340B & Medicare Outpatient Payments

FAH strongly supports CMS’s current policy under the Medicare Outpatient Prospective Payment System to reduce the payment rate on a budget neutral basis for separately payable drugs and biologicals acquired with a substantial discount under the 340B program and to reinvest those savings into higher payments to all hospitals for primary care and other outpatient services. The policy aligns payments and costs more closely for 340B-acquired drugs.

CMS’s current policy, which has been in place since 2018, significantly reduces beneficiary copayments for many drugs administered at 340B hospitals. In addition, the policy helps level the playing field across all hospitals consistent with the purpose of the OPPS to incentivize efficient behavior.

Along those lines, as documented in a March 2021 report by Avalere, reversing the policy would not only substantially increase the beneficiary cost burden for drugs acquired under the 340B program, it also would penalize with lower payments — in an already underfunded system — 89% of rural hospitals paid under the OPPS and 80% of urban hospitals.

The report also notes that uncompensated care services measured as a percent of operating costs are comparable in non-340B and 340B hospitals. Uncompensated care services account for 6.1% of hospital costs for FAH member acute care community hospitals.