The 340B Drug Pricing Program remains among the financial and policy issues hospital CEOs are watching closely, amid legal challenges and potential changes to how hospitals receive drug discounts.
Eligible hospitals currently receive 340B discounts up front when purchasing drugs. But a limited federal rebate pilot is scheduled to take effect Jan. 1, 2027, allowing qualifying manufacturers to provide 340B pricing for certain drugs through rebates instead. The Health Resources and Services Administration has said the model would improve claims-level transparency and help prevent duplicate discounts, while hospitals have raised concerns about the cash flow and administrative effects of paying higher prices up front and waiting for rebates.
In Sept. 23 comments on the SECURE 340B Act, the American Hospital Association asked Congress to permanently bar rebate models, arguing they would create cash flow and administrative challenges for hospitals.
The bill would require drugmakers to provide 340B pricing as an up-front discount for four years while a national claims-level clearinghouse is established. After that, continued up-front pricing would depend on whether federal officials certify that the clearinghouse meets certain performance benchmarks.
Becker’s asked hospital CEOs what a rebate model would mean for their organizations and what they would need from a clearinghouse to have confidence in it. Their responses point to several areas for leaders to consider, including how much cash could be tied up while rebates are pending, what additional staff and technology would be needed and how delayed or denied payments could affect services.
Matt Perry, president and CEO of Zanesville, Ohio-based Genesis HealthCare System, said the largest financial risk would be working capital. Today, Genesis purchases a drug at the 340B price and receives the benefit immediately. Under a rebate model, the system would pay the wholesale acquisition cost and wait for the difference to be returned.
For a drug with a $12,000 wholesale price and a $7,000 340B price, for example, Genesis would pay $12,000 up front and wait for a $5,000 rebate.
“This means the hospital is financing the drug inventory until reimbursement is received,” Mr. Perry said.
The change would increase inventory carrying costs, reduce operating cash flow and create greater exposure if rebates are denied, he said. It would also create new work around rebate submissions, denials, audits, disputes, reconciliation and cash forecasting. Mr. Perry estimated Genesis could need one to two additional full-time employees, along with technology capable of tracking claims and rebates.
Sean Fadale, president and CEO of Nathan Littauer Hospital and Nursing Home in Gloversville, N.Y., pointed to a similar concern. His organization would have to spend more up front on drugs while adding staff to administer the rebate process.
He estimated the hospital would need at least one additional full-time employee, at a minimum cost of $55,000 including salary and benefits.
The financial pressure could also affect decisions about services.
“This may make me choose if I can operate a service,” Mr. Fadale said.
For Bristol (Conn.) Health, President and CEO Kurt Barwis said the stakes are particularly high. Bristol Hospital is a disproportionate share hospital that relies on 340B savings to help sustain services for its community.
In comments to HRSA shared with Becker’s, Bristol said it has operated with less than 15 days cash on hand for the last three fiscal years. A January 2026 transition to purchasing at wholesale acquisition cost up front created a $560,000 cash flow impact, according to the letter.
Bristol estimated that administering rebates could cost between $150,000 and more than $500,000 for a third-party administrator. The hospital also estimated that including 10 drugs in a rebate model would require an additional 10 to 15 hours of work per week.
The hospital said the added financial pressure could force it to cut services, reduce the number of employed providers and cancel planned capital projects. Its letter specifically cited a plastic surgery program and projects including a labor and delivery renovation among those that could be affected.
Mr. Barwis said adding a claims clearinghouse would not eliminate his concerns.
“Having a claims clearing house/process creates an administrative burden that would increase the cost of care and impact accessibility and strain healthcare finance clearing,” he said.
The CEOs also pointed to payment delays and denials as risks.
Mr. Fadale said he would be skeptical of a clearinghouse until he saw it work.
“History has shown over and over that reimbursement and claims delays are the rule rather than the exception and I would almost guarantee that they would be commonplace in this model as well,” he said.
Mr. Perry said he would want complete claim traceability, reconciliation of expected and received rebates, denial and resubmission tracking and reports showing outstanding rebates and how long they have been pending.
“I would want to be able to provide downloadable reports that show everything our CFO would want to see,” he said.
George Mikitarian, DHA, president and CEO of Titusville, Fla.-based Parrish Medical Center, which is not 340B-eligible, also pointed to considerations for hospitals participating in the program. He said a clearinghouse would need predictable processing times, high data accuracy, reliable duplicate-discount detection, interoperability with hospital systems, independent oversight and strong cybersecurity.
“Even if these conditions were met, many providers would still view upfront discounts as the more efficient and reliable approach because they avoid the additional financing burden, administrative complexity, and payment timing risks that accompany rebate structures,” Dr. Mikitarian said.
