Here in Southern West Virginia, we are on the front lines of taking care of all patients regardless of their ability to pay. While we are fortunate to live in a beautiful state, West Virginia has much higher rates of cancer, opioid addiction and heart disease than the national average. Our patients – many of whom are low-income, elderly and either uninsured or underinsured – depend on us to provide them with high-quality, low-cost specialized services and care.
At Charleston Area Medical Center, we are proud of our mission, but it comes at a cost. Just last year, we had an operating loss of $30 million and had to reduce our workforce by 300 employees, including many caregivers. Our financial situation, and those of our patients, would be much worse off if it were not for a vital drug discount program called 340B. We rely on our 340B savings to meet the needs of the low-income and rural patients we serve, including Medicare beneficiaries.
Former President George H.W. Bush signed the 340B program into law 25 years ago with broad, bipartisan support. 340B enables hospitals and clinics that serve a disproportionate share of poor and rural Americans to access prescription drugs at a discount so that care providers can “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” These discounts cost the taxpayers nothing but save nearly $6 billion a year for hospitals and clinics that serve our most vulnerable. Those savings are vital to hospitals’ ability to serve patients in need, yet they represent only 1.3 percent of total drug sales in the U.S.
The pharmaceutical industry – and its allies – would have us believe that one of the reasons drug prices are so high is this obscure government program that forces them to discount those prices when they sell their products to hospitals and clinics that serve our poorest citizens (“Hospitals should accept the cuts to 340B drug payments,” Jan. 22, 2018). They claim the program is too big and that the discounts are driving drug prices higher. Let’s look at the facts.
Hospitals in the 340B program provide 60 percent of all uncompensated care in the country, even though we only comprise only 36 percent of all hospitals. 340B hospitals provide more services such as trauma, psychiatric care, and labor and delivery than other hospitals, despite the fact that those services often cost more to provide than they are reimbursed. In many rural communities, a 340B hospital is not only the sole provider of inpatient care, it is often the largest employer in the community.
But we are reeling from the impact of a policy decision by the U.S Department of Health and Human Services. As of Jan. 1, Medicare drug payments to hospitals in the 340B program have been slashed by 28.5 percent. The new policy will reduce CAMC’s drug savings by $7.4 million in 2018 alone. That will force us to reduce our workforce further and will result in a cutback in important services to our most vulnerable patients. The Trump administration has described the cuts as a way to lower co-pays to patients and reduce costs for the taxpayer. Neither of these arguments is accurate.
To make matters worse, lawmakers in Washington have begun rolling out proposals that we fear would reduce the scope of the 340B program. At a time of rising drug prices (and drug company profits) and a projected increase in the number of uninsured Americans, this is the wrong way to go. The hospital industry is one of the most transparent sectors of the economy. We routinely report to the government on the types of patients we serve and the care we deliver. We report the charity care we provide to patients who are uninsured and the uncompensated care we provide to patients who are either underinsured or enrolled in Medicaid and Medicare, which often fail to pay enough to cover the costs of delivering care.
That is why we are strongly supporting efforts by Congressman David McKinley, R-W.Va., who has introduced legislation to roll back the Medicare cuts. We’re encouraged that 184 Republicans and Democrats in the House of Representatives have co-sponsored the McKinley bill so far. Now we need Congress to finish the job and stop these counterproductive cuts.
David L. Ramsey is the President and CEO of Charleston Area Medical Center, the largest hospital in the state of West Virginia.
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