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DSH Hospital Participation Could Be Halved Under Congressional Bill

Analysis  |  By Jack O'Brien  
   July 10, 2018

Disproportionate share hospital participation in the 340B program could be drastically reduced thanks to a congressional bill raising the threshold to participate, which has invited pushack from 340B advocates. 

A congressional proposal seeking to raise the eligible theshold to qualify as a disproportionate share hospital (DSH) in the 340B Drug Pricing Program, could reduce participation by roughly 50%, according to a new study. 

340B Health released its analysis Monday of the Protecting Safety-Net 340B Hospitals Act, sponsored by Rep. Joe Barton, R-Texas, finding that the amount of DSH hospitals currently covered under the 340B program would be greatly reduced through the legislation.  

"This proposal would decimate the 340B drug pricing program and leave millions of low-income Americans with higher costs and less access to care," Maureen Testoni, Interim CEO of 340B Health, said in a statement. “Such a drastic change would put enormous pressure on safety net hospitals, clinics, and health centers.”

Proposed changes and likely impact:

  • The bill would raise the minimum Medicare DSH adjustment percentage required for hospitals to participate in the 340B program from 11.75% to 18%.
  • This change would cause an estimated 573 DSH hospitals, 51% of all DSH hospitals currently enrolled in the program, to be terminated as a result.
  • 340B Health stated that those hospitals provided $10.8 billion in uncompensated and unreimbursed care in 2016.
  • Almost 75% of states would see 50% or more of their DSH hospitals terminated, with five states seeing all of their DSH hospitals eliminated. 

The study was released one day after Health and Human Services Secretary Alex Azar addressed the 340B Summer Conference, promising action and increased oversight on the much-maligned federal program.

Related: 3 Takeaways from Azar's 'Frank' Speech at 340B Conference

A spokesperson for America's Essential Hospitals issued a statement to HealthLeaders Media in response to the study's findings. 

"Rep. Barton’s proposal raises serious concerns for our hospitals," said Beth Feldpush, senior vice president of policy and advocacy. "Some likely would fall out of the program despite providing significant levels of care to uninsured and underinsured patients. This change would structurally alter the 340B program and harm care for vulnerable patients."

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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