CMS Final Rule to Slash Medicare Part B Drug Payments for 340B Hospitals

cuts 340B hospitals

In August, we reported on the proposed cuts to the 340B drug discount program, which helps hospitals in low-income areas. The Centers for Medicare and Medicaid Services (CMS) made a final rule earlier this month to cut Medicare Part B reimbursement for outpatient drugs purchased under the Medicare 340B program. The total loss for 340B hospitals will be $1.6 billion. The financial hit on eligible hospitals will take effect on January 1, 2018. Hospitals in the program are not happy about the decision, and many are suing the U.S. Department of Health and Human Services.

How 340B Works

340B’s aim is to lower medication costs for low-income patients while keeping up the quality of services. Under the program, the covered hospital treats the insured patient with discounted medication, is reimbursed for the full amount, and keeps the difference for funding programs within their hospital and community.

The 25-year-old 340B program provides drugs to certain hospitals at deep discounts, helping hospitals provide services to people in rural and low-income communities. The Mission Health system in North Carolina, for example, saved over $37 million in 2016, and were able to support a walk-in clinic, health center for the homeless, and other programs. 340B is especially important in rural communities, where people have to drive a long way to get care, and where several hospitals are closing down.  

340B Soon-to-Be Extinct

Detractors, however, say that some hospitals are taking advantage of the program, and that it’s costing Medicare too much money.

Under the new CMS rule, hospitals can appeal to the Centers for Medicare and Medicaid Services to restore the price cuts, if the hospital can prove how it is benefiting patients.

To see which hospitals are part of the soon-to-be extinct 340B program in each state, click here.

Related links

Proposed Cuts to 340B Drug Discount Program

House Passes Bill to Improve Medicare Part B

Everything You Need to Know About Part B

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