by admin | April 4, 2013 12:06 pm
April 4, 2013—The Senate Judiciary Committee’s senior Republican has asked the Health Resources and Services Administration (HRSA) why it does not collect data on how much revenue safety-net providers derive from the 340B drug discount program, what is the payer mix for the 340B drugs they administer or dispense, and how they use 340B savings to meet program goals.
Sen. Charles Grassley (R-Iowa) gave HRSA until April 22 to respond to the request, which he made in a March 29 letter[1] that his office released yesterday.[ms-protect-content id=”2799″] The letter contains selective findings from a request for information he sent last September[2] to three North Carolina 340B hospitals: UNC Hospitals, Carolinas Medical Center, and Duke University Hospital. The three were the focus of a series of articles by The Charlotte Observer and News and Observer newspapers last fall questioning the size of their operating revenues and the amounts they bill for oncology and other medicines. Senator Grassley asked the hospitals to provide him with 340B revenue, billing, and expenditure information soon after those articles appeared.
The Senator told HRSA that the information he received “paint[s] a very stark picture of how hospitals are reaping sizeable 340B discounts on drugs and then turning around and upselling them to fully insured patients covered by Medicare, Medicaid, or private health insurance in order to maximize their spread.”
“Because hospitals who participate in the 340B program have broad discretion as to whom to sell their deeply discounted 340B drugs, hospitals can elect to sell all of their 340B drugs to only fully insured patients while not passing any of the deeply discounted prices to the most vulnerable, the uninsured,” he wrote “This is contrary to the purpose of the 340B program since much of the benefit of the discounted drugs flows to the covered entity rather than to the vulnerable patients that the program was designed to help.”
The letter says 340B’s original intent “was to extend the Medicaid drug discount to the most vulnerable of patients … those who are mostly, ‘medically uninsured, on marginal incomes, and have no other source to turn to for preventive and primary care services.'”
HRSA, federal watchdog agencies, 340B providers, and many in Congress have a different understanding of 340B’s purpose: that it was created to enable providers to “stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”
In a news release, Senator Grassley said his examination of the three hospitals shows they “appear to be making sizeable profits from the program.”
“If hospitals are charging Medicare more than they paid for a drug, they’re squeezing Medicare and ultimately the taxpayers,” he said. “Congress and the federal agency in charge have to get a better handle on where this program is failing and fix the problems for the benefit of the health care system. The ultimate question Congress and HRSA need to face is, do we want discounted drugs going to the uninsured and underinsured or to pad hospitals’ bottom line?”
The two North Carolina newspapers published an article[3] about Senator Grassley’s letter in their online editions the day before it was made available to the general public. Their story was accompanied by written responses to the letter from the three hospitals.
UNC Hospitals[4] said it uses its 340B savings to provide free drugs to thousands of charity care and uninsured patients and noted it is on track to provide $300 million worth of uncompensated care this fiscal year. “UNC Health Care is fully compliant with the 340B program,” it said.
Carolinas Medical Center[5] observed that it qualifies for 340B based upon having a Medicare disproportionate share (DSH) adjustment of 23.57 percent, more than double the 11.75 percent required percentage. It said its uses of 340B savings include operating outpatient clinics at little or no cost to uninsured or Medicaid patients; dispensing expensive mental health drugs at low cost through the region’s only behavioral health emergency department; providing pharmaceutical counseling to patients; and increasing poor and uninsured patients’ access to cancer infusion centers. “It has been CMC’s longstanding mission to provide access to high-quality services for all patients, regardless of their ability to pay,” the hospital said. “We assured Senator Grassley that CMC was an excellent steward of the 340B program.”
Duke University Hospital[6] also noted that it has a DSH percentage in excess of the threshold for 340B eligibility, 18.9 percent versus the 11.75 percent minimum. It said in 2012 alone it provided over 8,000 free or discounted medications. It added that it uses its 340B savings to employ five full-time pharmacy technicians to help low-income and uninsured patients access drug manufacturers’ patient assistance programs and to employ another 11 full-time clinical pharmacists. “Revenues generated through the 340B program are important to supporting our nonprofit patient care mission, including our ability to provide a substantial amount of charity care and community benefit for low-income and uninsured populations,” the hospital said.
Safety Net Hospitals for Pharmaceutical Access[7] (SNHPA), which represents about 1,000 hospitals and health systems in the 340B program, observed in a statement that “both HRSA and the Department of Health and Human Services Office of Inspector General have specifically acknowledged that Congress intended for hospitals to charge above the 340B acquisition cost when hospital patients are covered under Medicare or are privately insured.” It added that multiple reports by the Government Accountability Office (GAO) and federal contractors “clearly demonstrate that covered entities use 340B savings to benefit their patients, especially those who are uninsured, underinsured, or otherwise vulnerable.”
SNHPA also noted that the North Carolina newspapers continue to suggest “that providing 340B-discounted drugs to patients with commercial insurance is at odds with Congressional intent” in spite of having been informed by SNHPA last fall that this is not the case. SNHPA added that “their article also selectively references sections of government and industry reports to portray hospitals and the 340B program in a negative light.”[/ms-protect-content]
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