Increased Part B reimbursement will offset 340B cuts for most hospitals

Hospital groups have sued CMS to reverse $1.6 billion in cuts to Medicare payments made under the 340B drug discount program, but a new study from Avalere said only 15 percent of facilities will see a net payment reduction thanks to redistributing those funds under the Outpatient Prospective Payment System (OPPS).

The study, commissioned by the Community Oncology Alliance, found even among the hospitals which will see their total reimbursement reduced under the 340B cuts included in the 2018 OPPS rule, 76 percent of them will have to deal with a cut of under 5 percent. 55 percent of Medicare’s disproportionate share hospitals will see their payments increase.

Across all hospitals, Medicare Part B payments would increase by an average of 1.4 percent, Avalere said, with a bigger jump (2.7 percent) for rural hospitals.

“Rural hospitals benefit the most from these payment changes, which effectively redistribute funds from urban hospitals and those participating in the 340B program,” Joanna Young, senior director at Avalere, said in a statement.

Hospitals will see a net payment increase in all but eight states: Alaska, Arizona, Connecticut, Georgia, Idaho, Kentucky, Louisiana and Tennessee.

The American Hospital Association (AHA), America’s Essential Hospitals, the Association of American Medical Colleges (AAMC) sued to block the cuts, arguing the reductions were driven by the demands of the pharmaceutical industry. If the 340B cuts aren’t reversed, they contend hospitals will have to cut services, close facilities and reduce staff.

The Avalere analysis, however, is the second study released in less than a week damaging their argument. Research published in the New England Journal of Medicine found hospitals haven’t used the 340B discounts to expand care for low-income patients as intended. Hospital groups such as 340B Health responded by accusing the study of being misleading by excluding one-third of 340B hospitals and not accounting for uncompensated care.

“340B hospitals continue to use their program savings to support care to their low-income and rural patient populations, just as Congress intended when it created the program,” 340B Health said in response to the NEJM study.

The Community Oncology Alliance, however, said when taken together, the two studies show “transparency and accountability” are needed in the “black hole” which the 340B program really operates in hospitals.

“For far too long, large corporate hospitals have been abusing and enriching themselves off of the 340B program. This has come at the expense of taxpayers and patients, including the very vulnerable patients that the program is intended to help,” said Jeff Vacirca, MD, CEO of NY Cancer Specialists in New York and president of COA. “CMS should be commended for taking this bold first step and wisely adjusting the course of the runaway 340B program so that rural hospitals get the support they need and patients benefit.”