March 25, 2014—A drug-industry led coalition seeking major changes to the 340B drug discount program claimed today that relatively few 340B hospitals account for most of the charity care that all such hospitals provide.[ms-protect-content id=”2799″] It said the finding raises questions whether current 340B eligibility criteria for disproportionate share hospitals “are serving the spirit and intent of the law.”
The group, AIR 340B, made the allegation about the adequacy of hospital charity in a new study. The research was performed by the consulting group Avalere Health. The study looked narrowly at hospitals’ provision of charity care, described in the report as “the cost of providing free or discounted care to low-income individuals who qualify for a hospital’s charity care program.” It did not factor Medicaid underpayment into its calculations.
Safety Net Hospitals for Pharmaceutical Access, which represents 340B hospitals and health systems, said in a statement that the study “intentionally misrepresents” 340B’s purpose in order to conclude that “many safety net hospitals don’t deserve to be in the program.”
SNHPA said expansions of 340B to new categories of hospitals under both Republican and Democratic administrations show that the program “has lived up to congressional expectations.”
“Congress was clear when it established the program that eligible hospitals must serve a disproportionately high percentage of Medicaid patients, low-income seniors or be located in remote rural areas,” the group said “Congress allows these hospitals to advance the real purpose of the program: to stretch their limited resources so that they are less dependent on taxpayers dollars.”
AIR 340B said its study shows that “the current 340B program includes many hospitals that provide only a minimal amount of charity care.” It said its analysis of hospitals’ 2011 Medicare cost report data showed that for 69 percent of 340B hospitals, charity care represents 3.3 percent or less of patient costs—the national average for all hospitals regardless of 340B status.
AIR 340B said that 22 percent of all 340B hospitals account for 80 percent of charity care provided by all hospitals in the program. This 22 percent of hospitals, it said, accounts for 47 percent of all patient costs and 41 percent of all beds among all 340B hospitals.
“About 20 percent of 340B hospitals are doing it the right way … and that’s the model we want to preserve and protect,” said AIR 340B spokesperson Stephanie Silverman during a media briefing. “But today, under-regulated and overgrown, 340B is out of synch with its mission.” The “vast majority” of 340B hospitals, she said, “are not serving the intended population” of vulnerable, uninsured, and indigent patients.
Community Oncology Alliance Executive Director Ted Okon also spoke at the briefing. He said the 340B program “has two faces,” one “that is doing it right” and another that sees 340B as a “profit center for building new buildings and acquiring physician practices.” COA represents private cancer clinics, which have been among the most vocal critics of 340B.
Pharmaceutical Research and Manufacturers of America President and CEO John J. Castellani said in a statement that “we owe it to these patients to ensure that the program remains sustainable in the future and, as such, it is critical to revise the eligibility criteria for hospitals and improve accountability and oversight.”
In its statement, SNHPA also made the following observations:
- The report “is based on unreliable estimates of charity care that even the government refuses to use to determine uncompensated hospital expenses. In addition, hospitals are significantly underpaid by Medicaid, a fact completely omitted from the analysis.”
- “The average 340B hospital provides three times more uncompensated care than non-340B hospitals.”
- “Private oncology practices refer their Medicare, Medicaid, and uninsured patients to hospitals.”
- “The 340B program represents only 2 percent of the $325 billion U.S. pharmaceutical market.”[/ms-protect-content]