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GAO Issues Report on Characteristics of 340B Hospitals

July 20, 2018

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PRESS CONTACTS
Jason Kleinman, Senior Legislative Analyst, Govt. Relations

The Government Accountability Office (GAO) July 18 released a report on the characteristics of hospitals that participate in the 340B Drug Pricing Program. The report compares certain characteristics of 340B and non-340B hospitals and describes how the characteristics of these hospitals changed after some states expanded Medicaid coverage.

The report specifically focuses on three types of covered entities – critical access hospitals, sole community hospitals, and hospitals that have a Medicare disproportionate share hospitals (DSH) adjustment percentage greater than 11.75% – and uses data from 2012-2016 to assess the impact of Medicaid expansion.

The report finds that compared to non-340B DSH hospitals, DSH hospitals that participate in the program are larger; more likely to be a teaching hospital; provide higher amounts of charity care, uncompensated care, and total unreimbursed care; and have lower total facility margins.

In comparing changes in characteristics between Medicaid expansion and non-expansion states between 2012-2016, GAO finds that 340B DSH hospital participation increased by 6 percentage points among hospitals in Medicaid expansion states but did not increase in non-expansion states. The report explains this may be because more hospitals in expansion states met the minimum DSH eligibility threshold as a result of treating a disproportionate number of low-income Medicare and Medicaid patients.

Additionally, the report finds that the median amounts of charity care, uncompensated care, and total unreimbursed care in expansion states generally decreased over this period. The report explains, “This finding may reflect that, in Medicaid expansion states, hospitals experienced an increase in the number of patients covered by insurance, such as Medicaid, and therefore provided less charity care and uncompensated care, which are generally provided to patients who are unable or unwilling to pay for their care.”

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