Reducing Medicare Payment Rates for Part B Drugs in 340B Hospitals Discussed

November 16, 2015

Katy Lucas of King & Spalding LLP (Lexology, 11/16) reported on MedPAC’s monthly meeting, which included a discussion on “whether Medicare should be able to share in the savings of hospitals that participate in the 340B Drug Discount Program by reducing Medicare payment rates for Part B drugs in 340B hospitals.” Three options were presented on how 340B savings could be shared with beneficiaries and the Medicare program: “(1) reduce the Medicare payment rate by 22.7 percent of ASP (the estimated average discount on 340B drugs); (2) reduce the payment rate by 10 percent of ASP; or (3) reduce the beneficiary copayment by 22.7 percent, with no change in Medicare payment.” These options have projected payment reductions of $830 million, $365 million, and $150 million for options 1, 2, and 3, respectively.

In a separate post, John Jones, Jr. and Judith O'Grady (Lexology, 11/17) reported that with encouragement from policy makers, the Department of Health and Human Services Office of the Inspector General “will continue to evaluate the impact of a shared savings arrangement that would allow Medicare and its beneficiaries to share in the cost savings from 340B discounts.”