Patel Predicts 340B, Site of Service Reform to Be Ongoing Issues Under Biden

March 1, 2021
Mary Caffrey

Mary Caffrey is the Associate Editorial Director of AJMC/Managed Care for MJH Life Sciences. Her editorial responsibilities include Evidence-Based Oncology, Chief Healthcare Executive, and Managed Healthcare Executive.

Speaking to a group of oncology providers, Dr. Kavita Patel, a former Obama administration official, predicted that issues affecting hospital revenue would be revisited under Biden.

There’s no question that President Joe Biden comes into office with healthcare landscape forever changed by COVID-19. But once the dust settles, health system administrators may find that some of the aggressive steps seen during the Trump administration on drug costs, pricing transparency, and the 340B program may continue, according to Dr. Kavita Patel, a primary care physician and fellow at the Brookings Institution.

In a wide-ranging talk Monday, which kicked off the virtual meeting of the Association of Community Cancer Centers. Patel covered the future of telehealth, the need to deal with healthcare worker burnout, and the shortcomings of the Oncology Care Model, among other topics.

Patel, who served as a policy adviser under President Barack Obama, opened her talk by explaining the political reality Biden faces: super slim Democratic majorities in Congress will force the president to rely on executive actions to reverse some Trump policies and expand access to care. But in other areas that affect hospital and provider revenue, there’s bipartisan agreement on the need for action, she said.

For starters, CMS will look at changes in the Physician Fee Schedule with an eye toward keeping Medicare afloat past 2024.

Both parties believe drug costs too much, Patel said. Because Trump’s most far-reaching actions to rein in drug prices were blocked in court or lawsuits were threatened, “I predict we’re going to see legislation on drug prices. It might not be in the 2021 timeframe,” she said, but everyone from House Speaker Nancy Pelosi to Republican members “are very keen on seeing something happen. … In my opinion, it’s not a question of if, but when and what does it look like?”

Trump’s regulation requiring hospitals to disclose prices went into effect on January 1, 2021, and more transparency rules will take effect in 2022. Patel is not sure how much effect this will have, based on existing research. “What we see today is not going to make a meaningful change unless there’s something built on top of it,” she said.

But she does see possibilities from a more assertive Department of Justice, one that will take steps to enforce antitrust law. “We 're already seeing a record number of mergers,” she said, noting that many oncology practices have been forced to consider a private equity backed option, or have weighed being acquired by a hospital. Another oncology practice group, the Community Oncology Alliance, has argued that acquisitions drive up cancer care costs.

“Are we just going to have in 10 years about 10 hospital systems that dominate the preponderance of the healthcare market landscape?” Patel asked. “I think the answer is that you'll start to see a Department of Justice that tries to challenge that.”

She also predicted greater investment in community health centers, more attention to and investment in basic science, and a renewed dialogue about issues that have been temporarily shelved during the pandemic: equity in site-of-service costs, and “ongoing action” to bring reform the 340B program. The dispute has been the subject of multiple lawsuits from independent practices and hospital groups, with one drug manufacturer arguing last month that 340B has been “transformed” from a program “to assist vulnerable patients into a multibillion dollar arbitrage scheme that benefits national for-profit pharmacy chains and other for-profit intermediaries.”

The latest chapter in the 340B saga involves drug manufacturers' argument that contract pharmacies are not "covered entities" under the program. (In late December, the Trump administration issued an opinion that the discounts did apply.) Patel noted that the administrator of the Health Resources and Services Administration, who will manage this issue, hasn't even been appointed.

“This one this is one of those things where what's old is new again,” Patel said.

Similarly, there is “incredible bipartisan agreement” that if certain services are “exactly the same” in an inpatient or outpatient setting, there is no need for one to receive a higher facility fee. “This is going to be an ongoing issue,” she said.