December 4, 2023

A Well being Affiairs Forefront article by DiGiorgio (2023) argues the 340B has outlived its functions. He writes:

 By mandating that drug corporations give a big low cost to lined entities, the vast majority of that are hospitals with disproportionate share or essential entry designations, the 340B program was supposed to supply a monetary buffer for establishments such because the one the place I work. Nonetheless, the 340B program has develop into gamed by massive firms to extend income. It’s not serving its authentic intent.
This system has grown quickly amongst hospitals that serve wealthier affected person populations. 340B hospitals are increasing into more affluent neighborhoods, and they’re aware of payer combine as they transfer into areas with fewer publicly insured patients. 340B establishments usually tend to keep away from counties with lower income levels and more uninsured patients. Whereas Rep. Waxman argues that these revenues are getting used to extend service strains for low-income sufferers, the proof recommend that 340B hospitals did not increase care for underserved populations or increase their rates of uncompensated care. There are numerous reforms that might protect safety-net funding whereas curbing abuses of the 340B system

One key piece of proof DiGriogio cites is a paper by Mulligan et al. (2021). This examine discover strategic conduct amongst hospitals. Hospitals that recieve disproportionate share hospitals (DSH) funds are eligible for 340B if their DSH adjustment–a measure that identifies hospitals that deal with a disproportionate share of low revenue Medicare or Medicaid sufferers–is above 11.75%. Mulligan and co-authors used information from Healthcare Price Report Data System (HCRIS) to look at if hospitals are adjusting their DSH to achieve eligibility. As a result of investor-owned hospitals are usually not eliigble for 340B, one would anticipate no strategic conduct from these hospitals. The authors use a McCrary density assessments to evaluate whether or not the noticed distinction in density of hospitals slightly below and above the 11.75% threshold was considerably bigger than what could be anticipated by likelihood alone. The authors discover that:

In 2014–2016, the variety of hospitals will increase by 41% simply above the 340B eligibility threshold. McCrary density assessments discovered this enhance to be statistically vital throughout a spread of bandwidths in 2014–2016 (p < 0.01)…We discovered no comparable change amongst hospitals ineligible for the 340B program. These information are in keeping with the speculation that some hospitals alter their DSH to achieve 340B eligibility.

You possibly can learn the total Mulligan et al. (2021) paper here.