CMS finalizes 340B drug program cut

Dive Brief:

  • The CMS on Wednesday released a final rule that will significantly cut drug payments to hospitals that use the 340B Drug Pricing Program. The changes to the Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Program take effect Jan. 1, 2018.
  • The rule also puts a moratorium on enforcement of the direct supervision policy in certain cases, increases outpatient payments by 1.35%, removes six measures from the Outcome Reporting Program and removes total knee arthroplasty from the inpatient only list.
  • The American Hospital Association released a statement blasting the 340B cut, saying it “will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations.” AHA, America’s Essential Hospitals and the Association of American Medical Colleges plan to sue the administration over the change.

Dive Insight:

The cut to drug payments in the 340B program, which is mostly used by safety net hospitals, is dramatic. Instead of being paid the average sales price plus 6%, they will now be paid 22.5% less than the average price. Children’s hospitals and community hospitals in rural areas are exempt from the reduction.

Hospitals that use the program say it is necessary to helping them care for vulnerable populations, and have cautioned the cut will jeopardize that. There is little oversight, however, over how hospitals track and use the savings generating through 340B. Some lawmakers have said hospitals should be required to make this information readily available.

A controversial study released last month showed hospitals participating in 340B had more of a decline in charity care than other hospitals. AHA said the report is misleading and doesn’t take into account other community benefits hospitals provide.

Hospitals will also be angered by the CMS decision to allow total knee replacement surgeries to take place in outpatient settings. The agency is following the lead of commercial payers, who are pushing for care to move away from more expensive inpatient settings. CMS has said the change will let Medicare beneficiaries get a knee replacement at lower cost, but hospitals say the quality of care for those procedures could decrease.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.