Don’t Defund Community Health Care; Stop the 340B Carveout

Infographic describing the impact of 340B carveout

Read this post on our blog here.

By Nora OBrien-Suric, PhD

A regulatory change that has been in the works for several years in New York State has gone into effect—and the impact on community health centers, specialized HIV health plans, and nonprofit organizations is already devastating, according to the advocates who have been warning this would happen. On behalf of the Health Foundation for Western & Central New York, I share our extreme disappointment at New York’s 340B carveout and call for the immediate halt of its implementation.

The federal 340B program allows safety net providers that serve low-income and high-risk communities to purchase prescription drugs for patient care at a discount while receiving federal reimbursements at full price. Manufacturers participating in Medicaid agree to provide outpatient drugs to covered entities at significantly reduced prices. This provides a critically important way for safety net providers to stretch federal funding resources while they provide high-quality care.

For the last several years—before the pandemic, under the Cuomo administration—New York State has planned to suspend 340B and move to a new Medicaid pharmacy plan that would include the state handling prescription drug purchasing and reimbursements. Advocates have been sounding the alarm on that plan since it was first announced, saying that safety net providers depend on the funding that flows from 340B to meet community health needs.

As of April 1, Gov. Kathy Hochul and New York State have moved forward with the new prescription drug plan, causing an abrupt stoppage of 340B funds. The impact on safety net providers has been immediate and devastatingly disruptive.

An advocacy group known as Save New York’s Safety Net has been sharing what providers are already experiencing since April 1. Save New York’s Safety Net is a statewide coalition of community health clinics, community-based organizations and specialized HIV health plans who rely on 340B.

Providers who have reported to the group have already seen a collective financial deficit of more than $5 million, with 83 percent saying they would be unable to respond in a public health emergency in their current financial state. 75 percent are experiencing challenges filling prescriptions, and 42 percent are operating with reduced patient capacity.

“It’s been a nightmare,” said Michael Lee, Vice President and Chief Operating Officer at Evergreen Health, the western New York based community health center who has been instrumental in Save New York’s Safety Net. “Essentially, safety net providers across the state have been defunded. Evergreen is fortunate that we are able to continue providing care, but there are many organizations who are going to soon have to reduce staffing or patient services, or even close.”

340B reimbursements were a consistent and reliable funding source for nonprofit organizations that often work on a shoestring while delivering important health care to the people in our community who need it most—from HIV patients to older adults or young families who rely on their local Federally Qualified Health Center for care.

While New York State’s new plan is supposed to address this funding issue, it will likely involve longer wait times and more complex processes for reimbursements that most organizations simply cannot afford. Plus, safety net providers say they have not received an update from the state since the April 1 date passed.

“As far as we can see, there is no plan in place for the near future to make these providers whole,” said Mr. Lee. “We need a long-term solution or providers will have no choice but to reduce patient services. This is a ticking time bomb.”

Safety net providers are the front line in community health care across the state. They deserve reliable, sufficient funding to continue providing these critical services. I implore Gov. Hochul not to move forward with the 340B carveout, and instead to focus on long-term solutions that will ensure community health care providers have the resources they need to ensure all people in New York can access quality care.

Learn more about Save New York’s Safety Net here.