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New York state budget delays 340B ‘carve-out’ for two years

Tom Dinki/WBFO file photo
Leaders of Western New York's six Federally Qualified Health Centers call for reversing or delaying New York's 340B carve-out March 23 outside Evergreen Health in Buffalo. The New York State budget delayed the carve-out until 2023.

The 2021 New York state budget will push the impending 340B “carve-out” to 2023, providing something of a victory for health care providers who had said they stood to lose millions of dollars.


Federally Qualified Health Centers, or FQHCs, provide care for people of color, refugees, people living with HIV-Aids and the LGBTQ+ community. A federal program, known as 340B, allows FQHCs to get a discount on prescription drug prices for their Medicaid patients, and reinvest those savings into services. An impending state law passed last year, known as a 340B carve-out, would allow New York state to keep the savings for itself. 


However, the new state budget, passed by lawmakers this week, delays the carve-out for two years. Language in the state Health and Mental Hygiene budget bill says the New York State Department of Health cannot implement the carve-out before April 1, 2023.


Western New York’s six FQHCs spoke out against the 340B carve-out last month outside Evergreen Health in Buffalo, saying it would cost them millions of dollars and reduce services for their 130,000 total patients.


Evergreen Vice President and COO Michael Lee said although they had hoped lawmakers would completely revoke the carve-out, they were still “elated” with the delay.


“Everybody doesn't have to make changes to their patient services and programming,” he told WBFO Friday, “and I feel like two years is a good timeline for us to work collaboratively, because it is complex and there’s a lot of folks involved.”


Lawmakers listened to FQHCs’ concerns because of their track record helping marginalized patients, Lee said. FQHCs are administering 500 COVID-19 vaccinations a week, according to Lee, and helping over 90% of their HIV-positive patients remain virally suppressed, as well as helping them find housing and transportation. 


“So I do think that the lawmakers understood that and they have seen our results,” Lee said, “And knew that any reduction in resources could absolutely have negative implications on patient care, especially those that have high-need chronic illnesses.


“It does feel good to be heard,” he added. “340B is not marijuana. It’s not as easy as, ‘Oh, we want to legalize it.’ It's complicated. And so I think our elected officials really did a great job of understanding it, they wanted to understand it, and I had their staffers calling me asking questions, so I could tell that they were pretty engaged in it.”


FQHCs will now turn their attention to negotiating with the state on what the 340B carve-out will look like in two years.


The state Department of Health has said it will take over $100 million in savings from the carve-out and reinvest it back to FQHCs and other 340B providers. However, FQHCs have said $100 million is not enough for all of them to share, with some estimates they’ll need as much as $400 million. 


Lee said they’re speaking with other states that have also done 340B carve-outs, such as California, about how best to move forward.


“So trying to look at everybody's wish list and really come together in a meaningful way and say, ‘OK, is there a way to achieve some of this and get people mostly to where they need to be?’” Lee said. “My goal would be to, in a year, have a real solution that works for most folks, and to start to really shop that around and get it in front of lawmakers and other folks to take a look at.” 

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