Proposal to Change 340B Hospital Eligibility Would Cut Program in Half

July 10, 2018 in 340B Health News Releases

Impact Would Be Felt in All 50 States, D.C., and Puerto Rico

Washington, D.C.—A new analysis by 340B Health shows that more than half of the disproportionate share hospitals (DSH) currently participating in the 340B drug discount program would lose eligibility under a plan on the table in Congress. The proposal by Rep. Joe Barton (R-Texas) would raise the minimum DSH adjustment percentage that DSH hospitals must meet to qualify for the 340B program.

The analysis by 340B Health shows 573 of the 1,115 DSH hospitals currently in the program would be dropped from 340B and no longer eligible for drug price discounts. Hospitals that would lose 340B eligibility under this proposal provided $10.8 billion in uncompensated and unreimbursed care in 2016. Losing access to 340B savings would make it more difficult for these hospitals to continue providing this level of care to low-income patients. The House Energy & Commerce Health Subcommittee is scheduled to discuss Rep. Barton’s proposal along with 14 other bills during a “legislative hearing” scheduled for Wednesday, July 11.

“This proposal would decimate the 340B drug pricing program and leave millions of low-income Americans with higher costs and less access to care,” said Maureen Testoni, Interim President and Chief Executive Officer of 340B Health, which represents more than 1,300 hospitals and health systems that participate in the program. “Such a drastic change would put enormous pressure on safety net hospitals, clinics, and health centers.”

The impact of the proposed policy change would be felt in 47 states, the District of Columbia, and Puerto Rico (see table below for more details). The largest number of hospitals lost would be in California (39), Texas (35), North Carolina (33), Georgia (31), and Ohio (29). In five other states – Idaho, North Dakota, South Dakota, Utah and Vermont – all of the DSH hospitals currently participating in 340B would lose eligibility. Only Alaska would not lose any DSH hospital participants (New Hampshire and Wyoming do not currently have any DSH hospitals in the 340B program).

The 340B drug discount program requires pharmaceutical manufacturers to sell their products at a discount to hospitals, clinics and health centers that qualify. Hospitals use those savings to extend services to low-income patients in their communities. To be eligible to participate in the 340B program, DSH hospitals must provide a high level of care to Medicaid and low-income Medicare patients. Under the current requirements, DSH hospitals become eligible if their Medicare DSH adjustment percentage is greater than 11.75. The proposal by Congressman Barton would increase the DSH adjustment percentage needed to qualify to 18 percent, a hike of more than 50 percent.

“This kind of radical change to the 340B program will not help patients and will not lower the price of drugs. Instead, it will transfer billions of dollars from safety net hospitals to pharmaceutical companies,” Testoni added.