340B disproportionate share (DSH) hospitals’ contract pharmacies and child sites often are in richer and less diverse places where more residents have health insurance compared with the hospitals’ own locations, according to a new study.
Healthcare consulting firm Avalere Health issued the analysis on April 18. One of the study’s authors said yesterday that Avalere performed it on its own behalf, not for a client. Avalere has done prior analyses of the 340B program financed by the drug industy-funded group Alliance for Integrity and Reform of 340B (AIR 340B) and the Federation of American Hospitals, the trade group of for-profit hospitals. For-profit hospitals are not eligible for the 340B program.
Avalere compared the racial, income, and healthcare insurance coverage characteristics in 2021 of 340B DSH hospital locations with those of the hospitals’ contract pharmacies and off-campus outpatient facilities.
The study found that 94% of 340B DSH hospitals’ contract pharmacies were in a different ZIP code than the hospital. Fifty nine percent of the pharmacies were in a ZIP code that had a median income at least 10% higher than the hospital, and 46% in an area with a median income at least 30% higher.
Avalere said among contract pharmacies in a different ZIP code than their affiliated DSH hospital, 40% were in areas where the percent of white residents was at least 10% higher than the hospital, and 25% in areas where the percent of white residents was at least 30% higher.
Regarding 340B DSH hospital child sites, Avalere found that 61% were in a different ZIP code than the hospital. Among sites in ZIP codes different than the parent hospital, 45% were in areas where the percent of white residents was at least 10% higher than the hospital, and 26% in areas where the percent of white residents was at least 30% higher.
The study also compared health insurance coverage in 340B DSH hospital ZIP codes versus contract pharmacy and child site ZIP codes. It found that when contract pharmacies and child sites are in different ZIP codes than DSH hospitals, “60% of child sites and 49% of contract pharmacies are in areas with a smaller share of uninsured populations relative to location of their 340B DSH hospital.”
“The growth of the 340B program has raised questions regarding targeted reforms, limits on child sites and contract pharmacies, and the definition of 340B patients,” Avalere said. “As stakeholders discuss options to reform the 340B program, the demographic characteristics of the patients served by 340B covered entities and the potential guardrails that protect access for populations that are the intended recipients of 340B benefits can be used to inform that process.”
The American Hospital Association declined to comment on Avalere’s new study.