Pandion joined HANYS and New York regional associations urging Governor Andrew Cuomo and Commissioner Howard Zucker, MD, JD, to reverse the Medicaid pharmacy benefit provision included in this year's budget. This provision will drastically reduce cost savings that 340B hospitals rely on to provide access and care to vulnerable populations.
The measure shifts the Medicaid retail pharmacy benefit from the Medicaid managed care package to the fee-for-service program in 2021, meaning hospitals will no longer draw down savings when purchasing 340B drugs, effectively undermining the very purpose of the federal 340B program. The result will be an $87 million loss in state fiscal year 2021 for hospitals serving vulnerable, low-income, and indigent populations.
September 30, 2020
The Honorable Andrew M. Cuomo
Governor of New York State
New York State Capitol Building
Albany, NY 12224
Howard A. Zucker, MD, JD
Commissioner New York State Department of Health
Corning Tower Empire State Plaza
Albany, NY 12237
Dear Governor Cuomo and Commissioner Zucker:
We would like to begin by offering our sincerest thanks on behalf of our members for your leadership during this very difficult time. We have all been inspired by your determination, responsiveness, and partnership to ensure that healthcare providers have the necessary tools to combat COVID-19.
We write today on a different, but exceedingly important, matter. New York's vulnerable and low-income populations will suffer unintended, negative effects from a Medicaid pharmacy benefit provision in this year's enacted budget. We urge you to reverse this provision for the reasons outlined below.
The state fiscal year 2020-2021 budget will shift the Medicaid retail pharmacy benefit from the managed care package to the fee-for-service program in 2021, drastically reducing the cost savings many safety net hospitals realize from the federal 340B Drug Pricing Program. Hospitals reinvest these savings to expand healthcare services for the vulnerable patients and communities they serve.
The purpose of the 340B Drug Pricing Program is to enable participating healthcare organizations to stretch limited resources so they are able to provide more comprehensive services to their communities. To achieve this goal, the program requires participating pharmaceutical manufacturers to sell certain outpatient drugs at significantly reduced prices to healthcare providers who serve vulnerable populations and participate in the 340B Program.
Consistent with the program's intent, New York's 340B hospitals use these savings to support a variety of initiatives, such as providing free or substantially discounted prescriptions to low-income patients and funding programs and services that they may not be able to operate otherwise. With these funds, 340B hospitals are advancing the goals of New York's Ending the Epidemic plan and addressing underlying social determinants of health to improve health outcomes. The attached document provides more information on how 340B hospitals reinvest program savings in their communities.
By transitioning the Medicaid pharmacy benefit from Medicaid managed care to FFS as required by the enacted budget, New York's 340B hospitals will be reimbursed for 340B drugs at cost. That means participating hospitals will no longer draw down savings when purchasing 340B drugs, effectively undermining the very purpose of the federal 340B Program. At the same time, hospitals are grappling at the federal level with CMS' nearly 30% reduction to the 340B program. This cut comes on top of egregious efforts by drug companies to undermine hospital access to the 340B program by limiting access to 340B drugs and installing onerous reporting requirements.
This is a significant loss coming at the worst possible time for our safety net hospitals and their communities. About 100 hospitals serving low-income and indigent populations across the state will lose more than $87 million next year from this policy change. This is on top of the staggering $20 billion to $25 billion in losses and new expenses New York's hospitals are expected to suffer during this time due to the COVID-19 response.
If allowed to stand, this massive policy and operational shift will jeopardize the solvency of critical healthcare services and programs for vulnerable and low-income populations currently benefiting from the investments made by hospitals using 340B savings.
On behalf of the safety net hospitals participating in the 340B program and the communities and patients they serve, we strongly urge you to reverse the actions taken in the current state budget and keep the Medicaid retail pharmacy benefit where it can do the most good: in the Medicaid managed care package.
We appreciate and support your ongoing recognition of the extraordinary challenges currently facing hospitals and the healthcare provider community. Given the dire state fiscal challenges and indeterminate federal assistance, we ask you to reconsider this Medicaid pharmacy policy change and associated funding reduction in the context of what is the greatest public health emergency in modern history.
Thank you for your leadership and for helping to ensure that New York's hospitals can continue providing comprehensive health services to the patients and communities they serve.
Sincerely,
Marie B. Grause, RN, JD
President
HANYS
Kenneth Schoetz
President and CEO
WNYHA
Kenneth Raske
President
GNYHA
Travis Heider
President and CEO
Pandion Optimization Alliance
Kevin Dahill
President and CEO
Suburban Hospital Alliance
Gary Fitzgerald
President
Iroquois Healthcare Association
Download Link For Complete Letter and 340B Briefing Sheet Below