Hat’s off to three Ascension Health hospitals for writing op-eds for their local papers about why 340B is vital to their mission to help vulnerable patients.
In the Aug. 18 edition of the Austin (Texas) American-Statesman, Seton Healthcare Family CEO Jesús Garza noted that “the 340B law is simple and effective. Allowing Seton and other safety net providers to pay less for high-priced outpatient prescription drugs helps us spread our resources further.”
“Bottom line: Seton Healthcare Family relies on 340B to provide affordable medications to our poor and vulnerable patients,” he concluded. “Rolling back the 340B program will only add to pharmaceutical industry profits while leaving the most vulnerable citizens of Central Texas with reduced access to the medications and quality health care they desperately need – and deserve.” Read the complete article here.
On Aug. 19, Jeff Korsmo, CEO of Via Christi Health, wrote an op-ed for the Wichita (Kan.) Eagle, listing the ways 340B has helped underserved patients. Rolling 340B back, he concluded, “would hurt those who truly need this support, and actually increase the nation’s health care costs.” Read the complete article here.
Finally, on Aug. 20, Dr. Michael Schatzlein, CEO of St. Thomas Health, wrote an op-ed for The Tennessean. “We believe it is our responsibility to ensure that those we serve have access to the prescription medications they need to maintain or improve their health,” he said. “Our mission has always been to serve the most poor and vulnerable of society, to provide health care that truly leaves no one behind.” He then described how 340B helps them fulfill this mission, giving the example of a patient suffering from bipolar disorder who was able to obtain free medications, keeping her out of the hospital. Read the complete article here.
All three essays emphasize 340B’s importance and why rolling it back will hurt the most vulnerable.
Last week in Forbes, Big Pharma propagandist Sally Pipes claimed that 340B enables corruption, by letting hospitals “enhance their bottom lines with hundreds of millions of dollars intended to help the indigent.”
Someone forgot to tell this to Wall Street.
Around the same time that Pipes was fulminating about those devious 340B hospitals, Standard & Poor’s Ratings Services warned in two reports that nonprofit hospitals and health systems barely broke even in 2013 and face even harder times this year. Nonprofits are the bulk of hospitals enrolled in 340B and they are the targets of a relentless Big Pharma smear campaign.
As reported by the Drug Discount Monitor Aug. 18, Standard & Poor’s said in a third report that, “If anything is clear, it’s that pharmaceutical prices will continue to rise, with high-end specialty drugs causing growing headaches.”
The median operating margin for nonprofit health systems fell to 2.2 percent in 2013—the lowest it has been since the financial crisis of 2008—and it is expected to decline even further in 2014, S&P said.
And what’s the current average profit margin for major drug manufacturers? According to Yahoo! Finance, it’s 20.8 percent.
“We believe the sector is at a tipping point where negative forces have started to outweigh many providers’ ability to implement sufficient countermeasures,” said S&P credit analyst Margaret McNamara.
According to the policy magazine National Journal, Congress is more polarized now than ever before. That why it’s especially noteworthy that more than 100 members from both parties and all parts of the political spectrum have signed letters expressing “strong bipartisan support for the 340B drug discount program,” which the lawmakers say allows “hundreds of hospitals and other safety-net providers across the country to do more with less.”
The House letter, signed by 77 lawmakers, was addressed to Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Ranking Member Henry Waxman (D-Calif.). Thanks to 340B, it says, hospitals have been able to “expand community based services to our most vulnerable.”
“Our hospitals are able to expand services, increase the number of patients they serve, and offset losses from uncompensated care – all because of the 340B program,” the Representatives wrote. The letter was led by Reps. Chris Gibson (R-N.Y.), Kristi Noem (R-S.D.), and Kathy Castor (D-Fla.).
The Senate letter, addressed to Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-Iowa) and Ranking Member Lamar Alexander (R-Tenn.), notes that 340B “expands access to health care services in our states by reducing pharmaceutical costs for hundreds of hospitals serving our most vulnerable constituents.” The letter, which had 31 signatories, was led by Sens. Tammy Baldwin (D-Wis.), Bill Nelson (D-Fla.), John Thune (R-S.D.), and Rob Portman (R-Ill.).
“We are very gratified to see strong, continued bipartisan support for 340B,” says Ted Slafsky, President and Chief Executive Officer of Safety Net Hospitals for Pharmaceutical Access. “340B is about helping health providers better serve their neediest patients. It’s a program that transcends party affiliation.”
Without the 340B program, hospitals serving huge percentages of needy patients “would be forced to cut back services and close cancer clinics that help the underserved,” prominent oncologists at two academic medical centers write in Forbes.com today.
“We see the benefits from 340B every day,” say Dr. Robert Chapman of Henry Ford Health System in Detroit and Dr. Andres Wiernik of Hennepin County Medical Center in Minneapolis. “Our hospitals are in the 340B program because more than a third of our patient base is poor or on Medicare. These are needy patients whose reimbursements often do not cover our cost of care. But we treat them because we don’t turn patients away when they can’t pay for their services. Many of our patients have no insurance at all.”
Killing 340B “will only make giant drug manufacturers richer while leaving America’s neediest patients with fewer options and less healthcare,” they conclude.
Click here for their complete essay and pass it along.
The Community Oncology Alliance has been slinging mud at 340B hospitals for months. Now, a Wall Street Journal investigation has found that a Florida oncology practice with close ties to COA racks up big dollars billing Medicare for the anemia drug Procrit, which “can speed tumor growth and hasten death in cancer patients.”
In fact, one-sixth of the $128 million that Medicare paid in 2012 for Procrit went to Fort Myers-based Florida Cancer Specialists, WSJ reports. You might recall FCS from the recent AIR 340B “summit.” Michael Diaz, M.D., a member of the practice, sits on both the FCS and COA executive boards. Dr. Diaz spoke at the summit about “travesties” by 340B hospitals and how they cause private cancer physicians to suffer. It turns out that 28 of FCS’s doctors “were among the top 100 U.S. oncologists by 2012 Medicare payments for all services,” WSJ’s investigation found. In fact, the newspaper says 22 were paid over $3 million each by the government!
While it appears nothing was illegal about FCS doctors’ prescribing decisions, the WSJ investigation shows how private cancer clinics buy and bill certain medications to their advantage. For example, WSJ’s analysis of Medicare billing records found that FCS doctors prescribed Procrit at higher-than-average rates and billed Medicare for a whopping $20 million worth of the drug in 2012, despite FDA warnings to doctors as far back as 2002 to stop prescribing the drug liberally. Procrit is marketed by AIR 340B member Janssen, a subsidiary of Johnson & Johnson.
Private oncologists make much of their money administering high-priced drugs to patients. Because they make more money prescribing expensive meds, the WSJ piece calls into question whether medical need – or good old capitalism – is driving some private cancer doctors’ decisions. Funny, but this is the same argument COA has leveled at safety-net hospitals.
We will leave the hypocrisy aside and expect there are good medical reasons why Florida Cancer Specialists prescribes meds the way it does. After all, safety-net hospitals are in the same business of helping sick people get better. Our patients just happen to be a lot less able to pay for their care.
The forces arrayed against the 340B program will meet today in Washington for a “leadership summit.” That nearly all the speakers are allies of the pharmaceutical industry should give any responsible journalist or policymaker serious pause.
Big Pharma wants to scuttle 340B and is spending huge sums to discredit the program in the media and on Capitol Hill. Why? Because it eats into the profits of one of the wealthiest industries in the world. These companies benefit when drug prices stay high.
The panelists include the pharmaceutical industry’s paid consultants and representatives from organizations that unfortunately are more interested in their bottom line than addressing the real challenges in providing affordable and accessible cancer care. And of course, there are the “patient” advocacy groups that happen to be financed by the major drug and biotechnology companies.
This esteemed group will inevitably come up with recommendations that the program is in serious need of reform. The truth is the 340B program has been incredibly effective for twenty years and remains more important today than ever before. The challenges that hospitals and other providers face–lower reimbursement, high numbers of uninsured, underinsured and low-income patients—will not go away.
Safety-net hospitals support dialogue on 340B and would be happy to participate but it must be in a fairer venue – and one not organized solely by opponents of the program with a clear agenda.
A new study in the latest issue of Health Affairs helps explain why 340B will continue to be needed after the Affordable Care Act is fully implemented.
The study found that, despite health care reform, safety-net hospitals’ uncompensated care costs and Medicaid shortfalls will keep rising in California and in the states that do not expand Medicaid.
The study examines how California’s 20 acute-care public hospitals will be affected by reductions in Medicaid disproportionate share hospital payments under the Affordable Care Act. Congress is reducing Medicaid DSH payments under the assumption that expanded insurance coverage under ACA will generate increase revenue for safety-net hospitals.
The study found that if the Medicaid DSH payment cuts are implemented, California safety-net hospitals could face between $1.38 billion and $1.53 billion in uncompensated care costs and Medicaid shortfalls in 2019. In that year, it states, between 3.1 million and 4.0 million Californians “are still likely to be uninsured. Uncompensated care costs for this population will rise as a result of inflation in health care costs.”
Other factors that could impact a hospital’s total uncompensated care costs include patients not enrolling in the federal programs, and patients choosing to go to private hospitals once they are covered, the study said.
“The situation may be much worse” for hospitals in states that opt-out of Medicaid expansion, the study said. They will receive no extra funding from an expanded Medicaid patient population, yet they will still have to compensate for the same reduced DSH payments as all other safety-net hospitals, the researchers pointed out.
Congress has delayed the Medicaid DSH cuts twice, in 2013 and 2014. The cuts are slated to begin in 2017.
The idea that the 340B drug discount program is the cause of rising cancer treatment costs is missing the point. Quality cancer care comes at a price. Now, who is going to pay it?
By Holly Russo, RN MSN, MSECS
It’s no secret that changes in the healthcare industry have driven oncology patients from private practices to the nation’s safety net hospitals for their care. According to an Inside Oncology market intelligence report titled “Academic Cancer Centers (NCCC): Trends Impacting Key Account Management,” the ratio of private oncology clinic care versus hospital-delivered oncology care was 80:20 in 2007, compared to an estimated ratio of 50:50 in 2012 and a forecasted shift to 40:60 by 2015.
What’s the cause for this change in oncology care delivery locations? Many private practice oncology clinics simply can’t compete in a market where diminishing reimbursement from both Medicare and private payers has created intense financial pressures for private clinics.
Profitability issues began for private oncology providers back in 2003, when the Medicare Modernization Act introduced the Average Sales Price into the drug reimbursement equation, changing the way private practitioners were reimbursed. Since then, providers have been reimbursed using a formula known as ASP+6%. The 6 percent was intended to cover drug acquisition and clinic administration costs. But many private practitioners found that reimbursement through the new model was inadequate.
Prior to the ASP+6% model, the margins provided by Medicare Part B administered drugs helped private oncology practices stay financially healthy. With these profits, the practices were better equipped to handle the occasional losses associated with uninsured patients and those who failed to make their co-payments. But after ASP+6%, unable to balance out these losses, private providers began to refer their patients to the nation’s safety net hospitals for care. According to a 2012 report by biopharmaceutical consulting firm, Campbell Alliance, titled, “Turning Tides: Trends in Oncology Market Access,” only four percent of patients treated by community oncologists in 2011 were uninsured and another four percent were Medicaid. Of the patients these oncologists referred to outside practices, 15 percent were uninsured and 26 percent were Medicaid.
As the nation’s safety net hospitals began seeing higher volumes of oncology patients, they didn’t have the luxury of walking away or referring the patients elsewhere. They needed to expand their oncology services – an endeavor that called for investments in technology, equipment and staff to meet the growing need, deliver higher levels of care, and continue to improve outcomes. Hospitals stepped up to fill the gap, and in some cases, this meant acquiring existing oncology practices with practitioners who welcomed the opportunity to continue caring for patients in a more financially-stable environment.
Do oncology treatments administered in a hospital cost more than those administered in a private clinic? Medicaid and payors believe so, and they provide greater reimbursement rates in these settings. This makes sense, as the integrated care setting a hospital offers provides more value to the patient and, as a result, carries more associated overhead costs than a private practice clinic. Many hospitals provide comprehensive oncology services including advanced diagnostics, surgical services, radiation therapy, infusion services (including chemotherapy and hormonal therapy), counseling for the patient and their family, home care services and palliative care.
For safety net hospitals participating in the 340B Program, there’s the additional financial burden of serving a higher percentage of Medicaid and low-income, Medicare patients. This commitment to serving disadvantaged populations isn’t just feel-good hype. It’s their mission—and it’s a requirement for participation in the 340B Program. That’s where the 340B drug discounts come in. The 340B Program is helping make oncology care sustainable within our nation’s safety net hospitals without increasing taxes. The drug discounts these hospitals receive don’t raise the cost of care – they help to offset rising care and drug costs, expand services to the community, and ensure the organization’s financial stability. And unlike Medicare reimbursements, which must be paid for and measured in tax dollars, 340B drug discounts are exactly what the name implies: discounted pricing on eligible drug dispensations, with a cost that’s measured in slightly diminished profits for Big Pharma.
It should come as no surprise that AIRx340B, an alliance of pharmacy industry stakeholders, is leveraging a recent IMS Institute for Healthcare Informatics report in an attempt to demonize the 340B program and blame it for rising oncology care costs. They have profits to protect, and they’ve got the 340B Program directly in their sights – even though, according to the US Department of Health and Human Services Health Resources and Services Administration (HRSA), 340B drug purchases account for only two percent of all drug purchases. Yes, that’s right. Two percent of all drug purchases.
It’s time to stop blaming the 340B Program. Hospitals provide a level of integrated oncology care that is not available anywhere else, and it comes at a price. Refusing to pay the price for care delivered in the private practice setting has brought us to where we are today, and we need to heed the lessons learned. If not for the benefits hospitals receive from the 340B Program, hospital oncology departments may have no better chance of survival than private practice clinics.
(Note: This article first appeared in Sentry Data Systems’ More Perspective blog on May 29, 2014)