The Trump administration proposes a rule that would change how hospitals participating in the 340B program are reimbursed for outpatient prescription drugs for Medicare Part B patients. The administration says the change would prevent hospitals from charging markups when those drugs are purchased at discounted 340B prices, potentially reducing costs for Medicare patients. The Centers for Medicare & Medicaid Services estimates that the proposal would save about $1.1 billion next year, including an average reduction of roughly $800 per older adult with Medicare Part B who receives one of the affected drugs, based on the administration’s model.
Under the proposal, CMS would modify the reimbursement formula used for 340B participating hospitals, with the policy draft describing caps tied to average sales prices minus 33.4%, reflecting the discounted acquisition cost structure. One example cited in the draft uses Lupron Depot, where the administration says current reimbursement exceeds what hospitals pay under 340B.
Hospital advocates oppose the rule, saying it could increase financial pressure on hospitals that serve low-income patients and may reduce their ability to maintain services. The American Hospital Association argues the proposal would undermine access to care for people who rely on the 340B program. In 2018, a similar effort was blocked after the Supreme Court ruled in 2022 that the government could not use a separate reimbursement plan for 340B hospitals. If finalized, the rule would begin next year.
