IDEAS home Printed from https://ideas.repec.org/a/eee/jhecon/v89y2023ics0167629623000310.html
   My bibliography  Save this article

The impact of the 340B Drug Pricing Program on Critical Access Hospitals: Evidence from Medicare Part B

Author

Listed:
  • Han, Dan

Abstract

I study the impact of expanding the 340B Drug Pricing Program to include Critical Access Hospitals (CAH) on Medicare Part B drug utilization and spending. The 340B program entitles certain hospitals and clinics to discounts on most outpatient drugs. In 2010, the Affordable Care Act expanded 340B eligibility to CAHs — small rural hospitals that receive cost-based reimbursement from Medicare. Exploiting variation in the predicted exposure to the 340B expansion in a difference-in-differences method, I find that the 340B expansion reduced Part B drug spending but did not affect Part B drug utilization. This finding contrasts with existing evidence about 340B’s impact on hospitals but is consistent with the prediction that cost-based reimbursement dampens the incentives created by the 340B discounts. I also find suggestive evidence that CAHs passed the cost savings from 340B on to patients. These results add new perspectives to the ongoing debate over 340B.

Suggested Citation

  • Han, Dan, 2023. "The impact of the 340B Drug Pricing Program on Critical Access Hospitals: Evidence from Medicare Part B," Journal of Health Economics, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:jhecon:v:89:y:2023:i:c:s0167629623000310
    DOI: 10.1016/j.jhealeco.2023.102754
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167629623000310
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhealeco.2023.102754?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michael Greenstone & Rema Hanna, 2014. "Environmental Regulations, Air and Water Pollution, and Infant Mortality in India," American Economic Review, American Economic Association, vol. 104(10), pages 3038-3072, October.
    2. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
    3. Jeffrey Clemens & Joshua D. Gottlieb, 2014. "Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?," American Economic Review, American Economic Association, vol. 104(4), pages 1320-1349, April.
    4. Craig Garthwaite & Tal Gross & Matthew J. Notowidigdo, 2018. "Hospitals as Insurers of Last Resort," American Economic Journal: Applied Economics, American Economic Association, vol. 10(1), pages 1-39, January.
    5. Gary Solon & Steven J. Haider & Jeffrey M. Wooldridge, 2015. "What Are We Weighting For?," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 301-316.
    6. Carlos Dobkin & Amy Finkelstein & Raymond Kluender & Matthew J. Notowidigdo, 2018. "The Economic Consequences of Hospital Admissions," American Economic Review, American Economic Association, vol. 108(2), pages 308-352, February.
    7. Gowrisankaran, Gautam & Lucarelli, Claudio & Schmidt-Dengler, Philipp & Town, Robert, 2018. "Can amputation save the hospital? The impact of the Medicare Rural Flexibility Program on demand and welfare," Journal of Health Economics, Elsevier, vol. 58(C), pages 110-122.
    8. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    9. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    10. Amy Finkelstein, 2007. "The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(1), pages 1-37.
    11. Federico Belotti & Partha Deb & Willard G. Manning & Edward C. Norton, 2015. "twopm: Two-part models," Stata Journal, StataCorp LP, vol. 15(1), pages 3-20, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gautam Gowrisankaran & Keith A. Joiner & Jianjing Lin, 2016. "How do Hospitals Respond to Payment Incentives?," NBER Working Papers 22873, National Bureau of Economic Research, Inc.
    2. Jaraitė, Jūratė & Kurtyka, Oliwia & Ollivier, Hélène, 2022. "Take a ride on the (not so) green side: How do CDM projects affect Indian manufacturing firms’ environmental performance?," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).
    3. Jiayi Wen & Haili Huang, 2023. "Parental Health Penalty on Adult Children's Employment: Gender Difference and Long-Term Consequence," Papers 2308.13156, arXiv.org.
    4. Wang, Lucy Xiaolu, 2022. "Global drug diffusion and innovation with the medicines patent pool," Journal of Health Economics, Elsevier, vol. 85(C).
    5. Liao, Yanjun (Penny) & Mulder, Philip, 2021. "What's at Stake? Understanding the Role of Home Equity in Flood Insurance Demand," RFF Working Paper Series 21-25, Resources for the Future.
    6. Freise, Diana & Schmitz, Hendrik & Westphal, Matthias, 2022. "Late-career unemployment and cognitive abilities," Journal of Health Economics, Elsevier, vol. 86(C).
    7. Chabé-Ferret, Sylvain & Reynaud, Arnaud & Tène, Eva, 2021. "Water Quality, Policy Diffusion Effects and Farmers’ Behavior," TSE Working Papers 21-1229, Toulouse School of Economics (TSE).
    8. Solomon, Keisha T. & Dasgupta, Kabir, 2022. "State mental health insurance parity laws and college educational outcomes," Journal of Health Economics, Elsevier, vol. 86(C).
    9. Kárpáti, Daniel, 2023. "Essays in finance & health," Other publications TiSEM 5505e140-1f4d-4f61-a5a5-e, Tilburg University, School of Economics and Management.
    10. Nikpay, Sayeh, 2022. "The medicaid windfall: Medicaid expansions and the target efficiency of hospital safety-net subsidies," Journal of Public Economics, Elsevier, vol. 208(C).
    11. Simon Freyaldenhoven & Christian Hansen & Jorge Perez Perez & Jesse Shapiro, 2021. "Visualization, Identification, and stimation in the Linear Panel Event-Study Design," Working Papers 21-44, Federal Reserve Bank of Philadelphia.
    12. Liyang Sun & Jesse M. Shapiro, 2022. "A Linear Panel Model with Heterogeneous Coefficients and Variation in Exposure," Journal of Economic Perspectives, American Economic Association, vol. 36(4), pages 193-204, Fall.
    13. Mathur, Neil K. & Ruhm, Christopher J., 2023. "Marijuana legalization and opioid deaths," Journal of Health Economics, Elsevier, vol. 88(C).
    14. Alexander, Diane & Richards, Michael R., 2023. "Economic consequences of hospital closures," Journal of Public Economics, Elsevier, vol. 221(C).
    15. Son, Jinyeong, 2022. "Do mandated health insurance benefits for diabetes save lives?," Journal of Public Economics, Elsevier, vol. 216(C).
    16. Wozny, Florian, 2020. "Hospital Resources: Persistent Reallocation under Price Changes," IZA Discussion Papers 13256, Institute of Labor Economics (IZA).
    17. Volha Lazuka, 2022. "Household and individual economic responses to different health shocks: The role of medical innovations," Papers 2206.03306, arXiv.org, revised Nov 2022.
    18. Noghanibehambari, Hamid, 2022. "Intergenerational health effects of Medicaid," Economics & Human Biology, Elsevier, vol. 45(C).
    19. Owen (O.A.) O'Donnell, 2019. "Financial Protection Against Medical Expense," Tinbergen Institute Discussion Papers 19-010/V, Tinbergen Institute.
    20. Whaley, Christopher M. & Brown, Timothy T., 2018. "Firm responses to targeted consumer incentives: Evidence from reference pricing for surgical services," Journal of Health Economics, Elsevier, vol. 61(C), pages 111-133.

    More about this item

    Keywords

    340B; Drug Pricing; Critical Access Hospitals; Cost-based reimbursement; Medicare;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:89:y:2023:i:c:s0167629623000310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505560 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.