Several times in 2020, HIV and other safety-net service advocates in New York State have sounded the alarm about how Gov. Andrew Cuomo’s actions are at odds with his current national reputation as a leader of competence and compassion. That is, at least, in comparison to Trump—a rather low bar.
They pointed out that, even after the devastation of COVID began, he refused to reverse course on slashing $2.5 billion from the state’s Medicaid budget. And well into COVID’s brutal impact on people experiencing homelessness, they decried him for withholding regular funding for clean needles and other harm-reduction services for drug users even while threatening to lock up those found using drugs on the streets.
But this time, HIV advocates and providers are really freaking out. And it’s over Cuomo’s plan, to take effect as soon as April, to cut the so-called 340B Medicaid drug-discount program. The program acts as a crucial source of millions of dollars in revenues for health and service nonprofits that they plow into things they otherwise can’t get reimbursed for, such as case management and care coordination for their most vulnerable clients living with, or at risk for, HIV, as well as services in mental health, housing, nutrition, substance use treatment, pre-exposure prophylaxis (PrEP) uptake and adherence, and more.
Funds from 340B also often pay directly for health care and meds for the small percentage of New Yorkers who remain basically uninsured, such as undocumented people.
Providers and advocates statewide have banded together under a coalition called Save New York’s Safety Net to fight the potential loss of $250 million a year. For some agencies, that represents millions of dollars of their budget, sometimes approaching a quarter to a third of their total health-services budget. And Cuomo’s office has thus far given no indication that they plan to reverse course, despite the recent spate of protests in Albany on World AIDS Day.
“If we lose this money that we can’t easily replace,” said Jacqui Kilmer, CEO of Harlem United (which takes in up to $5 million in 340B money), “we’ll lose the ability to go out into the community to connect with people and get them into care, and retain them in care, particularly in the middle of a pandemic that is hitting Black and Brown communities especially hard.”
And that, she said, also means the ability to connect such vulnerable people to COVID vaccinations. “Clearly, the governor’s plan is focused on being able to vaccinate impacted communities. [Providers like us] are critical in that plan, not just for delivering the vaccine itself but educating people about it and building trust.”
What Exactly Is the 340B Program?
340B is a federal Medicaid program that allows the pharmacies of nonprofit health providers—such as, in New York State, Callen-Lorde and Housing Works, to name just a few—to buy drugs at hugely reduced rates. But it still makes the insurers pay out the full price of the drugs to the nonprofits, basically creating hefty revenues the nonprofits can put toward the above-mentioned crucial patient services they can’t fund any other way. What’s the use of giving clients on-site care and meds if you don’t have the bandwidth to go out and find those patients, build their trust, make sure that all their needs (health, food, housing, mental health, etc.) are met in a coordinated and holistic way, follow up with them constantly, and—in the broader public health picture—make sure they’re staying on their HIV meds so they’re not just healthy but incapable of passing on HIV to others?
All those important tasks are covered by 340B money, even if—admittedly—it’s the kind of weird workaround program we likely wouldn’t have if drugs in the U.S. were reasonably priced in the first place, and if we didn’t have an elaborate, heavily privatized multi-payer system instead of government-run universal health care.
But now Cuomo is planning to cut those funds, as part of the state’s cost-saving plan to move its Medicaid drug benefit out of managed care and into a direct fee-for-service system that the state manages itself. Basically, that means that nonprofits will no longer be reimbursed for drugs at the profitable sticker price but at the heavily slashed price—and hence those revenues, which fund all those crucial services, will suddenly dry up.
Wendy Stark, the executive director of Callen-Lorde, a large New York City health nonprofit with an LGBTQ focus, called that “an existential threat, because providers like us rely on those revenues to care for our most vulnerable patients and provide all the wraparound services that have no other reimbursement streams.” She said Callen-Lorde stands to lose about $12 million annually—up to 15% of its total budget.
“It’s kicking away money that we use to keep our patients alive and cared for, fed, in some cases housed—all things that Medicaid otherwise doesn’t pay for.” She pointed to the example of a recent client, a transgender woman.
“She’d been disengaged from health care for quite some time because of hostile treatment she’d faced in other health care settings,” said Stark. “When she came in, she’d been off HIV meds for a while, her CD4 counts were down, her viral load was up, she had hep C and active staph infection. She met with a nurse for an intake, which 340B pays for, and he took care of everything for her—not in one, but multiple, visits. She needed primary care, HIV meds, hep C treatment, staph infection treatment, access to mental-health and substance-use services, and a whole bunch of stuff. He was essentially providing nursing case management to her. She could walk in anytime and see him. She’s now thriving. That coordinated care might have saved her life. And it saved Medicaid money because it prevented unnecessary trips to the ER.”
In the Albany region, Perry Junjulas, the executive director of the Damien Center, said that the nonprofit stands to lose about $1.4 million annually—a quarter of the agency’s budget, which has allowed it to expand its meal program, housing, mental health counseling, transportation, and med adherence services. He said he’d already laid off eight people starting Jan. 1 and foresaw having to lay off a full quarter of the staff.
“We’ve had incredible success with our Ending the Epidemic efforts, getting people into care and virally suppressed, but now that’s jeopardized,” he said. “We usually serve breakfast, lunch, and dinner every day, but we’ll have to cut to two lunches a week. The people we’re serving are in extreme poverty, many homeless or unstably housed. They were eating out of dumpsters before they connected to us. We’ll also have to reduce the housing we provide and the support that helps people stay housed.”
In New York City, Charles King, the longtime head of the massive agency Housing Works, said that 340B revenues made up 40% of the agency’s health services budget. “Half of our 340B money pays for drugs and the pharmacy, and the other half allows us to invest $10 million in non-reimbursed services like outreach, care coordination, educational programs, nutrition, treatment adherence like our Undetectables program, and PrEP navigation and adherence.” He said 340B money also covered unavoidable capital expenses such as reconfiguring walls and HVAC systems in its clinics to better protect against COVID.
He said the 340B cuts would deprive the agency of $7 million. “We’d not only have to eliminate unreimbursed services, we’d probably have to close at least one or more health centers and eliminate behavioral health services.”
Like Junjulas, King said that services funded by 340B were essential to the state’s Ending the Epidemic goal, which Cuomo has consistently promoted. Cutting them “would completely undermine ETE in the state—they’re the backbone.”
So What’s Next?
Issues around 340B are playing out beyond New York. In California, a group of health providers are suing the state over similar planned changes, saying they could cause “irreparable harm.” And nationally, more and more drugmakers are refusing to give federally mandated 340B discounts on their drugs, which raises the question of whether the incoming Biden administration will punish them with fines.
In New York, Cuomo has said that the state will offset the 340B cuts with $100 million to HIV/AIDS providers—but those providers say that is the equivalent of taking $20 from the church collection plate and putting back $5. Not to mention, they say, the fact that even the $100 million would not be guaranteed after 2021.
“What happens after that?” asked King. He noted that the safety-net coalition did a survey of just 15 HIV providers statewide, finding that 340B cuts would lead them into a total loss of $57 million.
Cuomo’s office “doesn’t even understand how much the 340B money bolsters the system,” he said, “and both the state budget office and health department have been deaf on this issue.”
Providers and advocates are beating the drum around a bill introduced by state assembly member Richard Gottfried and senate member Gustavo Rivera, each their chamber’s respective health committee chair, that would put off the 340B cuts for three years. They urged New Yorkers to contact their assembly members and senators, which can be done easily via the Save NY’s Safety Net website.
TheBody reached out to Cuomo’s office relaying questions asked by providers in this story—namely, why the governor is moving forward with the 340B cuts when they threatened to undermine both Ending the Epidemic and COVID vaccine goals, and also why the governor’s office would not reply to the provider community’s concerns about the impending cuts.
Via email, Cuomo communications director Peter Ajemian replied: “In 2014, Governor Cuomo said we would end the AIDS epidemic in New York State, and that is exactly what we are doing. HIV diagnoses and new infections have reached all-time lows thanks to the state’s work and our partnerships with advocates and service providers, and we are redoubling those efforts. Calling this funding change a cut is a mischaracterization—we are working to redeploy resources where they are most needed, and we are in active discussion with frontline providers and advocates to make sure they have the resources they need so we can achieve our common goal of ending the epidemic.”
Asked to reply to the statement, King, Stark, Kilmer, and Junjulas collaborated on this:
“A survey of 15 HIV service providers found that the elimination of 340B would result in a loss of $57 million that will directly impact their Ending the Epidemic efforts. The suggestion that calling this a cut is a ‘mischaracterization’ is to deny reality. This is on top of a 20% withhold on all HIV-related prevention, care, and service contracts to community-based organizations.
“The total loss for all 340B safety-net providers is estimated at $250 million annually. Putting $100 million back for one year still leaves a gaping $150 million hole statewide for the first year. After that, there will continue to be a $250 million annual loss of resources currently utilized to help persons who are the most vulnerable.”
The response continues, “Thus, the suggestion of redeployment of funds is disingenuous at best. And efforts by frontline providers and advocates to discuss these matters with the governor’s office and the Medicaid program have been met with arrogance and contempt.”