You are here

Report: Medicare Part B Payment Hikes Could Offset 340B Cuts for Many Hospitals

However, some dispute these findings on the controversial cuts

Increased reimbursements under Medicare Part B overall could offset potential losses for hospitals under changes to the 340B discount program, according to a new analysis. FierceHealthcare reports that consulting firm Avalere Health analyzed hospital-level data from the Centers for Medicare and Medicaid Services on reimbursements in 2017 and 2018 and found that 85% of hospitals would receive higher Part B payouts that would minimize the reductions from cuts to 340B discounts.

CMS finalized changes to 340B in November, changing its payment rate to 22.5% less than the list price for medication. Previously, it had paid up to 6% more than the list price under the program, and the cuts could equal $1.6 billion in lost payments.

Rural hospitals would especially benefit from CMS’ increased Part B payouts, according to Avalere, as those facilities will net an average increase of 2.7%. Urban hospitals will see a 1.4% net increase.

“If a rural hospital closes, you often have an access problem,” Caroline Pearson, senior vice president of policy and strategy for Avalere, told FierceHealthcare in an interview. “Rural hospitals stand to benefit from this payment change, which would alleviate some of the access concerns.”

Avalere also found that among the 15% of hospitals facing payment reductions under the changes, the decreases are likely to be limited in most cases. Seventy-six percent face losses that equal less than 5% of their overall outpatient reimbursement, the article said.

“There will be winners and losers” as a result of the change, especially among hospitals that have very large 340B volumes, Pearson said. But the analysis shows that just eight states will see a net decrease in overall Part B payments: Alaska, Arizona, Connecticut, Georgia, Idaho, Kentucky, Louisiana, and Tennessee.

Major hospital groups have taken the fight over 340B changes to court and have expressed particular concern about the impact of the cuts on disproportionate share hospitals that sorely need 340B payments, according to the article. But Avalere’s analysis shows that more than half (55%) of disproportionate share hospitals will see payment increases that would offset the 340B cuts.

Tom Nickels, the American Hospital Association’s executive vice president for government relations and public policy, disputed the study’s findings in a statement to FierceHealthcare, saying that the study is “an attempt to again justify the industry’s agenda to misdirect and mislead” on the 340B issue. He said the study uses “selective measures” to reach its conclusion, and noted that it does not mention the impact of the rising cost of drugs on patients’ medical expenses. He said the study also fails to recognize that CMS’ 340B cuts are “unlawful and in excess of their authority under the law,” which is why the AHA is continuing to pursue legal action.

“The dramatic reduction to 340B drug payments is not permitted by the Medicare statute, and the agency cannot concoct its own reimbursement rules that effectively eviscerate the benefits and intent of the 340B program,” Nickels said in the statement. “That’s why we continue to pursue our legislative and legal strategies, and expect to prevail in holding the agency accountable for its overstepping.”

The 340B program wasn’t always controversial, but in recent years lawmakers and pharmaceutical companies have expressed concern that too many hospitals have enrolled, taking advantage of the program’s discounts. A study published last week suggests that hospitals have snapped up physician practices in areas like oncology to boost their 340B discounts but don’t often invest those savings in improving care for low-income patients.

“I think it’s undeniable that the 340B program has grown tremendously,” Pearson said. “There is [increasing] policymaker attention on whether the program is serving its intended purpose.”

Source: FierceHealthcare; January 29, 2018.

Recent Headlines

Despite older, sicker patients, mortality rate fell by a third in 10 years
Study finds fewer than half of trials followed the law
WHO to meet tomorrow to decide on international public heath emergency declaration
Study of posted prices finds wild variations and missing data
Potential contamination could lead to supply chain disruptions
Kinase inhibitor targets tumors with a PDGFRA exon 18 mutation
Delayed surgery reduces benefits; premature surgery raises risks
Mortality nearly doubled when patients stopped using their drugs
Acasti reports disappointing results for a second Omega-3-based drug