29 Dec Managed Care: Unfairly Targeting 340B Hospitals
“In an era of rapidly escalating prices, the 340B drug discount program remains one of the few checks to keep medicine and medical care accessible to the underserved. Contrary to the recent column, “Payers Must Develop Strategies To Overcome 340B Hurdles,” it is not being exploited by participating hospitals.
If it were, where exactly is the money?
The median operating margin for all U.S. not-for-profit and public hospitals (not just the subset that qualify for 340B) is only around 3.4%, according to Moody’s Investor Service. Finances are even worse for public hospitals, nearly all of which are in the program. More than half of these operate in the red, with an aggregate margin of −3.2%.
To qualify for 340B, a hospital must be either a not-for-profit or public institution. In addition, it must serve a very large volume of Medicaid and low-income Medicare patients—generally speaking, a minimum threshold of 30% of their total patient base. Most treat much higher percentages. On average, Medicare and low-income Medicaid patients make up 42.5% of 340B hospital patients versus 26% for non-340B hospitals. Safety-net hospitals provide $24 billion in uncompensated care annually(link is external)—that’s about 60% of all hospital uncompensated care, despite the fact that they make up only one-third of all hospitals.
While some payers would no doubt like a piece of 340B discounts, Congress created it as a provider program for a reason: It helps stretch scarce resources and allows them to serve more patients.”