Medicare proposes cutting 340B drug payments to hospitals
Medicare has proposed cutting the amount it reimburses hospitals for drugs purchased under the federal 340B program by more than a third, reviving a long-running fight over the discount scheme. Nonprofit and academic hospital groups opposed the move, warning it would fall hardest on safety-net providers.
The mechanism behind the dispute is a spread: 340B lets qualifying hospitals buy outpatient drugs at steep discounts while still billing Medicare at higher rates, and the difference helps fund care for low-income patients. Trimming the reimbursement narrows that margin. Hospitals argue it strips resources from providers serving vulnerable populations; the government’s position is that Medicare should not be paying well above hospitals’ acquisition cost. A prior attempt to cut these payments was litigated to the Supreme Court, so the proposal is likely to face legal challenge before it takes effect.