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GAO-18-521R 1 (2018-06-18)

handle is hein.gao/gaobacple0001 and id is 1 raw text is: GAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 June 18, 2018 The Honorable Greg Walden Chairman Committee on Energy and Commerce House of Representatives The Honorable Michael C. Burgess Chairman Subcommittee on Health Committee on Energy and Commerce House of Representatives Drug Discount Program: Characteristics of Hospitals Participating and Not Participating in the 340B Program The 340B Drug Pricing Program was created in 1992 to enable eligible covered entities- including certain categories of hospitals-to obtain discounts on covered outpatient drugs. Eligible hospitals generally must meet a minimum Medicare disproportionate share hospital (DSH) adjustment percentage, a measure that identifies hospitals that treat a disproportionate number of low-income Medicare and Medicaid inpatients.1 They also must either be state or local government-owned or -operated hospitals, nonprofit corporations formally granted state or local governmental powers, or private nonprofit hospitals with government contracts to provide health care services to low-income individuals not eligible for Medicaid or Medicare. According to the Health Resources and Services Administration (HRSA), the agency within the Department of Health and Human Services (HHS) responsible for administering and overseeing the 340B Program, the purpose of the program is to enable covered entities to stretch federal resources to reach more eligible patients and provide more comprehensive services.2 Eligibility for the 340B Program is determined pursuant to the definition of covered entity in section 340B of the Public Health Service Act and is generally limited to entities that participate in specified federal programs and six hospital types.3 General acute care hospitals that have a 1Medicare is a federally financed program that provides health insurance coverage to people age 65 and older, certain individuals with disabilities, and those with end-stage renal disease. Medicaid is a joint federal-state health financing program that provides health insurance coverage to low-income and medically needy individuals. 2HRSA bases this on language in a House Energy and Commerce Committee report pertaining to language similar to what eventually became section 340B of the Public Health Service Act (PHSA). See H. Rep. No. 102-384, Pt. 2, at 12 (1992) (discussing bill to amend the Social Security Act). See also Veterans Health Care Act of 1992, Pub. L. No. 102-585, § 602(a), 106 Stat. 4943, 4967 (adding section 340B to the PHSA). 3With the exception of critical access hospitals, 340B-eligible hospitals are required to meet or have a payer mix that would allow them to meet statutorily specified minimum DSH adjustment percentages. Eligible hospitals must also be owned or operated by a unit of state or local government, nonprofit corporations formally granted governmental powers by a unit of state or local government, or private nonprofit hospitals with government contracts to provide health care services to low-income individuals not eligible for Medicare or Medicaid. PHSA § 340B(a)(4)(L)-(O) (codified at 42 U.S.C. § 256b(a)(4)(L)-(O)). Other than specified categories of hospitals, eligible entities include GAO-1 8-521 R Drug Discount Program Page 1

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