The chickens have a way of coming home to roost in American healthcare, especially when accountability is ignored. The Justice Department’s recent resolution with the Cleveland Clinic, which required the system to pay to settle allegations tied to improper billing for pediatric transgender procedures, is not a small matter. It is a warning to every institution that believes complexity can hide misconduct. Even one of the nation’s most celebrated hospital systems is not beyond scrutiny when incentives are misaligned and transparency is absent.
The Justice Department says the Cleveland Clinic agreed to settle claims that it billed federal programs for services that did not meet applicable requirements, including those tied to the transgender sterilization of minors. Beyond settling the billing allegations, Cleveland Clinic agreed to a decades-long ban on performing or offering sex-rejecting procedures — including puberty blockers and cross-sex hormones — for minors, and committed $2 million to provide restorative care for detransitioners.
The conduct alleged here should trouble anyone who believes public money must be spent honestly and fairly.
Last year, I warned that the Cleveland Clinic owed patients transparency and accountability. At the time, the issue was not just the Clinic’s embrace of controversial medical interventions for minors. It was also the question of who was paying for them, and whether the public was being told the truth. That question remains unanswered, and it matters more now than ever.
Part of the answer lies in the sprawling 340B Drug Pricing Program, a program sold as a lifeline for hospitals serving low-income and uninsured patients. In theory, it gives eligible providers steep discounts so they can extend care to the vulnerable. In practice, it has become a system with too little oversight and too much room for abuse in hospitals nationwide.
Hospitals can buy drugs at a discount and bill insurers at full price, keeping the difference. They are not required to pass those savings on to patients. They are not forced to explain where the money goes. Even the Cleveland Clinic has acknowledged that it does not necessarily share those savings with the patients the program was meant to help.
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A number of hospital systems have used 340B revenue to bankroll programs far removed from the statute’s original mission, including youth transgender services at facilities such as Callen-Lorde in New York, Howard Brown Health in Chicago, Trillium Health in Rochester, and Rush University Medical Center.
Whether one supports or opposes those services is not the central issue. The real issue is whether taxpayer-supported discounts intended for the poor are being diverted without accountability. That is why the settlement matters. Weak reporting requirements make it easier for even large and respected institutions to drift from their mission.
The answer is not to abandon 340B, but to reform it so it serves the people it was meant to serve. That means real accountability, honest records, and no more hiding behind bureaucrat-speak.
The Trump administration's HRSA rebate program was a commonsense step in that direction. Instead of big hospital systems pocketing discounts upfront with no questions asked, a discount would only flow once there's proof a real drug went to an eligible patient.
Instead of letting it proceed, the hospital lobby went to court and got the pilot vacated on procedural grounds. Now Democrats in Congress are seemingly trying to block efforts to implement the program. If 340B is working the way hospitals claim, transparency should cost them nothing. Patients and taxpayers deserve a program that can prove its worth — not one that hides from the question.
The Justice Department’s action should be seen not as the end of a controversy, but as the beginning of a necessary correction. Transparency is the foundation of trust. And trust, once broken, is hard to restore. Cleveland Clinic’s settlement should remind us that this is a problem far beyond Cleveland.
The promise of 340B was supposed to be simple: help the sick, help the poor, and do it with accountability. Too many powerful institutions have turned it into a cash machine shielded from scrutiny. America should never be asked to fund opacity and call it compassion. If 340B is to remain legitimate, it must be brought into the sunlight and made answerable to the public it claims to serve.
J. Kenneth Blackwell is the former Ohio Treasurer of State and Mayor of Cincinnati. He currently serves as the Chairman of the Conservative Action Project and President of the Council for National Policy.
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