Hill lawmakers race to block HHS Medicare cuts to 340B hospitals

A fierce battle over HHS' new Medicare cuts to 340B hospitals has ratcheted up as lawmakers negotiate their year-end spending deal, pitting hospitals, Congress and the Trump administration against each other before the rule is finalized.

340B hospitals face $1.6 billion in annual Medicare cuts through the CMS' finalized hospital outpatient hospital prospective payment rule if Congress doesn't block or delay its implementation before Jan. 1, according to the American Hospital Association and Association of American Medical Colleges.

A bipartisan group of House lawmakers want leadership to include a bill in the year-end budget patch that would essentially bar the cuts and new reporting requirements that hospitals say add extra administrative burden from going into effect.

"It's causing a lot of division, but somehow we've got to keep pushing because it's the right thing to do," said Rep. David McKinley (R-W.Va.), who along with Rep. Mike Thompson (D-Calif.) took the lead on the legislation. "I'm willing to stand up and argue that even if it does cause division we've got to stand up and solve it because rural hospitals and small hospitals are struggling."

McKinley said his bill is stirring a "hornets' nest" and concedes he and his colleagues face obstacles in getting it passed before the end of the year. He told Modern Healthcare that his leadership hasn't given him direction on where he ought to go with the bill. So far, he and Thompson have more than 60 co-sponsors from both sides of the aisle.

Shawn Gremminger, director of legislative affairs for America's Essential Hospitals, hopes the crowded legislative agenda doesn't stop lawmakers from taking action.

"We believe majority staff understand the importance of this issue, and we're confident it's in the mix for end-of-year discussions," Gremminger said. "But we also worry it could fall off the radar due to a crowded schedule."

Another issue for congressional Republicans is that blocking the rule would put them in opposition to the Trump administration. One hospital lobbyist said the administration views this as a step in addressing high drug prices. At least one key lawmaker with health jurisdiction made it clear he wants to stay neutral.

"I support us trying to come up with a solution and not just colliding," said Rep. Mike Burgess (R-Texas), who chairs the House Energy & Commerce Committee's health subcommittee.

Burgess said his talks this week with the White House Office of Management and Budget on the issue indicated that the Trump administration officials are "very affectionate toward the rule they put out."

"So, obviously there could be an impasse there," Burgess said.

While he doubts Congress will enact any legislation on the rule before the end of the year, Burgess acknowledged a yearlong delay while Energy & Commerce continues to look at the 340B program "might not be unreasonable."

Further complicating the tumultuous legislative landscape is the injunction hospital groups filed against HHS. The hearing is slated for Dec. 21 and a ruling is expected before Jan. 1.

Along with the House effort, a bipartisan Senate group is also working on a strategy against the rule: either support of the McKinley/Thompson legislation or a year-long delay of the rule, according to lobbyists.

The Pharmaceutical Research and Manufacturers Association supports the rule and doesn't want it delayed or overturned although the group doesn't have a financial stake. Spokesperson Nicole Longo says PhRMA supports immediate implementation to fix "one of the many perverse incentives created by the 340B program that had previously let hospitals increase their profits at the expense of Medicare and its beneficiaries."

Non-340B hospital groups didn't weigh in on the issue for this story, but the American Society of Clinical Oncology referred Modern Healthcare to the group's comment letter on the proposed rule that urges greater oversight of the 340B program generally and says policymakers should look at the "original intent" of the program.

Those who want to see more transparency in the program have supporters in Congress, where lawmakers recently stepped up scrutiny. The House Energy & Commerce oversight and investigations subcommittee held hearings on the program this year and Rep. Buddy Carter, a Georgia Republican who sits on the committee, said he concluded from the testimony that lawmakers need to "codify" congressional intent for the program.

"We need some guardrails on this program," Carter said. "It's proliferated to the point that now it's being used for things it was never intended to be used for. We need to tighten it up, that is the responsibility of Congress."

An AHA official pushed back on the idea of congressional intent.

"Despite opponents wanting to re-write the history and intent of the program to better fit their agenda, the 340B program is working exactly as Congress intended," the representative said. "It allows eligible hospitals to apply savings generated through drugs purchased at a discount to improve or expand access to comprehensive services to low-income and other vulnerable populations served."

Rep. Diana DeGette of Colorado, the ranking Democrat on the Energy & Commerce oversight subcommittee, agreed. She said the hearings didn't uncover any evidence of abuse of the program by covered entities. She said the stories of how hospitals used the program to cover poor or otherwise vulnerable patients were compelling.

"We need to have flexibility so that these hospitals can use that revenue they get to pay for services that will help these populations," DeGette said.

While she said she agreed lawmakers need to make sure there's transparency in the program, "in the absence of evidence of any kind of misuse I don't think we should put overly burdensome regulations on these providers."

On Friday, the effort opposing the McKinley-Thompson legislation took an interesting twist: an identical form letter purportedly signed by mayors' and local council officials from senators' home states started circulating in congressional offices. The letter, obtained by Modern Healthcare, expresses local officials' "concern" about the 340B program.

"My understanding is the 340B program was designed to benefit those in need and to offset higher drug costs, but those individuals are seeing very little if any of the benefit," the letter reads.

It is unclear who is behind the letter, which shows the ramp-up of last-minute efforts by program critics in the face of Congress' potential block of the Medicare cuts.