Medicare is set to reduce payments to hospitals for drugs acquired through the 340B drug discount program by over 33% starting next year, following findings that some patients are paying more for these drugs than the hospitals themselves. This proposal, unveiled in a recent rule on hospital outpatient payments, suggests that Medicare would reimburse hospitals at the average sales price minus 33.4%, a stark contrast to the current model which includes a 6% markup.
This initiative is part of an ongoing debate surrounding the 340B program, which is seen by some as essential for safety-net hospitals while others criticize it as a profit mechanism for affluent health systems. The response from nonprofit and academic hospital groups has been swift and critical, emphasizing that such cuts would disproportionately impact safety-net providers, as only these facilities qualify for the 340B program. In contrast, the proposed rule indicates a 7.4% payment increase for for-profit hospitals, highlighting the potential inequities in Medicare’s approach.
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