Hospitals Slam GAO Finding That 340B Drug Discounts Fuel Prescribing

Hospitals say the Government Accountability Office used faulty methodology when it found that hospitals that serve high numbers of low income patients abuse a federal drug discount by overprescribing medications.

HHS raised similar concerns about the findings.

Hospitals that serve a disproportionate number of low-income patients have access to discounted prices on outpatient drugs through the 340B Drug Pricing Program, which is administered by HHS.

A GAO report released Monday found that in both 2008 and 2012, per beneficiary Medicare Part B drug spending, including oncology drug spending, was substantially higher at hospitals utilizing the 340B discount than other hospitals.

“This indicates that, on average, beneficiaries at 340B disproportionate share hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other hospitals in GAO’s analysis,” the watch dog agency says.

For example, in 2012, average per beneficiary spending at 340B DSH hospitals was $144, compared to approximately $60 at non-340B hospitals.

Provider trade groups questioned how GAO came up with it results. They feel the report doesn’t take into account that 340B hospitals may see sicker patients that other hospitals and noted that the GAO may have unfairly ignored other reasons for the higher spending including the fact that patients of non-340B hospitals more frequently receive drugs in non-hospital settings.

“None of this stopped GAO from reaching unsupported conclusions and policy recommendations based on its faulty analysis,” Dr. Bruce Siegel, CEO of America’s Essential Hospitals, a trade group for safety net hospitals, said in a statement. “We’re surprised not only by the lack of evidence and data for GAO’s conclusions and recommendations, but also by its suggestion that physicians in our nation’s essential hospitals would ignore patient needs to enrich hospitals.”

American Hospital Association Senior Vice President Tom Nickels made similar criticisms of the methodology in a newsletter to members. “Simply put, the GAO report misses the mark,” he said.

340B Health, an association of more than 1,000 hospitals echoed the remarks in their own statement and they appear to have an ally in HHS, which also raised similar concerns in its response to the report.

“We are concerned that the report characterizing spending on Part B in 340B DSH hospitals…is not supported by the study methodology,” HHS says. “GAO’s study, which only examined average difference in per-beneficiary spending by hospital type, did not examine any patient differences in terms of outcomes or quality.”

A GAO representative did not immediately return a request for comment on the criticism of the report’s methodology.

There were 1,039 disproportionate share hospitals participating in the 340B Program as of May 31, 2013 the last year a federal count is available according to Congressional data.

The program has been around since 1992 but was expanded after the Affordable Care Act allowed more providers to become eligible for the discount. The number of participants taking advantage of the discounts has since risen.

More troubling, is that over prescribing may be the way hospitals “maximize Medicare revenues,” the report says. “While hospitals may be financially benefiting …this poses potentially serious consequences to the Medicare program and its beneficiaries.”

GAO suggested that Congress consider eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals.

Safety net providers and clinics that participate in the 340B program are expected to meet this month to address the criticism. They’re now contending with a pile of reports that cast a shadow over the program.

An analysis released last year by Avalere Health and sponsored by the pharmaceutical industry-backed advocacy group, Alliance for Integrity and Reform that found roughly two-thirds of hospitals participating in 340B provide less charity care than the average U.S. hospital, with charity care making up 1% or less of total costs at a quarter of those facilities.

An analysis conducted by the Berkeley Research Group found that drug purchases made at the 340B price rose from $1.1 billion in 1997 to more than $7 billion by 2013, with projections of reaching more than $16 billion by 2020.

More positive studies include an analysis conducted in May by healthcare policy consulting firm, Dobson DaVanzo & Associates. That found 340B hospitals provided nearly twice as much care to Medicaid and low-income Medicare beneficiaries compared with hospitals not participating in the program.

The Health Resources Services Administration, the federal agency that regulates 340B, estimated the program saved providers about $3.8 billion in drug costs in 2013.


By Virgil Dickson

Original article:  http://www.modernhealthcare.com/article/20150707/NEWS/150709938


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