340B Health

New Report Shows 340B Hospitals Provide an Important Health Care Safety Net For Low-Income Americans

in 340B Health News Releases

Washington, D.C.—A new report (PDF, infographic) shows 340B hospitals provide significantly more care for low-income patients than other hospitals, including uncompensated care and unreimbursed care. They also provide more specialized and community-based health services that are critical for low-income patients but are often underpaid.

The 340B drug pricing program requires pharmaceutical manufacturers to discount their prices for many outpatient drugs sold to clinics, hospitals, and health systems that serve large numbers of low-income and rural patients. Those providers – known as covered entities –use the savings “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Hospitals that serve a disproportionate share of low-income patients enrolled in Medicaid or Medicare are eligible to participate.

The study, which was commissioned by 340B Health, looked at fiscal year 2015 Medicare data and found:

  • 340B disproportionate share (DSH) hospitals were responsible for 60% of all uncompensated and unreimbursed care despite representing only 38% of acute care hospitals studied;
  • 340B DSH hospitals treated significantly more low-income patients than non-340B hospitals. Low-income patients made up 42% of 340B hospitals’ patient load compared with 27% for non-340B hospitals;
  • 340B hospitals provided 52.9% more uncompensated and unreimbursed care than non 340B hospitals; and
  • 340B DSH hospitals are more likely to offer services that are critical to low-income patients but are often underpaid, including outpatient alcohol and drug abuse services, trauma care, and care for patients with HIV/AIDS.

“When Congress created the 340B program they wanted to shore up the health care safety net for millions of low-income and rural patients. This report shows the program is working properly, just as Congress intended, by ensuring the safety net hospitals that qualify for the program target their services to low-income patients,” said Ted Slafsky, President and Chief Executive Officer of 340B Health. “340B hospitals are often the only source of care for patients who struggle to make ends meet, and the drug discounts come at zero cost to the taxpayers. That’s why the 340B program is as vital today as it was when it was when it was signed into law by President George H.W. Bush 25 years ago.”

The report, prepared by L&M Policy Research, examined data from 2,505 hospitals, including 955 DSH hospitals in the 340B program and 1,505 non-340B acute care hospitals, and it provides a window into what hospitals in the 340B program are doing to support care to low-income patients. The researchers looked at hospitals’ unreimbursed and uncompensated care (including charity care for which hospitals never expect to be paid, bad debt in cases where hospitals cannot obtain reimbursement for care provided), and public payer shortfalls (when Medicaid or other state-administered programs pay less than the costs of delivering care), as well as the percentage of low-income patients in each hospital’s total patient load.

Despite only representing 38 percent of acute care hospitals, 340B hospitals provided “in excess of $26 billion in unreimbursed and uncompensated services” compared with $17 billion by non-340B hospitals. Based on the evidence, the report concludes that “340B DSH [hospitals] provide an important community safety net.”
“As lawmakers debate proposals that could limit the reach of the 340B program, they need to focus on the facts. Proposals to weaken or limit the program would cause real harm to low-income patients who rely on 340B providers for their care,” Slafsky said.

Contact: Richard Sorian at richard.sorian@340bhealth.org or 202-536-2285 or Tom Mirga at tom.mirga@340bhealth.org or 202-552-5843.