May 21, 2010 – Ten of the 11 free-standing cancer centers that were just allowed to seek 340B drug discounts would be denied enrollment if they were to apply because they do not meet the program’s eligibility requirements, an analysis by a health care consulting firm concludes.
The findings by Avalere Health, which the company summarized on its Web site, could represent a second—perhaps knockout—blow for most of the cancer hospitals aspiring to enroll in 340B as provided for under the new health care reform law. Earlier, the hospitals learned that the law prohibited them from buying so-called orphan drugs at 340B discounted prices. That category includes many specialty drugs that the hospitals use in oncology treatments. The prohibition also applies to critical access hospitals, rural referral centers and sole community hospitals that were also made potentially eligible for 340B discounts.
To enroll in the 340B program, a free-standing cancer hospital must:
- be owned or operated by a state or local government, operate as a public or private nonprofit organization with governmental status, or be a private nonprofit hospital with a contract with state or local government to provide health care to low-income individuals, and
- have the equivalent of a Medicare disproportionate share hospital (DSH) adjustment percentage of 11.75 or higher.
The Office of Pharmacy Affairs (OPA) has the final say over which providers qualify for 340B. Avalere reports, however, that of the 11 cancer hospitals it studied only City of Hope National Medical Center in Duarte, Calif., would be eligible.
Avalere says it reviewed Medicare cost report data and impact files from the Centers for Medicare and Medicaid Services (CMS) to determine the cancer hospitals’ likely eligibility. Of the 10 facilities presumed to be ineligible, nine have Medicare DSH adjustment percentages below the 11.75 threshold. The University of Miami Hospital comes closest to qualifying with a DSH adjustment percentage of 10.6. The other eight have DSH adjustment percentages below 5 percent.
At the time that Avalere conducted its analysis, it determined that USC Kenneth Norris Jr. Cancer Hospital in Los Angeles would not qualify for 340B because it was a for-profit institution. The hospital has since become nonprofit. It is unclear, however, whether it will qualify for the program.
The Monitor has not independently verified that most of these institutions would not qualify and has heard that at least one other than City of Hope might be eligible.
The 11 cancer hospitals included in Avalere’s analysis are:
- City of Hope National Medical Center (Duarte, Calif.)
- USC Kenneth Norris Jr. Cancer Hospital (Los Angeles)
- Dana Farber Cancer Institute (Boston)
- Memorial Hospital for Cancer and Allied Disease (New York)
- Roswell Park Memorial Institute (Buffalo, N.Y.)
- American Oncologic Hospital (Fox Chase) (Philadelphia)
- The University of Texas M.D. Anderson Cancer Center (Houston)
- Fred Hutchinson Cancer Research Center (Seattle)
- Arthur G. James Cancer Center Hospital and Research Institute (Columbus, Ohio)
- University of Miami Hospital and Clinics (Miami)
- H. Lee Moffitt Cancer and Research Institute Hospital, Inc. (Tampa, Fla.)