Aggressive Medical Debt Collection Undermines the Promise of 340B

By Lisa Bercu, J.D. – Senior Director of Health Policy at NCL

At a time when Americans are increasingly concerned about the cost of healthcare, a troubling contradiction is emerging within the hospital system meant to care for our most vulnerable patients. A new analysis from the National Consumers League reveals that hospitals participating in the federal 340B Drug Pricing Program— including many hospitals that treat high volumes of cancer patients — are more likely than non-340B hospitals to permit aggressive medical debt collection practices such as lawsuits, wage garnishment, liens, and credit reporting.

The upcoming House Energy and Commerce Subcommittee on Health hearing, “Lowering Health Care Costs for All Americans: An Examination of the U.S. Provider Landscape,” plans to address the broader debate over healthcare affordability.  As lawmakers examine the role hospitals play in shaping the cost of care for Americans, they should also scrutinize the aggressive medical debt-collection practices at 340B hospitals.

The 340B program was created with a clear and compassionate purpose: to allow hospitals to purchase certain drugs at steep discounts to help low-income, uninsured, or otherwise vulnerable patients have access to affordable healthcare. In theory, those savings are supposed to help hospitals expand services, improve access to care, and ease financial burdens for patients.

But new data suggest that some hospitals are instead sending those patient bills to medical debt collection. The National Consumers League’s analysis reviewed more than 2,500 hospitals nationwide and found that 75 percent of hospitals participating in the 340B program may take legal action against patients. Among hospitals not participating in the 340B program, that number is just 62 percent.

The pattern is particularly concerning among hospitals that treat the highest volumes of cancer patients, where 340B hospitals continued to be more likely than non-340B hospitals to maintain policies permitting legal action.

For families facing a cancer diagnosis, the financial burden can be overwhelming. Treatment often requires expensive diagnostics, extended drug therapies, and repeated hospital visits for treatments. Even for insured patients, deductibles, coinsurance, and non-covered services can accumulate into staggering bills.

Medical debt is now one of the most widespread forms of financial distress in the United States. Nearly half of American adults report they have experienced medical debt.  For cancer patients, the stakes are even higher: research from the American Cancer Society Cancer Action Network found that almost half of patients with cancer and cancer survivors incurred medical debt, and that those with debt were three times more likely to fall behind on recommended screenings.

Behind these statistics are real stories. Patients frequently exhaust their savings, tap retirement funds, or turn to crowdfunding to stay afloat during treatment.

This disconnect raises an important policy question: if hospitals are receiving substantial savings through the 340B program, are those savings truly reaching the patients the program was intended to protect?

Congress now has an opportunity—and a responsibility—to examine that question.

Ensuring that the 340B program works as intended does not require dismantling it. Rather, it calls for targeted reforms to ensure that patients benefit from the program and aren’t left facing medical debt as a result. Policymakers should strengthen charity care requirements for participating hospitals and prohibit aggressive debt collection practices against patients.  They should also exclude medical debt from credit decisions.

These and other reforms to improve program transparency and oversight would further protect patients navigating already difficult health journeys.

As Congress examines the role of providers in shaping healthcare costs, it must look not only at the prices hospitals charge, but also at how they treat the patients they serve. Programs designed to support vulnerable communities must deliver on their promise.