Alliance for Integrity Analysis Questions 340B Hospitals' Charity Care

The Alliance for Integrity Reform of 340B — a coalition of patient advocacy groups, healthcare providers and biopharmaceutical industry members — has released an analysis showing most hospitals that benefit from the 340B drug discount program provide less charity care than average.

Healthcare business advisory company Avalere Health conducted the analysis for the Alliance, based on 2011 Medicare cost report data. According to the analysis, more than two-thirds of hospitals that receive 340B discounts provide less charity care as a percent of patient costs than the national average of 3.3 percent for all hospitals. Additionally, the study found about one-fifth of 340B hospitals provide 80 percent of all charity care delivered by hospitals in the program.

prescription drugsThe 340B program allows nonprofit hospitals, community health centers, hemophilia treatment centers, HIV/AIDS clinics and other similar facilities that serve a large proportion of under- or uninsured patients to purchase medications from manufacturers at reduced prices.

The PPACA expands the program to include providers such as critical access hospitals, freestanding non-prospective payment system cancer hospitals, sole community hospitals, certain non-PPS children's hospitals and rural referral centers with disproportionate share adjustments equal to or greater than 8 percent.

Based on its analysis, the Alliance has concluded Congress should consider revisiting the eligibility criteria for the discount program "to ensure that the eligibility criteria align with the program’s original intent, which was to offer targeted assistance to providers serving safety net populations of uninsured or vulnerable patients."

The American Hospital Association has criticized the analysis, saying it "ignores the fact that the 340B program enables hospitals to provide essential healthcare services to the nation's most vulnerable populations," according to an AHA News report.

AHA Senior Vice President for Public Policy Analysis and Development Linda Fishman has said the analysis is based on Medicare's worksheet S-10, which is still in development and isn't considered by policymakers to be ready for use in payment calculations, according to the report. Additionally, Ms. Fishman said 340B hospitals provide 62 percent of uncompensated hospital care in the U.S., and "charity care alone does not account for the myriad programs and services that hospitals provide, which are tailored to the needs of their own unique community."

During the past year or so, the 340B program has become the target of significant criticism from those who believe hospitals might be abusing the discount. Last summer, American Enterprise Institute Fellow Scott Gottlieb, MD, wrote an opinion piece for The Wall Street Journal alleging that hospitals are buying drugs at a discount through the program, charging insurers the full price and then pocketing the difference.

Additionally, last year, a collection of pharmaceutical and biotechnology associations released a white paper that raised concerns about the program leading to harmful consequences for patients. In response, the group Safety Net Hospitals for Pharmaceutical Access released a July report "to set the record straight" after allegations about misuse of the 340B program for hospital profit continued.  

More Articles on the 340B Drug Discount Program:
PhRMA Files Lawsuit to Stop 340B Drug Discount Regulation
AHA, Lawmakers Defend 340B Drug Discount Program
AHA: Court Should Reject 340B Orphan Drug Challenge 

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