Relationship between initiation of 340B participation and hospital safety-net engagement

Objective: The 340B program allows safety-net hospitals to acquire discounted outpatient drugs and charge payers full price. We examined whether 340B participation increases safety-net engagement. Data Sources: 340B participation data, Medicare hospital cost reports, American Hospital Association Survey, and Schedule 990 nonprofit hospital tax returns. Study Design: Quasi-experimental difference-in-differences design comparing 340B hospitals (the “treatment” group) before and after participating to changes over time to three alternative “control” groups: all other nonprofit and public hospitals, hospitals that are not participating during our study, and hospitals that were not-yet-participating but started after 2015. Outcome measures include a range of safety-net care measures that are alternatives to the standard uncompensated care: charity care, community benefit spending, charity care policies, and low-profit service-line provision. Data Extraction: We extracted data on all nonprofit and public hospitals from 2011 to 2015. We linked 340B participation data to Medicare hospital cost reports and American Hospital Association data using Medicare hospital identifiers. 990 Data was linked on name and address. Principal Findings: New 340B participation was not associated with a change in uncompensated care, but was associated with a 28.9 percent increase in charity care spending (SE = 8.8), or about $880,000 per hospital. However, total community benefit spending (including charity care) did not change. 340B was associated with an increase in the probability of offering discounted care (4.3 percentage points, SE = 1.6) from 84 to 88 percent and an increase in the income eligibility limit for discounted care (18.9 percentage points, SE = 5.6) from 294 to 313 percent. Participation was not associated with the probability of offering low-profit medical care services. Conclusions: Alternative measures show that newly participating hospitals may increase charity care, potentially through offering more patients discounted care. However, increases appear to be fully offset by reductions in other community benefit programs.