GAO report hits lax oversight of 340B drug program

Weaknesses in the oversight of the 340 drug-pricing program may allow some hospitals to get discounts they are ineligible for, a newly released report from the Government Accountability Office found. 

Nongovernmental hospitals can be eligible for the 340B program based in part on having contracts with state or local governments to provide healthcare services to specified low-income populations who are not eligible for Medicaid or Medicare. 

The GAO reviewed the contracts of 258 nongovernmental hospitals, which make up less than 10 percent of participating nongovernmental hospitals. 

It found that while most of the hospitals had contracts requiring them to provide healthcare services to low-income individuals, only a few of the contracts provided details about those obligations, such as the amount or type of care they were required to provide. 

The GAO also found that 18 of the 258 hospitals reviewed submitted documents that did not appear to be contracts, such as descriptions of community programs, yet all of these hospitals were permitted to participate in the program. 

The Health Resources and Services Administration, which oversees 340B, allowed hospitals to avoid compliance after audit findings by doing such things as entering into new contracts with retroactive start dates, which the GAO says undermines the integrity of the administration's audits.

The GAO also found that contracts for 13 hospitals reviewed did not appear to require hospitals to serve the 340B-specified low-income population, but all 13 were permitted to participate in the program.

"Given these weaknesses, some nongovernmental hospitals that do not appear to meet the statutory requirements for program eligibility are participating in the 340B program and receiving discounted prices for drugs for which they may not be eligible," the GAO wrote. 

The GAO is making six recommendations for the administration to improve its oversight of the program, including amending its contract reviews to make sure all contracts meet requirements.

The GAO said HHS concurred with all of the recommendations, except the one to implement a process to verify that all nongovernmental hospitals have contracts. 

Maureen Testoni, president and CEO of 340B Health, a group which represents hospitals participating in the program, said the systems in place to make sure hospitals are eligible to participate in the program work well. 

"GAO has identified a handful of hospital contracts for which they have some questions. Hospitals are always ready and willing to answer such questions. The fact is, 340B hospitals provide 60 percent of all uncompensated care in the U.S. while representing only 38 percent of acute care hospitals. Patients served include those who have no insurance and those with public or private coverage, including Medicaid," Ms. Testoni told Becker's Hospital Review

Read the GAO's full report here

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