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LIJ, Stony Brook University Hospital, Mercy & Other LI Anchors Are In Midst Of Massive Centers For Medicare & Medicaid Services (CMS) Cut To Fed Drug Discount Program Called  ‘340B’; Schumer Launches Push To Reverse Cuts, Arguing They Will Hurt Critical Care Across Island & Cost Millions

Services Such As Addiction, Mental Health, Cardiac & Cancer Care Could All Suffer – Including Opioid Treatment

Schumer: Without Fed Action, LI Hospitals & Patients Stand To Lose $170 Million Within Next Decade

Standing at Long Island Jewish Medical Center In New Hyde Park with doctors and others, U.S. Senator Charles E. Schumer revealed that Long Island hospitals are being deprived of critical federal dollars because of an under-the-radar-cut that began in January of this year. Schumer warned that, gone untreated, this federal cut to the Island’s hospitals jeopardizes health care and services for many. Schumer explained that LIJ alone is losing about $11 million a year because of the recent federal slash. He called on the Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) to reverse course on a 28.5% slash to a federal drug discount program called 340B, saying the program is critical because of how it gives hospitals who serve needy and sick patients the ability to stretch prescription medicine budgets to reduce costs and focus on local health initiatives, like beating back the local opioid scourge or leading the way on area cancer care.

“An under-the-radar federal funding cut is inflicting Long Island hospitals and could upend the balance of health care here if left untreated,” said U.S. Senator Schumer. “What I mean is that doctors, caregivers and entire staffs at our Long Island hospitals work day and night to help each and every person who comes through the doors—and they do this blindly—but they do it with a little help from a federal drug discount program known as 340B. You may have never heard of its name, but you can see its impact locally, because the program works like a prescription in that it helps keep the budgetary blood flowing for our most critical care initiatives centered around opioid, cardiac and cancer treatment to name a few. 340B helps our Long Island hospitals stretch their own dollars at the local level. And moreover, as the push to reduce the costs of all prescription drugs ensues, this federal program helps lessen the burden of costly drugs that patients can’t always afford, but hospitals must always provide.”

Schumer explained that in January of this year, the feds slashed the 340B hospital program which risks hospitals being stripped of their ability to provide critical services. For example, here on Long Island, services such as addiction, mental health, cardiac and cancer care could all suffer if the cut is not dealt with—that includes efforts to combat opioid treatment. Schumer is calling on HHS and CMS to reverse these cuts to protect access to essential health care services for Long Island and New York. Specifically, Schumer detailed federal cuts at Long Island Jewish Medical Center, Stony Brook University Hospital, Nassau University Medical Center, St. Charles Hospital, Mercy Medical Center, and Southside Hospital. He said the 340B program has given these hospitals significant financial relief by decreasing the burden of high cost prescription medication, like chemotherapies, and it must be protected at all costs.

Schumer detailed the full cuts to Long Island hospitals within the next decade. Schumer noted that these cuts to 340B would be felt in other areas of hospital care and treatment that rely on the federal program to help buoy larger mission and the local healthcare demands of patients.

  • Long Island Jewish Medical Center - New Hyde Park full cut: $127 million
  • Stony Brook University Hospital - Stony Brook full cut: $42.8 million
  • Nassau University Medical Center - East Meadow full cut : $725,000
  • St. Charles Hospital - Port Jefferson full cut: $486,000
  • Southside Hospital – Bay Shore full cut: $213,000
  • Mercy Medical Center - Rockville Centre full cut: $167,000

“As a not-for-profit health system dedicated to helping those in need – regardless of their financial or health status – any cut to the life-saving 340B Drug Pricing Program is a painful one,” said Michael Dowling, President and CEO of Northwell Health. “That’s especially true because we operate on a razor-thin margin and this cut alone translates into a $127 million funding gap for Northwell Health over the next decade, which will negatively impact care delivery and our fight to stymie the opioid epidemic on Long Island and across the New York metro area.”

“The most vulnerable, including women and children, depend upon Mercy Medical Center’s and St. Charles Hospital’s clinics to provide care and secure desperately needed lifesaving medications. Without the 340B program, these patients could not afford expensive drugs to keep them healthier and out of hospitals,” said Alan D. Guerci, MD, President and CEO, Catholic Health Services. At St. Charles, cuts to 340B would impact pediatric and adult muscular dystrophy programs, as well as pediatric services for gastroenterology, scoliosis and spasticity. Similarly, Mercy Medical Center offers a full-service outpatient obstetrical, gynecologic and pediatric center, enabling pregnant women and children without insurance or Medicaid access to the critical medications they require. Thanks to 340B, in 2017 Mercy and St. Charles were able to assist the underserved patients, reducing the cost of prescription drugs by $1,123,582 million and are on track to exceed that amount in 2018.”

“Reductions to the 340B Drug Pricing Program are devastating to safety net hospitals like Stony Brook University Hospital, which has multiple untoward ripple effects throughout our healthcare system, Stony Brook Medicine. The 340B discounts enable us to stretch scarce resources, providing critically necessary services to vulnerable patients, while mitigating losses we experience due to chronic underpayments from public payers, like Medicaid,” said Kenneth Kaushansky MD, MACP, Senior Vice President for Health Sciences at Stony Brook University and Dean of the School of Medicine. “These cuts cost Stony Brook Medicine $3.8 M in year 1 and a total of $42.8 M by year 10. The reductions have a direct impact on our neediest patients. I applaud Senator Schumer for championing this issue and urge CMS to restore this crucial funding.”       

“The 340B program allows Nassau University Medical Center to provide care to some of Nassau County’s most needy and sick” said NUMC Chairman George Tsunis. “Through this funding, we are able to provide vital medications to patients unable to bear the burden of drowning medical bills.  The Administration’s cuts to the federal 340B program is devastating to our—and all hospitals —long term mission of providing for each and every person who walks into our doors with health issues that spread the gamut and can sometimes mean life or death.  I want to thank Senator Schumer for pushing back on these senseless cuts.”

“As drug prices continue to soar, the 340B program is more important than ever to financially fragile safety-net hospitals and their patients,” said Kevin Dahill, President and CEO, Nassau-Suffolk Hospital Council. “Discounted prices also make it possible for these nonprofit institutions to reinvest in the needs of their communities. We thank Senator Schumer for standing up for New York’s hospitals and their neediest patients, and look forward to working with him to restore funding for the program.”

“HANYS and its member hospitals and health systems applaud Senator Schumer for his leadership in protecting the 340B Drug Pricing program,” said HANYS President Bea Grause, RN, JD.  “This program provides New York’s hospitals and health systems the ability to offer affordable drugs and services to their most vulnerable patients. This year alone, New York’s 340B hospitals have absorbed a staggering $160 million in cuts for certain 340B drugs, which will lead to painful choices at a time when hospitals can ill afford to absorb yet another attack on their Medicare reimbursement. We look forward to continuing our strong partnership with Senator Schumer and working together to protect access to affordable care for all New Yorkers.” 

Schumer explained, earlier this year, a CMS rule cut the reimbursement 340B hospitals receive by 28.5%. That previous higher reimbursement rate had allowed hospitals to reinvest their drug cost savings into critical patient services. Schumer said that these cuts to the 340B program could force Long Island Jewish Medical Center to endure a total cut of more than $127 million by 2028 or roughly $11.4 million a year. These cuts began to take effect on January 1, 2018. In terms of SBUH, the hospital stands to lose $42.8 million over the next ten years. Furthermore, Nassau Health Care will lose $725,000; St. Charles Hospital will lose $486,000; Southside Hospital will lose $213,000; and Mercy Medical Center will lose $167,000, all over the next ten years.

Schumer explained that due to the high cost of prescription medication, many hospitals have very tight operating margins and any long-term or drastic federal cuts could force them to reduce services and eliminate staff. So, in order to provide hospitals like Long Island Jewish Medical Center with relief, Congress enacted the 340B Drug Pricing Program (Section 340B of the Public Health Service Act) in 1992, allowing eligible organizations to purchase prescription medications at a 20%-50% discount. Schumer explained that these discounts gave these hospitals the financial margins and ability to offer more critical care services and hire more staff.

However, Schumer detailed, on January 1, 2018, CMS imposed a major cut to the critical 340B hospital program. Under the rule, hospitals are now paid average sales price (ASP) minus 22.5% for drugs purchased under the 340B program and administered in the outpatient setting, whereas they had previously been paid ASP +6%, the standard formula for all other Medicare Part B drugs. This reimbursement change drastically reduces the difference between the cost of the product under 340B and the reimbursement level. Schumer said that it will result in cuts to critical services at the 340B hospitals, or layoffs of hospital staff – ultimately hurting the patients and communities those hospitals serve.

This October, Schumer received a letter from more than 700 hospitals, including 26 New York 340B hospitals, asking for his help in eliminating this cut to the 340B hospital program and before and since, the Senator has been working to undo the cuts and make a bipartisan case for the 340B program at the federal level.