CMS Proposes Remedy for 340B Medicare Drug Payment Policy

 This proposed rule describes the actions that the Centers for Medicare & Medicaid Services (CMS) proposes to take to comply with the United States Supreme Court’s decision about the adjustment of Medicare payment rates for drugs acquired under the 340B Program from calendar year (CY) 2018 through September 27th of CY 2022.  As background, in 2018, CMS decreased the Medicare payment rate for 340B drugs from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent.  They also made a corresponding increase to payments to all hospitals (340B hospitals and non-340B hospitals) for outpatient non-drug items and services, so the policy change was budget neutral.  The Supreme Court unanimously ruled that the differential payment rates for 340B-acquired drugs were unlawful because, prior to implementing the rates, HHS failed to conduct a survey of hospitals’ acquisition costs under the relevant statute.  To comply with the ruling, CMS proposes to pay affected 340B providers an estimated $7.8 billion in lump sum payments and to reduce future outpatient non-drug item and service payments to all hospitals starting in CY 2025. CMS would continue to adjust the OPPS payments until the full $7.8 billion is offset, estimated to be 16 years. The proposed actions in this rule would affect all hospitals. Comments are by September 5, 2023.