A Patient’s Guide to 340B: Why Transparency Matters to You

Written By Jen Laws, President & CEO

***This is the second report in a six-part series to educate patients about the 340B Drug Pricing Program***

All public-private partnerships require transparency to instill confidence in program function, private business operations, and government accountability. Transparency is an essential part of the equation; it brings us more accountability and more effective programs. It helps to identify areas of improvement in operations or enforcement, as well as limiting waste, fraud, and abuse. The 340B Drug Discount Program is no exception because transparency ensures investments into patient access to medications for critically vulnerable populations are reaching patients. Transparency – in every programmatic aspect – serves the public interest and is, frankly, just good government. It builds confidence in the efficacy of the program and good will of the participating entities.

In general, under the 340B program, those entities receiving federal grant funding – known as “federal grantees” – under other programs (i.e., federally qualified health centers, Ryan White HIV/AIDS clinics, hemophilia centers, and others) receive a great deal over oversight on how they use their discounts and rebates from 340B, though that oversight comes as part of their fiscal reporting under those other programs. For non-grantee covered entities, oversight is primarily dependent on audits and self-attestation of compliance and corrections to issues. With non-grantee covered entities lacking dedicated oversight like federal grantees, there’s a lack of transparency in how those entities qualify under the program and how those entities are using 340B-generated revenues to benefit low-income patients.

Regardless of program, dollars meant to serve low-income patients are often scarce. As such, patients lose when the investments needed to support and expand services for vulnerable populations are directed elsewhere (outside of the community those dollars originated from or for-profit building purposes). Patients lose out on funding support that keeps programs stable, ensures access to critical health programs nearest to them, and ultimately threatens to destabilize a program relied upon by the federal government and community stakeholders to keep clinic and hospital doors open.

At the inception of the 340B program, legislation such as the Patient Protection and Affordable Care Act did not exist, and only 29 million people nationwide were enrolled in Medicaid. Fast forward to 2018, Medicaid rolls had grown to 72 million people – meaning in all but the hold-out “non-expansion states” nearly any hospital in the country might qualify as a “disproportionate share hospital” – a situation 340B never considered at inception. The development and growth of the program was analyzed in a 2018 report issued by the U.S. House of Representatives’ Committee on Energy & Commerce.

According to a Government Accountability Office report (GAO-21-107) about 80% of current covered entities are federal grantees and 20% of covered entities are hospitals. However, many of these entities, especially hospitals operate multiple sites – not all entities are created equal in terms of generating program revenue. Of the approximate 37,500 covered entity sites participating in the program, about 75% of those sites are hospital affiliated with hospitals, not federal grantees. Hospitals are able to qualify specifically because of the low threshold of “disproportionate share” of low-income patients who can now afford to seek care thanks to Medicaid expansion – even if the hospital entity is generally well off enough to not actually need those dollars in order to provide care. In order to better understand how these changes have impacted growth and qualification of the program, “disproportionate share” may not be the best formula to ensure 340B dollars are helping those who need it most. Particularly, given the decreasing share of charity care certain hospital entities have offered over the years, evaluating charity care percentages and qualifying patients by income and payer type (self-pay, Medicaid, private insurance, etc.) may be more accurate in ensuring entities are actually serving low-income communities.

To be clear, “charity care” is a specific type of “uncompensated care” – or when patients receive care but can’t pay their bills. Unlike other types of uncompensated care, whereby providers may send a patient’s bill to a collections company, charity care releases the patient from a portion or all of their financial responsibility. Typically, charity care is limited to those who have to choose between putting food on their table and seeking preventative care like mammograms or having to decide in what life-saving neonatal care a family might need. Given the intersection of race and poverty in this country, charity care is a critical, even if anecdotal measure of how much a hospital is invested in their local community and combating community health disparities like pregnancy-related mortality.

The 340B program’s statutory language is largely silent on how these revenues dollars may be spent and because of that, there’s little to ensure these dollars are actually going to benefit patients instead of hospital networks or pad executive pay. Patient advocates have long crowed about the need for non-grantee covered entities to meet the same transparency requirements federal grantees are required to meet. Indeed, one of the biggest challenges facing the 340B program is better understanding how these dollars are spent. Now, typically, where statute is vague, government agencies tasked with managing programs have the regulatory power to make rules and the man power to enforce them. That’s just not the case with 340B and the Health Resources and Services Administration (HRSA) has repeatedly stated a lack of surety in its ability to regulate beyond guidance and frequently cited an inability to expand auditing capacity due to lack of funding. So much so that President Biden included $17 million in his budget request to strengthen and expand oversight of the program specifically in terms of auditing how 340B revenues are generated and spent among on-grantee covered entities.

Given the program’s growth, there’s reason and need to further clarify the intent of the program, cemented into unambiguous statutory language to reflect the country’s health care landscape of today and ensure the revenues generated are actually helping patients and not padding executive pockets. In our next blog, we’ll discuss the accountability processes currently in play for covered entities and manufacturers and the glaring holes in that part of the oversight “net”.

For more information on the issues facing the 340B Program, you can access the Community Access National Network’s 340B Commission final report and reform recommendations here 2018 report.

Sources:

Jen Laws, President & CEO

Jen Laws (Pronouns: He/Him/His) is the President & Founder of Policy Candy, LLC, which is a non-partisan health policy analysis firm specializing in various aspects of health care and public health policy, focusing on the needs of the HIV-affected and Transgender communities. In that capacity, Jen has served as the President & CEO of the Community Access National Network (CANN), beginning in January 2022. He previously served as the Project Director of CANN's HIV/HCV Co-Infection Watch, as well as 340B Policy Consultant.

Jen began his advocacy efforts in Philadelphia in 2005, at the age of 19, coordinating team efforts for a corporation participating in the AIDS Walk. His connection to HIV advocacy grew when partnering with Mr. Friendly, a leading anti-HIV-stigma campaign.

He began working in public health policy in 2013, as a subcontractor for Broward Regional Planning Council evaluating Marketplace plans for plan year 2014, advising and educating constituents on plan selection. Jen was a member of South Florida AIDS Network and has worked with Florida Department of Health, Broward and Miami-Dade County Health Departments, Pride Center South Florida, and other local organizations to South Florida in addressing the concerns and needs of these intersecting communities. During this time, Jen was seated on the board of directors for the ADAP Advocacy Association.

Having moved to the New Orleans area in 2019, Jen resumed his community-based advocacy as the chair of Louisiana's Ending the HIV Epidemic planning subcommittee for Data-based Policy and Advocacy, regular participation as a community member and "do-gooder" with other governmental and non-governmental planning bodies across the Louisiana, and engages with other southern state planning bodies. He continues his advocacy in governmental health care policy evaluation, which has been utilized to expand access to quality healthcare by working with RAD Remedy to deliver the nation's foremost database of trans* competent health care providers. Lending his expertise on policy matters ranging from 340B impact on RW providers and patients to strategic communications and data analysis, Jen's approach to community engagement is focused on being accessible across all stakeholder groups and centering the perspectives of PLWHA and Transgender people. He is a community ambassador alumni of the CDC's Let's Stop HIV Together campaign.

In his personal life, Jen enjoys spending his time being "ridiculously wholesome" with his partner, Aisha, and her two amazing daughters. In their personal time, when not immersed in crafts or house projects, they can be found seeking opportunities to help their neighbors, friends, and community members (who have come to rightfully expect exquisite gift baskets of Aisha's homemade jams and jellies from time to time). Jen strives to set a good example both in his personal professional life of integrating values into action and extending the kindness and care that have led him to a life he calls "extraordinarily lucky".

https://tiicann.org
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A Patient’s Guide to 340B: Why Accountability Matters to You
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A Patient’s Guide to 340B: Why the Program Matters to You