340B hospitals provided below-average rates of charity care, report finds

Many hospitals that participated in the 340B drug discount program from fiscal years 2011 to 2017 provided below-average rates of charity care, according to a new report from the Alliance for Integrity and Reform of 340B.

The 340B program, enacted nearly three decades ago, enables hospitals and other organizations that treat a large number of low-income and uninsured patients to buy certain outpatient drugs from drugmakers at a discount.

For the report, the alliance — a self-described coalition of patient advocacy groups, clinical care providers and biopharmaceutical innovators — tapped Avalere Health to analyze the most recent Medicare cost report data filed by hospitals. The analysis examined the cost of providing free or discounted care to low-income individuals who qualify for charity care at 340B disproportionate share hospitals.

Three findings from the analysis:

1. Charity care provided by nearly two out of three 340B hospitals was consistently below average rates between 2011 and 2017.

2. In 2017, 29 percent of 340B disproportionate share hospitals provided charity care that represents less than 1 percent of their total patient costs, according to the analysis.

3. Charity care represented 3.3 percent of total patient costs at 340B hospitals in 2011, on average, compared to 2.7 percent in 2017.

"Based on … the results of this analysis of charity care, it is critical that Congress consider revising eligibility criteria for 340B hospitals to ensure that it aligns with the program’s original intent —which is to offer targeted assistance to providers that serve safety-net populations," the Alliance for Integrity and Reform of 340B concluded.

Maureen Testoni, president and CEO of 340B Health, said the report misrepresents the 340B program.

She told Becker's Hospital Review: "As part of its efforts to sharply restrict 340B, the group misleads policymakers and the public by using averages that ignore hospital size and focusing solely on charity care, which is only part of the uncompensated and unreimbursed care that 340B hospitals provide."


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