April 24, 2024

Health care providers are making a profit by taking advantage of programs designed for the poor

There is a health care program to help vulnerable communities ignite intense controversy in recent years, but most have been focused on hospitals. A new study found that federally supported clinics are also taking advantage of the system.

Called 340B for section According to the 1992 law, the program was well-intentioned, but its design encouraged maximum profit from helping patients in need. Many of the 55,000 hospitals and clinics in the program rely heavily on 340B. They have a huge incentive to leverage the flawed structure to resell as many discounted drugs as possible to insured patients, not the low-income, uninsured Americans who were supposed to be the beneficiaries.

The program grew in seven years, and much of that growth came from there “granted,” such as clinics treating HIV/AIDS, sexually transmitted diseases and hemophilia. But in most 340B discussions, the role of these grantees has been overlooked—until now, when a study was published showing that grantees earn far greater profit margins from 340B than hospitals.

First, understand how does 340B work: Hospitals and grantees buy prescription drugs at a deep discount and are then reimbursed by insurers, including Medicare and Medicaid, at the full price of the drugs. The difference, or profit, is a major source of income for suppliers. For example, in the 2022 annual report, one clinic in Florida 340B reported that 94 percent of its $300 million in revenue comes from such 340B savings.

The shortcomings of 340B, now the second largest prescription drug program after Medicare, have been documented for at least ten years. “The financial benefits of the 340B discounts are accruing almost entirely to hospitals, clinics and physicians; and increasing patient out-of-pocket costs and the total cost of care,” concluded in 2013 article in JAMA by Rena Conti of Boston University and Peter Bach of Sloan Kettering.

But 10 years ago, clinic participation was just the beginning. Recently, a study by Eleanor Blalock for the Berkeley Research Group found that grantees are now responsible for $21 billion in reimbursements and that the profit margin of grantees is far higher than that of hospitals—an incredible 73 percent, compared to 25 percent to 50 percent for hospitals.

Through and through, buying drugs under 340B in 2021 totaled $45 billion, and repayments were An estimated $110 billion. Most of the $65 billion gap goes to hospitals and grantees and the contract pharmacies that these providers use to dispense outpatient medications.

Around 80,000 pharmacies now have arrangements with grants – a figure that by three from 2017, produce profits estimated at $10 billion annually; Only 91 percent of pharmacies are part of three large for-profit chains: CVS, Walgreens and Wal-Mart.

Who do these clinics and pharmacies serve? New researchpublished in the peer-reviewed American Journal of Managed Care, found that 91 percent of pharmacies were not even in the same zip code as the grantee that contracted with them and that the median pharmacy zip code had a household income 33 percent higher than family income. zip code of the grantee.

The role of 340B grants has received little attention in the past, but now is the time to take serious action to remedy a government program that is being run incorrectly. It would not be difficult to fix the program. For starters, grantees must publicly account for how they’re spending their windfall from 340B rebates—especially since, unlike hospitals, about 70 percent of the drug’s margin goes to granted to public payers, primarily Medicare and Medicaid.

The use of far-flung contract pharmacies in much more affluent neighborhoods could be restored through regulation or legislation. Conti and Bach are recommended Ten years ago discounted rates applied “only to those patients who are poor and uninsured” rather than anyone treated at a 340B hospital or grantee institution.

They also proposed that hospitals and grantees be required to “pass on their savings from drug purchases to patients and their insurance providers, including Medicare,” or, even better, that insurers be required to “pass on some of the 340B profits be reimbursed by hospitals and physicians and return those profits. to their beneficiaries.”

This system could be much simpler than the 340B contraption. The IQVIA study It found last year that use of a “340B discount card” reduced patients’ out-of-pocket costs by 93 percent, but such cards were used in only 1.4 percent of 340B claims.A new study at a small Kansas hospital system looked at a program where 340B treatments for chronic obstructive pulmonary disease were given directly to patients, saving them $335 per month. The result: “A significant reduction in the average composite number of all-cause hospitalizations and emergency department visits,” saving $1,013 per patient.

The House Energy and Commerce Committee has advanced legislation with new requirements that both hospitals and grantees would wear report “by site total number of patients receiving 340B drugs by payer, payments, total cost and savings.” This is a step in the right direction.

Advocates for people with HIV/AIDS and other conditions faced by grantees have a particular reason to support 340B reforms. I an opinion piece in POZ, two such advocates, Brandon M. Macsata of the ADAP Advocacy Association and Guy Anthony of the Black, Gifted and Total Foundation, emphasized that “stronger accountability and transparency are urgently needed so that [340B] the program can start working as planned, and patients are not always left behind.”

Their concern is that unless reforms are enacted, a government program so poorly implemented could prompt political action to fix it or end it altogether. “Can’t but won’t – inaction will have serious consequences for the care our community receives,” they wrote.

It’s clear that if 340B is ever enacted, policy makers must lead reforms not only at hospitals but at grantees as well.

James K. Glassman, former fellow and Under Secretary of State for the American Institute, advises healthcare companies and nonprofits.

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