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340B ‘carve-out’ to cost millions for WNY’s Federally Qualified Health Centers

Evergreen Health
Raymond Ganoe, president and CEO of Evergreen Health, speaks at a press conference outside Evergreen's Bailey Avenue location Tuesday while joined by other leaders of local Federally Qualified Health Centers.

A New York state law due to take effect in one week could pose a financial challenge to Western New York health care providers that service some of the area’s most marginalized patients. 

Federally Qualified Health Centers, or FQHCs, provide care for people of color, refugees, people living with HIV-Aids and the LGBTQ+ community. Under a federal program known as 340B, FQHCs get a discount on prescription drug prices for their Medicaid patients, and can reinvest the savings in services.


But FQHCs say they stand to lose those savings, worth millions of dollars, thanks to the state making a change in the program, known as the 340B “carve-out.” Passed into state law last year, it would allow the state to purchase the drugs itself and keep the savings. 


The 340B carve-out will go into effect April 1, unless the 2021 budget revokes or delays it. There’s also a bill, currently in committee, that would delay the carve-out for three years.


Western New York’s six FQHCs, which service approximately 130,000 people, called on state lawmakers to reverse course on the carve-out Tuesday morning outside Evergreen Health on Bailey Avenue in Buffalo.


“Let us be clear: If this carve-out is not reversed or delayed, we may have to make significant cuts to our organizations and the services our patients have come to depend on,” said Evergreen Health Vice President and COO Mike Lee. “We're using (340B savings) to fund things like housing, transportation, nutrition programs, closing holes in substance use, mental health and those are all things that would be severely impacted. We wouldn't have the ability to self-fund or amplify any of those services that we offer.”



Credit Evergreen Health
Mike Lee, vice president and COO of Evergreen Health, speaks with the media Tuesday.

The potential carve-out comes at a time when FQHCs are trying to help communities of color battle COVID-19, added Ekua Mends-Aidoo, Evergreen Health’s chief equity and inclusion officer. 

She noted the 14215 zip code that Evergreen Health services has had the most confirmed cases (3,296) in Buffalo and the third-most confirmed cases in all of Erie County, and 340B savings help Evergreen get the 14215 community vaccinated, 


“With our vaccination efforts already severely underfunded, there is no doubt that stripping the 340B benefit from our health centers would impede our ability to vaccinate those hardest hit by the COVID-19 pandemic,” Mends-Aidoo said.


There will also be an impact on rural areas. Mike Pease, CEO of the Chautauqua Center, said his FQHC, which operates in Dunkirk and Jamestown, stands to lose roughly a million dollars a year from the carve-out.


“Which in our area is a significant amount of money and helps care for 12,000 unique patients,” he said.


The New York State Department of Health has said it will take the savings from the 340B carve-out and reinvest more than $100 million of it back into 340B providers.



Credit Tom Dinki/WBFO News
Leaders of Western New York's six Federally Qualified Health Centers call for reversing or delaying New York's 340B carve-out Tuesday.

“The State recognizes that the 340B program is important for many safety net providers, including FQHCs and Ryan White recipients,” the state DOH said in an FAQ response updated March 1. “This is evident in NYS DOH’s commitment to a multi-year reinvestment of the 340B savings explicitly for Covered Entities in the 340B program.”


However, Lee said $100 million isn’t enough for all of the 340B providers across the state, adding it’s estimated it would take closer to $400 million. 


Lee also pointed to California, which he said had issues deciding how much 340B carve-out savings should go to each FQHC.


“And the first thing to go in (California’s) COVID budget crisis was that pool of money,” he said. “So even if we had some pool, nobody can agree on how to distribute it. And it's a very small pool.”

Tom Dinki joined WBFO in August 2019 to cover issues affecting older adults.