New Study Shows Rural Hospitals Benefit Most From Recent 340B and Other Medicare Payment Changes, With Majority Seeing 2.7 Percent Average Payment Increases

Majority of All Hospitals Will See Average of 1.5 Percent Net Medicare Payment Increases in 2018, Offsetting 340B Payment Change; Avalere Study, Commissioned by Community Oncology Alliance, Adds to Growing Body of Evidence Showing Need for Transparency in Hospital Programs

Washington, DC, Jan. 29, 2018 (GLOBE NEWSWIRE) -- 85 percent of hospitals will see net payment increases from recent Medicare Part B outpatient payment changes, with rural hospitals seeing much greater than average overall payment increases for 2018. These findings are included in new research released today by Avalere Health, which was commissioned by the Community Oncology Alliance (COA).

The Avalere study “2018 OPPS Medicare Part B Payment Impact Analysis” is the first to investigate the net financial impact of a restructuring of payments for Part B drugs to correct the unintended consequence of some 340B hospitals profiting from the program. The study dispels misinformation that the new payment system will result in hospitals seeing a drastic cut in reimbursement.

The Avalere analysis finds that, on average, all hospital types will see a 1.5 percent net payment increase in Medicare Part B payments compared to 2017. Rural hospitals see a much larger 2.7 percent net payment increase due to the redistribution of 340B savings. The report also breaks the data down on a state-by-state basis and finds that 42 states will experience a net increase in Part B payments.

In the study, Avalere experts looked at the net impact of recent Medicare Part B payment changes on payments to 3,814 hospitals across the country. They compared 2017 Part B payments to 2018 payments, accounting for recently implemented change to 340B reimbursement as well as other increases announced in the final 2018 Medicare Outpatient Prospective Payment System (OPPS) rules.

Recognizing that the 340B program had grown astronomically and is being abused by some hospitals for profit, the Centers for Medicare & Medicaid Services (CMS) wisely adjusted the payment rate for drugs purchased through 340B to be the average sales price (ASP) minus 22.5 percent, rather than previous rate of ASP plus 6 percent. The payment change will save the government $1.6 billion in 2018 which is being reallocated across all hospitals, including 340B hospitals, to increase reimbursements for other non-drug items and services paid under the OPPS. Additionally, CMS estimates that the change will reduce drug copayments for seniors by an estimated $320 million in 2018 alone.

“For far too long, large corporate hospitals have been abusing and enriching themselves off of the 340B program. This has come at the expense of taxpayers and patients, including the very vulnerable patients that the program is intended to help,” said Jeff Vacirca, MD, CEO of NY Cancer Specialists in New York and president of COA. “CMS should be commended for taking this bold first step and wisely adjusting the course of the runaway 340B program so that rural hospitals get the support they need and patients benefit.” 

Started by Congress in 1992, the 340B program requires drug companies to sell medicines to certain hospitals and clinics at steep discounts. Today, approximately 45 percent of all acute care hospitals participate in the 340B program. However, because participating hospitals aren’t required to pass savings on to patients, and the program lacks any transparency and accountability requirements, it has been plagued by hospital profiteering.

Three other notable studies have recently highlighted significant problems with the 340B program in hospitals. These include a study released last week in the New England Journal of Medicine (NEJM) which found that the program is driving consolidation of the nation’s cancer care system into the much more expensive hospital system; is associated with hospitals administering more cancer drugs; and has not resulted in any clear expansion care or lower mortality for eligible patients. Earlier this month, the House Committee on Energy and Commerce released the results of an exhaustive, two-year-long investigation into the 340B program. It’s report details problems with program oversight, reporting requirements, and data, and recommends Congress make significant changes to improve it. And late last year, a Berkeley Research Group study found the average profit margin on 340B oncology drugs was 49 percent in 2015, providing hospitals a clear financial incentive to aggressively expand and market oncology services.

“Contrary to the hype and misinformation we have seen in recent months, this study clearly shows that the vast majority of America’s hospitals, and in particular rural hospitals, are benefitting from the recent 340B and Medicare payment changes,” said Ted Okon, executive director of COA. “In light of these findings and the campaign of deception being waged by some in DC, Congress must act now to introduce transparency and accountability to the 340B program so that light is shined on the black hole of how this program really operates in hospitals.”

In recent weeks Congress has advanced several important pieces of legislation to improve 340B program operations, introduce transparency, and reign in program abuses. These include the “Helping Ensure Low-income Patients have Access to Care and Treatment,” also known as the HELP ACT (S. 2312) introduced by Senator Bill Cassidy (R-LA), and “340B Protecting Access for the Underserved and Safety-Net Entities Act,” also known as the 340B PAUSE Act (H.R. 4710) introduced by Representatives Larry Bucshon (R-IN) and Scott Peters (D-CA). COA strongly supports both bills and is working with policymakers to advance meaningful reforms to fix the 340B program so that it helps patients in need and not hospital profits.

A full copy of the Avalere study and methodology are available on the COA website at


A photo accompanying this announcement is available at


A photo accompanying this announcement is available at


A photo accompanying this announcement is available at

Avalere "2018 OPPS Medicare Part B Payment Impact Analysis" - Cover Overall, rural hospitals will benefit most from OPPS payment changes in 2018.

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