Recent changes to CMS’s Hospital Outpatient Prospective Payment System (OPPS) rule for CY 2018 have created a stir across the healthcare industry due to the profound impact on organizations participating in the 340B Drug Pricing Program. The new rule, which goes into effect January 1, 2018, reduces reimbursement for Part B drugs and biologicals for most hospitals participating in the 340B program by nearly 30%.
The 340B program has provided vital financial resources to many safety net hospitals, allowing them to improve clinical programs and enhance access to care for patients. Participating hospitals often use 340B operating margins to benefit the communities they serve by investing in capital improvements (e.g., building new locations, expanding current facilities) or offering nonreimbursable support services (e.g., case management, patient education programs, psych/social support, patient navigation). Without this income stream, not only is the viability of community benefit programs in question, but participating health systems will also likely need to scrutinize operating expenses across their entire enterprise.
While there are efforts underway to impede the enactment of the policy, with less than two months until the cuts are planned to take effect, participating organizations should nevertheless begin preparing for the changes. The purpose of this paper is to provide a framework for how to proactively respond.