Report slams charity care spending of 340B-eligible hospitals

Hospitals that often receive millions of dollars in discounted drugs for their safety net populations are providing relatively little charity care, according to a new report. But the American Hospital Association (AHA) knocked the report, issued by a non-profit organization highly critical of the 340B program, AHA News Now reported.

The report found that more than two-thirds of the hospitals that participate in the 340B program provide charity care totalling less than 3.3 percent of costs, which is the nationwide average for hospitals, according to the Alliance for Integrity and Reform. At one-quarter of the participating hospitals, the charity care levels are 1 percent or less.

"The 340B program was intended to create a safety net for America's vulnerable and uninsured patients by lowering the cost of outpatient prescription medicines where a significant percentage of these patients receive care. Yet this analysis tells us that only a small minority of 340B hospitals are providing significant charity care," said Stephanie Silverman of the Alliance for Integrity in a statement.

"These findings clearly demonstrate that the 340B program needs to be examined and possibly updated to ensure that the eligibility criteria for participating hospitals better align with the program's intent to serve patients of true safety net hospitals in their communities," she added.

The 340B program has come under fire over the past year after reports surfaced that Duke University Hospital pocketed nearly $70 million in profits by selling the drugs it purchased at a steep discount to insured patients. The AHA asked for delays in changes to the program meant to end drug reselling.

The AHA criticized the report, countering that the program still functions at a very high level, according to the article. Sixty-two percent of all uncompensated care is provided by hospitals that participate in 340B, according to Linda Fishman, AHA's senior vice president for public policy analysis and development. "Charity care alone does not account for the myriad programs and services that hospitals provide, which are tailored to the needs of their own unique community," she said.

Fishman also noted that the Alliance for Integrity and Reform based its calculations "on Medicare's worksheet S-10, which is still in the development stages and judged by Medicare policymakers to be not yet ready for use in payment calculations."

To learn more:
- read the AHA News Now article
- check out the Alliance for Integrity statement (.pdf)
- here's the report (.pdf)