There are several elements to the Administration’s most recent budget proposal that would have a significant impact on the 340B program. While 340B Health, a group representative of 1,300 hospitals and health systems in the program, makes clear that they support efforts to improve the integrity of the program, they do not believe that legislation is necessary to accomplish this goal. The proposals include the addition of user fees and adjustments to the regulatory authority and Medicare payment policies.

The 26 million dollars in the budget for the 340B program would be comprised of 10 million dollars discretionary budget authority and 16 million dollars new user fees on drug purchases by covered entities. The fee is intended to improve the program’s operations and oversight.
The Administration proposes a broad regulatory authority for the program to set “enforceable standards of program participation and require all covered entities to report on the use of program savings.”

In 2019, the reduction in Medicare Part B drug payments to 340B hospitals would continue to decrease under the Outpatient Prospective Payment System. Currently, the CMS issues budget neutral OPPS laws. When the budget cut 1.6 billion in Part B payments to 340B hospitals, CMS redistributed savings in the form of increased payments for non-drug services to all hospitals in OPPS. The budget neutral approach would be discontinued in the 2019 budget. Instead, CMS would determine the savings from hospitals that “provide uncompensated care equaling at least one percent of their patient care cost” and redistribute those savings “based on their share of aggregate uncompensated care.” Hospitals below a certain benchmark will not receive redistribution payments and the savings from the payment reduction overall will be kept in Medicare trust funds.

340B Health reiterates that hospitals rely on 340B savings to fund critical programs for their low-income, Medicaid, uninsured, and underinsured patients. They hope to work with the Administration and Congress to protect the program so it may continue to help hospitals serve their patients without increasing taxes. Click here for more information on the effects of the proposal, and click here to read an article in response from a West Virginia medical center.