Argue hospital buyouts of small clinics signal a profit motive.
This article first appeared October 12, 2017 on Medpage Today.
By Shannon Firth
WASHINGTON -- A program that helps lower the costs of prescription drugs for safety net hospitals and clinics has come under scrutiny from the House Energy and Commerce's Oversight and Investigations Subcommittee.
At a Wednesday hearing, subcommittee chairman Rep. Morgan Griffith (R-Va.) lauded some of the so-called 340B program's achievements while also highlighting some concerns.
"I see news accounts indicating that some covered entities spend million on salaries and bonuses for their CEOs and hundreds of millions on building expansions, even as charity care to those entities is on the decline," he said.
The 340B drug pricing program requires drug companies to sell outpatient drugs at a marked discount to safety net providers such as hospitals that treat high numbers of low-income patients -- so-called Disproportionate Share Hospitals (DSH) -- and some publicly funded HIV clinics. A government review indicated that participating facilities saved some $6 billion in 2016 through the program.
Democrats say the program is fulfilling its mission to "stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services."
Republicans, on the other hand, want greater transparency and accountability for the program, and are concerned that some hospitals are milking the system through buyouts of private clinics that sell the costliest drugs.
At a hearing in July, the subcommittee was told the agency lacked the authority to track how or whether hospitals and clinics participating in the 340B program were using savings to enhance care to patients.
On learning of this problem, the subcommittee sent letters to a number of participants requesting the following information:
- How much they saved through discounted drug purchases
- What level and kind of charity care an entity offered
- How patients benefit from participation in the 340B program
At Wednesday's hearing, Rep. Buddy Carter (R-Ga.) asked Shannon Banna, director of finance and system controller for Northside Hospital in Atlanta, whether her hospital system had acquired any oncology clinics since it joined ht program.
Banna said the hospital system was being "encouraged" to expand clinically integrated outpatient care.
Pressed further by Carter, she said that Northside had acquired oncology clinics in 2011 and 2012.
"Are you acquiring the oncology clinics because you have a chance to make more money through the 340B program?" Carter asked point-blank.
"No ... we are being encouraged to expand our clinically integrated model ... " said Banna, who seemed taken aback, before Carter cut her off.
He asked her to "submit in writing" the number of clinics Northside had bought since 1992.
Rep. Chris Collins (R-N.Y.) asserted that hospitals were acquiring oncology clinics solely to reap profits under 340B.
Participating hospitals and health systems in the 340B program saved 25%-50% off the average wholesale price for reimbursable outpatient drugs according to a House E &C Subcommittee press release.
Once bought, these same small clinics would see the cost of cancer drugs -- some of the most expensive in the country -- dramatically reduced, in spite of the fact that most of their patients are fully insured, particularly in the suburbs.
The reason for this is that the definition of what determines a DSH hospital relies only on having a certain percentage of Medicare and Medicaid inpatients and does not factor in the level of outpatient care.
More specifically eligibility is based on the share of inpatient stays by these Medicare and Medicaid patients only, whereas most clinics in the suburbs provide only outpatient care.
This "loophole" means DSH hospitals can acquire oncology clinics without altering their DSH status and continued access to the 340B program.
Several Republicans, including Carter, Collins, and Rep. Greg Walden (R-Ore.), who chairs the full House Energy and Commerce Committee, stressed that the program wasn't on the chopping block and that they were only trying to improve accountability.
Nevertheless, Democrats pressed witnesses to say what would happen if Congress eliminated the 340B program -- their cue to brag about the many services they can provide as a result of participation.
Banna, for example, cited her hospital's management of high-risk maternity patients, community outreach, oncology nurse navigators, and the fact that the hospitals passed on savings directly to patients.
Another witness from Johns Hopkins Hospital in Baltimore, spoke of investments in prevention such as educational programs for expectant mothers and installing railings in elderly patients' homes to prevent falls.
On the issue of hospital consolidation Rep. Raul Ruiz, MD (D-Calif.), said, "The fact that clinics and hospitals are expanding to more communities is a good thing. The fact that you're bringing in ... oncology clinics, for example, that otherwise would be inaccessible through other healthcare systems into your mission driven hospital is a good thing ... The poor and struggling working families also getting cancer. They also need the medications. They also need care."
Rep. Diana DeGette (D-Colo.), ranking member for the subcommittee, compared the savings that each 340B entities achieved through the the program against the total uncompensated or charity care for the entity.
Northside Hospital, for example, produced $53 million in 340B savings, compared to the $370 million in charity care, it reported in 2016, DeGette said.
In more than a half-dozen other examples, 340B savings were only a fraction of the amount of charity care dispensed.
"From what this committee has seen [hospitals] don't seem to be lining their pockets. They're using the savings to provide critical care for the community and vulnerable populations," she said.
DeGette said that she was open to discussing what is and isn't "charity care" and making improvements in transparency.
"In doing so, we should not reduce the providers' ability to fulfill their missions and continue their important work."