More on Reimbursement

Medicare 340B a $2.2 billion boon for Massachusetts hospitals, study finds

The results of new research conducted by Avalere Health counter the argument that 340B drug pricing would bring dramatic reimbursement cuts.

Jeff Lagasse, Associate Editor

Western Massachusetts Hospital - Credit: Google Street ViewWestern Massachusetts Hospital - Credit: Google Street View

Hospitals in Massachusetts, especially those in rural areas, will benefit from recent changes to Medicare payments, including changes to reimbursement of prescription drugs under the 340B drug pricing program, according to a new analysis

On average, Massachusetts hospitals will see a 2.5 percent increase -- or an additional $52,896,645 -- in Medicare payments related to the changes. The findings were released by Avalere Health, a nonpartisan Washington, D.C.-based firm that analyzes the impact of health policies.

[Also: Massachusetts grabs spotlight by proposing new twist on Medicaid drug coverage]

The study contradicts an assertion by some that the Medicare changes to the payment of drugs purchased under the 340B program would bring drastic cuts to hospital reimbursement and threaten operations. Massachusetts hospitals, in fact, are estimated to receive nearly $2.2 billion in net Medicare payments as a result of the changes in 2018.

Started by Congress in 1992, the 340B program gives certain hospitals and clinics that treat high numbers of uninsured or underinsured patients steep discounts on drugs purchased. The program has grown substantially, morphing into a profit-generating program for most hospitals who can make upwards of 50 percent profit selling drugs purchased at a discount to insured patients, the authors wrote. 

Today, nearly half of all acute care hospitals participate in the 340B program. Recognizing that it is being abused by some hospitals, the government sought to reduce the profit motivation by adjusting the payment rate for drugs purchased through 340B beginning this year.

Some 340B hospitals have predicted that reductions in program reimbursement, which took effect on Jan. 1, would cause them to lose revenue. The Avalere research showed that increases in Medicare Part B payments for non-drug items and services have more than offset the 340B cuts, with 42 states, including Massachusetts, seeing overall payment increases.

Twitter: @JELagasse
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