TL/DR –
US lawmakers are proposing fixes to a federal program created to prevent rural hospital closures, including allowing older closed facilities to reopen and enabling rural emergency hospitals to use the 340B federal drug discount program. The 340B program allows eligible hospitals to buy drugs at a discount and then charge insurance companies, Medicare or Medicaid the market rate, keeping any profit. However, opponents argue that it can be exploited by hospitals that do not serve enough vulnerable patients, with the Pharmaceutical Research and Manufacturers of America stating that patients have not benefited from the program’s growth.
Lawmakers Consider Legislation to Support Rural Hospitals
US lawmakers are exploring fixes for a federal program aimed at keeping rural hospital services alive amidst ongoing closure concerns. Various proposals have been presented to Congress, capturing the attention of rural hospital leaders such as Eric Briesemeister from Anamosa, Iowa. His hospital, UnityPoint Health-Jones Regional Medical Center, chooses not to convert into a rural emergency hospital, a process which would mean extra federal funding in exchange for maintaining emergency departments and relinquishing inpatient beds.
Despite its benefits, only about two dozen of the 1,500 eligible hospitals have become rural emergency hospitals since the launch of the program. In response, federal lawmakers have introduced legislative solutions, including a senate bill advocating the reopening of older facilities and a House proposal, dubbed the Rural 340B Access Act, which seeks to expand the use of the 340B drug discount program to rural emergency hospitals.
The 340B Federal Drug Discount Program
The 340B program, established by Congress in 1992, allows eligible hospitals and clinics to purchase drugs at a discount, bill insurance companies, Medicare, or Medicaid at market rates, and retain the profit made from the difference. The program was designed to indirectly assist struggling hospitals. Larger hospitals often use the revenue for community and charity care while smaller hospitals depend on the drug discounts to alleviate staffing and operational deficits.
Currently, emergency hospitals are ineligible for 340B discounts. However, the House proposal aims to correct this oversight, an initiative backed by the American Hospital Association and the National Rural Health Association. Briesemeister and others believe the 340B program could greatly benefit small-town hospitals by using money generated to subsidize emergency services and assist uninsured or underinsured patients.
Debate Over the Expansion of the 340B Program
Opponents argue the 340B program benefits hospitals that do not serve enough vulnerable patients. Nicole Longo, deputy vice president of public affairs for the Pharmaceutical Research and Manufacturers of America (PhRMA), accuses hospital systems and chain pharmacies of exploiting the program. Despite this, Longo supports rural emergency hospitals accessing the 340B program as they serve vulnerable patients in underserved communities.
The use of the 340B program surged after the Patient Protection and Affordable Care Act in 2010 permitted unlimited contracts between hospitals, clinics, and retail pharmacies. Adam J. Fein, president of Drug Channels Institute, disclosed that the 340B program’s drug purchases reached $53.7 billion in 2022.
Pharmaceutical manufacturers have since limited their discounted drug offers, affecting rural hospitals like Labette Health in Kansas. Experts voice concerns about the expansion of the 340B program, citing a lack of clarity regarding the generated revenue and who benefits. However, allowing rural hospitals access to the federal drug discounts is viewed as a sensible move due to their service to vulnerable patient populations.
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