Presentation (CTI)

OBJECTIVES: Hospitals have come under increasing scrutiny for how their public policy allowances - for instance, non-profit status and ability to participate in the 340B drug pricing program - impact their finances. 340B rewards hospital size and scale because integrated systems have more opportunities to capture 340B profits from distant patients and to ensure that prescriptions are filled at 340B contract pharmacies. Hospital consolidation often brings higher prices for commercial insurance plans. We examine whether 340B hospitals charge higher or lower commercial insurance prices than their non-340B counterpart hospitals accounting for size.
METHODS: We use payer transparency files provided by DeductibleData and Hospital Pricing Specialists to collect commercial insurance prices for top inpatient and outpatient codes from 1,196 hospitals across 17 plans. For each code we establish the average price across all hospitals weighted by commercial revenues. We compare the price for each service and each hospital to the weighted average price and calculate the relative average price across payers for each service at each hospital. We establish the overall price index for each hospital along with the inpatient, outpatient and service line indices and compare them controlling for hospital size and other characteristics.
RESULTS: Large 340B hospitals charge 7% higher prices than large non-340B hospitals. Looking only at disproportionate share hospitals (n=805), both small and large hospitals charge higher prices overall (8.5%). Total hospital spending by commercial payers was just over $800 billion last in 2023; 60% of which at large 340B hospitals. The higher prices at those hospitals translate to about $36 billion a year in extra hospital spending by employers/commercial payers at 340B vs non-340B hospitals.
CONCLUSIONS: Hospitals that benefit from 340B status appear to charge significantly higher prices to commercial plans than similar hospitals that do not participate in the program.