Texas hospitals worried about impact of cuts to drug discount program

Bottles of prescription medication are seen on the shelf of a pharmacy (AP Photo/Lisa Poole)
Bottles of prescription medication are seen on the shelf of a pharmacy (AP Photo/Lisa Poole)

AUSTIN (KXAN) – For more than two decades, safety net hospitals and community health centers have relied on the 340B Drug Pricing Program, which allows participating entities to get discounts on outpatient prescription drugs.

The cost savings are meant to help hospitals provide additional services to their patients, often low income or uninsured.

“Those are the ones providing significantly more care to patients who are not able to afford medical care and prescription drugs,” 340B Health President and CEO Ted Slafsky said.

Maureen Milligan, president & CEO of the Teaching Hospitals of Texas, said the program is a critical part of the health care safety net in Texas, citing many of the drugs as lifesaving prescriptions.

At CommUnityCare’s health centers across Central Texas, CEO Dr. Jaeson Fournier says medications are more affordable for their patients under 340B.

“So if you’re uninsured and you come through our door and you’re at 125 percent of the poverty level, we ask you to contribute $7 for a 30-day supply of medications,” he said.

Fournier said a 90-day supply is $14. Ninety-seven percent of their patients are low income and the savings through the 340B program allow their health centers to executive a variety of other services.

“We’re able to support clinical pharmacies in our environment, which allows clinical pharmacists to engage our patients in medication therapeutic management,” he said. “It allows us to support a very robust patient assistance program.”

On Jan. 1, the Centers for Medicare and Medicaid Services finalized cuts of $1.6 billion to reimbursement for Medicare Part B drugs under the 340B program. This was following a judge’s dismissal of a lawsuit filed by hospital groups, seeking to halt the cuts from going into effect. These organizations argued it would harm patients, hospitals and the communities they serve.

Children’s hospitals, certain cancer hospitals and rural sole community hospitals will be exempted from the drug payment reductions for 2018, CMS said. The cuts only affect disproportionate share hospitals and rural referral centers.

CMS said in a statement posted to its website that it “looks forward to working with Congress to provide [Health and Human Services] additional 340B programmatic flexibility which could include tools to provide additional considerations for safety net hospitals.”

“As part of the president’s priority to lower the cost of prescription drugs, Medicare is taking steps to lower the costs Medicare patients pay for certain drugs in the hospital outpatient setting,” Seema Verma, administrator of CMS, said in the statement. “Medicare beneficiaries would benefit from the discounts hospitals receive under the 340B Program by saving an estimated $320 million on co-payments for these drugs in 2018 alone.”

Rep. David McKinley, R-Va., and Rep. Mike Thompson, D-Calif., have filed a bill to permanently stop these cuts.

Teaching Hospitals of Texas represents 17 members and says each hospital is estimated to lose around $500,000 to more than $2.5 million this year. According to 340B Health, 61 hospitals in Texas are affected by the cuts. The Texas Hospital Association said that’s around $41 million in losses.

Parkland Hospital and Health System is one of the Teaching Hospitals of Texas members and uses its estimated $133.7 million in savings to provide a variety of services, such as an Antibiotic Therapy Clinic and Home IV antibiotic therapy program. Milligan said they’ve heard of hospitals in other states getting ready to cut back on services and are currently monitoring what their members will have to do in Texas.

“If you wait for the impact to hit, it’s like trying to unscramble eggs,” she said. “You can’t go back and really roll back some of the harm that’s been done.”

There is also legislation in Congress to address concerns over how hospitals use 340B.

Sen. Bill Cassidy, R-La., has introduced the Helping Ensure Low-income Patients Have Access to Care and Treatment (HELP) Act. It would provide a two-year moratorium on registration of new non-rural section 340B hospitals and associated sites. A recent review of the program by the House Energy and Commerce Committee highlighted several findings, including how “there is a lack of data on how much charity care is provided by covered entities.”

“Further, because there is no universally accepted definition of charity care, drawing a fair comparison of charity care provided across covered entities is difficult, if not impossible,” the report said.

Advocates of reform, such as the group Alliance for Integrity and Reform of 340B, say the program has strayed away from its original intent. “Financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients,” an article in The New England Journal of Medicine published Wednesday said.

“It hasn’t been implemented in a way that necessitates that the profits from that program always will go toward the care for the poor and underserved,” Dr. Debra Patt with Texas Oncology said.

Patt said the auditing process needs improvement.

“Sometimes the funds are used to care for the poor and underserved,” she said. “Sometimes they’re used to bolster executive compensation. Sometimes they’re used to develop physical plants.”

The American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals are continuing to pursue their lawsuit against these cuts.

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