Medicare proposes cuts to hospital reimbursement for 340B drugs

Tara covers the business of health care. Her stories focus on hospitals, doctors, and how their business practices affect patients — especially when private equity gets involved. She also writes about health insurance and ideas for improving our broken health system. You can reach Tara on Signal at tarabannow.70.

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 nonprofit 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.