Skip to main content
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Blogs
    • AI
    • Deals
    • Layoff Tracker
    • HLTH 2024
    • Sponsored Content: Vital Signs Blog
  • Opinion
    • Letters
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • 40 Under 40
    • Best Places to Work in Healthcare
    • Healthcare Marketing Impact Awards
    • Innovators Awards
    • Diversity Leaders
    • Leading Women
    • Best in Business Awards
    • The 2030 Playbook Conference
    • Innovations in Patient Experience
    • Leading Women Conference & Awards Luncheon
    • Leadership Summit
    • Workforce Summit
    • Best Places to Work Awards Gala
    • Diversity Leaders Gala
    • - Looking Ahead to 2025
    • - Financial Growth
    • - Hospital of the Future
    • - Value Based Care
    • - Looking Ahead to 2026
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Sponsored Video Series - One on One
    • Sponsored Video Series - Checking In with Dan Peres
  • Data & Insights
    • Data & Insights Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Skilled Nursing Facilities
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
    • Sponsored Content
MENU
Breadcrumb
  1. Home
  2. Politics & Policy
September 06, 2023 02:26 PM

Hospitals disagree with 340B pay remedy's 'clawback'

Alex Kacik
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    drugs_money
    MH Illustration

    Hospitals' chief complaint about the 340B remedy payment proposed rule is that it's budget neutral, which the federal government likely won't be able to change.

    The Centers for Medicare and Medicaid Services and the Health and Human Services Department have had to backtrack since the Supreme Court invalidated reimbursement cuts to the 340B drug discount program, which gives hospitals and other covered entities that treat low-income and uninsured patients discounts of between 25% to 50% on pharmaceutical purchases. Under the proposed rule issued in July, the agencies would offset those payment cuts through a one-time lump sum payment, but reduce reimbursement for other outpatient services to ensure that Medicare spending remains the same.

    Related: 340B payment remedy favors hospitals with the least uncompensated care

    Budget neutrality is the central sticking point across the 150-plus comments submitted to the federal government regarding the proposed rule. The American Hospital Association, among other provider associations and health systems, disagrees with government's assessment, arguing that the Health and Human Services Department has “the legal obligation and legal flexibility to not seek a clawback of funds that hospitals received as a result of HHS’ own mistakes.”

    Chicago-based CommonSpirit Health, one of the biggest nonprofit health systems, also said HHS should not pursue a budget neutrality adjustment. But if it does, the federal government should drastically reduce the amount, delay recoupment until 2026, spread it over a longer period and ensure that the adjustment does not unduly enrich Medicare Advantage organizations, the health system said.

    “There is a significant risk that these commercial [Medicare Advantage organizations] will pay hospitals a decreased rate because of HHS’s recoupment methodology. This would double the adverse impact of the proposed recoupment on hospitals,” Alyssa Keefe, CommonSpirit senior vice president, public policy and advocacy, said in a comment letter.

    Jared Kosin, president and CEO of the Alaska Hospital and Healthcare Association, urged the government to eliminate the proposed 340B remedy payment’s budget-neutral framework, claiming its 340B-covered entities would experience a negative net impact of $10.8 million as a result of the proposed changes.

    Under the proposed rule, the federal government would pay $9 billion to more than 1,600 hospitals to offset the federal government's roughly 30% reduction of Medicare 340B payments that the Supreme Court deemed unlawful. CMS plans to cut non-drug item and service payments to all hospitals by $7.8 billion over a 16-year period starting in 2025 to maintain budget neutrality, which is required by the Social Security Act, the agency said in the proposed rule.

    Generally, health systems and hospital associations agreed with many elements of the proposed rule, including the one-time lump sum repayment and the methodology for calculating what 340B hospitals are owed. Despite hospitals’ requests to not issue corresponding revenue cuts along with the remedy payments, it is unlikely that CMS would move away from budget neutrality, regulatory experts said.

    The 340B remedy payment proposed rule and ensuing debate represents the latest standoff involving the heavily contested law.

    Hospitals, particularly those in rural areas, say they rely on the program to offer services their communities need. The recent stretch of elevated labor and supply costs reinforce the 340B program’s importance, hospitals and other providers say.

    The number of 340B-eligible hospitals and clinics increased six-fold from 2000 to 2020, according to data from the University of Southern California Schaeffer Center. The program’s growth has sparked concern from drug manufacturers and policy experts, some of whom argue that 340B dollars aren’t going to health systems that offer the most uncompensated care.

    A Modern Healthcare analysis of estimated uncompensated care costs relative to the size of the proposed 340B remedy payments shows the drug discount program may have strayed from its mission to support hospitals that carry the heaviest burden of care for low-income patients. Hospitals that would receive the biggest remedy payments tended to provide proportionally less charity care and carry less bad debt than other 340B-eligible hospitals, the analysis showed.

    Dr. Miriam Atkins, president of the Community Oncology Alliance, and Ted Okon, executive director of the association that represents independent oncology practices, said in a comment letter that the “340B program no longer exists to benefit the nation’s most vulnerable patients.” Large hospitals with more than 500 beds will receive nearly half of the proposed remedy payments, while rural hospitals will only receive 5% of the total sum, they noted.

    Stakeholders have until Sept. 11 to submit comments. A final rule is expected in November.

    Related Articles
    340B pay remedy favors hospitals with the least uncompensated care
    CMS’ 340B proposal a 'hard pill to swallow' for some hospitals
    Hospitals to receive $9 billion under proposed 340B remedy
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    mh-20250512-Brett-Guthrie
    House GOP bill would make deep cuts to Medicaid
    Copy of 110220-regionals2-medicaid_WEB_i.jpg
    What would Medicaid cuts look like? Missouri gave a preview
    Most Popular
    1
    Here are new state healthcare laws taking effect in 2025
    2
    Meet Modern Healthcare's 2025 Leading Women
    3
    New York-Presbyterian layoffs affect 2% of employees
    4
    Evernorth, Optum, CenterWell units buoyed insurers in Q1
    5
    Epic CEO Judy Faulkner on AI, antitrust and consolidation
    Sponsored Content
    Modern Healthcare Alert: Sign up for this breaking news email to be kept in the loop as urgent healthcare business news unfolds.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Help Center
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HLTH 2024
      • Sponsored Content: Vital Signs Blog
    • Opinion
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • 40 Under 40
        • Best Places to Work in Healthcare
        • Healthcare Marketing Impact Awards
        • Innovators Awards
        • Diversity Leaders
        • Leading Women
        • Best in Business Awards
      • Conferences
        • The 2030 Playbook Conference
        • Innovations in Patient Experience
        • Leading Women Conference & Awards Luncheon
        • Leadership Summit
        • Workforce Summit
      • Galas
        • Best Places to Work Awards Gala
        • Diversity Leaders Gala
      • Virtual Briefings
        • - Looking Ahead to 2025
        • - Financial Growth
        • - Hospital of the Future
        • - Value Based Care
        • - Looking Ahead to 2026
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
      • Data & Insights Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Skilled Nursing Facilities
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing
      • Sponsored Content