Study: Most Hospitals Benefit from 340B, Medicare Changes

Cuts to the 340B program may not negatively impact hospital reimbursement.

A new report conducted by Avalere Health and commissioned by the Community Oncology Alliance (COA) suggests that a majority of hospitals will experience Medicare payment increases that will offset potential losses spurred by reform to the 340B program.

This study is the first to evaluate the overall financial impact of altering Part B payments, which were put in place to correct the consequences of 340B. These findings suggest that restructuring payments will not affect reimbursement, while also highlighting the need to increase transparency among hospital programs, according to a press release.

Approximately 85% of hospitals will experience payment increases related to the 2018 Medicare Outpatient Prospective Payment System (OPPS) rule. Notably, rural hospitals will generate larger reimbursements under this rule, according to the release.

The OPPS rule lowered Medicare reimbursement for Part B drugs purchased through 340B from average sales price (ASP) plus 6% to ASP minus 22.5%. This change cut an estimated $1.8 billion in payments to approximately 3900 facilities; however, these savings are reallocated to hospitals to increase non-drug and service reimbursement, according to the report.

The Centers for Medicare and Medicaid Services (CMS) projected that the OPPS change will result in an increase of $690 million in payments in 2018 compared with 2017. The agency also projected that these changes will cut Medicare co-payments by $320 million in 2018, according to the report.

The researchers analyzed the net impact of Part B changes for 3814 hospitals and compared reimbursement for 2017 to 2018. They accounted for 340B reimbursement and other OPPS-related changes.

The analysis showed that all hospitals will see an average reimbursement increase of 1.5% compared with 2017, which reflects a 17.6% reduction in drug payments and a 19.1% increase in other payments.

Rural hospitals will benefit from a 2.7% payment increase resulting from the redistribution of 340B profits.

Notably, only 1% of hospitals will experience a Part B reimbursement cut of 10%, according to the study.

On the state level, the researchers noted that 42 states will benefit from increased Part B payments. Although 8 states were projected to experience a decrease in reimbursement, the reduction averaged 0.4%, according to the report.

Multiple recent studies have suggested that the 340B program lacks transparency and oversight. Additionally, critics have speculated that hospitals may not be translating 340B savings to the underserved patients they treat.

Recently, Sen Bill Cassidy, MD (R-LA), introduced the Helping Ensure Low-income Patients have Access to Care and Treatment Act as an effort to close loopholes in the 340B drug discount program. This bill would also hold hospitals accountable for passing savings on to patients, which may drive up health care costs.