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Public Comments - Healthcare Systems Bureau (HSB)

General Comments

America's Essential Hospitals, Washington, DC

Thank you for the opportunity to respond to the above-captioned request for information on administrative streamlining and burden reduction. America's Essential Hospitals appreciates the Health Resources and Services Administration's (HRSA's) efforts to reduce administrative burden in its programs. We are writing in response to Provision B, HRSA's Healthcare Systems Bureau (HSB).

One program under HSB's jurisdiction that could benefit from streamlining and reduction of burden is the 340B Drug Pricing Program. Our more than 325 member hospitals serve a disproportionate share oflow-income patients; as such, most qualify to participate in the 340B program. Savings from the 340B program are critical to ensuring that our members can reach more patients and continue to offer vital services, safeguarding access to affordable health care for vulnerable individuals. While the 340B program is indispensable to our hospitals and their patients, the complex and burdensome administration of the program poses significant challenges for participating covered entities.

We are pleased to provide feedback on ways to reduce burden in the 340B program and ensure the program remains a robust resource for essential hospitals. Below, we outline specific steps HRSA can take to reduce unnecessary bureaucracy in the program, increase transparency, and provide more clarity for all stakeholders.

  1. HRSA should finalize outstanding rules that will strengthen the 340B program and make policy changes, where the agency has clear statutory authority to do so, through a transparent and consistent process involving stakeholder feedback.

    HRSA should enforce the January 2017 final rule on ceiling price calculation and manufacturer civil monetary penalties for overcharging. In 2010, Congress directed HRSA to establish regulations on manufacturer ceiling prices and civil monetary penalties on manufacturers who knowingly or intentionally overcharge covered entities. With this direction came a clear statutory deadline: HRSA was to promulgate such regulations by September 19, 2010. In January 2017, the agency issued a final rule on the subject that was scheduled to go into effect in March 2017. Implementation of this final rule has since been delayed several times, most recently to July 2019—nearly a decade after the statutory deadline. This delay is unwarranted, particularly given that the rule has gone through four rounds of public comment.

    HRSA justifies the most recent delay as necessary because the Department of Health and Human Services (HHS) is considering other policy changes in the future that might affect the 340B program. There is no reason that a statutory mandate related to one part of the program cannot or should not be implemented because of contemplated changes in other parts of the 340B program or entirely separate Medicaid and Medicare policies. In addition, HRSA apparently has decided to overrule Congress' judgment that civil monetary penalties are needed, dismissing the idea that the rule would bring any benefit that is not already available to covered entities. HRSA does not have the authority to replace Congress' judgment with its own and must comply with requirements of the law. Providing clear direction to manufacturers on the calculation of ceiling prices and requiring that they share ceiling prices with covered entities are clear steps to streamline the program and reduce burden on covered entities.

    HRSA also should finalize its 2016 proposed rule to establish the administrative dispute resolution (ADR) process described in the 340B statute. The proposed rule would create a new decision-making body to adjudicate disputes between manufacturers and covered entities, including for cases in which covered entities are overcharged. Creation of the AD R process is crucial to increase accountability in the program by giving covered entities a channel to seek recourse when they are overcharged.

    We recognize that HRSA's formal rulemaking authority is limited, which can hamper its ability to efficiently administer the 340B program. Nonetheless, HRSA can and should continue its work to adhere to principles of transparency and provide opportunity for stakeholder feedback of its policymaking activities—from significant changes in policy to changes in implementation—that can cause significant operational costs and disruptions for covered entities. We appreciate that HRSA has used the notice-and-comment process for many of its major policies. However, HRSA has failed to provide opportunities for meaningful stakeholder feedback prior to implementation of several new guidelines, leading to unnecessary confusion. This is especially true for policy issues that must be resolved through duplicative, one-off responses to questioning entities. Such activity inhibits HRSA's ability to implement policy changes in an efficient manner due to technical and operational challenges unforeseen by the agency. The 2013 group purchasing organization (GPO) guidance is a prime example. HRSA chose to "clarify" the GPO prohibition and specifically implement changes to the use of GPO drugs in an inventory replenishment model, simply by posting a program notice to the agency's website. Given the complexity of the 340B program and the evolution in the use of virtual inventories, this guidance represented a significant operational overhaul in hospital inventory management (and significant associated expense) with a woefully insufficient 60-day deadline. After covered entities relayed the technical challenges in meeting this deadline (including inability of replenishment software vendors to meet hospital demand), and with input from Congress, HRSA had to delay the deadline for four months—and still anticipated that entities might be unable to comply.

    Uncertainty in how HRSA will announce changes pertinent to compliance with the 340B program causes confusion among essential hospitals. Policies issued without clear and advanced public notice lack stakeholder review, resulting in unnecessary technical or operational challenges to compliance when more feasible alternatives to achieving the policy objectives are available. Issuing policies without advanced notice also leads to unnecessary misunderstandings about the details of the policies due to lack of opportunity for stakeholders to comment and ask questions. We encourage HRSA to subject all guidance to the notice-and-comment process to avoid confusion and differing interpretations among stakeholders about important program requirements. Making policy through a more formal process would avoid differing interpretations among stakeholders about important program requirements and allow for more comprehensive guidance and clarity for stakeholders.

    HRSA also has begun using monthly program updates on its website to convey critical program information. We support the agency's attempt to make information available to all stakeholders on a uniform basis, but nevertheless, we encourage HRSA to ensure these updates are not used for policy and operational changes (like the 2013 GPO guidance that could have significantly benefitted from public comment). We urge HRSA to apply this same standard before posting responses to frequently asked questions (FAQs) on its website. To the extent that FAQs still are appropriate, HRSA should begin dating FAQs and providing alerts when an FAQ is posted or revised (including FAQs on the Apexus website) so that stakeholders can easily track new compliance information.

  2. HRSA should ensure the audit process is balanced, straightforward, and fair by requiring audit parity and the ability to correct audit findings before corrective actions take place.

    America's Essential Hospitals supports an audit process that appropriately ensures compliance with 340B program requirements. We urge HRSA to ensure that the audit process is comprehensive, straightforward, and fair. Covered entities—particularly hospitals—are audited exponentially more frequently than manufacturers and are expected to maintain rigorous self-auditing, and even independent audits, that contribute to a meaningful burden of ensuring compliance. Essential hospitals also face steep penalties for noncompliance and receive audit findings even for minor Office of Pharmacy Affairs Information System (OPAIS) errors. At the same time, manufacturers face significantly less accountability for more limited compliance issues, such as providing drugs at no higher than the ceiling price and not engaging in restricted supply or distribution methods intended to limit drugs for 340B covered entities. Despite documented examples of significant overcharging, HRSA has performed only 11 manufacturer audits since 2012 and has found no noncompliance. HRSA, Congress, and covered entities will remain blind to the full extent of manufacturer overcharging until the ceiling price rule is implemented and enforced. In the interest of ensuring compliance from all 340B stakeholders, pharmaceutical manufacturers should be subject to the same proportionate levels of audits as covered entities. Additionally, HRSA should ensure that covered entities have the same ability to report concerns and trigger targeted audits of manufacturers that is available to trigger audits of providers.

    HRSA should revert to its previous audit procedure, allowing audited entities an opportunity to review and provide feedback on draft audit reports before finalization and within an appropriate timeframe, and to request an in-person meeting with the Office of Pharmacy Affairs (OPA) regarding the findings. Unreviewed audit findings in a final report, some of which might later be removed, could place covered entities in a bad light.

    Audit findings can have serious consequences for covered entities, including sanctions and termination from the 340B program. As such, the 30-day deadline for submitting documentation to dispute the final audit report is not a sufficient opportunity for hearing and appeal of the most complex and gray areas of 340B policy. There should be an opportunity for further administrative appeal to an independent body within the agency to review HRSA's audit decision de novo rather than forcing covered entities to jump to the costly and arduous process of judicial review—a significant burden for both the government and the covered entity.

  3. HRSA should clarify and simplify the 340B recertification process and ensure covered entities are informed of any changes well in advance of the recertification deadline.

    The annual 340B recertification process requires covered entities to verify they are still in compliance with and eligible to participate in the program. It typically takes place over the course of about one month, requires significant staff time, and carries a penalty of removal from the program for at least one year for failure to recertify. Annual recertification puts a heavy administrative burden on covered entities. The most recent round of recertification introduced further complications that caused confusion among covered entities and put them at risk of missing the recertification deadline and thereby losing access to the program. HRSA should ensure that future recertification deadlines and changes in attestation language, documentation, or other requirements are clear and announced with sufficient time for covered entities to prepare for and engage in the recertification process.

    For example, HRSA in July 2017 announced it would delay the annual recertification of hospitals participating in the 340B program until it could launch an upgrade to the OPAIS. The new system would allow providers to register and recertify 340B sites and contract pharmacies through a single dashboard. Hospitals then were informed that the recertification process would take place later than usual, beginning on October 24.

    On October 27, three days into the recertification period, OPA informed stakeholders that the OPAIS was experiencing technical difficulties and recertification was suspended, but would resume shortly. On November 1, HRSA emailed covered entities announcing that due to these technical difficulties, a new recertification period would begin on November 3 and run through December 6. Any hospital that already began or completed recertification during the first period would have to re-start the process.

    On November 17, two weeks into the second recertification period, HRSA announced via email a new recertification process requirement applicable to disproportionate share hospitals (DSH) that either contract with or are owned or operated by a state or local government. The email announced that these hospitals must either update or enter information regarding the government official who attested to the government's relationship with the hospital. While all hospitals are required to have government attestation at the time they enter the program, they had not previously been required to provide this information as part of recertification, and this information often is not readily available due to personnel turnover and other factors. Adding this new requirement halfway through the recertification period added to the already significant confusion among essential hospitals. Inquiries to the 340B Prime Vendor, Apexus, yielded varying responses and hospitals were left unsure if they were complying with the new step in the recertification process and whether they would face penalties due to errors.

    HRSA can avoid errors and streamline the recertification process by giving covered entities ample notice of any changes to the recertification process and clearly communicating deadlines and processes in advance.

  4. HRSA should interpret and enforce the GPO prohibition in a manner that accounts for the complexity of hospital inventory management.

    The GPO prohibition requires, as a condition of eligibility, that DSH hospitals not purchase covered outpatient drugs through a GPO. We believe that HRSA must interpret the eligibility requirement in a manner that accounts for the enormous complexity of pharmaceutical inventory management in modern-day hospitals, particularly hospitals participating in the 340B program. For the vast majority of hospital pharmacies, adhering to the GPO prohibition is not simply a matter of putting 340B drugs on one shelf and GPO drugs on another. Modern purchasing, dispensing, billing, and replenishing processes are highly automated; Covered entities use complex systems developed by outside vendors to help manage inventory to be in full compliance with current policy. Essential hospitals work with these vendors to connect the pharmacy systems with electronic health record systems implemented and updated throughout the hospital. As with any complex technological system, there might be bugs, flaws, and breakdowns at certain points, which could result in inadvertent technical violations of the GPO prohibition. HRSA's policy should support—not discourage—hospitals from implementing ongoing system improvements, even with the knowledge that previous errors might be revealed as part of that process.

    The GPO prohibition not only is burdensome to implement, but also results in increased prices. Implementation of the 2013 guidance on the GPO prohibition forced hospitals to switch from a two-inventory system to a three-inventory system. Hospitals must have an inventory for GPO purchased drugs and a separate one for 340B purchased drugs; The third inventory, for other drugs, typically is priced at the drug's wholesale acquisition cost (WAC). This change forced hospitals to invest in costly special technology and new staffing for 340B compliance. The harsh sanction for noncompliance—repayment and potential removal from the program—makes hospitals hesitant to use the GPO discount, even for cases in which it might be permissible and/or a 340B discount is not available. In such cases, the hospital is unnecessarily purchasing at WAC, which can cost 25 to 30 percent more than GPO purchased drugs. The enormous complexity and burden of the GPO prohibition has even caused some hospitals to drop out of the 340B program altogether. Until a policy is in place that does not unnecessarily divert resources away from patient care, HRSA should rescind its 2013 GPO prohibition guidance.

  5. HRSA should allow hospitals to register each eligible offsite clinic location as a single child site, even if multiple service lines are provided.

    As noted above, the annual registration process for covered entities has become increasingly burdensome and unpredictable. Adding to the complexity is HRSA's recent policy of requiring hospitals to register each service line provided at one physical ambulatory location as a separate child site in the agency's database. Initially, HRSA's database only tracked offsite locations that received shipments of 340B drugs. Later, the registration requirement expanded to any offsite buildings where 340B drugs were used. The current policy, posted to HRSA's registration website, requires separate certification and identification of a child site for each service line within an offsite location. HRSA does not provide justification for needing such detailed information, and the additional bureaucracy does not improve program administration, efficiency, or effectiveness. HRSA requires that the clinic be an integral part of the covered entity hospital, such that the clinic is reimbursable on the hospital's cost report; It is not necessary to separately register each service line to determine eligibility on this basis. Further, if there were circumstances in which additional information about services were necessary, HRSA could request that information from the hospital or review information available on the Centers for Medicare & Medicaid Services cost report.

    This policy of requiring registration of each service line at a single clinic location has only increased the size and complexity of the OPAIS and the corresponding burden of verification and technical corrections; It does not increase program integrity. America's Essential Hospitals strongly recommends that HRSA reinstitute the prior registration policy, in which each location—not each service line—is separately registered.

    Relatedly, HRSA's requirement that a clinic appear on a filed hospital cost report before it can be registered has created a needless administrative barrier to adding legitimate outpatient facilities to the 340B program. In 1994, OPA issued a final notice clarifying the definition of a 340B-eligible DSH hospital and the application of this definition to hospital outpatient facilities. The notice states that an outpatient facility is considered an integral part of the hospital, and therefore eligible for section 340B drug discounts, "if it is a reimbursable facility included on the hospital's Medicare cost report." [59 Fed. Reg. 47,884, 47,886 (September 19, 1994).] More than a decade later, OPA began increasingly technical enforcement of this definition by requiring hospitals to show not merely that the costs of a new outpatient facility are reimbursable and would be included in the hospital cost report, but that the costs already are included in a filed cost report. Because cost reports are retroactive, gaps exist between the point at which a new facility begins operations and the end of a hospital fiscal year; the end of a hospital fiscal year and the due date for a filed cost report (up to five months); and the quarterly deadlines to enroll in the 340B program. As such, a covered entity hospital could be forced to wait well over a year to receive discounts on drugs dispensed to covered entity patients seen at a new outpatient facility. There are reasonable and existing methods to document that a facility complies with OPA's "reimbursable facility" requirement prior to appearing on the filed report (for example, a voluntary attestation of the outpatient facility's Medicare provider-based status or a Medicare enrollment application for the outpatient facility), but OPA has refused to adopt them. As a result, clearly eligible facilities are forced to wait on a technicality, with ripple effects for their programs and patients.

HRSA should eliminate the administrative barrier created by this narrow definition of a 340B-eligible DSH hospital; It is contrary to the intent that an eligible hospital's integrated outpatient locations, whether on-campus or off-campus, benefit from the 340B program.

American Society of Transplant Surgeons, Arlington, VA

The American Society of Transplant Surgeons appreciates HRSA's issuance of an RFI soliciting public comments on how to achieve administrative streamlining and burden reduction in HRSA programs. We note that the only proposed initiative related to the reduction of administrative burden for those programs within HRSA's Healthcare Systems Bureau (HSB) is an initiative related to the administration of the Hill Burton Program. As noted in the RFI, HRSA’s HSB also exercises extensive authority over the regulation of solid organ transplantation programs, and, in our view, HRSA could play a pivotal role in reducing the administrative burden for transplant centers (TCs), which are subject to extensive, duplicative, and sometimes inconsistent regulation by the Centers for Medicare and Medicaid Services (CMS) and HRSA, through the activities of the Organ Procurement and Transplantation Network (OPTN). We request that HRSA include this issue in its administrative relief agenda.

Late last year, we submitted to both CMS and HRSA a request for administrative relief from the duplicative and overly prescriptive requirements imposed on TCs. Our correspondence includes an approach under which TCs would be subject to a single set of regulations, a single set of outcomes requirements, a single unified survey, and a single set of sanctions.1 (Attachment A available upon request)

Request: We urge HRSA to work with CMS to institute the unified approach outlined in the attached correspondence.

I.  Request for Reconciliation of OPTN Policies related to TC Operations and CMS Conditions of Participation (CoPs) that Overlap, as a First Step in Relieving Administrative Burdens on TCs.

The National Organ Transplant Act (NOTA) and the Final Rule implementing NOTA (42 CFR §121) (the Final Rule) envision an extremely limited role for HRSA and the OPTN in overseeing the quality of the services provided by TCs. In fact, the OPTN's statutory tasks, as delineated in NOTA, do not include the kind of comprehensive, detailed and intrusive OPTN oversight of TC operations that is in place today. While NOTA requires the OPTN to "adopt and use standards of quality for the acquisition and transportation of donated organs,"2 it does not include among the OPTN's statutory tasks the adoption of quality standards for the transplantation of donated organs. The only statutory authority for OPTN oversight over TCs is language that gives the OPTN authority to establish membership criteria.3

However, the Final Rule significantly restricts the OPTN's authority to establish membership criteria for TCs. Specifically, 42 CFR §121.3(b) requires the OPTN to "admit and retain" transplant hospitals that participate in Medicare or Medicaid as OPTN members. Likewise, §121.9(a) of the Final Regulation indicates that, to be eligible to receive organs for transplantation (i.e., to be a "designated transplant program"), a non-federal program must either participate in the Medicare program or meet a list of particular requirements as set forth in OPTN policies.4 The Final Rule, therefore, clearly does not anticipate duplicative regulation of TCs by both CMS and the OPTN, but rather anticipates the OPTN's reliance on CMS operational standards for TCs.

Since the submission of our initial request for administrative relief and accompanying proposal, a number of developments have occurred. Most importantly, we have met both with you and with CMS officials to discuss the current administrative burden placed on TCs. At this stage, it appears that, as a first step, there is some willingness on the part of both agencies to review requirements that overlap and to eliminate disparities.

Request: We request that, as a first step in implementing the unified TC regulatory process described in the ASTS correspondence, CMS and OPTN place a high priority on identifying overlapping areas of TC oversight and work with the transplant community to reconcile conflicting and overly prescriptive requirements.

II.  Request for Further Reform of OPTN Oversight Process to Conform to Requirements in the Final Rule.

Both CMS and OPTN have separate and uncoordinated processes for enforcing each of their respective TC regulatory requirements. The Final Rule does anticipate the OPTN’s exercise of some oversight responsibilities over TCs in connection with the imposition of sanctions under §121.10: The Final Rule, at 42 CFR §121.10(b)(1), requires the OPTN to design appropriate plans and procedures, including survey instruments, a peer review process, and data systems, for the purpose of, among other things, "conducting ongoing and periodic reviews and evaluations of each member…. transplant hospital for compliance with the [Final Rule] and OPTN policies." However, not all policies are subject to oversight and sanctions process authorized by §121.10: The Final Rule specifically requires that HRSA publicly identify those OPTN policies that are subject to sanctions under the OPTN oversight process. Specifically, 42 CFR §121.4 (c), relating to OPTN policies, states:

The Secretary will publish lists of OPTN policies in the FEDERAL REGISTER, indicating which ones are enforceable under § 121.10 or subject to potential sanctions of section 1138 of the Social Security Act.

It is only violations of policies specifically designated by HRSA that can result in revocation of a TC's status as a designated transplant program or can terminate the transplant program's Medicare or Medicaid reimbursement. 42 CFR §121.10 (c). HRSA is required to publish lists of OPTN policies in the Federal Register, indicating which ones are enforceable under Section 121.10 or subject to sanctions under the Social Security Act. See 42 CFR §121.4( c).

Request. We request that HRSA review the multitude of OPTN policies related to TC performance and operations that are subject to OPTN/MPSC oversight and identify a limited number of policies whose violation may result in loss of  "designated hospital" or Medicare participation status, as required by the Section 410.4 (c) of the Final Rule.

III.  Request for Collaborative OPTN Oversight Process.

We note that both HRSA and the OPTN appear to be attempting to move toward a less adversarial model of TC oversight. Section 3.6 of the final OPTN Scope of Work anticipates a less threatening oversight process involving greater self-disclosure and a less adversarial relationship between the OPTN and member TCs. The Membership and Professional Standards Committee (MPSC) of the OPTN recently put forward OPTN Bylaws changes, the objective of which ostensibly is to create a less formal and less onerous process of TC evaluation. These Bylaws changes substantially change the OPTN review and oversight processes for TCs.

It is significant then that the new OPTN scope of work, which will become effective later this year, provides that, within one month of the designation of the Contracting Officer Representative (COR), the OPTN is required to submit to HRSA a document outlining TC oversight processes that are consistent with these Bylaws changes. The document required under Section 3.6 must meet the following requirements:

a) Standard: The document includes a description of data and processes the Contractor use to monitor compliance with NOTA, the OPTN final rule, OPTN Bylaws and policy, and other applicable Federal laws.

b) Standard: The document includes frequency of OPTN member monitoring.

c) Standard: The document provides guidance to OPTN members on criteria used to monitor and evaluate compliance to NOTA, OPTN final rule, OPTN Bylaws and policies.

d) Standard: The document includes specific criteria to assess member data submissions for completeness, accuracy, and timeliness consistent with the requirements of the OPTN final rule.

e) Standard: The document includes guidance to members for performance improvement, including development of corrective action plans, processes for participating in collaborative performance improvement structures, and guidance on the potential imposition of sanctions by the OPTN per the OPTN Bylaws and final rule, and potential imposition of federal sanctions by the Secretary.

Request: We request that, in formulating the document required by Section 3.6, HRSA instruct the OPTN to minimize TCs' administrative burden and to coordinate review processes, plan of correction requirements, and review criteria with those used by CMS to the extent practicable.

1 ASTS request for relief of the administrative burdens imposed by duplicative and overly prescriptive regulation of TCs, including our proposal for a unified regulatory scheme, were submitted to HRSA in conjunction with our comments on the OPTN's scope of work. (Attachment B available upon request) In those comments, we requested that HRSA include in the OPTN's scope of work a new task requiring the OPTN contractor work with HRSA and CMS to eliminate duplicative and overly restrictive regulation of transplant centers. Unfortunately, that additional task was not included in the final OPTN scope of work issued earlier this year.
2 42 USC Section 274 (b)(2)( E)
3 42 USC Section 274(b)(2)(B).
4 It follows from these provisions of the Final Rule that the OPTN does not have the authority to expel a Medicare-participating TC from membership or to revoke its "designated transplant center" status, unless HRSA has decided to impose sanctions under 42 CFR §121.10

American Society of Transplantation, Mt. Laurel, NJ

The American Society of Transplantation (AST) has reviewed the HRSA RFI on administrative streamlining and burden reduction, and appreciates the opportunity to provide comment. The AST applauds the administration on working to reduce administrative burden and reporting requirements. Of specific interest to the Society is the Organ Procurement and Transplantation Network (OPTN) data collection process for both organ transplant candidates and recipients, falling under section B (HRHSA's Healthcare Systems Bureau (HSB)).

The electronic forms the OPTN uses to collect these data require Office of Management and Budget (OMB) approval whenever addition or elimination of collection fields is warranted. This process is long and unnecessarily cumbersome, and creates issues when new or modified policies include changes to these forms. The AST believes that OMB approval is an unnecessary process for this type of data collection form.

Additionally, the AST strongly supports ongoing efforts to reduce the data collection and entry burden on transplant hospitals through automated data transfers. We believe that this plays a specific and powerful role in simplifying the data collection process for transplant programs that take care of these patients and improve accuracy when reducing the need for manual re-entry.

Premier, Inc., Charlotte, NC

Thank you for the opportunity to respond to the above-captioned request for information (RFI) on administrative streamlining and burden reduction. Premier, Inc. appreciates the Health Resources and Services Administration's (HRSA's) efforts to reduce administrative burden in its programs. We are writing in response to Provision B, HRSA's Healthcare Systems Bureau (HSB). One program under HSB that could benefit from streamlining and reduction of burden is the 340B Drug Pricing Program. We are particularly concerned about HRSA's implementation of the GPO exclusion in the 340B through the agency's implementation of Policy Release 2013-1.

Premier, Inc. represents an alliance serving approximately 3,900 leading hospitals and health systems, hundreds of thousands of clinicians and 150,000 other provider organizations. Premier healthcare alliance, a 2006 Malcolm Baldrige National Quality Award recipient, plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Our comments primarily reflect the concerns of our owner hospitals and health systems which, as service providers, have a vested interest in the effective operation of the 340B program.

We respectfully request that HRSA rescind Policy Release 2013-1. The Policy Release has increased the regulatory and compliance costs as well as increased the costs of products for Premier member hospitals.

For 21 years (1992 to 2013) the 340B program ran effectively. Under that model, hospitals maintained a 2 inventory system. All initial purchases were through GPOs and replenished with either a GPO or 340B drug depending on the patient's eligibility. Policy Release 2013-1 forbade hospitals from making initial purchases through a GPO account, forcing them instead to buy their initial inventories at a non-GPO, non-340B price. The practical effect of the Policy Release was that hospitals had to start maintaining 3 inventories: 1) a 340B inventory for drugs that qualify as "covered outpatient drugs" and are dispensed or administered to 340B-eligible patients; 2) a GPO inventory for inpatient drugs or drugs that don't otherwise qualify as "covered outpatient drugs"; and 3) a non-GPO, non-340B inventory for initial purchases and when a “covered outpatient drug” can't be replenished with a 340B drug.

Today, when a hospital participating in the Prime Vendor program makes its initial purchases through a non-GPO, non-340B account, the Prime Vendor's sub-WAC price file is automatically loaded into that account. Those drugs are then replenished with 340B drugs when used as "covered outpatient drugs" for 340B-eligible patients, with GPO drugs when used for purposes outside the "covered outpatient drug" definition and with non-GPO, non-340B drugs for anything else.

The 3-inventory model is not required by statute, which states that hospitals may not "obtain" covered outpatient drugs through a GPO. A drug only becomes a "covered outpatient drug" once it is furnished to a patient and billed to a payer. Before that, it is simply a drug with no inpatient or outpatient status. The purchase of the covered outpatient drug comes after the fact when the drug is replenished. Moreover, a drug's purchase price is typically not final until after the manufacturer has settled up with the wholesaler through the chargeback process – which can take days, even weeks, to complete – making HRSA's initial-purchase-at-WAC requirement an illusory concept. The Supreme Court in Abbott Laboratories v. Portland Retail Druggists, 425 U.S. 1 (1976), recommended a 2-inventory system for a similar GPO exclusion.


The 3-inventory system is burdensome to operate and has increased operating costs. It imposes substantial labor and software costs on hospitals. One analysis estimates that the policy has raised costs by $223,000,000 since its inception.

The 3-inventory system also increases drug costs through unnecessary sub-WAC purchases. Complexities of 3-inventory system may cause many hospitals unnecessarily to purchase drugs eligible for GPO discounts or 340B pricing through the higher priced sub-WAC account. Comparisons between GPO and the Prime Vendor's sub-WAC file prices show that the sub-WAC file is substantially more expensive. A 2015 survey showed that approximately 90% of respondents affected by the 2013 policy reported increased spending on their non-GPO, non-340B accounts.

Finally, the 3-inventory system puts hospitals at risk of being terminated from the 340B program or making significant repayments to manufacturers by using a single GPO drug on a hospital outpatient, even if unintended.

Because of the cost, regulatory and compliance requirements of the current policy governing the GPO prohibition, we urge HRSA to rescind Policy Release 2013-1.

United Network for Organ Sharing (UNOS), Richmond, VA

United Network for Organ Sharing (UNOS) is a Virginia nonprofit corporation that serves as the Organ Procurement and Transplantation Network (OPTN) under contract with the Health Resources and Services Administration (HRSA). Following are comments from the UNOS Corporate Affairs Committee in response to the above-referenced Request for Information (RFI) HRSA released on May 1, 2018.

UNOS welcomes this opportunity to support HRSA's efforts to make changes that would result in a more streamlined, flexible, and less burdensome compliance and reporting structure, while maintaining appropriate program oversight. These comments specifically address RFI Section B and the OPTN information collection requirements currently imposed by HRSA's Healthcare Services Bureau (HSB) Division of Transplantation (DoT).

The National Organ Transplant Act of 1984 (NOTA) directed the Secretary of Health and Human Services (HHS) to, by contract, provide for the establishment and operation of an OPTN. Congress, at that time, made an intentional decision to place the OPTN in the private sector in order to take the fullest possible advantage of expertise in the professional donation and transplant community. The founding legislation requires (among other things) the OPTN to be a private nonprofit entity that has expertise in organ procurement and transplantation.

UNOS, serving as the OPTN for over 30 years, has established an extensive data collection system regarding candidates awaiting transplantation, organ donors, matching and allocation of donor organs, the transplant and associated hospitalization, and annual patient follow-up. Analyses of the resulting OPTN databases have served as the evidence basis for informed policymaking, as well as patient and medical professional decision-making. The OPTN maintains an unparalleled database of scientific and clinical data that enable researchers and policy makers to make continual improvement to the field. This data also enables performance assessment and improvement for OPTN operations and measuring the effectiveness of policies. The data collected and held by the OPTN is for public benefit, and requires frameworks for making that data available to the Government, researchers, OPTN members, and the general public.

There are opportunities for cost savings and increased efficiencies by using processes common in the private sector that are not available to government agencies; since the OPTN is a private entity, we propose to use that flexibility to patients' and HRSA's benefit. HRSA's proactive removal of this unnecessary and inapplicable restraint on OPTN data collection would have two key benefits for OPTN members as well as the government. Faster implementation will be possible for many future Board-approved allocation policy actions when IT programming can be accomplished without delay pending the preparation and subsequent processing of a package to provide HRSA to prepare and submit to OMB for approval. This also would lead to significant cost savings, as the time previously spent by both the OPTN as well as the government staff on this activity could be focused on achieving more pressing objectives.

The OPTN already has a governance structure in place to actively maintain its data collection framework and processes to ensure that its data collection system is appropriate, efficient, and creates minimal burden of data reporting. In 2006, the OPTN Board of Directors approved Principles of Data Collection used to guide the collection of any new data from OPTN members into the data collection system. The OPTN maintains a separate Data Advisory Committee (DAC) that reviews all data collection proposals for adherence to these Principles of Data Collection. The DAC's standard of review checklist includes a consideration of the basis in evidence and consideration of alternative data sources for proposed additional data elements to be collected into the OPTN Contractor's data collection system. The OPTN data collection process includes submission of proposed changes for public vetting through the OPTN public comment process, and ultimately to the Board of Directors for approval. Most importantly, new required data collection is vetted by the very people who will bear the costs of reporting that data, and they balance those collection cost against the added value of the data.

The existing process of committee review, public comment and Board approval ensures that required OPTN data collection receives appropriate public vetting and evaluation of burden. Through the public comment process, we obtain feedback on burden, promote transparency into the data collected by the OPTN, and promote consistent, standardized data collection as outlined in the OPTN Principles of Data Collection. HRSA-DoT staff currently participate in all committee meetings and OPTN Board of Directors meetings/calls, and are informed of all proposed required data collection by the OPTN. In this way, the HRSA-DoT is afforded plentiful opportunities for appropriate and effective oversight.

OMB approval is not legally required for OPTN data collection because, as described above, the PRA applies to data collection by or on behalf of a federal agency, which is inapplicable to data collection by a private nonprofit entity. NOTA directs that that the OPTN shall be "a private nonprofit entity that has an expertise in organ procurement and transplantation." As provided in NOTA and the OPTN Final Rule, the OPTN shall collect data for OPTN purposes. This is separate and distinct from collecting data for the Federal Government. According to the Paperwork Reduction Act (PRA) Guide Version 2.0 from the US Office of Personnel Management in April 2011, the definition of information collection under the purview of OMB is:

Information collection: The obtaining, causing to be obtained, soliciting, or requiring the disclosure to an agency, third parties or the public of information by or for an agency by the means of identical questions posed to, or identical reporting, recordkeeping, or disclosure requirements posed on, ten or more persons, whether such collection of information is mandatory, voluntary or required to obtain or retain a benefit (5 CFR 1320.3).

Since all OPTN data are collected by the OPTN at the direction of its Board of Directors, and not by or for a federal agency, requiring this data be approved through the OMB process is simply not required by the PRA, and introduces substantial unnecessary costs to the private OPTN while decreasing system efficiency by introducing additional delays to implementation of system enhancements. For this reason, it is an unnecessary inefficiency to require the OPTN to comply with a requirement that is applicable only to Federal Government agencies, employees or others collecting data by or for a federal agency.

We appreciate the opportunity to provide information useful as HRSA works to identify areas for appropriate administrative streamlining. If you have any questions regarding our comments, or if we can provide information that would be useful as you consider the matter further, please contact us.

RFI section B.1

California Primary Care Association, Sacramento, CA

No California health centers have reported participating in the Hill-Burton Program. However, health centers have expressed interest in exploring opportunities to reduce federal interest resulting from recent capital grants through an amortization schedule. We would be interested in exploring this option with HRSA.

Family Health Centers of San Diego, San Diego, CA

N/A. Family Health Centers of San Diego is not a direct Hill-Burton program recipient.

Health Center Partners of Southern California, San Diego, CA

Changes don't occur substantially enough from year to year to merit annual reporting. Perhaps, if a major change were to happen the center should be required to report updates, but not the status quo.

Mendocino Community Health Clinic (MCHC), Ukiah, CA

MCHC does not participate in the Hill-Burton Program. However, we are interested in exploring opportunities to reduce federal interest resulting from recent capital grants through an amortization schedule. We would be interested in exploring this option with HRSA.

Neighborhood Healthcare (NHcare), Escondido, CA

NHcare does not participate in the Hill-Burton Program. However, we would like to exploring opportunities to reduce federal interest resulting from recent capital grants through an amortization schedule. We would be interested in exploring this option with HRSA.

Whitman-Walker Health, Washington, DC

HSB may want to consider other regular reporting that is provided to HRSA, such as the UDS to BPHC, or Single-Audits to the clearinghouse, to determine if those reporting mechanisms might satisfy Hill-Burton requirements.

Date Last Reviewed:  November 2018