CMS Rule Cuts 340B Drug Payments Affecting Safety Net Hospitals

The Centers for Medicare and Medicaid Services finalized the 2027 Medicare Hospital Outpatient Prospective Payment System rule, KFF Policy and KFF reported. The rule reduces Medicare reimbursement for 340B drugs, lowering payments from the average sales price. [1][2]

The analysis from KFF Policy and KFF found that the reduction in 340B drug reimbursements will lower revenues for safety-net hospitals. At the same time, an accompanying increase in Medicare reimbursement for other outpatient services will increase revenues for for-profit hospitals. [1][2]

The 340B Drug Pricing Program is a federal initiative created by the United States Congress under the Veterans Health Care Act of 1992. It requires drug manufacturers to offer outpatient drugs at reduced prices to eligible healthcare organizations to help them stretch federal resources and serve more patients. [3]

The Centers for Medicare and Medicaid Services previously used methods such as the Medicare Sustainable Growth Rate to control Medicare spending on physician services. As FTMQ Politics reported earlier, rules for 2027 will also affect Medicare Advantage plan availability across counties as major insurers exit multiple markets. [5][6]