340B DSH HOSPITALS PROVIDE THREE-QUARTERS OF MEDICAID HOSPITAL SERVICES, NEW RESEARCH FINDS
WASHINGTON, D.C.— Hospitals participating in the 340B drug pricing program provide significantly more care to Medicaid patients and Medicare patients with low incomes than non-340B hospitals, according to new research that 340B Health released today.
The report by Dobson DaVanzo & Associates includes an analysis of 2018 data comparing 340B disproportionate share (DSH) hospitals to non-participating acute care hospitals in the delivery of services to Medicaid and low-income Medicare patients (recipients of Supplemental Security Income). It also compares them by their provision of essential community services and other care that is crucial to typically underserved populations. The report examines the financial performance of hospitals in both cohorts, a measure that also can reflect the extent of their provision of services to patients with Medicaid, which significantly underpays providers for delivering care.
This study has several central findings:
- 340B DSH hospitals deliver disproportionately more hospital services to Medicaid and low-income Medicare patients. The 340B hospitals provide 75.2% of Medicaid hospital services despite making up only 42.9% of all acute care hospitals. The average Medicaid/Medicare SSI patient load for 340B DSH hospitals was 40.6% in 2018, compared with 26.3% for non-340B hospitals.
- Medicaid makes up a greater share of operating revenue for 340B hospitals, where Medicaid revenue as a percentage of total operating revenue is twice as high (16.9%) than at non-340B hospitals (8.5%). Medicaid patients have a higher burden of illness, are more racially and ethnically diverse, and have lower payment rates.
- Operating margins for 340B DSH hospitals are consistently and significantly lower across all size groupings – with average margins putting them in the red – than those of non-340B hospitals. This may be reflective of 340B hospitals’ dedication of resources to provide vital services to Medicaid and other patients living with low incomes.
- 340B DSH hospitals are more likely to provide unreimbursed and under-reimbursed “essential community services,” specialized services, and community health and wellness services than non-340B hospitals. These services, which include burn and trauma care, HIV/AIDs care, and behavioral health services, often contribute to low or negative operating margins because hospitals lose money delivering them.
Congress created 340B to help safety-net hospitals, health centers, and clinics stretch their scarce resources to serve more patients and offer more comprehensive services. Savings from 340B drug price discounts help cover those expenses without using taxpayer dollars.
“The 340B program inherently recognizes the special challenges that these hospitals face in providing care to Medicaid and Medicare patients with low income and is critical to the continued existence of many eligible entities,” the study concludes. Read the full report and see an infographic summarizing its main findings.
Contact: Richard Sorian at richard.sorian@340bhealth.org or 202-536-2285.