The American Hospital Association is urging Congress to permanently bar rebate models in the 340B program.
AHA issued the request in Sept. 23 comments on the SECURE 340B Act. Lawmakers introduced the bipartisan bill in July. The legislation combines protections hospitals have long sought with new requirements.
The AHA said it shares the sponsors’ goals of program integrity and accountability but warned that several provisions would “fundamentally alter the operation of the program” and impose new administrative and financial burdens on hospitals.
Six things to know:
1. The AHA wants rebates barred for good. The bill would require drugmakers to provide 340B pricing as an upfront discount for four years while a national claims-level clearinghouse is built. After that, upfront pricing would continue only if federal officials certify that the clearinghouse meets benchmarks for claims processing, duplicate-discount detection, timely adjudication and data completeness. The AHA said it “strongly supports” the initial ban but wants it made permanent. The association said a rebate model would strain cash flow at rural and safety-net hospitals already running on thin margins. The AHA also said rebates would shift control of the program from the Health Resources and Services Administration to drugmakers, who could delay, reduce or deny payments over documentation disputes or technical errors.
“In effect, under a rebate model, hospitals would be extending drug companies an interest-free loan while continuing to bear the full, unreimbursed cost of acquiring medications for their patients in the interim,” the letter states.
2. The AHA backs the bill’s contract pharmacy protections but not its new compliance rules. The association praised the bill for recognizing contract pharmacies as a core part of 340B, with no limits on how many a hospital uses or where they are. However, the AHA said the bill’s new registration, contracting, recordkeeping, audit and claims-level data rules could burden hospitals and push some pharmacies out of the program. That would undercut the access the provision is meant to protect. The AHA also backed the bill’s ban on payer and pharmacy benefit manager discrimination based on 340B status.
3. The AHA says the patient definition is too rigid for modern care. The bill would require each 340B prescription to be tied to a qualifying outpatient visit within the previous 24 months, with extensive documentation of the provider-patient relationship. The AHA argued that HRSA’s current standard, in place since 1996, is enough. It warned that a prescription-by-prescription test could exclude patients whose care involves multiple clinicians, integrated care teams or virtual care. It said tracing each prescription to a visit would be especially hard for chronically ill patients whose medications are adjusted between visits. The AHA also said a rigid definition could require repeated fixes from Congress as artificial intelligence and other technologies change care delivery. It asked Congress to adopt a standard based on whether the hospital maintains “a meaningful clinical relationship” with the patient.
4. The AHA warns that child site tests could disqualify legitimate clinics. Under the bill, a child site would have to meet several requirements to keep 340B eligibility. It would have to be wholly owned by the parent hospital, meet Medicare provider-based rules, extend the hospital’s financial assistance policies and appear on its Medicare cost report. It would also generally have to be in a community that meets set vulnerability thresholds. The AHA said it is unclear what these tests would achieve, since HRSA already requires annual recertification and Medicare provider-based status. The AHA said losing 340B eligibility could force hospitals to cut services, delay expansion into underserved areas or close outpatient sites.
5. The AHA says affordability mandates would override how communities use their savings. The association said it supports the bill’s focus on financial assistance. However, it said a uniform federal affordability formula ignores state laws and existing hospital obligations and could force hospitals to divert resources from other essential services.
“Every dollar saved through the 340B program ultimately benefits patients, whether by directly reducing prescription costs or by sustaining services,” the AHA wrote. Those services include oncology, behavioral health and maternal health care.
6. The AHA wants transparency and oversight to cover drugmakers, payers and PBMs, too. The bill would require hospitals to report each year on their 340B savings and how they use them, patient and prescription counts by payer, charity care, and Medicare and Medicaid shortfalls. It would also require HHS to publish hospital-level data. The AHA said reporting should build on Medicare cost reports, IRS Form 990 filings and HRSA recertification rather than duplicate them. It said similar transparency rules should apply to drugmakers’ pricing practices and price increases and to payers and PBMs. The association also called for audits that apply equally to all stakeholders and for a fair chance to fix compliance problems before penalties are imposed.
View the AHA’s full comments here.
