May 31, 2023 / By

House Subcommittee 340B Bills: Understanding the Implications for Your Covered Entity (CE)

House Subcommittee 340B Bills: Understanding the Implications for Your Covered Entity (CE)

The House of Representatives Health subcommittee recently held a hearing on May 17,2023 to discuss bills that could have a great impact on the 340B program. These two bills H.R. 3281 and H.R. 3290 could cause some serious wake within the 340B space. Bill H.R. 3281 requires Medicaid managed care organizations (MCOS) and their respective Pharmacy Benefit Managers (PBM) to implement fee-for-service payment models, while H.R. 3290 would require covered entities to report 340B savings and would allow HHS to audit how those savings dollars are spent.

What does this mean for CEs?

H.R. 3281 could significantly impact 340B programs and savings. It forces MCOs and their PBMS to reimburse in the same manner as FFS Medicaid. This reimburses the pharmacy the actual cost of the ingredient plus a “professional dispensing fee” which is determined by each state. The FFS regulations from 2016 require state Medicaid programs to ensure that the 340B actual cost is what is reimbursed. This creates a redistribution of the savings from the CE to the state Medicaid program. This could limit CEs and their ability to sustain certain service lines for patients or even cause some to shut their doors. Earlier this year California and New York both shifted toward aFFS model, which diminished 340B savings.  New York estimated the loss of savings to be 240 million dollars and claims that some CEs will have to shut their doors.

For a point of reference in the United States there are 14,000 Federally Qualified Health Centers (just one type of CE) that care for 30 million lives, 14 million of those are enrolled in Medicaid, H.R. 3281 threatens the financial sustainability of these entities.

H.R. 3290 allows HHS to audit CEs on the use of 340B savings and requires increased reporting on 340B program details. These details include, number of patients, costs incurred, use of charity care, as well as many others. The 340B program already creates a significant administrative burden to CEs, the additional workload will increase stress to an already overstretched staff.On top of that most CEs are still struggling to reach post covid staffing levels.

H.R. 3281 and H.R. 3290 is a potential double whammy to CEs. A slashing of 340B savings (which some is used for salaries of employees) and the increased administrative burden cranks up the pressure on our safety net provider system.