in their retail network. However, most prescription drug manufacturers disagree and have filed a lawsuit against the DOD. Currently, the TRICARE retail pharmacy program is the only federal government program that does not receive rebates from manufacturers. Retaining Section 721 of the Senate bill, which clarifies that discounts may be negotiated for prescriptions dispensed through the DOD's retail pharmacy network, will remove the need to force or coerce patients to receive their pharmacy services through the DOD's mail-service program.

Update on Federal 340B Legislation

The June/August Policy Update contained a thorough analysis and discussion of legislation pending in Congress ( S. 4 and HR 3547 ) that would make several changes to the 340B program. There has been no progress on those particular bills at this time. S. 4 , a comprehensive healthcare bill introduced by Senate Majority Leader Bill Frist (R-TN) contains provisions that would impact 340B. Under the legislation, Disproportionate Share Hospitals (DSHs) would be allowed to purchase covered outpatient drugs through a group purchasing organization (GPO). Additionally, S. 4 would permit a covered entity to use multiple contract pharmacies. HR 3547 would extend 340B pricing to DSH inpatients, and would allow Critical Access Hospitals (CAHs) to use 340B pricing. However, the Congressional schedule has been filled with Medicaid reform, relief for hurricane victims, United States Supreme Court nominations, and the consideration of the budget bills for Fiscal Year 2006. Consequently, there has bee no movement on either of these bills.

    However, on October 6, Senators John Thune (R-SD) and Jeff Bingaman (D-NM) introduced S. 1840 a companion bill to HR 3547. S. 1840 would also permit the extension of the 340B program to include inpatient drug purchases of DSH hospitals and would include CAHs as “covered entities” under the law. The bill was referred to the Committee on Finance, which has also jurisdiction over Medicaid and Medicare . There was some hope that the provisions 340B extensions would be incorporated into the Senate's Medicaid reform package, but that has not happened.

Office of Inspector General Releases Two 340B-related Reports; Withdraws One

Two recent reports from the Department of Health and Human Services Office of Inspector General (OIG) focused on the administration of the 340B Drug Discount Program and prices paid by covered entities for drugs.

"Appropriateness of 340B Drug Prices" (OEI-05-02-00070) June 2004

On October 21, the Office of Inspector General withdrew report OEI-05-02-00070 entitled "Appropriateness of 340B Drug Prices," dated June 2004.  The OIG withdrew the report because of problems with the underlying data used in developing the report's findings.  The OIG has issued a memorandum to the Administrators of the Centers for Medicare & Medicaid Services and Health Resources and Services Administration announcing the withdrawal of the report and OIG plans for additional work related to the 340B program.  To view the memorandum, please click here.

“Deficiencies in the 340B Drug Discount Program's Database”

Focuses on the integrity of the Office of Pharmacy Affairs 340B participant  database and points out several areas for improvement. These areas include: incorrect participation information in the database, incorrect address information for covered entities and missing information on billing and shipping. OIG recommended that HRSA conduct a revalidation of information currently residing in the database, issue annual recertification for covered entities, develop a separate listing of newly added or deleted entities, develop a standard reporting format for entity addresses and add an additional field to designate entities with contracted pharmacy management. The OIG also encouraged HRSA to “optimize its Pharmacy Services Support Center contract as a means to move toward complete action.” To access this report, please click here.

340B Program Revision and Expansion Act of 2004
H.R. 4161 was introduced on April 2 and referred to the House Committee on Energy and Commerce. The bill is titled the "340B Program Revision and Expansion Act of 2004." Rep. Bobby Rush of Illinois sponsored the bill.  The bill expands the definition of "covered entity," extends 340B pricing to inpatient drugs, eliminates the group purchasing prohibition for certain hospitals, and permits the use of multiple contract pharmacies.

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