CMS Proposes Cuts to 340B Reimbursement

As part of a larger proposed rule for its hospital outpatient payment program for 2018, the Centers for Medicare and Medicaid Services (CMS) is considering reducing reimbursement to hospitals for discounted drugs purchased through its 340B Drug Pricing Program.

For drugs purchased through 340B, CMS now reimburses hospitals for the average sales price plus a 6 percent premium; the new proposal suggests reducing reimbursement to average sales price minus 22.5 percent. Hospitals would continue to receive the 6 percent premium for drugs purchased outside of the 340B program.

The goal of this proposed reduction is to make drugs more affordable to the consumer, Department of Health and Human Services Secretary Tom Price said. “If it is adopted, Medicare would pay hospitals for drugs purchased through the 340B discount program at a price more consistent with the actual cost hospitals and other providers pay to acquire those drugs,” adding that the change could reduce spending by an estimated $180 million per year.

The Medicare Payment Advisory Commission previously released a draft package proposing several changes to Medicare’s Part B program that included transitioning the payment system to a voluntary market-based program in which third-party vendors negotiate the prices on behalf of the medical providers.

CMS is seeking public comment on how to implement the discounted percentage “in a manner that will bring down out-of-pocket drug costs for Medicare patients and allow providers to best meet their patients’ needs.”

Source: Congressional Quarterly, July 14, 2017.