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In 1992, Congress Enacted The 340B Drug Pricing Program, Requiring Pharma Companies Participating In Medicaid Program To Provide 20%-50% Discounts To Health Care Organizations That Serve A High Number Of Low-Income And Uninsured Patients; Program Allows Organizations To Stretch Limited Federal Resources To Expand Services And Reduce Costs To Patients

In January 2018, The Centers For Medicare & Medicaid Services (CMS) Imposed A 28.5% Cut To Reimbursement For 340B Drugs; Schumer Launches Push To Reverse Cuts, Arguing They Could Force Hospitals To Lay Off Staff And Eliminate Critical Services 

New York Hospitals Say This Program Allows Them To Provide Services Such As Addiction And Mental Health Treatment, Free-Cost Medications – Including Opioid Overdose Reversal Drugs – To Those Who Can’t Afford Them, Cancer Treatment And More; These Services Are At Risk If Cuts Are Not Reversed 

Schumer To Feds: Cut To 340B Program Will Devastate Rochester-Finger Lakes Rural Hospitals, You Must Reverse Course

Standing at the United Memorial Medical Center (UMMC) hospital in Batavia, U.S. Senator Charles E. Schumer today called on the Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) to reverse course and eliminate dramatic cuts to Upstate New York’s rural hospitals. Schumer explained that the 340B hospital program is critical, in that it gives hospitals who serve many low-income patients and constantly need to stretch their budgets prescription medicine at a reduced cost, better allowing them to provide care for their patients, as it alleviates some of the pressure on their bottom line. However, Schumer explained, earlier this year, a CMS rule cut the reimbursement 340B hospitals receive by 28.5%. Schumer said that these cuts to the 340B program could force Rochester Regional Health’s United Memorial Medical Center (UMMC) in Batavia, UR Medicine Noyes Health’s Nicholas H. Noyes Memorial Hospital in Livingston County, and other 340B hospitals across Upstate New York to lay off staff, or even cut critical care services. Therefore, Schumer called on HHS and CMS to reverse course and eliminate cuts to the 340B hospital program, to allow rural hospitals to best serve the most vulnerable patients and communities.

“The 340B hospital program has been a lifeline to hospitals across the Rochester-Finger Lakes Region; specifically UMMC and Noyes. This critical program has given rural hospitals significant financial relief by decreasing the burden of the high cost of prescription medication, and it must be protected at all costs,” said Senator Schumer. “However, in January of this year, the feds slashed the 340B hospital program, which could lead to hospitals being stripped of their ability to provide critical services, and could even lead to the layoff of hospital staff. That’s why today I’m calling on HHS and CMS to reverse these cuts at once, to protect access to essential health care services for communities across Upstate New York.”

Schumer explained that due to the high cost of prescription medication, many rural hospitals that accept that a high volume of low-income uninsured patients typically have very tight operating margins and any cuts could force them to reduce services and eliminate staff. So, in order to provide these rural hospitals with relief, Congress enacted the 340B Drug Pricing Program (Section 340B of the Public Health Service Act) in 1992, allowing eligible organizations to purchase prescription medications at a 20%-50% discount. Schumer explained that these discounts gave these hospitals the financial margins and ability to offer more critical care services and hire more staff.

However, Schumer detailed, on January 1, 2018, CMS imposed a major cut to the critical 340B hospital program. Under the rule, hospitals are now paid average sales price (ASP) minus 22.5% for drugs purchased under the 340B program and administered in the outpatient setting, whereas they had previously been paid ASP +6%, the standard formula for all other Medicare Part B drugs. This reimbursement change drastically reduces the difference between the cost of the product under 340B and the reimbursement level. Schumer said that it will result in cuts to critical services at the 340B hospitals, or layoffs of hospital staff – ultimately hurting the patients and communities those hospitals serve.

This October, Schumer received a letter from more than 700 hospitals, including 26 New York 340B hospitals, asking for his help in eliminating this cut to the 340B hospital program. Today, Schumer stood alongside 340B hospitals to say that he is answering the call and committed to fighting back against the 340B cuts. Schumer was joined by Daniel Ireland, President of United Memorial Medical Center, Amy Pollard, President & CEO of the Noyes Community Hospital in Dansville, NY, as well as doctors and other health care officials from UMMC.

Schumer explained that ten hospitals are categorized as 340B hospitals across Western New York, the GLOW region, and the Rochester-Finger Lakes Region: Highland Hospital, Strong Memorial Hospital, Unity Hospital, Clifton Springs Hospital and Clinic, Erie County Medical Center, Kaleida Health, Niagara Falls Memorial Medical Center, Sisters of Charity Hospital, Nicholas H. Noyes Memorial  Hospital, and United Memorial Medical Center (UMMC). Schumer said that UMMC expects to lose $7,479,800 because of the 340B cuts over the next decade, and Noyes expects to lose $10,297,400 over the next decade. In total, New York State 340B hospitals stand to lose $1,769,963,000 because of the cuts over the next decade.

At Strong Hospital, the hospital alone stands to lose $258 million due to these 340B cuts over the next decade. Beyond Strong Hospital itself, UR Medicine says the savings from the program are what allows it to keep its regional cancer centers open, including the new Myers Cancer Center at UR Medicine’s Noyes Hospital in Livingston County.  Schumer said the new Cancer Center at Noyes has been critical to bringing top-notch cancer treatment to residents in rural Livingston County, sparing cancer patients from an otherwise nearly hour long drive to Rochester for lifesaving chemotherapy, blood work, and other medical necessities. Moreover, the 340B savings have allowed UR Medicine hospitals to expand services, maintain addiction and mental health services, provide free Narcan (the opioid overdose reversal drugs) to patients, fund charity care and provide low-cost or free medications for patients who cannot afford them. If these cuts are not reversed, all of these services could be at risk.

Schumer said that UMMC is Genesee County’s largest employer, with 880 total employees. Schumer said that UMMC is a 131 bed hospital, performs 5,500 surgeries every year, hosts the birth of approximately 650 babies every year, and receives 22,000 Emergency Department visits per year. The 340B program allows UMMC to offer affordable prescription drugs to financially vulnerable patients. Over the years, as UMMC has participated in this crucial program, the hospital reinvests these savings into their organization to provide greater access to pharmaceuticals and more comprehensive services. For instance, last year, UMMC provided over 6,000 medical oncology treatments in the Lipson Cancer Institute. According to Schumer, the cut to the 340B hospital program could greatly impact UMMC’s ability to act as Genesee County’s largest employer and provide these critical care services to the most in-need patients.

Additionally, Schumer explained that this cut to the 340B program will cost Noyes Community Hospital more than $10 million over the next decade. Noyes Hospital said it may have to curtail its mental health services if the cuts are not reversed. Specifically, Noyes Hospital operates an outpatient mental health service staffed by a psychiatrist, two psychiatric nurse practitioners and 25 therapists/counselors who, together, see up to 1800 patient visits per month.  This robust outpatient service also helps prevent the need for inpatient treatment and is the only site in the region with walk in crisis appointments Monday through Friday. Noyes officials explained the advent of the opioid crisis has added to the demand for these mental health services. While Schumer explained that Noyes intends to keep their commitment to operate the outpatient mental health services, the hospital says those services could be curtailed if the 340B cuts are left in place.

“The 340B drug pricing program is critical for many of our financially vulnerable patients, especially those battling cancer. This program covers the daunting financial gap between the high cost of medication and the low reimbursement of many insurance plans, making it possible for hospitals like United Memorial to continue to provide the highest level of care to all patients regardless of their ability to pay,” said Dan Ireland, President of United Memorial Medical Center.

Amy Pollard, President & CEO of Noyes Community Hospital said, “Senator Schumer has been a consistent advocate for protecting rural healthcare.  On behalf of UR Med/Noyes Health we are grateful for his support of and vision for rural healthcare.” 

“HANYS and its member hospitals and health systems applaud Senator Schumer for his leadership in protecting the 340B Drug Pricing program,” said HANYS President Bea Grause, RN, JD.  “This program provides New York’s hospitals and health systems the ability to offer affordable drugs and services to their most vulnerable patients.  This year alone, New York’s 340B hospitals have absorbed a staggering $160 million in cuts for certain 340B drugs, which will lead to painful choices at a time when hospitals can ill afford to absorb yet another attack on their Medicare reimbursement.  We look forward to continuing our strong partnership with Senator Schumer and working together to protect access to affordable care for all New Yorkers.” 

“The importance of the 340B program to financially struggling safety net hospitals – in New York and nationwide – cannot be overstated,” said Greater New York Hospital Association President Kenneth E. Raske. “The plan to drastically slash Medicare reimbursement for certain outpatient drugs purchased by 340B hospitals would severely compromise their ability to continue caring for vulnerable, low-income communities, including Medicare patients in need of outpatient cancer drugs. The hospital community is extremely grateful to Senator Schumer for his leadership in opposing this reckless proposal.”