In this episode, Tim Powell, Sr. Reimbursement Consultant at BESLER, provides us with a glimpse into the next webinar in our Fundamentals of Reimbursement Series, Understanding 340B, presented live on Wednesday, April 24, at 1 PM ET.
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Learn how to listen to The Hospital Finance Podcast® on your mobile device.Highlights of this episode include:
- How to determine if you qualify for 340B program
- Reapplying
- Supreme Court decision and settlement
- Medicare Advantage payments
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Tim Powell, Senior Reimbursement Consultant here at BESLER. In this episode, Tim will provide us with a glimpse into the next webinar in our Fundamentals of Reimbursement Series, Understanding 340B, that we’re presenting live on Wednesday, April 24th at 1 PM Eastern Time. Welcome back and thanks for joining us, Tim.
Tim Powell: Nice to talk to you again, Kelly. I really appreciate this opportunity to talk about the 340B program.
Kelly: Yeah, well, let’s go ahead and jump in. So, if someone’s hospital is not enrolled in the 340B program, can you tell us how to determine if they qualify?
Tim: Well, to start with, in order to be in the 340B drug program, you have to be either a nonprofit or governmental hospital. And then if you are a nonprofit or a governmental hospital, there are certain percentages that come off of the Medicare cost report related to disproportionate share hospital payments. So, the vast majority of hospitals that are nonprofit, in order to qualify for the 340B drug program, have to have a payment percentage, not a qualifying percentage, but an actual payment percentage of 11.75% or higher on their latest file cost report. And I’d also like to point out, and I’ll probably chat about it more again, but hospitals come on and off of the 340B program. So, the way that you determine is you look at your most recently filed cost report and look at your disproportionate share hospital payment, which we can always help you find. If you have that and you are a nonprofit hospital, then you should be able to qualify for the 340B drug program. But obviously, that’s a little bit of a technical thing. So, we’re happy to talk to you in more detail about how you do the qualifying calculations.
Kelly: Thank you very much for all that. So, let’s say someone’s hospital was in the 340B program, but they were told they no longer qualify. Is it possible to qualify now and can they reapply?
Tim: Absolutely. It can go year by year. And so every year, you look and see whether or not you meet the qualifying percentages. So, this is sadly one of the mistakes that I see happen to providers on a fairly regular basis is they lose their 340B status because based on their cost report, they don’t meet that 11.75 percentage. And then they are under the misconception that they can’t re-qualify or reapply. So, we see hospitals all the time that come on and off disproportionate share depending on how close you are. And one of the other things is the factors that go into that calculation, that DSH calculation are kind of in a swirl as you go around. So, it may be that when you filed your cost report, it didn’t seem like you qualified, but now you do. So, it’s always good every year to double check or check to see if you can meet those criteria for the 340B drug program. And then you can certainly reapply at least once a quarter.
Kelly: Very interesting. So, a hospital is in the 340B program, and it thought it was supposed to get a settlement due to a recent Supreme Court decision. Can you explain in general terms what the payments are for?
Tim: Well, Medicare kind of arbitrarily slashed payments on certain drugs that were billed to Medicare as what they call ASP drugs. And there have been usually paid at 6% of the average sales price. And that policy had been fairly consistent. Well, suddenly in 2018, CMS decided that it was going to slash that payment rate to the average sales price, less 22.5%. And so CMS just unilaterally went and cut the payment rate for a lot of these 340B drugs from 2018 through ’22. And as addressed in a final rule, CMS on November 2nd of 2023 outlined the implications for future changes to change it back after a Supreme Court case. But also, CMS has proposed to make a one-time lump sum payment as a remedy to address the underpayments from the 340B program for fiscal years 2018 through 2022. And that was in the latest proposed rule. And so we know that the claims for the 340B acquired drugs paid after the district court’s decision on September 28, 2022, are automatically paid at that higher rate or actually the rate that it was paid of ASP plus 6%.
Kelly: Wow, that sounds very complex, but thank you for that explanation there. It’s very helpful. Can you tell us when people can expect to get paid under the settlement?
Tim: Well, in November, in early November, the CMS released a calculation of how much it thinks that hospitals are due from the Medicare program. And when it did, it not only made a list of how much it was going to pay, but in some cases, some of the hospitals had already been paid. And also, there were certain hospitals that because they had recently qualified for the 340B program, weren’t going to receive any compensation. So, if you would like, and we’re going to be discussing in the actual webinar, is we’re going to tell you where you can go to see how much you can expect to get paid. And then as kind of happenstances, it depends on whether your Medicare MAC has released those funds actually paid to the hospital.
Kelly: Well, that would be very helpful. So does the settlement include Medicare Advantage payments for the drugs Medicare Advantage paid hospitals for?
Tim: Well, this is actually something that is going to be probably half of our webinar presentation. No, it doesn’t. And it’s kind of a double whammy is that most hospitals are paid for Medicare Advantage using Medicare rates. So even though it’s a contract under Medicare Advantage with a Medicare Advantage Plan, you’re paid at Medicare rates. And the Medicare Advantage Plans have said that they really are unhappy making those payments for those back years is something that is going to involve litigation. But it’s a double whammy and really frustrating is if your hospital is being reimbursed on a moving forward basis using Medicare rates, Medicare is cutting all payment rates for all Medicare outpatient claims, starting in fiscal 2026 for five years in order to recoup the extra money that was paid to 340B hospitals. So, it’s actually really, it’s a double whammy where Medicare Advantage in many cases didn’t have to pay for those special drug payments. And then in addition, they get the extra benefit of not having to pay in future contracting if those payments are based on Medicare rates. So that’s going to be really the vast majority, I think, of our upcoming webinar is talking about what you can do to try to collect your money from Medicare Advantage.
Kelly: Wow, well that’s going to be really helpful that you guys cover that. If the Medicare Advantage Plan did not pay a hospital a settlement, can you tell us how to determine if they can raise the issue with Medicare Advantage Plans?
Tim: Well, our co-presenter of the webinar, Greg Fliszar, is going to be talking about this at length. And unfortunately, it’s going to go hospital by hospital and plan by plan. And also, it’s going to probably involve litigation. The Medicare Advantage plans aren’t going to offer to give that money back to you automatically. This is something that has to be raised as a contractual issue. I am looking forward, and I hope that everyone is looking forward to seeing what opportunity they have in order to recover those back payments from Medicare Advantage plans, as well as maybe in combination, not having to suffer the reduction in Medicare Advantage payments on a moving forward basis. So even if you don’t qualify for the 340B drug program, you may want to listen to this webinar because you may want to see if there’s a way that you can avoid having your claims cut in order to make up for the reimbursement remedy of the 340B program.
Kelly: Most definitely, this is going to be a good one for sure. Well, thank you so much for joining us, Tim, and for sharing this sneak peek into our upcoming webinar, Understanding 340B. And as a bonus, you can earn CPE. Thanks again, Tim.
Tim: Thank you, Kelly.
Kelly: And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…
[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.com/podcasts. The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.
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