Pioneer Institute alleges hospitals abusing federal program to finance low income patients’ medical care – Boston Herald

A new report by the Pioneer Institute casts a negative light on a program designed to fund necessary medical care for low-income patients in hospitals stateside and throughout the country.

“There are institutions out there doing yeoman’s work as far as dispensing charity care, but I think there are others that have taken advantage of the program, that have not raised their charity care expenditures,” said Bill Smith, the institute’s director of its Life Sciences Initiative, who authored the report.

Smith noted that recent national studies have found a “troubling” inverse relationship between the growth of the program, known as 340B, and “charity care,” which he defined in a roundtable on the subject as “the ability of low-income and uninsured people to get medicines and health care.”

The program was introduced nationally in 1992 for use by hospitals in areas that serve a significant percentage of Medicaid patients, as a proxy for underserved communities.

Hospitals eligible for 340B qualified for perks like discounted drugs, though individual patients are not screened for eligibility. Therefore, 340B-eligible hospitals who also serve those on commercial insurance plans can buy drugs at a lower cost, charge the difference to insurers, and pocket the difference, Smith explained, a practice that generated $40 billion for hospitals and pharmacies in 2019.

“The law was very bare-bones, in my view, poorly written, and it allows for this kind of arbitraging.”

In Massachusetts, Smith said that two of the state’s largest safety net hospital systems, Cambridge Health Alliance and Boston Medical Center, had a “very generous dispensation” of care for low-income or uninsured patients, but many other state regional hospitals’ charity care shares have plummeted in the last decade.

Smith recommended reforms including clarifying 340B eligibility at the patient level and requiring hospitals to report 340B revenue.

Daniel McHale, vice president of Healthcare Finance & Policy for the Massachusetts Health and Hospital Association, called 340B “of tremendous benefit to Massachusetts” to serve the state’s low-income patients. The state’s acute care hospitals spent $750 million in 2020 on community benefit programs.

He said the report “distorts the merits of the program,” and argued that its recommendations would threaten safety-net hospitals. McHale instead pointed to rising drug costs as the most significant factor to cost growth.

Next Post