Chicago-based UChicago Medicine set up a separate bank account so it could track every Inflation Reduction Act refund owed to its 340B hospitals. For September and October, that account shows nothing.
“In the last two months, for multiple of our entities, we’ve got $0 back,” said Denise Scarpelli, PharmD, chief pharmacy officer at UChicago Medicine, during a 340B panel at Becker’s Fall Chief Pharmacy Officer Summit in Chicago. Payments were strong in January, she said, then fell month by month until they stopped. “I don’t know if that’s intentional.”
Chicago-based Rush University System for Health is still checking whether its own refunds have stalled, said Kate Schaafsma, PharmD, vice president and chief pharmacy officer. Without a setup like a separate account that ties each payment to a claim, “it is very challenging to get back to that,” she said. She urged other health systems to check.
The missing refunds come as 340B hospitals prepare for two major changes set to take effect Jan. 1: a new 340B rebate pilot and a steep cut to Medicare payments for 340B-acquired drugs. Medicare’s second round of negotiated drug prices also takes effect that day.
A cut finalized during the conference
CMS finalized a payment rate of ASP minus 28% for 340B-acquired drugs, effective Jan. 1, 2027, replacing ASP plus 6%. The agency had proposed ASP minus 33.4%.
Maureen Testoni, president and CEO of 340B Health, told attendees the move amounts to about a 32% cut once the lost 6% add-on is counted. She said hospitals cannot sue until the cut takes effect and they receive the lower payments. She also said most of the savings will be redistributed to non-340B services under budget neutrality rules.
Dr. Scarpelli said her first step after the announcement was briefing UChicago Medicine’s CEO and CFO. The cut was not included in a budget that had already been set. “Of course it impacts us,” she said of leaders’ first question. “So the number one thing they want to know is the dollar amount.” Her team is now looking at drug switches and shifting patients to other sites of care to limit the financial hit.
Dr. Schaafsma said leaders need to hear that the cut cannot simply be absorbed. The C-suite must understand “this is not something you can necessarily fully mitigate, nor is it something that you can make go away as much as many of us would like to,” she said. She added that limiting the impact on patients will take physicians, nurses, finance and revenue cycle teams working together, not just pharmacy.
Ms. Testoni said one hospital at a recent Atlanta roundtable is weighing whether to stay in 340B at all because of its heavy infusion volume.
The rebate pilot returns
The HRSA rebate pilot is back with more drugs, and a lawsuit against it is pending. Under the model, hospitals buy certain drugs at full price and wait for manufacturers to pay back the difference.
Dr. Scarpelli said her team will handle submissions in-house because a vendor contract could not be in place by Jan. 1. She said UChicago Medicine’s finance and treasury teams know the system may need to borrow money to cover higher upfront drug spending, a cash flow problem more than a margin one. “If you don’t have a plan in place, you’re kind of behind,” she said.
Rush took the opposite approach. Dr. Schaafsma said the health system handled the work in-house last year and “did a fairly good job,” but it came with complexities. Rebates are not the only pressure on her team right now. This year, Rush is pursuing an outside partner and has pulled in stakeholders from across the organization.
“This is not something that we can maintain just within the pharmacy world or even within the small pharmacy 340B team,” she said. “This is a full-on strategy for the organization to keep us whole.”
Manufacturers want more data
Dr. Scarpelli said manufacturers have asked UChicago Medicine for purchase invoices before paying IRA refunds, which the program does not require.
Ms. Testoni said HRSA has not responded to manufacturers’ demands for 340B claims data, such as Eli Lilly’s requirement. She said at least three hospitals have sued manufacturers under state consumer protection laws, and Arizona’s attorney general has also taken action. She expects 340B program staff to move from HRSA to CMS soon.
Making the case
Dr. Schaafsma said Rush is now working to make sure everyone in the organization, including its board, can explain why the program matters. Rush did the same at the state level when it pushed for Illinois’ contract pharmacy protections.
“340B wasn’t meant for at the counter, but it’s meant to support the community,” she said. “Not a lot of health systems, not a lot of hospitals will survive if it just goes away.”
Ms. Testoni urged hospitals to track every missed payment so HRSA can see where the pilot falls short. Both chief pharmacy officers said the most important step is making sure the C-suite understands the financial impact before Jan. 1.
