Matsui, Stewart Lead Bipartisan Letter Calling to Preserve 340B Eligibility for Hospitals

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Washington, May 8, 2020 | George Hatamiya (916-201-5412) | comments

WASHINGTON, D.C.  – Today, Congresswoman Doris Matsui (D-CA) and Congressman Chris Stewart (R-UT), along with 121 colleagues, sent a letter to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy, asking for temporary flexibility with 340B Drug Pricing Program requirements to preserve hospitals’ eligibility for the program amid the COVID-19 pandemic. 

Under the 340B program, drug manufacturers agree to provide outpatient drugs at a discount to safety-net providers that serve our most vulnerable Americans, including low-income Medicare, Medicaid and Supplemental Security Insurance patients. These providers include Medicare disproportionate share (“DSH”) hospitals, children’s hospitals, free-standing cancer hospitals, and rural hospitals.

America’s hospitals have been on the front lines of the fight against the COVID-19 pandemic, which has necessitated operational changes to prioritize caring for COVID-19 patients. In order to be eligible for the 340B program, these providers must serve a certain percentage of low-income patients. But with elective procedures on hold and stay at home orders deterring people from seeking non-urgent care, many of these safety-net hospitals are experiencing changes in their patient mix that could potentially jeopardize their eligibility for the 340B Program. Loss of 340B eligibility would be devastating for these hospitals and the communities they serve, as savings from the program help fund free and low-cost medications – as well as HIV/AIDS, diabetes, cancer, dental and primary care clinics that serve our most vulnerable citizens.

Today, this bipartisan group of 123 lawmakers is calling on House leadership to make sure that we preserve 340B eligibility during this public health emergency in order to ensure hospitals are able to continue to serve our nation’s most vulnerable communities.

Full text of the letter is below:

Dear Speaker Pelosi and Minority Leader McCarthy:

Our nation’s safety-net hospitals have always served on the front lines of health care for the medically underserved and uninsured. During the COVID-19 pandemic, these essential providers are stepping up to provide more care and services to their communities. As the outbreak continues and more COVID-19 patients are in need of hospital care, we are concerned that the impact of COVID-19 could temporarily affect hospitals' ability to meet 340B eligibility requirements in ways that could potentially cut off their access to the 340B drug discount program (“340B Program”). To support our safety net hospitals through this crisis, we write to ask that any future supplemental relief bill include policies to temporarily protect these hospitals from losing 340B eligibility due to the COVID-19 pandemic.

To qualify for the 340B Program, hospitals that participate as Medicare disproportionate share (“DSH”) hospitals, free-standing children’s and cancer hospitals, sole community hospitals (SHCs), and rural referral centers (RRCs) must maintain a minimum DSH adjustment percentage on their most recently filed Medicare cost report. In addressing the surge of COVID-19 patients, hospitals are increasing bed capacity and shifting care from inpatient beds to outpatient settings to reserve space for the critically ill. While such operational changes are essential to build capacity for crisis response at this time, ensuing shifts in payer mix could potentially reduce a hospital’s DSH adjustment percentage and jeopardize their eligibility for the 340B Program.

340B eligibility requirements also restrict certain hospitals from using a group purchasing organization (GPO) to purchase covered outpatient drugs. Facing drug shortages and distribution challenges due to COVID-19, some providers are struggling to maintain adequate drug supply while adhering to the GPO prohibition. HRSA has recently recognized this problem and issued guidance providing some flexibility to 340B hospitals to temporarily purchase drugs through a GPO in certain cases without seeking HRSA approval. However, HRSA indicated it is unable to temporarily waive the GPO prohibition.

Therefore, we ask that Congress consider providing hospitals with temporary flexibility related to 340B program eligibility rules in any future supplemental relief bill. We look forward to working collaboratively with you on this important issue to ensure that our safety-net providers relying on the 340B program can continue to provide vital care to low-income and vulnerable communities during and after the public health emergency.

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