Trump administration proposes more cuts to drug discount program for safety net hospitals


Trump administration proposes more cuts to drug discount program for safety net hospitals

Kate Randall

28 July 2018

The Trump administration proposes to expand its cuts to a drug discount program that benefits some hospitals that serve indigent people, elderly and the poor. Last year, the administration slashed by nearly a third the rate it pays for drugs used in hospital outpatient settings, resulting a $1.5 billion loss to many hospitals in the program.

The administration’s latest proposal centers on the so-called 340B program, which requires drug makers to give some safety net and nonprofit hospitals discounts on nearly all drugs. Federal programs reimburse these hospitals for the same medicines at a higher rate. Hospitals contend that they use the balance after reimbursement to pay for charity care and other services.

The Trump administration is proposing to expand the cuts in 340B to other off-campus departments, such as separate clinics owned by participating hospitals. Earlier this month, a federal judge denied a bid by a collection of hospital groups to roll back the cuts. There are currently more than 12,000 hospitals and facilities in the program.

Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma claims that the cuts will help patients at these facilities. “This will ensure that seniors at these locations get access to these savings,” she said in a call with reporters.

The Trump administration contends that because Medicare beneficiaries’ coinsurance payments are a percentage of what Medicare pays, a lower reimbursement rate will mean lower out-of-pocket costs for patients.

The administration claims that beneficiaries will save $320 million in 2018 because of its initial cut to 340B rates and that the change proposed…

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