The Impact of Legislation on Hospital Facility Fees and the 340B Program

Ben H.

Hatched by Ben H.

Apr 20, 2024

3 min read


The Impact of Legislation on Hospital Facility Fees and the 340B Program


The healthcare industry in the United States is constantly evolving, with new legislation and programs being implemented to address various challenges. In recent news, a Senate panel has advanced a bill that seeks to limit hospital facility fees, drawing criticism from the hospital sector. Concurrently, a new paper sheds light on the 340B program, revealing some key findings. In this article, we will explore the implications of the Senate bill on hospital facility fees and delve into the complexities of the 340B program.

The Senate Bill and Hospital Facility Fees:

The Senate bill has raised concerns within the hospital sector due to its provisions regarding facility fees for telehealth and evaluation and management services provided outside hospital walls. Additionally, the bill requires outpatient providers to use separate identifiers to prevent overbilling and prohibits hospitals from demanding contracts with health insurance companies that restrict patient referrals. The American Hospital Association has expressed apprehension, stating that while the bill addresses healthcare workforce shortages, it may come at the expense of hospitals, health systems, and caregivers who require support.

Investments in Healthcare Workforce:

Despite the concerns raised by the hospital sector, the Senate bill does allocate significant funds towards supporting various aspects of the healthcare workforce. These investments include $5.8 billion for community centers, $950 million for the National Health Service Corps, $1.5 billion for the Teaching Health Center Graduate Medical Education program, $1.2 billion for nurse education at community colleges, and $300 million for primary care doctor training. Proponents of the bill argue that these investments will lead to long-term cost savings by enabling timely primary care and reducing the need for expensive hospital admissions.

The 340B Program and Contract Pharmacies:

The 340B program, which aims to provide affordable medications to eligible healthcare organizations, has been under scrutiny. A recent paper highlights two key findings regarding the program's contract pharmacy arrangements. Firstly, despite the program's expansion, less than half of the claims prescribed by 340B-affiliated clinicians are captured by 340B pharmacies. This raises questions about the program's effectiveness in reaching its intended beneficiaries. Secondly, the proportion of 340B claims has increased significantly from 1.7% in 2013 to 9.6% in 2020, based on Medicare Part D claims data. This growth highlights the program's expanding influence in the healthcare landscape.

Implications for Phrma and Medicare:

The findings of the paper also shed light on the potential impact on the pharmaceutical industry (Phrma) and the Medicare program. The 340B program poses a significant risk to Phrma, even without capturing all eligible claims. The Genesis lawsuit, which revealed that entities were not required to issue scripts for their patients, further complicates the situation. Additionally, the 340B program takes precedence over the government for Medicare Fee-for-Service claims, potentially resulting in a shift of savings from the Medicare program to 340B entities.

Actionable Advice:

  • 1. Hospital administrators should closely monitor the progress of the Senate bill and actively engage with policymakers to ensure that the concerns of the hospital sector are adequately addressed.
  • 2. Healthcare organizations participating in the 340B program should assess their contract pharmacy arrangements and explore strategies to increase the capture rate of claims prescribed by 340B-affiliated clinicians.
  • 3. Pharmaceutical companies should closely monitor developments related to the 340B program and evaluate the potential risks and opportunities it presents to their business.


The Senate bill's provisions regarding hospital facility fees have sparked controversy within the hospital sector. While the bill aims to address healthcare workforce shortages, concerns have been raised about the potential negative impact on hospitals, health systems, and caregivers. Simultaneously, the 340B program continues to evolve, with the recent paper highlighting the challenges in capturing all eligible claims and its implications for Phrma and the Medicare program. As the healthcare landscape continues to change, it is crucial for stakeholders to actively engage, adapt, and explore strategies to navigate these complex issues effectively.

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