LUGPA Policy Update: New Report Raises Questions About 340B Hospital Charity Care

October 2026

At a Glance

What Happened:
A new report is adding to growing scrutiny of the federal 340B Drug Pricing Program and whether participating hospitals are directing the financial benefits of the program toward patients and communities most in need. The analysis, conducted by the Pioneer Institute and CancerCare, examined CMS cost-report data from nearly 4,000 hospitals and found that 340B-participating hospitals provided less charity care, as a share of operating expenses, than hospitals that do not participate in the program.

The findings come as policymakers are taking a closer look at the size and structure of 340B, which has grown significantly in recent years. The report argues that greater transparency and accountability may be needed to ensure that the program's substantial financial benefits translate into measurable community benefits.

Key Findings:

• 340B hospitals spent 2.16% of operating expenses on charity care, compared with 2.82% among non-340B hospitals.
• The difference was even larger when looking specifically at charity care for uninsured patients: 1.60% of operating expenses at 340B hospitals versus 2.26% at non-340B hospitals.
• 340B hospitals served a somewhat higher share of Medicaid patients, with Medicaid accounting for 19.69% of admission days, compared with 17.76% at non-340B hospitals.
• The report recommends greater transparency into how 340B savings are generated and used, as well as consideration of minimum charity-care standards for participating hospitals.

Why It Matters:
The report provides additional evidence for policymakers questioning whether the current 340B structure appropriately balances the program's original goal of supporting care for vulnerable patients with the financial advantages it provides to participating hospitals. As the program has expanded, concerns have increasingly focused on whether 340B savings are being used to improve access and affordability or are contributing to other hospital financial priorities.

For LUGPA, this is particularly relevant because the growth of 340B is closely connected to the broader shift of services and physician practices from independent settings into hospital systems. Hospitals that qualify for 340B can obtain significant discounts on eligible drugs, creating financial advantages that independent practices generally cannot access. Those advantages can affect competition for patients, physicians and outpatient services.

How It Affects LUGPA Members:
Many LUGPA members compete with hospital systems that benefit from 340B participation. The financial differential can be particularly important in urology, where physician practices frequently administer high-cost Part B drugs in outpatient settings. When hospitals acquire independent urology practices or shift services into hospital outpatient departments, the resulting 340B economics can reinforce incentives for consolidation and make it more difficult for independent practices to compete on a level playing field.

The report does not by itself establish that 340B savings are responsible for hospital consolidation or that every participating hospital fails to provide meaningful community benefits. However, its findings strengthen the case for policymakers to examine whether the program's financial benefits are appropriately targeted and whether participating hospitals should face greater transparency and accountability requirements.

LUGPA Perspective:
LUGPA supports the underlying goal of 340B: helping eligible providers serve vulnerable and underserved patients. However, the program should be transparent, accountable and appropriately targeted, and its structure should not create unintended incentives that disadvantage independent, community-based providers.

LUGPA's position is focused on 340B reform—not elimination of the program. Policymakers should ensure that 340B benefits are tied to measurable patient and community benefits while addressing the competitive distortions that can arise when hospitals receive discounts unavailable to independent practices.

What to Watch:
340B reform is likely to remain part of the broader debate over hospital consolidation, drug pricing and site-of-care incentives. Congressional proposals have included greater transparency and reporting requirements, changes to eligibility and reforms intended to ensure that 340B savings benefit patients. LUGPA will continue to monitor these developments and advocate for reforms that preserve access for vulnerable patients while promoting a more level competitive environment for independent urology practices.