From Avalere Study, Commissioned by Community Oncology Alliance, Adds to Growing Body of Evidence Showing Need for Transparency in Hospital Programs. January 29, 2018
February 13, 2018
E. Randoph Broun, MD
President & Chairman of the Board with OHC
All Ohio Hospitals Will See $52 Million More in Payments from Recent Increases in Medicare Part B Reimbursement and 340B Program Changes
Hospitals in Ohio, especially those in rural areas, will benefit from recent changes to Medicare payments, including changes to reimbursement of prescription drugs under a federal program known as the 340B Drug Pricing Program.
On average, Ohio hospitals will see a 2.2 percent increase—or an additional $52,213,493—in Medicare payments related to the changes.
These findings are included in new research released by Avalere Health, a nonpartisan DC-based firm that analyzes the impact of health policies. The study dispels misinformation being touted by some large, corporate hospitals that the Medicare changes to the payment of drugs purchased under the 340B program would bring drastic cuts to hospital reimbursement and threaten their operations. Ohio hospitals are estimated to receive nearly $2.5 billion more in net Medicare payments as a result of the changes in 2018.
Started by Congress in 1992, the 340B program gives certain hospitals and clinics that treat high numbers of uninsured or underinsured patients steep discounts on drugs purchased. The program has grown substantially, morphing into a profit-generating program for most hospitals who can make upwards of 50 percent profits selling drugs purchased at a discount to insured patients. Today, nearly half of all acute care hospitals participate in the 340B program. Recognizing that it is being abused by some hospitals, the government sought to reduce the profit motivation by adjusting the payment rate for drugs purchased through 340B beginning this year.
“Contrary to what the public and Congress is being told, the vast majority of America’s hospitals, and in particular rural hospitals, are benefitting from recent Medicare’s payment changes,” said Ted Okon, executive director of the Community Oncology Alliance (COA) which commissioned the study. “All Ohio hospitals benefit from the recent 340B and Medicare changes, not just a select few. What’s more, consumers will save money in lower drug co-pays, so everyone wins.”
Experts from the Centers for Medicare & Medicaid Services (CMS) predict that the changes to 340B payments will save seniors an estimated $320 million in drug copayments nationally in 2018 alone.
Many 340B hospitals have predicted that reductions in program reimbursement, which took effect on Jan. 1, would cause them to lose revenue. The Avalere research shows that increases in Medicare Part B payments for non-drug items and services have more than offset the 340B cuts, with 42 states, including Ohio, seeing overall payment increases.
“Community oncologists care deeply about the future of 340B, because some hospitals continue to use the program as a business strategy to take over local practices,” said E. Randolph Broun, MD, president and chairman of the board at OHC, an independent community-based oncology practice in greater Cincinnati, and a member of the COA board. “The Avalere data is clear: Ohio hospitals aren’t going to lose money from Medicare payment adjustments like many claim. It’s time hospitals started using 340B to help patients the way the program was intended, instead of irreparably harming the backbone of our cancer care system. When local independent practices shut down, patients suffer.”
According to the most recent Community Oncology Alliance Practice Impact Report, Ohio has seen 53 community oncology practices close or be acquired by hospitals since 2008. As a result, patients have fewer independent cancer doctors to choose from in their local community and they experience significantly higher costs with hospital acquired practices for the exact same cancer care.
The Avalere analysis comes on the heels of an independent study released last week in the New England Journal of Medicine (NEJM). The study found that the 340B program is driving the consolidation of the nation’s independent cancer doctors into the much more expensive hospital system. The 340B program is also associated with hospitals administering more cancer drugs and has not resulted in any clear expansion care or lower mortality for uninsured and under-insured patients.
The Avalere study and methodology are available here.
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OHC is a member of the Community Oncology Alliance, a non-profit organization dedicated to advocating for community oncology practices and, most importantly, the patients they serve. To learn more about COA, visit www.CommunityOncology.org.
