Safety-net hospitals want CMS to stop trying to collect information about how much they pay for drugs eligible for discounts under the 340B drug pricing program, according to the hosipitals' lobbying group.
CMS shouldn't launch its survey of drug acquisition costs during the COVID-19 pandemic because it will "create a heavy burden on hospitals" already struggling with limited resources, America's Essential Hospitals said in a letter to CMS on Wednesday
"The complex and burdensome nature of the 340B survey, as well as the lack of notice and short timeframe to complete it, pose daunting challenges," America's Essential Hospitals wrote.
The agency launched its survey of 340B hospitals on April 24, requiring hospitals to submit their drug acquisition costs by May 15. It could use the information to determine reimbursement rates for Medicare Part B drugs.
But providers' reluctance to share information with the federal government about how much they pay for 340B-eligible drugs began long before the outbreak.
Hospitals sued CMS in 2017 after the agency finalized a rule that would slash 340B drug payments to providers by changing how the agency calculates them. CMS made the change because it thought the federal government was paying 340B hospitals more for the drugs than hospitals paid for them. It argued that the program is supposed to make the drugs affordable for 340B hospitals, not profitable.
By charging more for the drugs that they had to, 340B hospitals were costing taxpayers and Medicare beneficiaries more money, the agency argued in a federal appeals court in November.
CMS previously paid 340B hospitals 106% of the average sales price for many Medicare Part B drugs, but it's paid them just 77.5% of the average sales price since 2018. A federal judge last year ruled that the cuts were illegal but didn't stop them. CMS has since appealed the case, but a three-judge panel has yet to reach a decision.
Safety-net hospitals have much smaller operating margins than other hospitals because they treat more uninsured patients or patients covered by Medicare or Medicaid, both of which pay less for medical services than commercial insurers.
The federal government and many healthcare experts think that 340B hospitals are using the drug discount program to pad their margins. And while several industry insiders think that safety-net hospitals need more financial support, many of them believe there are better ways to do it, like increasing Medicaid reimbursement rates or expanding Medicaid coverage.
Congress created the 340B drug pricing program in 1992, requiring drugmakers to sell outpatient drugs to eligible providers at significantly discounted prices. The pharmaceutical industry has continually lobbied to scale back the program and make it more difficult for providers to qualify for discounts.
HHS Secretary Alex Azar was formerly president of drugmaker Eli Lilly and Company and a pharmaceutical lobbyist.