Indiana’s Family and Social Services Administration could end Medicaid drug reimbursement for qualified health care providers across the state.
Last month, the administration posted notice of plans to discontinue Medicaid reimbursement for drugs purchased under the federal 340B drug pricing program.
The proposed change would eliminate the ability of safety net health care providers to claim drug discounts for medication used by poor and low-income populations.
Under that program, certain clinics and hospitals get medication from pharmaceutical companies at a reduced price. Those health centers can then submit Medicaid insurance claims for the drugs and have them reimbursed at full price.
The savings from those funds are then reinvested into providing care to uninsured patients, covering facility costs, or other services.
Under the proposed change, the state would claim those drug rebates for itself.
Speaking in front of the state budget committee last December, FSSA Secretary Mitch Roob told lawmakers the funds would go directly into the state’s Medicaid budget, equalling approximately $63 million annually.
Roob said he had concerns about how health organizations are investing savings.
“We have no idea how those dollars are used at all,” Roob said. “We also lose out on the rebate.”
This isn’t the first time officials and lawmakers have raised concerns about how 340B drug savings are being invested. Last year, lawmakers considered language that would have stopped healthcare organizations from claiming reimbursements on drugs that were higher than they would have paid for them.
Speaking during the budget committee, Sen. Chris Garten (R-Charleston) suggested that there may be some organizations abusing the funds. But he asked Roob whether ending access to the program could harm clinics and hospitals effectively using those dollars, and end up costing the state more money.
“If we don’t know what services are provided with these dollars, then how can we say it’s cheaper?” Garten asked. “What services is it going to directly affect?”
Rep. Ed Delaney (D-Indianapolis) asked Roob if ending reimbursements through the drug program could endanger the business model of hospitals or clinics using it.
“If you’re telling me a hospital is going to close because it lost 340B pricing, they were going to close anyway,” Roob responded.
Health centers said the change will have damaging impacts, reducing their ability to provide care to the poorest Hoosiers.
Alan Witchey is the President and CEO of the nonprofit Damien Center, and said they save about $5 million under the program, which allows them to provide medicine free or at reduced cost.
“By doing this, they will reverse that, and there will be less options for Hoosiers to get their medications, less options for Hoosiers to get medical care, and it will likely lead to far more people accessing emergency care,” Witchey said.
The Damien Center, the state’s largest HIV care provider, isn’t alone in worrying how the change could impact them.
René Kougal is the president and CEO of HealthNet, which operates 10 health centers across the state. She said the change will cost them $3 million every year.
Kougal said the change is yet another way funding for services for poor and low-income Hoosiers is being pulled, pointing to expected cuts to the state’s Medicaid population.
“By our mission, we provide care regardless of someone's ability to pay, but that care is not reimbursed, and so programs like Medicaid and savings from the 340B drug pricing program are what allow health centers to keep serving patients when they can't afford to pay,” she said. “If both of those supports weaken at the same time, it creates real financial instability for safety net providers.”
A spokesperson for the FSSA did not respond to a request for comment.
People can submit a written comment on the proposed plan. The change is expected to go into effect July 1.
Contact Government Reporter Benjamin Thorp at bthorp@wfyi.org