Patients across the country are receiving hospital care not knowing if they will get stuck with enormous and unexpected bills when they are released.  A patient in North Carolina made headlines for receiving a $41,000 medical bill from a hospital when he needed emergency surgery – and he had insurance. Think of the millions of underinsured or uninsured patients needing care across the country receiving a similar bill.  It’s time to take a hard look at hospitals, particularly those that participate in federal safety-net programs like the 340B drug discount program, which is designed to serve needy patients, and assess whether the hospital administrators are acting in patients’ best interests or their own. 

Rising costs and surprise medical bills hit everyone hard, but they hit low-income, uninsured patients the hardest.  Safety-net programs exist to help make sure these patients aren’t gutted by high costs.  But this objective is subverted when hospitals committed to serving primarily underserved patients become part of the problem.    

The North Carolina hospital that charged $41,000 for emergency surgery also participates in the 340B drug discount program, which was created nearly 30 years ago to allow certain healthcare entities to purchase outpatient drugs from manufacturers at a deeply discounted rate so the savings can be used to provide better or increased care for vulnerable populations.  This hospital was included in an April 2013 Charlotte Observer exposé which showed it had saved millions in drug costs but could not report revenue it had received as a result.  The hospital simply represents what many other nonprofit hospitals are doing: participate in the discount program, take advantage of the fact there is no clear definition of a 340B patient, and use the program like an ATM.  By treating insured patients with 340B discounted drugs and pocketing the difference between the 340B drug price and insurance reimbursement, they can make millions in profits.

Even though purchases on 340B discounted drugs have skyrocketed from $6.9 billion in 2012 to $24.3 billion in 2018, hospital charity care rates have consistently declined over the past five years, at the same time as they are coming under consistent fire for aggressive and predatory bill collecting tactics.

Unfortunately, the government is asleep at the wheel.  The Health Resources and Services Administration, which is responsible for administering 340B, is not making sure hospitals are adhering to program guidelines and treating patients right. The Government Accountability Office has already released two reports in 2020 citing the federal government’s inability to: properly determine if hospitals participating in 340B are even eligible for the program and ensure hospitals aren’t receiving multiple discounts for the same drugs through the 340B and Medicaid programs, which is statutorily prohibited.

Hospitals that participate in the 340B program are not required to demonstrate how they use savings from 340B discounts to increase care for low-income patients.  Instead they are fighting back efforts to reform the program where gamesmanship is occurring, a change Citizens Against Government Waste has urged the Centers for Medicare and Medicaid Services to adopt.  The abuse by hospitals of safety-net programs like 340B must be stopped.