Insurers paying higher prices for drugs at top-performing hospitals
The once-confidential prices have come to light thanks to the federal price transparency rule.
Reimbursement for clinician-administered drugs under Medicare Part B is set at the average sales price charged by manufacturers to wholesalers, plus a 6% markup. Although these prices had long been confidential, hospitals now are required to post payer-specific negotiated prices under a transparency rule that took effect early this year.
In a report published in JAMA Internal Medicine, researchers analyzed a set of top-performing hospitals to quantify drug pricing variation across insurers Among their findings:
- Seventeen of the 20 hospitals posted files aimed at complying with the new transparency rule.
- Eleven included payer-specific pharmaceutical prices.
- Of the hospitals that released pharmaceutical data, 82% (and 85% of hospitals overall) were 340B entities, which entitled them to acquire drugs from manufacturers at prices below the average sales price.
- Prices varied between and within hospitals.
- There also was substantial variation by drug.
“Top-performing U.S. hospitals routinely charge commercial insurers prices far in excess of Medicare payment limits, which are based on the average acquisition costs of drugs for non-340B entities,” according to the report. “While hospitals often charge commercial insurers more than Medicare for a range of services, they generate revenue on pharmaceuticals by buying and reselling drugs, earning sums in addition to the amounts that they separately bill insurers for the professional services required to administer these drugs.”
The gap between pharmaceutical acquisition costs and hospital charges is particularly wide for 340B entities, including many hospitals in the study sample. The 340B program was designed to help hospitals provide care to vulnerable patient populations and offset the costs of uncompensated care.
“Our findings are consistent with a recent report examining the prices of oncology drugs at 340B hospitals,” the report said. “Further research is needed to understand how 340B entities generate revenue from commercial insurers and how proposed cuts to the 340B program may affect the ability of hospitals to fulfill their obligations to provide care for marginalized communities.”
The results are helpful despite the small sample size and lack of certain information, researchers said.
“The findings show substantial variation in payer-negotiated prices and self-pay cash prices at top-performing U.S. hospitals and considerable markups on clinician-administered drugs,” the report concluded.
Read more: