April 26, 2018

New Bill Calls for Transparency under 340B

Rep. Carter (R-GA-1) introduced the 340B Optimization Act on April 24, 2018 to increase transparency and ultimately improve care for low income patients.

What does the 340B Optimization Act require?

The 340B Optimization Act would require certain disproportionate share hospital (DSH) covered entities to annually report on their low-income utilization rate of outpatient hospital services for the most recent fiscal year. DSH covered entities would also be required to report on the low-income utilization rate of all off-site outpatient facilities, clinics and other associated sites. The low-income utilization rate is defined under the Social Security Act § 1923 with modifications to account for the requirement of reporting outpatient utilization rates not only at hospitals but at off-site facilities and associated child sites.

When would annual reporting of low-income outpatient utilization rates commence?

The Administrator of the Health Resources and Services Administration (HRSA) would be required to submit a report to Congress on the DSH covered entities’ low-income outpatient utilization rates by January 1, 2021 and annually thereafter.

What is the purpose of this bill?

The 340B Optimization Act is aimed at increasing transparency for the 340B program. DSH covered entities are already required to report on their low-income utilization rates for inpatient services, but requiring them to report on outpatient services will help capture more uncompensated care which is a big determinant in if one is deemed to be a DSH and ultimately impacts eligibility for participation in the 340B program.

The 340B Optimization Act will help Congress better understand the demographics of disproportionate share hospital covered entities under the 340B program to make necessary improvements to the program and ensure it is being used as intended to care for the nation’s most vulnerable populations.

Bottom Line

Congress has made it clear they plan to modify the 340B drug discount program. The House Energy & Commerce Committee, of which Rep. Carter is a member, is currently prioritizing opioid legislation but there will likely be subsequent action on 340B so hospital leaders should remain vigilant.

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