August 7, 2009 – As Congress wrangled over the details of health reform over the past month, many concessions were made as committee chairmen tried to gain the votes needed to push the legislation forward. But one element of the health reform package – a significant expansion of the 340B program – remains standing.
In fact, legislation to expand the 340B program to new covered entities and to extend 340B discounts to the hospital inpatient setting has now made it through the two congressional committees with jurisdiction over the 340B program. Considering that previous efforts to accomplish this same goal stalled for close to a decade, it’s the most important development in the 340B world since Congress created the program in 1992.
On July 31, 340B expansion efforts cleared a significant legislative hurdle in the U.S. House of Representatives, when the House Energy and Commerce Committee included language in its section of the House health reform bill, H.R. 3200, to extend the 340B program to the inpatient setting. It would also extend the discount to rural and children’s hospitals, and to federally funded mental health, substance abuse, and maternal and child health programs.
H.R. 444 and S. 1239, stand-alone legislation to extend the discount to the inpatient setting, would allow hospitals to continue to contract with a GPO for pharmaceutical purchases in the inpatient setting only, but continue the prohibition on the outpatient side.
During the Energy and Commerce Committee’s consideration of the health reform bill, Rep. Eliot Engel (D-N.Y.) introduced an amendment that, in essence, mirrors the language in H.R. 444 and allows hospitals to continue to use their GPOs in the inpatient setting, while leaving the outpatient GPO exclusion intact. Rep. Engel’s amendment passed the committee unanimously through a voice vote.
340B providers fight back against amendments
The Senate Health, Education, Labor & Pensions (HELP) Committee approved health care reform legislation July 15 that also contains numerous reforms to the 340B program. They include an extension of the drug discount to the inpatient setting for 340B hospitals and a provision making free-standing children’s hospitals and certain rural hospitals eligible for 340B.
The legislation also contains language intended to improve program integrity, including pricing transparency and beefed-up enforcement against manufacturers and providers that abuse the program.
The 340B provisions were the target of several amendments seeking to stop expansion of the program and, in one case, to eliminate the 340B program completely for many providers. To the relief of 340B advocates, those amendments didn’t pass, with one exception: Senators did agree to insert language asking the General Accountability Office to conduct a study on the future of the 340B program.
Meanwhile, an amendment introduced by Sen. Sherrod Brown (D-Ohio) to make free-standing cancer hospitals eligible for the 340B program did pass, but not without some debate. Sen. Enzi (R-Wyo.), the HELP committee’s ranking Republican, questioned why Congress should expand participation in the 340B program at the same time that it seeks to provide health insurance coverage to every American. Ten hospitals in the United States qualify as free-standing cancer hospitals today.
Eight percent or 11.75? And how about integrity?
If the 340B provisions remain in the health care reform legislation that eventually passes both chambers of Congress, there are notable differences between the two bills that the House and Senate must reconcile before they can send final legislation to President Obama’s desk.
The House health reform bill would allow all sole community hospitals and rural referral centers to participate in the 340B program, while the bill passed out of the Senate HELP Committee only allows these entities access to the program if their Medicare disproportionate-share (DSH) adjustment percentage is 8 percent or greater. The DSH formula was adopted to compensate hospitals for the costs they incur when treating a large number of low-income and uninsured patients.
Today, sole community hospitals and rural referral centers can participate in 340B only if their DSH percentage exceeds 11.75 percent. The House bill would also include new covered entities in the 340B program, including federally funded mental health, substance abuse, and maternal and child health programs.
Meanwhile, the HELP health reform bill contains numerous integrity provisions for both drug manufacturers and health care facilities participating in the 340B program. These provisions were included in the stand-alone 340B reform legislation introduced in both the House and Senate earlier this year, but were dropped from the House health reform bill.