"Life in the Community" sculpture outside of CMS headquarters in Baltimore.

Will New Administration Reverse Deep Medicare Part B Cuts to 340B Hospitals?

The U.S. Centers for Medicare & Medicaid Services (CMS) Tuesday asked the White House to review a hospital payment proposed rule for next year that will either keep, end, or change the nearly 30 percent cut since 2018 in Medicare Part B drug reimbursement for hospitals’ 340B-purchased drugs.

CMS on May 11 sent its calendar year 2022 hospital outpatient prospective payment (OPPS) payment rates and policy changes proposed rule to the Office of Management and Budget (OMB) for approval to be published in the Federal Register. Compared with recent years’ OPPS proposed rules, OMB is getting this one from CMS for review sooner than normal. Last year, CMS released the calendar year 2021 proposed rule for public comment on Aug. 4. Signs point to the new proposed rule being released in July.

The massive annual rule sets what Medicare Part B pays for what are called separately payable non-pass-through drugs. These are relatively high-cost physician-administered drugs that are already established in the drug market.

Under President Trump, CMS reduced reimbursement to many 340B hospitals for these drugs, from average sales price plus 6% to ASP minus 22.5%. It said the lower rate is more closely aligned to what hospitals pay for the drugs, and results in lower out of pocket costs for beneficiaries.

Hospital groups have fought back against the cuts, all the way to the U.S. Supreme Court. A federal appeals court upheld the cuts in July 2020. The high court is unlikely to accept the case for review.

Hospital groups hope the Biden administration will be sympathetic to their argument that the cuts, which total $1.6 billion a year, harm 340B hospitals and the communities they serve. The new administration has not said what it will do about the cuts, however.

Hospital groups also are worried that CMS might adopt Medicare Payment Advisory Commission (MedPAC) recommendations that they say would amplify the effect of the Part B drug payment cuts for 340B hospitals.