CMS finalized a cut to Medicare payments for 340B-acquired drugs in its 2027 outpatient payment rule, issued Nov. 4. Here are nine things to know:
- CMS will pay for 340B-acquired drugs at the average sales price minus 28%, down from the current ASP plus 6%. In July, the agency proposed ASP minus 33.4%.
- CMS estimates the policy will reduce Original Medicare drug payments by $4.35 billion and beneficiary drug payments by $1.1 billion in 2027, down from $4.55 billion and $1.15 billion in the proposal. The average beneficiary who receives a qualifying drug in a hospital outpatient department will save about $900 in 2027, according to the agency.
- The cut rests on a CMS survey of hospital drug acquisition costs, conducted from Jan. 1 to April 7. CMS said it found significant disparities between what hospitals pay for 340B drugs and drugs acquired outside the program. In some cases, beneficiary cost-sharing, typically 20% of the payment, exceeded what the hospital paid for the drug.
- The policy must be budget neutral, so CMS will raise payments for non-drug outpatient services by an equivalent amount.
- CMS raised the annual offset on non-drug payments, tied to its earlier 340B cuts that the Supreme Court struck down, from 0.5% to 2% starting in 2027. That is below the 3% it proposed. The reduction continues until CMS recoups $7.8 billion, which it estimates will happen in 2031.
- The rule finalizes a 2.3% payment update for hospitals and ambulatory surgery centers that meet quality reporting requirements, slightly below the 2.4% proposed. The update reflects a 3.2% market basket increase less a 0.9 percentage point productivity adjustment.
- CMS extended site-neutral payment to imaging without contrast, including certain bone density scans, X-rays, ultrasounds, CT scans and MRIs, in off-campus provider-based departments, with rural sole community hospitals exempt. The agency estimates the policy will reduce Medicare Part B spending by about $260 million in 2027.
- The rule also removes 637 more services from the inpatient-only list in the second year of a three-year phase-out, allows accrediting organizations to assess hospitals’ compliance with EMTALA administrative requirements and requires prior authorization for eight more botulinum toxin injection codes.
- Hospital groups criticized the rule. “We remain deeply concerned about CMS’ continued assault on the 340B program by reducing reimbursement rates and the accelerated clawback of funds from hospitals,” Ashley Thompson, AHA’s senior vice president of public policy analysis and development, said in a Nov. 4 statement. America’s Essential Hospitals called the cuts “an existential threat to essential hospitals and the patients they serve,” according to a Nov. 4 statement. The group said CMS is prioritizing hospitals that don’t serve the safety net and favoring pharmaceutical industry interests, and that the cuts arrive as millions of people risk losing Medicaid coverage in the coming months. She urged Congress to ensure CMS follows the law and preserves the 340B program. Hospital groups also condemned the proposed rule in July, and health systems estimated annual 340B losses ranging from about $7 million to $109 million under the proposal. The proposal’s provisions were detailed in July.
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