NEW REPORT: 340B Hospitals Continue to Provide Below Average Rates of Charity Care
Analysis Raises Questions about Qualification Criteria for 340B Hospitals

WASHINGTON – A new report, Left Behind: An Analysis of Charity Care Provided by Hospitals Enrolled in the 340B Drug Pricing Program shows 65% of 340B DSH hospitals provide lower than the national average in charity care. The report from the Alliance for Integrity and Reform of 340B (AIR340B) and commissioned by Avalere Health analyzed charity care levels at 340B disproportionate share hospitals (DSH). Charity care is defined as free or discounted health care provided to patients who qualify for a hospital’s charity care program and are considered low income.

“During the eight years since AIR340B first released an analysis of hospital charity care, the 340B program has more than quadrupled in size (from $9 billion in 2014 to $38 billion in 2020) and yet most 340B hospitals continue to provide relatively low levels of charity care as a percent of their operating costs,” the report states.

Key Takeaways:

25% of 340B DSH hospitals provide charity care that represents less than 1% of their total operating costs.

65% of 340B DSH hospitals provide less charity care than the national average for all short-term acute care hospitals, including for-profit hospitals.

A small share of 340B DSH hospitals account for most of the total charity care from all 340B hospitals – with just 29% of 340B DSH hospitals accounting for 80% of the total charity care provided by all 340B DSH hospitals in FY 2019.

“Another year of analysis exposes the harsh truths that currently exist in the 340B program – unchecked growth and little to no transparency for covered entities has left patients on the backburner of the conversation,” said Bob Dold, former Congressman and AIR340B Spokesman. “The consistently low levels of charity care paired with dramatic growth in 340B program further proves 340B is not working how Congress intended. Changes are needed to strengthen the program’s eligibility standards and hold covered entities accountable.”

Clinics, federal grantees, and certain types of hospitals are eligible to participate in the 340B program. However, there is no requirement as part of the 340B program for these covered entities to report how the program is used, or how the revenue derived from 340B is reinvested in care for vulnerable or uninsured patients.

The report concludes that a large portion of 340B hospitals fail to provide an adequate amount of charity care to justify their participation in the 340B program. The mounting evidence, including this report, illustrates 340B hospitals are not always reinvesting that revenue back into patients who need it most. For the program to work as intended, eligibility criteria and reporting requirements should be reconsidered.

The Alliance for Integrity and Reform of 340B (AIR340B) released a new report by Xcenda, titled “340B and Health Equity: A Missed Opportunity in Medically Underserved Areas,” which found a dismal 38% of 340B disproportionate share hospitals (DSH) are located in medically underserved areas (MUAs) as defined by the Health Resources and Services Administration, despite their mission of “serving a significantly disproportionate number of low-income patients.”

“Safety-net facilities that participate in the 340B program have a responsibility to support low-income and vulnerable patients, but it’s clear that is often not the case. Instead, the vast majority of DSH hospitals, their child sites and affiliated contract pharmacies are located in more affluent areas rather than in the communities of medically underserved populations,” said AIR340B Spokesperson and former Illinois Congressman Bob Dold. “This analysis adds to the mounting evidence that, despite the exponential growth of the 340B program, low-income and vulnerable patients are not receiving the care they need. With only four in ten DSH hospitals – and less than one third of their child sites and affiliated contract pharmacies – located in MUAs, it is clear the program is being exploited for financial gain with no consequences.

“AIR340B has been a longstanding advocate for fixes to the program to ensure it works for patients, and the majority of voters agree: hospitals and pharmacies should not be making money off safety-net programs intended to help low-income and vulnerable patients. Fortunately, the 340B program can play an important role in advancing health equity if Congress acts now. We urge Congress and the administration to reconsider eligibility standards for participating in the 340B program, a commonsense solution that – coupled with increased transparency and oversight – will help prevent further abuse from profit-seeking hospitals and pharmacies.”

Today, the Alliance for Integrity and Reform of 340B (AIR340B) released a new report by Health Capital Group that uncovered significant growth in sales within the 340B Drug Pricing Program, including a near 200% increase in hospital participation in the program over the last decade. The question that remains is whether this growth has benefited patients.

“This new report is further evidence that the 340B program has become a lucrative revenue stream for disproportionate share hospitals and their contract pharmacies as a result of lax oversight and dismal transparency requirements. The data, obtained through the Freedom of Information Act, are proof of how difficult it is to ensure the vulnerable and uninsured communities the program is intended to support are benefiting from this exponential growth. At a minimum, greater oversight, transparency, and accountability should be required of these bad stewards of the program so we can ensure 340B is working for patients,” said former Illinois Congressman and AIR340B Spokesman Bob Dold.