Rx|X’s Take on the Latest GAO Report

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GAO

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admin

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GAO, Rural

Finally, the Facts are Coming Out

A report this week from the GAO shows that the 340B program is doing what it is intended to do: supporting the hospitals that serve vulnerable patient populations. Over 60% of 340B hospitals are serving rural areas, usually as critical access or sole community hospitals. The 340B DSH hospitals are providing more charity care, uncompensated care and unreimbursed care (CC-UC-UR) than non-340B hospitals.

In addition to measuring the median values for providing CC-UC-UR care, the report looked at hospitals providing high levels of CC-UC-UR. These are levels the GAO defined which are 50% to 100% over the median values. The report finds “a higher percentage of 340B hospitals provided high amounts of charity care, uncompensated care, and total unreimbursed and uncompensated care compared
with non-340B hospitals.”

340B Growth Began in 2010

The report verifies that most of the recent growth in 340B participation is from the legislatives changes in 2010 which added eligibility for critical access, sole community, and rural referral hospitals. These newly eligible categories now account for more than 60% of 340B program hospitals.

340B’s Financial Importance

The report also shows the financial importance of the 340B program. All hospitals need a reasonable financial margin to reinvest in facilities, technology and staff in order to sustain their patient care ability for the long run. For critical access hospitals with 340B, their median facility margin in 2.42%; without 340B, the margin is 0.01%. For DSH hospitals, because of the financial challenges of serving low-income patient populations, the facility margins are 30% lower than non-340B hospitals, even with the support of the 340B discounts.

340B Only 6% of Drug Company Discounts

The 340B program is only 6% of the total amount of discounts that drug companies are providing, but those dollars are well spent. They are providing the critical difference in overall funding that allows 340B hospitals to stay open and keep providing high levels of care to rural and low-income patients. As Congress intended when the 340B legislation was passed in 1992, the 340B program enables “covered entities to stretch federal resources to reach more eligible patients and provide more comprehensive services.”

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