340B Standards Updates: What Do They Mean to You?

340B Standards Updates: What Do They Mean to You?

With the passing of the Consolidated Appropriations Act of 2022, hospitals that depend on 340B Drug Pricing Program discounts to help make up budget shortfalls got some breathing room through the end of 2022.

Section 340B of the Public Health Service Act provides discounts on eligible outpatient prescriptions to hospitals serving a disproportionate share of low-income individuals not covered by Medicare and Medicaid. The formula used to determine discounts resulted in extra money for those hospitals – many of which operate with tight margins and have come to depend on those extra funds.

When COVID hit, many of these hospitals transformed operations to emergency response, stopping services for all but those dealing with COVID and other life-threatening issues. As a result, fewer people went to the hospital. In turn, a number of the hospitals were dropped from the 340B program because they didn’t meet minimum thresholds for Medicaid inpatient days.

The impact was dramatic. A study  by 340B Health showed critical access hospitals losing an average of 39% of contract pharmacy savings (or the equivalent of $220,000 per hospital). Of smaller rural hospitals, 10% said they lost at least $700,000. Larger hospitals reported losing 23% of their community pharmacy savings, with an average loss of $1 million and the top 10% losing $9 million or more.

Earlier this year, the $1.5 trillion Consolidated Appropriations Act of 2022 was passed. Among other things, it provides temporary relief on eligibility for the 340B Drug Pricing Program. The legislation ensures hospitals can stay in the program if they otherwise would lose eligibility based on patient data included in Medicare cost reports for 2020 through 2022.

Hospitals at risk of losing their 340B eligibility due to the pandemic will continue to be eligible through December 31, 2022. Those that lost eligibility could be reinstated by filing a self-attestation indicating the loss of eligibility stemmed from Covid-19 impacts with the Secretary of the Department of Health and Human Services (DHHS) within 30 days of enactment (April 14, 2022). However, reinstatement is not retroactive so any funds lost when eligibility ended will not be made up.

What happens after December 31, 2022 remains to be seen and may be determined in courtrooms. Since 2020, six major drug manufacturers stopped providing 340B discounts to entities that had an onsite pharmacy and contracted with outside pharmacies to distribute drugs purchased through the program. The companies assert the outside pharmacies receive discounts from both 340B and Medicare or Medicaid.

In 2021, Arkansas passed a law requiring drug manufacturers to sell to all contract pharmacies at 340B rates. This year, several states have tried passing similar legislation. A court ruling in the District of Columbia indicated DHHS doesn’t have authority to require the companies to resume drug discounts to 340B entities. In a separate case, the District of New Jersey court ruled pharmaceutical companies couldn’t limit the number of pharmacies used by a 340B entity. With opposing opinions in the courts, more litigation is required.

In another case, Becerra v Empire Health Foundation, Supreme Court justices are examining how Medicare calculates disproportionate share of hospital payments. The court’s opinion could limit DHHS’ ability to interpret the law and increase judicial policy’s role in interpreting health care statutes. The court’s opinion is expected next spring.

As if things can’t get any more complicated, Michigan is enacting laws to stop insurance companies and pharmacy benefit managers from discriminating against hospitals and other providers for participating  in 340B.

With no interested constituent appearing to be happy with the way things stand now, it looks like the future of 340B will be at the mercy of the courts. Stay tuned. In the meantime, if all the legal updates to 340B have you questioning accounting and tax repercussions for your organization, give RBT CPAs a call. We’re a leading accounting firm in the mid-Hudson Valley, providing support for a number of the region’s leading healthcare institutions.

To What Degree Can You Boost College Completion Rates?

To What Degree Can You Boost College Completion Rates?

Colleges are doing better than ever attracting new students, but the same can’t be said for getting students to finish degrees.

In fact, about four out of every 10 students who start college never finish, leaving many with student loan debt but no college degree to show for it. Growing research and resources show improving college completion rates is good for students, colleges/universities, and society overall. Is it time to jump on the bandwagon?

According to the National Student Clearinghouse Center (NSC), which tracks completion rate trends, the 2021 six-year completion rate for those who started in the fall of 2015 reached 62.2% (a 1.2% increase over 2014), with the largest increase in community colleges. CollegeTransitions.com reports that in 2021 just 41% of students completed college in four years.

poll conducted by Third Way and New America found that due to the pandemic one out of every three students believe they’ll need an additional semester or year to finish college. Since this requires more funding, there’s a chance many of these students will never get their degree.

Those who don’t finish college see much lower earnings than their counterparts who do graduate.

2020 Bureau of Labor Statistics Data shows the following relationships between education and earnings:

  • Less than a high school degree: $619 weekly and $32,188 annually
  • High School Degree: $781 weekly and $40,612 annually
  • Some college: $877 weekly and $45,604 annually
  • Associate’s degree: $938 weekly and $48,776 annually
  • Bachelor’s degree: $1,305 weekly and $67,860 annually
  • Master’s degree: $1,545 weekly and $80,340 annually
  • Professional degree: $1,893 weekly and $98,436 annually
  • Doctorate degree: $1,885 weekly and $98,020 annually

Students aren’t the only ones impacted – institutions of higher learning are, too.

According to CampusLogic.com, “Students who drop out in order to attend a different institution, or who drop out entirely, will negatively impact graduation rates and generate lost tuition revenue.”

What’s an institution of higher learning to do?

Some states are using American Rescue Plan Act (ARPA) funds to expand programs shown to improve completions rates, like CUNY ASAP (which doubled participant graduation rates) and Bottom Line (which increased graduation rates by 23% in four years). Colorado has a task force charged with using remaining ARPA funds to improve completion rates. North Carolina invested $2 million of CARES Act funds to expand its Accelerate, Complete and Engage (ACE) program to enhance bachelor’s degree completion rates in the state’s school system.

Some schools are benefiting from the Title III Strengthening Institutions program Part A, using funds specifically for retention and completion purposes.

Proposed legislation like the College Completion Fund Act would provide for $62 billion over 10 years on programs to help students complete their degrees.  There’s a lot of lobbying for Federal retention and completion funds in 2023 fiscal year appropriations.

Some colleges are already moving ahead with their own retention grant programs.

EdSurge.com reports that the main reason students leave college is financial. Some colleges offer small grants for those close to graduating, owing a modest amount, who used up all other aid sources, and are at risk of dropping out due to funds. One study found about a third of colleges that used these grants experienced higher graduation rates among recipients.

Georgia State University’s retention grant program has had 86% of recipients since 2011 going on to complete their degrees. Perhaps even more notable: it also benefits the university. Boston Consulting Group showed “for every 1,500 grants disbursed, the university receives an additional $5.4 million to $9.2 million in revenue. Even after including the costs of the grants themselves and the costs associated with the administration of the program, the Boston Consulting Group estimated that Georgia State’s return on investment was between $4 million and $7.8 million.”

Grants are just one solution – there are others.

Refer to the U.S. Department of Education database containing individual college and university plans for driving retention and completion. Also the University Innovation Alliance has a playbook to help institutions interested in exploring and starting a retention and completion program.

For insights and assistance on how investing in a retention and completion program can have a positive impact on accounting and taxes, give RBT CPAs a call. We’re the Hudson Valley’s premier accounting firm and within the top 250 nationwide. A number of institutes of higher learning in the area are already our clients – see why. Give us a call.

JUNE 9 Update: NY County Gas Caps

JUNE 9 Update: NY County Gas Caps

We recently published an article about NY county gas caps, based on information available in May. Since then, several counties updated how they are handling the cap. In an abundance of caution, we felt it best to update our piece based upon these recent changes.  It should be noted that there is a lot of controversy surrounding the tax and its administration. This may result in additional changes, so it’s best to refer to the NYS Department of Taxation and Finance and NYS Tax Publication 718-F for up-to-date information or simply give us a call.

From June 1 through the end of this year, New York State is giving a tax break on fuel.

Both the sales tax and excise tax on fuel is taking a holiday, June 1 through December 31. Distributors and wholesalers must exclude these taxes from the price charged for motor fuel and highway diesel motor fuel. In addition, county governments have the option to cap the price their applicable sales tax rate is imposed on based on cents per gallon.

As noted in NYS Tax Publication 718-F, “The Tax Law authorizes counties and cities to change their percentage rate sales tax to a cents-per-gallon method, or stay with a percentage rate method. Effective June 1, 2022, several localities have elected to change their method of computing local sales tax on motor fuel, highway diesel motor fuel, and B20 biodiesel sold as qualified fuel. In many of these localities, the local sales tax will no longer be computed using a percentage rate method and will instead be computed on a cents-per-gallon basis.”

Some counties have signed on to offer the tax break – see table below.

Counties Adopting the Cents-per-Gallon Method (Source: NYS Tax Publication 718-F)

Counties Adopting the Cents-per-Gallon Method

1 Rate will expire on August 31, 2022. 2 Rate will expire on November 30, 2022. 3 Rate will expire on December 31, 2022. 4 Rate will expire on February 28, 2023.  * Sales and uses made in these cities are subject to cents-per-gallon local tax in addition to the percentage rate local tax.

For help with related taxes or accounting, contact RBT CPAs – a leading firm in the Hudson Valley and one of the top 250 nationwide.