The U.S. Centers for Medicare & Medicaid Services (CMS) said today it proposes to continue a nearly 30% reduction in Medicare Part B reimbursement for hospitals’ 340B-purchased drugs.

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In Surprise Move, Biden Administration Proposes Keeping Trump’s Nearly 30% Cut in 340B Hospitals’ Drug Reimbursement

The Biden administration said today it proposes to continue a nearly 30% reduction in Medicare Part B reimbursement for hospitals’ 340B-purchased drugs.

The Trump administration implemented the payment reduction in January 2018. Hospital groups say it costs affected 340B hospitals $1.6 billion a year, and they have lobbied the new Democratic administration to end the cut. They say it hurts safety-net hospitals and low-income patients, undermines the 340B program, and does virtually nothing to reduce Medicare beneficiaries’ out of pocket expenses.

The U.S. Supreme Court early this month agreed to review a federal appeals court’s July 2020 decision upholding the legality of the cut. It will hear arguments during its next term, which begins Oct. 1.

“We propose to continue our current policy of paying an adjusted amount of ASP [average sales price] minus 22.5 percent for drugs and biologicals acquired under the 340B program,” the U.S. Centers for Medicare & Medicaid Services (CMS) said today in its hospital outpatient prospective payment system (OPPS) proposed rule for calendar year 2022. “We are proposing to continue to exempt Rural SCHs [sole community hospitals], PPS-exempt cancer hospitals and children’s hospitals from our 340B payment policy.”

The Part B drug payment rate for other hospitals is ASP plus 6%.

CMS said in its proposed rule that keeping the current ASP minus 22.5% for 340B drugs “is appropriate given” the federal appeals court’s decision that CMS’s interpretation of the 340B was reasonable.

CMS said it also still believes “that the current payment rate of ASP minus 22.5 percent represents the minimum discount that 340B covered entities receive, which more closely aligns the payment rate with the resources expended by 340B hospitals to acquire such drugs compared to a payment rate of ASP plus 6 percent, while also recognizing the intent of the 340B program to allow covered entities, including eligible hospitals, to stretch scarce resources in ways that enable hospitals to continue providing access to care for Medicare beneficiaries and other patients. Additionally, we continue to believe it is important to provide consistency and reliable payment for these drugs both for the remainder of the Public Health Emergency (PHE) and after its conclusion to give hospitals some certainty as to payments for these drugs.”

CMS posted its proposed rule for public inspection late this afternoon. Public comments are due by Sept. 17 (60 days after today’s date).

“We are deeply disappointed that CMS has proposed perpetuating this inequitable payment policy that originated during the previous administration,” said Maureen Testoni, President and CEO of hospital group 340B Health. She said the cuts have forced some hospitals “to cut services or cancel care expansion plans to maintain other core services for their patients and communities.

“We strongly urge CMS to abandon these ill-conceived payment cuts when it finalizes 2022 rates later this year,” Testoni said. “Four years of reductions already have taken a substantial toll on our nation’s health care safety net, and 340B hospitals and the patients who rely on them can ill afford another year of harm.

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