Proposal to Cut 340B Reimbursement Elicits Opposition From Health System Pharmacists


The American Society of Health-System Pharmacists (ASHP) has released a statement opposing the Centers for Medicare and Medicaid Services’ (CMS) proposed cuts to reimbursement for drug purchased through the 340B Drug Pricing Program.

The Centers for Medicare and Medicaid Services’ (CMS) has proposed cuts to reimbursement for drug purchases through the 340B Drug Pricing Program, an action being opposed by the American Society of Health-Systems Pharmacists (ASHP).1

The 340B program enables covered entities to obtain outpatient drugs from participating manufacturers at significantly reduced prices. Eligible organizations for participation in the program include federally qualified health centers, Tribal and Urban Indian Health Centers, Ryan White HIV/AIDS Program grantees, children’s hospitals, and some specialized clinics.2

In its outpatient prospective payment system (OPPS) rule for 2018, CMS reduced payments to hospitals for drugs purchased under 340B by nearly 30%. On December 27, 2018, the US District Court for the District of Columbia ruled that the rate cut was unlawful. The court did not, however, rule that vacating the rule was the appropriate remedy, because they feared doing so could be highly disruptive to Medicare services.3

While the court ordered additional briefings on possible remedies, the 2019 OPPS rule went into effect. It continued the same program cuts and extended them to include new hospital locations.3

According to CMS’ proposed changes to the OPPS rule for 2020, released July 29, the agency intends to keep reimbursement rates for Medicare Part B payments to hospitals and off-campus departments at average sale prices minus 22.5% through 2020.4 A statement released Wednesday by ASHP said CMS' announcement disregards a district court decision that the agency's prior cuts to 340B hospitals exceeded the agency’s authority.1

According to the CMS statement, the proposed changes aim to follow directives in President Trump’s executive order “Improving Price and Quality Transparency in American Healthcare to Put Patients First.”4 By encouraging site-neutral payment, the agency hopes to increase price transparency.

ASHP, however, is criticizing the reimbursement cuts, which they say could negatively impact patient care.

“ASHP is disappointed that CMS has chosen to ignore the court ruling and double down on these drastic cuts that threaten patient care,” said Tom Kraus, ASHP vice president of government relations. “CMS should immediately and fully restore funding for 340B hospitals to avoid doing more harm to the vulnerable patients who rely on these entities.”1

The statement from ASHP added that the organization plans to work with Congress and CMS to oppose the changes, and will solicit feedback from their members to help create a remediation approach to compensate hospitals for their losses.1


  • ASHP Opposes Proposed Cuts to 340B. ASHP. Published July 29, 2019. Accessed July 31, 2019.
  • 340B Eligibility. Health Resources & Services Administration. Published May 8, 2018. Accessed July 31, 2019.
  • Wright JS, Zaitlin HE, Warren A, Shankar A. 340B Rate Cuts: DC Court Enjoins and Remands CMS’ 2018 and 2019 Reductions for Hospital Outpatients: Blogs: Health Care Law Today: Foley & Lardner LLP. Blogs | Health Care Law Today | Foley & Lardner LLP. Published May 22, 2019. Accessed July 31, 2019.
  • CY 2020 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS-1717-P). CMS. Published July 29, 2019. Accessed July 31, 2019.
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