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2026 has already proven to be an incredibly turbulent year for 340B. As new state and federal regulations continue to take effect, many organizations may find their current 340B designation no longer accurately reflects the CE’s structure, services, and patient mix, so proactive analysis of that data is crucial. In some cases, adjusting the CE type may be appropriate to remain consistent with evolving regulatory definitions and HRSA eligibility requirements. Preparing for that change today can turn tomorrow’s disruptive challenges into manageable courses of action—and even uncover new opportunities.
Context: What’s causing the increased volatility in CE eligibility?
Medicaid Patient Volumes & Section 1115 Waivers
New Medicaid eligibility requirements take effect this year and next, causing millions of Americans to lose coverage through 2034. [1],[2] Several states also have pending or recently approved Section 1115 waivers that may implement additional Medicaid restrictions, further limiting coverage eligibility and enrollment.[3]
For hospitals, it will create a cascade of steady decline: fewer enrollees mean fewer Medicaid inpatient days, which factor into disproportionate share hospital (DSH) percentages, and lower DSH percentages can not only lead to reduced reimbursements but also threaten 340B eligibility altogether.
Organizations that rely on Medicaid patient volumes to meet federal program thresholds may face greater risk; according to recent estimates, over 10% of eligible hospitals could come up short against their current CE type’s requirements.[4]
Strategy: What’s the next step to safeguard 340B eligibility in this environment?
Proactive Assessment & Change Management
For current CEs, the key objective is to execute a data-driven strategic plan that consistently assesses patient volumes and tracks DSH percentages to avoid surprises in future Medicare cost reports. This proactive approach will not only allow CEs to more readily identify and address potential threats but also provide them with more time to prepare for a shift in their CE type if needed.
For example, hospitals falling below the DSH threshold of 11.75% may still maintain their 340B eligibility if they qualify as a sole community hospital (SCH) or rural referral center (RRC), both of which require a DSH percentage of 8% or higher.
Click here for a free checklist to prepare your organization for a potential CE type change.
Impact: What’s the aftermath of a CE type change?
Financial & Operational Considerations
A sudden, unexpected shift in CE type can create an overwhelming, time-sensitive burden for any organization—especially one already dealing with reduced reimbursements, labor shortages, and rising costs.
For hospitals, lower DSH percentages equal fewer add-on payments. If they drop below the standard DSH threshold but still meet that of an SCH or RRC, then the hospital could maintain its 340B eligibility for purchases with the exception of orphan drugs, which could significantly reduce savings in specialty areas like oncology.
Some organizations may consider operational changes, such as service line reductions or program additions, to help offset increased financial costs. However, a deep understanding of each area’s Medicaid utilization rates and 340B savings is critical; sweeping steps in the pursuit of short-term cost reduction could jeopardize long-term program eligibility and financial stability.
With a pre-established plan, organizations will already have the strategic changes in motion to counterbalance financial shortfalls and address operational needs while benefiting both patient access and the bottom line.
Working with an industry leader can provide valuable resources for all CE designations, even if yours changes. At CPS, our dedicated teams of Apexus-Certified Experts (ACEs) and specialty pharmacy leaders work alongside all types of CEs to help promote stability, realignment, and growth.
Learn more about our holistic support by visiting our website.
[1] Swagel PL. Estimated effects on the number of uninsured people in 2034 resulting from policies incorporated within CBO’s baseline projections and H.R. 1, the One Big Beautiful Bill Act. US Congressional Budget Office. June 4, 2025. Accessed April 7, 2026. https://www.cbo.gov/system/files/2025-06/Wyden-Pallone-Neal_Letter_6-4-25.pdf
[2] Rudowitz R, Burns A, Hinton E, Tolbert J, Williams E. Medicaid: what to watch in 2026. KFF. January 23, 2026. Accessed April 7, 2026. https://www.kff.org/medicaid/medicaid-what-to-watch-in-2026/
[3] Medicaid waiver tracker: approved and pending section 1115 waivers by state. KFF. March 9, 2026. Accessed April 7, 2026. https://www.kff.org/medicaid/medicaid-waiver-tracker-approved-and-pending-section-1115-waivers-by-state/
[4] Auberle F. Pinpointing the pain: what to expect as OBBBA impacts your state, hospital and healthcare system. Mauldin & Jenkins. February 20, 2026. Accessed April 7, 2026. https://www.mjcpa.com/pinpointing-the-pain-what-to-expect-as-obbba-impacts-your-state-hospital-and-healthcare-system/
Dennis Killian is vice president of 340B Solutions at CPS. He can be reached at Dennis.Killian@cps.com.
To learn about CPS please visit our website here.
