Many hospitals reduced inpatient admissions during the COVID-19 pandemic. 340B hospitals now fear that this could cause them to lose their eligibility for 340B drug discounts due to changes in patient mix.

One-Fourth of 340B DSH Hospitals at Risk of Losing Eligibility Due to Pandemic, Analysis Finds

Roughly one out of four 340B disproportionate share (DSH) hospitals could lose their eligibility for 340B drug discounts due to COVID-19 pandemic-related changes in patient mix, an analysis of hospital Medicare cost reports for 2019 and 2020 shows. About one out of 10 current 340B sole community hospitals (SCHs) and rural referral centers (RRCs) also are at risk.

Modern Healthcare did the analysis and reported its findings online on July 12. It based its projection of the share of 340B hospitals vulnerable to expulsion on a sample of hospital cost reports.

To qualify for 340B, DSH, children’s, and free-standing cancer hospitals must have a Medicare DSH adjustment percentage greater than 11.75% for their most recently filed Medicare cost report. This represents a low-income patient threshold of close to 30 percent in order to qualify for the 340B program. SCHs and RRCs must have a Medicare DSH adjustment percentage equal to or greater than 8%.

The DSH calculation is based on inpatient days. For many months during 2020, hospitals significantly reduced inpatient admissions as a public safety measure. Many 340B hospitals fear that this policy skewed the demographics of their inpatient population. If 340B hospitals admitted too few Medicaid and/or Medicare supplemental security income beneficiaries as inpatients during the pandemic, they could be kicked out of 340B at least for the coming year.

Bills have been filed in the U.S. Senate and House to protect hospitals from losing their 340B during the COVID-19 public health emergency. The legislation’s odds of enactment are slim unless it is attached to a higher-profile, must-pass bill.