Unexpected windfall or fragile safety net? Affluent communities or vulnerable poor? Welfare check or supplemental provider program? Making sense of the latest 340B program study published by the journal Health Affairs depends on your perspective—and how you dice the data.
As emphasized by Healthcare Finance News, the 340B discount drug program is a financial lifeline to help eligible healthcare organizations offset the losses incurred when treating underinsured and uninsured patients.
Intended solely for disproportionate share hospitals (DSH) and other covered entities, the program was never intended to provide direct drug assistance to impoverished patients as suggested by the Health Affairs authors, Rena M. Conti and Peter B. Bach. There are patient assistance programs for that. Furthermore, it is not a profit-generating engine to help fuel clinic expansion in affluent communities. Instead, 340B is a 20-year program that has been helping safety-net facilities stretch scarce federal resources to serve more patients.
The recent study and ensuing industry articles paint 340B program participants in a negative light, suggesting that covered entities chase profits and experience windfalls rather than help patients. However, these assumptions are far from true, and come from a misinformed perspective.
It seems that a misunderstanding around the program’s original intent led the researchers to misinterpret their data. Sifting through the controversial study and related articles is the best way for hospital executives to separate fact from fiction.
Four facts to consider
Sentry Data Systems took a deeper dive into the Health Affairs 340B Program data to uncover the truths behind the story. Here are four important observations to consider:
1. 340B drug discounts are only available to covered entities that meet established guidelines. In addition, 340B organizations are regularly audited and analyzed. Full compliance is federally regulated, and penalties are assessed for those who don’t comply.
2. Census income data from geographic-based designations for each clinic was used for the study, versus the income of patients seen and treated—neighborhoods versus actual patient populations. Therefore, the main assertion of the report, that recently-added clinics serve wealthier communities, is fodder for debate.
Additionally, two key points must be stressed. First, regardless of where they’re located, 340B entities never turn away low-income patients. Second, all 340B covered entities are non-profit organizations. The 340B Program helps these providers offset the high costs of unreimbursed care – not line their pockets.
3. The study alludes to recent growth in the number of hospital-based clinics participating in 340B. While this data point is not disputed, it must be explained.
Recent changes in reporting by HRSA now require clinics to have a unique listing in HRSA’s database for each service they provide. As a result of this change, a single clinic may have added up to 20 or more listings to comply with the new rules.
In addition, a plethora of industry drivers is working together to fuel the expansion of hospital-based clinics participating in 340B. Changes resulting from the Affordable Care Act, an increase in physician-practice hospital affiliations, and a general move toward preventative outpatient versus inpatient services are just a few of these drivers. Recent growth is certainly not the direct result of profits derived from drug savings realized through 340B participation.
4. The “large share of the population living under poverty” is high in every chart, graph and case cited in the study—ranging between 18 and 22 percent. The program’s intent was not, as the study’s authors assert, to directly help low-income and uninsured patients. It is not a prescription assistance program.
Instead, as stated in the statute’s legislative history, the intent of the 340B program is to “stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services” by reducing the amount that qualified organizations spend on outpatient drugs [H.R. Rep. No. 102-384(II), at 12 (1992)]. This is one point where the facts must be clear.
Protect 340B
The 340B program is an important part of the continued viability of America’s safety-net providers, who turn no one away, regardless of their ability to pay. Established in 1992, the program ensures our nation’s most vulnerable patients receive the healthcare services they need to stay healthy and out of acute-care settings—where cost of care skyrockets.
Hospital financial executives are encouraged to help preserve the 340B Program through awareness, advocacy and action. You can find facts and data to counter 340B opposition at the Safety Net Hospitals for Pharmaceutical Access (SNHPA) website and through the American Hospital Association’s Advocacy Alliance for the 340B Program.
It’s important to use the facts to counter misrepresentation of the program in local and national media. And it’s also important to let your Congressional representative and Senators know the importance of the 340B Program in providing care for the most vulnerable patients in your community.