CHARLOTTE, N.C. — After the state treasurer released a report saying hospitals overcharge North Carolinians for oncology infusion drugs, hospitals say his report is misguided and focus should be on the rising costs of pharmaceutical drugs burdening insured patients.
As part of a Hospital Price Transparency project, State Treasurer Dale Folwell invited researchers to analyze the State Health Plan for Teachers and State Employees’ medical claims on oncology and infused drugs from 2020 to 2022. In a recent report about the research, Folwell found that “340B hospitals billed state employees an average price markup of 5.4 times their discounted acquisition costs for oncology drugs. Hospitals generated average spread profits as high as $13,617 per claim on cancer drugs paid for by the North Carolina State Health Plan for Teachers and State Employees.”
Section 340B of the Public Health Service Act is a drug pricing program enabling hospitals that cover impoverished and uninsured communities to buy certain drugs at a discounted price. North Carolina hospitals say the discounts enable them to make up for the financial losses that come with doing charitable work.
In Folwell’s report, he asks policy makers to require greater transparency over 340B hospitals’ revenue and profits and for policies that dictate when they share 340B discounts with patients.
The North Carolina Healthcare Association immediately released a statement about Folwell’s report, saying it paints a false picture of the mission-driven work hospitals do.
“Congress did not create the 340B program for price discounts to be passed to insurance companies,” the statement reads. “The ability to obtain third-party reimbursement for drugs purchased at 340B prices is a critical component of the program for participating providers; the difference between their price and the reimbursed amount is an important component of the healthcare safety net that cares for the poor, uninsured, and underinsured.”
The statement goes on to say there should be policy discussion on the rising cost of pharmaceutical drugs that’s burdening patients who do have insurance.
Despite who is to blame, it is families who are suffering from crippling medical bill debt after facing life-threatening and fatal illnesses.
Terry Belk and his wife, Sandra, both fought cancer. Sandra Belk was diagnosed in 2003 with metastatic breast cancer, which she beat. Terry Belk overcame prostate cancer after being diagnosed in 2010. Belk says his wife’s cancer returned, ultimately taking her life.
“The number one priority was for her to get better and to get treatment, so we didn’t really care about the bills like that. We didn’t even look at them at the time, but of course it was a shock when the bills started coming in,” Terry Belk said. “We’re talking close to $100,000. A lot of money for just average people.”
Terry Belk said they had insurance, but it wasn’t enough to cover the cost. The Belks were getting medical treatment from Atrium Health, and ultimately the Charlotte Hospital Authority sued the Belks for the rest of their bill.
“It’s out of hand. It’s a national debt crisis,” said Terry Belk. “There is no transparency in the billing. The average person cannot figure this out. You would have to be a medical person to understand these bills.”
It’s a debt that he has been dealing with for over 20 years.
“It’s atrocious. Around my neck, something basically I will probably take to the grave with me,” Terry Belk said. “I already have a deed of trust on this house, which means I can’t even sell this house until the bill is settled. So basically, The Charlotte Hospital Authority has turned a homeowner, like me, into a renter. And there are plenty of people going through this and there are plenty of people scared to speak up, but I’m not. I’m in this fight for a long time.”
Atrium Health, Novant, Wake Med, and UNC are some of the many North Carolina hospitals mentioned in Folwell’s report. Spectrum News 1 asked the hospitals how they track the 340B drugs discounts and the charitable money used to service impoverished and uninsured communities. We asked how hospitals decide what to charge patients and their insurances, compared to the costs the hospital takes on. Here are the responses in full:
ATRIUM HEALTH:
At Atrium Health, our hospitals act as a safety net for underserved patients, providing necessary care and prescription medicines regardless of an individual’s ability or inability to pay. The savings we receive from the 340B program participation are essential to our mission, allowing us to maintain – and even enhance – access to care and prescription medicines in areas that need it most. Roughly one-third of our hospitals participate in the program.
The 340B program is an essential component of nonprofit hospitals’ ability to serve the public – and is widely misunderstood and frequently misconstrued. The program is not funded by taxpayer dollars and was never intended to lower the costs of medicines for patients, but rather as a way to provide savings for hospitals serving a high percentage of low-income patients. The intent of the program is to preserve access to health care by offsetting losses incurred by hospitals that provide high amounts of uncompensated and undercompensated care, including the costs of prescription medicines, while treating patients.
Forty-seven percent of new drugs coming onto the market in recent years cost more than $150,000 per year. Under 340B, pharmaceutical companies provide hospitals that care for a large number of low-income patients substantial discounts on certain drug purchases. Discounts under the 340B program are essential for treating chronic illness, such as cancer, where a single dose of medicine can cost tens of thousands of dollars. The hospitals use these savings to ensure continued access health care in rural and underprivileged areas and to invest in better care delivery programs – often including medication assistance programs.
It’s also important to note there are no “profits” in nonprofit health care. We reinvest resources directly into areas that benefit the communities we serve. In fact, across Advocate Health (of which Atrium Health is a part) charitable care and services – beyond just the 340B program – represent $1 out of every $5 we spend, with annual community benefit totaling nearly $6 billion in 2022, the most recent year for which figures are available.
WAKE MED:
Federal initiatives like the 340B program support critical efforts to ensure patient access and affordability. As the area’s largest safety-net hospital, WakeMed provided more than $364 million in charity care for the uninsured and underserved last year.
The 340B program allows WakeMed to continue to serve our community and deliver on our mission to care for all—it helps make what we do possible.
NOVANT:
“We understand the enormous pressures patients face when undergoing treatment, especially cancer treatments. Our care teams, including patient navigators, do all they can to help make that path easier to walk for our patients and their families. We also ensure cancer patients are aware of the variety of holistic resources available such as those offered for free at the Novant Health Cancer Institute Kemp Bessant Support Center in Charlotte. From counseling for patients and their families, to financial navigators, support groups and more, our teams ensure our cancer patients are not walking their journey alone.
We recognize that healthcare costs are complex, but accusing hospitals of overcharging patients is misleading and any suggestion that we’re not fully invested in the health of our communities is entirely false. The most recent claims published by the North Carolina Treasurer’s office fundamentally misrepresent the value hospitals and health systems provide to the community, dismissing the hundreds of millions of dollars of investment we provide each year and overlooking the role of pharmaceutical companies and health plans in care delivery. By comparing private insurance to Medicare, the Treasurer is cherry-picking data to create a false narrative and ignoring the significant contributions hospitals make to share the cost of care for Medicare patients. In just the last year, Novant Health proudly contributed $1.6 billion in community impact, including nearly $500 million in charity care and community benefit programs.”
We have reached out to UNC Hospitals for a statement, but have not heard back at this time.