Last week, a bipartisan group of six senators, led by Senator John Thune (R-SD), reintroduced legislation (S. 773) that would allow disproportionate share hospital (DSH), children’s hospitals, and rural referral centers, or sole community hospitals to temporarily maintain 340B eligibility during the COVID-19 pandemic. One of the requirements for these hospital types to participate in the 340B program is that they maintain a Medicare DSH adjustment percentage greater than 11.75 percent for the most recent cost reporting period ending before the calendar quarter involved. The COVID-19 public health emergency resulted in many hospitals experiencing a reduction in inpatient hospital admissions of low-income Medicare and Medicaid patients, a critical metric in determining a hospital’s DSH percentage and 340B eligibility. This legislation would allow hospitals to temporarily remain eligible to participate in the 340B program if they do not meet the applicable DSH percentage requirements at any point during the declared COVID-19 public health emergency, but otherwise meet the statutory requirements for being a 340B covered entity.
The 340B program allows safety-net hospitals to provide vital health care services at little or no cost to their low-income patients. In a press release issued by Senator Thune’s office, the Senator acknowledged that “[t[he 340B program has been critical to South Dakota hospitals that are relying on the certainty it provides – especially during this ongoing health crisis. This commonsense and targeted measure would ensure that no hospital that is currently participating in the 340B program can lose eligibility due to a reduction in hospitalizations during the pandemic.” Senator Debbie Stabenow (D-Mich.), a longtime ally of the 340B program also stated that “[t]his bill will help lower prescription drug costs, create more certainty in funding, and ensure that those on the frontlines of this crisis have the resources they need to care for patients and save lives.”