This is the final article in a series.
January 16, 2015—The Government Accountability Office and the Health and Human Services Office of Inspector General is each issuing a report this year on 340B and Medicare – the GAO on how much Medicare spends reimbursing hospitals for 340B-discounted drugs, and the OIG on whether Medicare might save money if it could share in 340B savings. [ms-protect-content id=”2799″]
Medicare’s relationship with 340B might be mentioned next week when the House Energy & Commerce Health Subcommittee holds a two-day hearing Jan. 21-22 on replacing the current Medicare physician payment formula, also known as Sustainable Growth Rate reform or the “doc fix.”
During a December E&C health subcommittee hearing on Medicare and Medicaid spending, Rep. John Shimkus (R-Ill.) asked a witness, Medicare Payment Advisory Committee Executive Director Mark Miller, if he had ideas on how to “realize savings in Medicare at it relates to the 340B program.” At MedPAC’s November meeting, staff members briefed commissioners about a paper on the 340B program that the staff prepared at the request of E&C committee members and other members of Congress.
In the last session of Congress, a biotech company floated a proposal to require 340B hospitals to pass all of their 340B savings along to Medicare as a way to help pay for the doc fix. Hospital groups say many hospitals would drop out of 340B if this were to occur because the costs of participation would outweigh the benefits. Drug companies, meanwhile, reportedly are divided over the proposal, with some arguing that making Medicare rely on 340B savings would cement 340B in place and encourage expansion.
The E&C health subcommittee chairman, Rep. Joseph Pitts (Pa.), is one of five Republican members of Congress who requested the new GAO study of 340B. The others are: Sens. Lamar Alexander (Tenn.), Orrin Hatch (Utah), Charles Grassley (Iowa), and Michael Enzi (Wyo.). Rep. Pitts asked a witness during his subcommittee’s December hearing whether it was “time for a complete re-evaluation of the 340B program” to help “free up more drug industry dollars for additional research and development.”
The forthcoming GAO report is expected to have two objectives: (1) to examine 340B and non-340B hospitals’ sources of revenues and margins and how they have changed over time, and (2) to compare 340B and non-340B hospitals’ Medicare Part B drug reimbursements and how those have changed over time. It is reportedly slated for release by mid-year.
The OIG first announced its study of Medicare Part B payments for drugs bought through 340B in its fiscal 2014 work plan and described it again in this year’s plan. It said it will determine how much Medicare Part B spending could be reduced if Medicare were able to share in providers’ 340B savings, based on various shared-benefit methodologies.
The OIG, meanwhile, is also assessing the risk of duplicate discounts for 340B-purchased drugs paid through Medicaid managed care organizations and will describe states’ efforts to prevent them. “Existing tools and processes used to prevent duplicate discounts in fee-for-service Medicaid may not be sufficient for drugs paid through Medicaid MCOs,” the OIG said in its 2015 work plan. The Health Resources and Services Administration and the Centers for Medicare & Medicaid Services reportedly have heard from Congress they should do more to help states exclude 340B purchased drugs from Medicaid MCO rebate requests.
Finally, it is unclear whether OIG plans to follow up its February 2014 report on how hospitals and health centers ensure compliance with 340B requirements for prescriptions filled at contract pharmacies. In that report, OIG said it was continuing to review 340B contract pharmacy arrangements and “may make recommendations in an upcoming report if appropriate.” There was no mention of such a report in OIG’s 2015 work plan, however. [/ms-protect-content]