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)
People struggling to get by in Southwest Virginia and East Tennessee are receiving vital health services thanks to their local hospitals’ access to 340B drug discounts, a cancer physician and hospital leader write in in their local newspapers.
“The 340B program is working exactly as it was intended by giving patients who need lifesaving care an opportunity to receive it at less expensive rates,” says Dr. Sue Prill, an oncologist affiliated with Kingsport, Tenn.-based Wellmont Health System, in a May 21 op-ed in Tricities.com, the website of the Bristol (Va.) Herald Courier. Dr. Prill treats patients in Abingdon, Va., and Bristol, Tenn. “Many people in communities we serve have experienced hardships from the challenging economic times that have affected our country deeply in recent years. Our more rural communities have been particularly affected by this trend.”
Through its participation in 340B, “Wellmont can purchase drugs at a discount and pass on the reduced rates to low-income, uninsured and underinsured patients,” Dr. Prill continues. “This is a terrific way to help our patients receive the care they deserve and sometimes desperately need to survive.”
“This program is particularly helpful to the Wellmont Cancer Institute, which must pay extremely high prices for drugs,” she says. “We have been able to offer the 340B savings to patients at our cancer facilities in Johnson City and Kingsport, Tennessee, and Norton, Virginia. Patients of the Hawkins County Memorial Hospital, Hancock Lonesome Pine Hospital and Mountain View Regional Hospital also have received assistance from this outstanding program.”
Kevin M. Spiegel, President and CEO of Chattanooga’s Erlanger Health System, related a similar story in a May 11 op-ed in the Chattanooga Times Free Press.
For Erlanger, which operates five hospital campuses and two community health centers and provides $92 million in uncompensated care annually, being able to purchase medications at a discount for eligible patients through 340B “means a savings of $9 million annually,” Spiegel explains.
“An example of an Erlanger program which is fully funded by these 340B savings is the pharmacy at the Dodson Avenue Community Health Center,” he says. “The Dodson Avenue pharmacy has dramatically reduced the multiple barriers of medication availability, accessibility, cost, and management for low-income patients. The 340B drug discount program supports Erlanger’s effort to provide these critical services that help keep local residents healthy and out of the hospital.”
Erlanger also uses its 340B savings to pay for “the free delivery of approximately 42,000 prescriptions to over 3,000 eligible Hamilton County patients every year,” Spiegel adds.
“The pharmaceutical industry wants Congress to revise or repeal the 340B law,” his essay concludes. “At stake is the health of some of our community’s most vulnerable residents. They will have the most to lose if drug discounts for the needy are no longer available to hospitals like Erlanger.”
The policy journal Health Affairs has published a new study that found that hospitals provide 60 percent of all the uncompensated care in America.
Hospitals in the 340B program provide a hefty chunk of this benefit. The American Hospital Association recently reported that 340B hospitals account for around 60 percent of the uncompensated care that hospitals provide. That works out to $28.6 billion a year.
The Health Affairs study didn’t say what percentage of uncompensated care comes from private cancer doctors. Their trade group, Community Oncology Alliance, is one of the 340B program’s chief faultfinders. The study did find that the larger category of “office-based physicians,” to which private cancer docs belong, accounted for just 14 percent of uncompensated care. That’s less than one-fourth of what hospitals provide.
Remember, private practitioners have the luxury of sending poor and uninsured patients to nearby safety-net hospitals for care – and most do.
About 30 Oregon hospitals that serve poor and rural patients met near Portland on April 29 to discuss how the 340B drug discount program enables them to fulfill their safety-net mission, the Portland Business Journal reports. Click here to read the article “While Oregon hospitals embrace drug discount program, ‘Big Pharma’ wants to scale it back.”
340B savings have allowed Oregon Health & Science University to open pharmacies, clinics, and cancer treatment centers in less densely populated areas, Joe Fazio, OHSU’s assistant director for pharmacy informatics, told the newspaper. Likewise, they allow Legacy Health System hospitals enrolled in 340B “to address the needs of underserved populations and expand the scope of what we can provide,” such as free mental health prescriptions for needy patients, said Kathleen Stoner, Legacy Health’s director of pharmacy services. The Portland-Vancouver area health system hosted the meeting. It was sponsored by the Oregon Association of Hospitals and Health Systems, the Oregon chapter of the Healthcare Financial Management Association, and the national group Safety Net Hospitals for Pharmaceutical Access.