340B Hospitals Treated High Shares of Underserved Populations

Compared to non-340B hospitals, 340B hospitals provided care for a higher share of historically underserved populations, including dual eligible beneficiaries, people with disabilities, and Black individuals, according to a report prepared by L&M Policy Research for 340B Health.

Researchers used data from 2019 Medicare Part B and outpatient claims and Beneficiary Summary Files to evaluate the demographics of patients who received care at 340B hospitals, non-340B hospitals, and physician offices.

The study found that hospitals participating in the 340B Drug Pricing Program treated a larger percentage of Medicare beneficiaries who are dually eligible for Medicare and Medicaid, are eligible for Medicare due to a disability, or are part of a racial and ethnic community that has faced historical and ongoing discrimination.

“Patients who are most in need are much more likely to rely on 340B hospitals for their care, and those hospitals use their 340B savings to provide additional services and reduce inequities in care,” Maureen Testoni, president and chief executive officer of 340B Health, said in a press release. “By doing so, 340B serves as a cornerstone in the continuing effort to build more access and equity into the healthcare system.”

The percentage of dual eligible patients at 340B hospitals (22.7 percent) was 48 percent higher than at non-340B hospitals (15.3 percent) and 72 percent higher than at physician officers (13.2 percent).

Dual eligible beneficiaries are over three times as likely to report being in poor health than those not eligible for Medicare and Medicaid. Dual eligibles are also more likely to identify as Black or Hispanic, be under age 65, and have a disability. These beneficiaries tend to have lower incomes, a higher prevalence of chronic diseases, and more health disparities resulting from their socioeconomic status.

In addition, dual eligible beneficiaries cost Medicare 48 percent more than Medicare fee-for-service beneficiaries who are not dual eligibles.

Although Medicare is typically for individuals aged 65 or older, people under 65 can qualify for Medicare if they have received disability benefits for at least two years, have amyotrophic lateral sclerosis (ALS), or have end-stage renal disease (ESRD).

Under-65 Medicare beneficiaries are more likely to have poor health status and incur higher spending due to underlying health conditions or diseases with aggressive treatment.

The share of Medicare patients under age 65 was 37 percent higher at 340B hospitals (17.7 percent) than at non-340B hospitals (12.9 percent) and 116 percent higher than at physician offices (8.2 percent).

Similarly, the percentage of patients who qualified for Medicare based on disability was 37 percent higher at 340B hospitals (16.9 percent) compared to at non-340B hospitals (12.3 percent) and 114 percent higher than at physician offices (7.9 percent).

Communities of color are more likely to experience less equitable access to high-quality healthcare due to structural racism contributing to health inequities, the report noted.

The share of Medicare patients who identified as Black or African American was 69 percent higher at 340B hospitals (10.3 percent) than at non-340B hospitals (6.1 percent) and 63 percent higher than at physician offices (6.3 percent).

“The research presented here supports evidence from previous analyses showing that 340B hospitals continue to treat a higher proportion of patients with demographic and other characteristics associated with medical complexity and greater challenges related to access to appropriate, quality care,” the report stated.

The 340B Drug Pricing Program allows participating safety-net hospitals, clinics, and health centers to buy discounted drugs from pharmaceutical companies. The health systems must direct the savings they earn through the program toward providing care for underserved patients.

A report from 340B Health recently revealed that despite experiencing negative operating margins in 2020, 340B hospitals provided 67 percent of all uncompensated care.