Heritage Health and Housing, Inc. and Evergreen Health (Evergreen) filed the suit in New York County State Supreme Court on Friday, March 24 on behalf of the patients who depend upon 340B for needed health care services.

Heritage operates a federally qualified health center (FQHC) in Harlem that provides health care and medications to more than 5,500 patients. Evergreen is an FQHC “look-alike” in Buffalo serving more than 24,000 patients. Heritage and Evergreen are two of many providers who form New York’s healthcare safety-net, providing critical care services to nearly 2.3 million New Yorkers, of whom 71 percent are persons of color, and 89 percent are classified as low-income.

The main source of funding for Heritage and Evergreen is the federal drug pricing program called 340B.

According to an article by Business First of Buffalo, Evergreen Health could see $13 million in annual losses to its $117 million budget. Another local federally qualified health center, The Chautauqua Center, said they would lose $2 million in the carve out. Statewide, health centers are estimated to lose $250 million due to the changes set to go into effect by New York State on April 1, 2023

A report released by the NY Health Plan Association estimates the change will actually increase annual New York State-specific expenditures, costing taxpayers more than $235 million annually. Between the $250 million cut from safety-net providers and the cost to taxpayers, the 340B “carve-out” will have a near $500 million dollar negative impact.

The Chautauqua Center CEO Mike Pease discusses how a proposed state carve out of 340b funds could affect local health care centers in the millions of dollars.

TCC CEO Mike Pease said through the 340b program, TCC has the ability to offer prescriptions at a greatly reduced price for patients, “And the second thing is, it offers another form of income for organizations like us as well as other health centers, hospitals systems, Ryan White clinics, most of us participate in this program. And we reinvest those dollars into programs like care coordination, case management, transportation, translation services – things we don’t traditionally get reimbursed for.”

Pease said while this is a federal program, former Governor Andrew Cuomo‘s 2021 budget introduce a measure to “carve out” the savings healthcare facilities receive and directed it back into the state coffers. That measure was put on hold due to the Pandemic, but is now part of Governor Kathy Hochul‘s budget and is set to go into effect April 1.

Pease said if this goes forward, it means a loss of over $2 million for TCC. According to a report by Buffalo Business First, Buffalo-based Evergreen Health could see $13 million in annual losses to its $117 million budget due to the changes. Business First reports that the change is expected to usher in a $250 million funding loss statewide, and hospitals across New York are predicting losses of $240 million. Pease said this also would affect UPMC Chautauqua and Brooks Memorial Hospital who have their own pharmacy programs.

Pease said TCC is part of the Save New York’s Safety Net Coalition, which has come up with an alternative proposal for the State Legislature, “On how we could continue to get the benefit of the program as health centers but also we would ensure that the program’s guidelines are being met from the standpoint of reinvesting those dollars into programs that are supportive, things like that. So, there is a way that this could benefit both the state, the community – which is the most important, as well as us as providers of those services.”

Pease added that both State Senator George Borrello and Assemblyman Andy Goodell have been supportive of the continuance 340b program.