Medicare proposes cutting 340B drug payments to hospitals by over a third

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Medicare wants to slash payments to hospitals for drugs acquired through the 340B drug discount program by more than a third beginning next year, after the agency said its surveys found some patients paid more for the drugs than the hospitals did.

Under a proposal released Thursday , Medicare would pay hospitals for 340B drugs at their average sales price minus 33.4%, dramatically less than they’re getting currently, which is that price plus 6%. The provision, part of a proposed rule on hospital outpatient payments, represents the latest swing at what’s become a hotly debated drug discount program, viewed by some as a lifeline for safety net hospitals and by others as a profit center for wealthy health systems.

The proposal drew swift condemnation from groups representing nonprofit and academic hospitals, who said it would disproportionately harm safety-net providers. That’s because only these non-profit facilities are eligible for 340B, while for-profit hospitals are not. Medicare’s proposed rule shows a 7.4% pay increase to for-profit hospitals under the 340B adjustment.

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