In the wake of a recent New York Times investigation into alleged misuse of 340B savings by Catholic health system Bon Secours Mercy in Richmond, Va., a local Richmond newspaper has published a comprehensive look at the purpose and value of the 340B program, particularly for community health centers.
The Times investigative piece focused on Bon Secours’ alleged redirection of 340B revenue from its program-eligible hospital in Richmond—a stripped-down facility lacking an ICU, basic supplies, and key specialty services located in a low-income, majority Black neighborhood—and diverting it to help fund state-of-the-art facilities in more privileged suburbs. The revelation was met with outrage from the community and policymakers, with the latter calling for increased oversight of the 340B program.
The lengthy story, published in the Richmond Times-Dispatch on Oct. 1, spotlights Daily Planet Health Services, a network of community health centers in Richmond operating 10 locations, two of which are located in homeless shelters. Daily Planet also provides Ryan White Care services for patients living with HIV/AIDS, and Medication Assisted Treatment (MAT) via methadone or suboxone for people struggling with opioid addiction. Per the Times-Dispatch story, the health center uses some of its 340B savings to pay outreach workers who deliver services to people experiencing homelessness across the Richmond area.
“The furor over the allegations” against Bon Secours as detailed in the Times story “has overshadowed the 340B program’s importance to organizations such as the Daily Planet,” the Times-Dispatch article says.
The article acknowledges that attacks on the 340B program—and its intended benefits for covered entities—were already underway prior to the Times investigation, in the form of pharmaceutical manufacturers’ refusal to grant 340B discounts on drugs dispensed by contract pharmacies and discriminatory reimbursement and network exclusion by insurers and pharmacy benefit managers.
In an interview with the Times-Dispatch, Dr. Patricia Cook, chief medical officer at the Daily Planet, said, “We have seen some manufacturers limit their [drug] formulary for 340B, and that is hurtful.” Daily Planet currently relies on two contract pharmacies in Richmond to dispense drugs to their patients, but plans to open its own in-house pharmacy over the next two years. Cook called the 340B program “a huge advantage to our patients,” due to its ability to help fund medications for the uninsured.
Allegations that Bon Secours has funneled 340B revenue to its facilities in more affluent areas of Richmond at the expense of its bare bones inner-city hospital has “dismayed some of the program’s biggest supporters in Congress,” in the midst of preliminary legislative efforts to both protect and reform 304B, the article said.
U.S. Rep. Rob Wittman (R) of Virginia’s 1st District said the 340B program “helps rural and underserved patients with affordable prescription drugs and expanded health care services.”
“Given the rural nature of Virginia’s First Congressional District, I understand and hear directly from constituents about how this program improves the quality of life of so many patients,” said Wittman in a statement to the Times-Dispatch. “Like any federal program, we must always ensure these resources are properly allocated and reaching those they are intended to help,” Wittman said.
Tim Kaine, one of Virginia’s Democratic U.S. senators and former mayor of Richmond, told the Times-Dispatch, “The 340B program is really, really working. We could not serve our low-income population if not for 340B.” Kaine said hospitals must answer for whether “they use the savings they gain to help low-income patients or not.”
Community Health Centers as “Collateral Damage” of 340B Hospitals’ Adversaries
Criticism of the program has centered mainly on hospitals, according to the Times-Dispatch article. Their number, size, affiliated sites, and diverse patient base may make it easier for them to use 340B savings in ways that were not intended by the program. On the other hand, community health centers represent just 5% of the program, according to Colleen Meiman, a 340B policy expert who was interviewed for the article.
Health centers, whose patients are almost universally vulnerable and underserved, are generally regarded to have both great need for the 340B program and to procure great benefit from it in terms of expanding services for needy patients. Community health centers are “collateral damage in somebody else’s war,” said Meiman, quoted by the Times-Dispatch.
The Times-Dispatch piece points out that the program became a state issue earlier this year when the legislature approved a bill Gov. Glenn Youngkin (R) signed into law, to prevent insurance companies and PBMs from paying less for drugs covered by 340B than they would for those that are not, excluding those pharmacies from preferred insurance networks and charging higher co-payments. The article notes that 340B hospitals were excluded from the protection.
According to the Times Dispatch, Virginia hospitals say they use savings under 340B to pay for a wide range of health care services that don’t pay for themselves. The money also helps compensate for low reimbursement rates under Medicaid and a provider assessment to pay the state’s share of expanding the program, beginning in 2019, under the Affordable Care Act.
“Other providers, pharmaceutical companies, and insurers are not contributing to state [Medicaid] program costs even though they benefit from the coverage program,” said Julian Walker, spokesman for the Virginia Hospital & Healthcare Association.
In a previously published article, the Times-Dispatch delved further into the 340B-eligible clinics of Richmond Community Hospital, and found 10 outpatient clinics designated as 340B child sites and thus able to access 340B discounts. These 10 sites include an infusion clinic, a cancer institute, and a rheumatology clinic, among others; all located several miles from Richmond Community in wealthier areas of town, usually adjacent to other Bon Secours hospitals that are not 340B eligible.
Several (mostly anonymous) patients who accessed the child site clinics and one referring doctor told local media outlets that bills or paperwork they received for clinic services listed Richmond Community as the delivery site.
“I did not know it is as bad as it appears to be,” said state Sen. Jennifer McClellan (D-Richmond), quoted in the more recent Times-Dispatch article, in response to reports that Bon Secours had eliminated basic medical services, including an intensive care unit, at 340B-eligible Richmond Community Hospital while investing in facilities in more affluent suburbs. “The poorest people have some of the highest health care needs,” McClellan told the Times-Dispatch. “That means you need to invest the profits in the services you get in the community.”
Not All 340B Hospitals Are Alike
The previous piece in the Times-Dispatch did not paint all 340B hospitals with the same brush. The article points out that the city’s academic medical center, VCU Health, also benefits from 340B. VCU Medical Center cares for more patients who are uninsured or covered through Medicaid than any other hospital in the state, Grant Heston, vice president for university relations, told the paper.
Thanks to 340B, VCU Health saved $114 million in 2020, benefiting more than 2,000 patients the health system said. VCU reinvested that money, opening the 17-story Adult Outpatient Pavilion downtown last year, the paper said. It is currently building a 16-story Children’s Hospital of Richmond tower, which will bring the hospital’s inpatient and outpatient care for children under one roof. The health system has made a number of other investments in recent years, according to the Times-Dispatch.
