Medicare Proposes 33.4% Cut to 340B Drug Payments
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- Medicare proposed paying hospitals for 340B drugs at average sales price minus 33.4% beginning next year, a sharp cut from the current rate of ASP plus 6%, as part of a draft hospital outpatient payment rule.
- Medicare justified the cut by saying its surveys found some patients paid more out-of-pocket for 340B drugs than the hospitals paid to acquire them, turning the program into a source of profit for some providers.
- Nonprofit and academic hospital groups swiftly condemned the proposal, arguing it would disproportionately harm safety-net providers — the only facilities eligible for 340B, since for-profit hospitals are barred from the program.
- Medicare's proposed rule also includes a 7.4% pay increase to for-profit hospitals under the 340B adjustment, sharpening the contrast that critics pointed to between the two sectors.
- The 340B program itself is described in the source as hotly debated: viewed by some as a lifeline for safety-net hospitals and by others as a profit center for wealthy health systems.
Why it matters: Safety-net and academic hospitals — the only facilities eligible for 340B — would see a roughly 39-percentage-point reduction in the margin Medicare pays on 340B drugs, threatening the program they and their advocates describe as a lifeline, while for-profit hospitals, which can't participate, get a 7.4% boost in the same rule.
