Medicare Proposes Deep Cut to 340B Hospital Payments
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- Medicare proposed paying hospitals for 340B drugs at average sales price minus 33.4%, down from the current ASP plus 6%, a swing of roughly 39 percentage points set to take effect next year.
- The cut is embedded in a proposed rule on hospital outpatient payments released Thursday; Medicare cited its own surveys finding that some patients paid more for certain 340B drugs than the hospitals acquiring them did.
- 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 excluded from the program.
- Under the same 340B adjustment, the proposed rule grants for-profit hospitals a 7.4% pay increase, creating a sharp split between safety-net and for-profit reimbursement despite their opposite roles in the program.
- The 340B program remains contested: some view it as a lifeline for safety-net hospitals serving low-income patients, while others characterize it as a profit center for wealthy health systems.
Why it matters: The proposal inverts the incentive structure of the 340B program: the safety-net hospitals that 340B was designed to help would absorb the steepest reimbursement cut (a swing from ASP+6% to ASP–33.4%), while for-profit hospitals ineligible for 340B would simultaneously receive a 7.4% pay bump under the same adjustment, deepening the financial strain on nonprofit and academic facilities.
