Researchers Sunita Desai (left) and J. Michael McWilliams, M.D., say they found no evidence that hospitals increased uncompensated care after entry into the 340B program any more than hospitals that never entered or had not yet entered the program.

Managed Care Journal Article Gives 340B Hospitals Low Marks on Uncompensated Care

Researchers who reported in 2018 that the 340B program leads to hospital-physician practice consolidation but probably not to better care or outcomes for low-income patients have released a new 340B study, this time on hospital provision of uncompensated care. The article appears in a publication that often features critics of the 340B program.

Health economist Sunita Desai and health care policy professor J. Michael McWilliams, M.D., reported yesterday in an article published on the American Journal of Managed Care (AJMC) website they found no evidence that general acute care hospitals and critical access hospitals “increased provision of uncompensated care after entry into the 340B program differentially more than hospitals that never entered or had not yet entered the program.”

“Relying on hospitals to invest surplus into care for the underserved without marginal incentives to do so or strong oversight may not be an effective strategy to expand safety-net care,” Desai and McWilliams wrote.

“A growing body of evidence that the program is not benefiting safety-net populations combined with evidence that it is contributing to hospital-physician consolidation and increases in hospital-based drug provision suggest the need for program reform,” Desai and McWilliams wrote. “Reforms could include requiring that drugs purchased under the 340B program are provided to safety-net populations, establishing mechanisms for hospitals to pass on discounts to patients in the form of cost-sharing assistance, and increasing oversight and enforcement of how hospital surplus is used. More broadly, evidence to date on the program suggests that policies to finance safety-net care should more transparently and directly target resources to patient populations of interest, rather than indirectly by altering the profitability of some services, and include greater oversight and enforcement over how providers receiving resources use them.”

“Optimal policy might involve ending the 340B program and expanding or developing other programs to help low-income populations,” Desai and McWilliams said.

Desai and McWilliams drew attention three years ago with a study about 340B in The New England Journal of Medicine. “The 340B Program has been associated with hospital–physician consolidation in hematology–oncology and with more hospital-based administration of parenteral drugs in hematology–oncology and ophthalmology,” they wrote. “Financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients.”

Hospital group 340B Health criticized the 2018 study published in NEJM, saying its findings were inconsistent with other research on 340B hospitals’ provision of care to low-income patients. They also said the study excluded “roughly one-third of 340B DSH [disproportionate share] hospitals, including many large institutions that treat very high volumes of low-income patients.”

340B Health said this morning it is reviewing Desai and McWilliams’s new study. The American Hospital Association responded yesterday to a request for comment by citing its finding last month that in 2018, the most recent year for which information is available, tax-exempt hospitals participating in the 340B drug savings program provided $67.9 billion in total benefits to their communities.

Sean Dickson, Director, Health Policy at West Health Policy Center, said the AJMC article’s authors “raise interesting questions about how 340B discounts are used by hospitals, but one of their proposed policy solutions—ending the 340B program—would simply transfer 340B discounts from hospitals to pharmaceutical manufacturers, who certainly won’t use the dollars for uncompensated care.”

“Research shows that the inflation penalties under the 340B program act as a brake on manufacturer price increase for everyone, and policy proposals that reduce the scale of the 340B program must carefully weigh these effects,” Dickson said.

Pharmaceutical Research and Manufacturers of America (PhRMA) said the new study in AJMC “provides further evidence that 340B hospitals are not using the billions of dollars they make off the program to provide care to low-income and uninsured patients. It confirms findings published in NEJM, Health Affairs, and numerous other journals over the years, yet hospitals continue to get away with abusing the program. It’s time for change. Covered entities must be held accountable for how they use 340B, ensuring patients are the true beneficiaries not hospitals, for-profit pharmacies or others.”

Editorial Board Includes A Number of 340B Hospital Critics

According to AJMC’s website and McWilliams’s Harvard Medical School bio, McWilliams is a member of the AJMC editorial board, information not included in the article.

In response to a request for clarification of its policy on articles written or co-written by its editorial board members, AJMC this morning said it does not disclose board membership information in articles because its board member list is public and board members do not make decisions on papers. Board members are not compensated for their participation on the board, the journal said. When they submit a paper to the journal, it goes through the double-blinded process like any other author. When AJMC publishes an article by one of its editors-in-chief, however, the author’s position at AJMC is disclosed, because these editors do make acceptance and rejection decisions, the journal said.

Other editorial board members include Charles “Chip” Kahn, long-time president and CEO of the Federation of American Hospitals, the trade group for for-profit hospitals, Robert Dubois, chief scientific officer of the National Pharmaceutical Council, a nonprofit research group funded by the drug industry, and health economist and columnist Austin Frakt who has called for the 340B program to be scaled back. Others on the editorial board come from a wide swath of health care and consulting sectors.

Representatives from the Community Oncology Alliance, an organization representing private cancer doctors, are often featured guests on AJMC’s video platform. COA is one of the leading critics of 340B hospitals and have called for signficant reforms.

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