Providers will soon be receiving far less reimbursement for drugs, and they’re understandably upset. The Centers for Medicare and Medicaid Services (CMS) recently announced their plan to cut the 340B Medicare Drug Pricing Program by a staggering $1.6 billion on January 1st, which means that the average CMS drug payment will drop to 22.5% less than average sales price.
In response, three of the country’s leading hospital groups–the American Hospital Association, America’s Essential Hospitals, and the Association of American Medical Colleges–have already filed a lawsuit against CMS, claiming that the the decision oversteps statutory authority. According to Tom Nickels, the executive vice president of American Hospital Association, the cut “is not based on sound policy and punishes hospitals and patients for participation in a program outside of CMS’ jurisdiction.”
Despite the vehement backlash, CMS has argued that the cut is designed to better align their reimbursements with the actual costs that are incurred by hospitals. According to the final rule that introduced the payment reduction, the change is meant to lower drug costs for hospitals that are part of the 340B program. However, many critics argue that hospitals will simply exploit the money they save, as there are no rules for how the savings must be spent. Without any explicit guidelines, there is fear that the money could end up in administrator’s pockets instead of helping the facilities cater to patients.
Though the rule will go into effect in less than two months, medical leaders are hoping they can change CMS’ mind in time. “CMS’ decision in today’s rule to cut Medicare payments to hospitals for drugs covered under the 340B program will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations,” asserted Nickels. “We strongly urge CMS to abandon its misguided 340B rule, and instead take direct action to halt the unchecked, unsustainable increases in the cost of drugs.”