About the Report
The Government Accountability Office (GAO) released a study last month comparing Medicare Part B spending at hospitals participating in the 340B drug pricing program to non-340B program hospitals. The study has raised more questions because no patient outcome data was provided to support many of its claims. The GAO analyzed 2008 and 2012 data from the Health Resources and Services Administration (HRSA) and the Centers for Medicare and Medicaid Services (CMS) to compare financial characteristics along with Medicare Part B drug spending for 340B eligible hospitals and non-340B hospitals. The GAO study found that “per beneficiary Medicare Part B drug spending, including oncology drug spending, was substantially higher”, in some cases more than double, “at 340B DSH hospitals than at non-340B hospitals.”
The GAO said, “This indicates that, on average, beneficiaries at 340B DSH hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other hospitals in GAO’s analysis.” The study then goes on to say, “there is financial incentive at hospitals participating in the 340B program to prescribe more drugs or more expensive drugs to Medicare beneficiaries. Unnecessary spending has negative implications, not just for the Medicare program, but for Medicare beneficiaries as well, who would be liable for larger copayments as a result of receiving more drugs or more expensive drugs. In addition, this raises potential concerns about the appropriateness of the health care provided to these beneficiaries.”
The GAO’s recommendation was that “Congress should consider eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals.”
The full GAO report can be found HERE. The highlights and recommendation can be found HERE.
Thoughts for Consideration
Are the GAO’s conclusions potentially flawed? Is this study simply an exercise in making the numbers support a particular position? Did the study adequately support findings that additional drugs were prescribed for the hospital’s financial gain?
The absence of supporting patient outcome data raises concerns about the methodology used in the study and the standard of care provided to those beneficiaries in non-participating hospitals. Consider these critical points:
Is there a different standard of care in 340B hospitals compared to non-340B hospitals?
Was there a clinical evaluation that, “more drugs or more expensive drugs than necessary”, were used?
Can drug costs prohibit non-340B hospitals from providing the same standard of care as 340B hospitals?
Where is the quality and patient outcomes data to support the study’s findings?
Stakeholder Reaction
Some of the concerns above were echoed among major 340B stakeholders. Prior to releasing the study, the GAO sent a draft of the report to The Department of Health and Human Services (HHS) and 340B Health (an organization of more than 1,000 public and private nonprofit hospitals and health systems throughout the U.S. that participate in the 340B drug pricing program) for their review. Both HHS and 340B Health voiced concerns that the study did not examine patient outcomes or quality of care.
HHS said, “[W]e are concerned that the report characterizing spending on Part B in 340B DSH hospitals as “excess,” “potentially inappropriate,” and “more…than necessary to treat Medicare Part B beneficiaries” is not supported by the study methodology. GAO’s study, which only examined average differences in per-beneficiary spending by hospital type, did not examine any patient differences in terms of outcomes in quality. While we acknowledge that one possible interpretation for higher spending in 340B hospitals is (as asserted by GAO) that the higher spending may be unnecessary or excess, it is also possible that higher volume of physician-administered drugs can lead to better clinical outcomes. To identify whether patients did or did not receive the necessary level of care would require further analysis that accounts for patient-level characteristics and examines outcomes and quality of care.”
340B Health released a statement saying, “There is insufficient data in the [GAO] report to justify a conclusion that higher per beneficiary spending on Medicare Part B drugs at 340B disproportionate share (DSH) hospitals ‘may’ be in response to financial incentives created by the 340B program. The report does not sufficiently evaluate the causes behind the increased spending, such as treatment of more complicated cancer patients. The report also does not evaluate whether higher spending has an impact on patient outcomes.” 340B Health stated that they “have retained outside experts to evaluate Medicare Part B spending at 340B DSH hospitals in more depth by looking at what is causing the reportedly higher spending and how health outcomes are affected.”
After the release of the GAO report, additional healthcare organizations released statements regarding the controversial study.
Dr. Bruce Siegel, President and CEO of America’s Essential Hospitals wrote, “We are particularly troubled by the GAO’s unfounded conclusion that hospitals that serve our nation’s most vulnerable patients inappropriately prescribe medications to Medicare beneficiaries for financial gain. 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.” Dr. Siegel’s full statement can be found HERE.
Additionally, the American Hospital Association (AHA) wrote that the GAO report “draws unsubstantiated conclusions about a program that has a proven track record of improving access to care for poor patients and vulnerable communities.” See AHA’s full statement HERE.
Political Action
On July 17, 2015, Senator Chuck Grassley sent a letter to Senator Orrin Hatch, Chairman of the Senate Finance Committee and Senator Ron Wyden, Ranking Member, requesting a committee hearing on the 340B program. The letter highlighted information from the GAO study and the concluded negative effects on the Medicare program. If granted, it would be the second hearing on the 340B program in Congress this year.
Homework
Let’s be blunt before someone ques the acceptance speech walk-off music:
READ THE GAO STUDY
Engage your team in discussion regarding the conclusions reached in the GAO report and how you would respond to inquiries/reactions from your congressional delegation
Summarize 340B/non-340B hospital differences (i.e. the acuity of the patients that a 340B DSH hospital treats versus non-340b hospital, etc.)
Be prepared to tell your congressional delegation about the report and about the reality of how things work at your hospital
Educate your congressional delegation on the 340B program and the importance to your hospital
Up Next
The GAO study also compared uncompensated care provided by 340B hospitals to non-340B hospitals. Stay tuned as we are in the midst of preparing a follow up blog addressing the issues with the GAO’s uncompensated care conclusions at 340B hospitals. Finally, SCA will keep you posted on any updates as a result of Senator Grassley’s letter to the Senate Finance Committee.
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