a variety of pills laying on top of 100 dollar bills

Hospitals participating in the 340B federal drug discount program may eventually see a bundling policy implemented for oncology drugs.

The Medicare Payment Advisory Commission (MedPAC) met Nov. 5 and discussed developing recommendations for guidelines it plans to have drafted in March, written up in April and voted on in June.

Eligible hospitals have generated big revenue dollars from the 340B program. They receive roughly 23.1 percent off the average price of most drugs, MedPAC Senior Analyst Daniel Zabinski told the MedPAC panel.

Stakeholders, including the pharmaceutical industry, say 340B hospitals are gobbling up community oncology practices to expand their outpatient revenue base. The program has been roundly criticized by independent outpatient oncology practices that aren’t eligible for the discounts.

In October, the Community Oncology Alliance (COA) published a study of hospitals that acquired or affiliated with cancer clinics in the last two years and found that nearly 75 percent were eligible for 340B discounts.

“Hospitals are contributing to the escalating cost of cancer care – where the same cancer care is more costly for patients and their insurers,” said COA vice president, Jeffrey Vacirca, CEO at the East Setauket, N.Y.-based North Shore Hematology Oncology Associates.

The program was created to help safety-net health care providers stretch dollars to serve vulnerable populations with outpatient drugs purchased at discounted prices. Eligible hospitals must be owned by or under contract with a state or local government, or be a public or nonprofit hospital providing services to low-income patients who aren’t eligible for Medicare or Medicaid.

The Health Resources and Services Administration (HRSA) manages the program and estimates covered entities saved $3.8 billion on outpatient drugs in fiscal year 2013.

More hospitals became eligible for 340B discounts in 2010 due to the Patient Protection and Affordable Care Act. The number of participating hospital organizations (a hospital and all of its eligible affiliated sites) climbed from 583 in 2005 to 2,140 in 2014, according to MedPAC.

A June report by the Government Accountability Office (the investigative arm of Congress) found that approximately 40 percent of all U.S. hospitals participate in the 340B program and notable numbers were not providing uncompensated or charity care.

The GAO also found that Medicare Part B drug spending (including oncology drug spending) was substantially higher at 340B hospitals than at non-340B hospitals, indicating that 340B hospitals are either prescribing more drugs or more expensive drugs. The GAO expressed concern about the appropriateness of health care provided to Medicare Part B beneficiaries and recommended that Congress consider eliminating the incentive to prescribe more than necessary.

The HRSA maintains a database of 340B hospitals that can be searched here: https://opanet.hrsa.gov/opa/CESearch.aspx

Twitter: @StephHoopsDRG

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