COA backs CMS plan to cut 340B hospital drug margins

The Community Oncology Alliance is urging CMS to finalize 2027 Medicare outpatient payment reforms that would lower reimbursement for 340B-acquired drugs, expand site-neutral payments and tighten hospital price transparency. The group says the changes would reduce patient cost-sharing and redirect Medicare dollars toward smaller, rural and community hospitals.

Why it matters: - COA says the 2027 OPPS proposal could reduce inflated Medicare payments for drugs hospitals buy through the 340B program. - The group argues the changes could lower beneficiary cost sharing and shift Medicare dollars toward smaller hospitals, rural facilities and community oncology settings. - COA also sees stronger hospital price transparency as a practical step for cancer patients trying to compare costs.

What happened: - The Community Oncology Alliance submitted comments to CMS on the Calendar Year 2027 Hospital Outpatient Prospective Payment System proposed rule. - COA backed CMS’ proposal to rebalance payment for 340B-acquired drugs. - COA also urged CMS to expand clinically appropriate site-neutral payment and strengthen hospital price transparency requirements. - The group posted the full comment letter.

The details: - Under CMS’ proposed 340B policy, hospitals would be paid Average Sales Price minus 33.4% for 340B-acquired drugs. - CMS based the proposed rate on its 2026 hospital acquisition-cost survey. - Hospitals currently receive Average Sales Price plus 6%, even when they buy drugs at steep 340B discounts. - COA said that structure lets some large, high-volume hospital systems keep substantial margins between acquisition cost and Medicare reimbursement. - COA said the new approach would better align payment with actual hospital drug costs. - COA said the policy would also reduce cost sharing for Medicare beneficiaries. - Avalere analysis cited by COA found that 78% of OPPS hospitals would receive a net payment increase because of budget neutrality. - The same analysis found rural hospitals would see an average increase of 3.4%. - Hospitals with fewer than 100 beds would see an average increase of 7.0%. - COA supports ASP minus 33.4% with no add-on payment for 2027 and future years. - COA also supports a targeted exemption for rural, sole community hospitals because of their access and financial constraints. - On site-neutral payment, COA supports Physician-Fee-Schedule-equivalent rates for imaging without contrast in excepted off-campus hospital departments. - COA urged CMS to identify additional services and locations that could be paid at aligned rates, with rural and access safeguards. - On transparency, COA wants standardized payer and plan identifiers. - COA also wants structured reporting in a common downloadable shoppable-services file for every hospital. - COA asked CMS to add infusion administration, PET/CT imaging and tumor genomic-sequencing panels to the shoppable-services list. - Ted Okon, COA executive director, said seniors should not pay cost sharing based on inflated drug reimbursement when hospitals buy drugs at steep discounts. - Debra Patt, MD, PhD, MBA, FASCO, COA president, said affordability, access and information all matter for people facing cancer.

Between the lines: - COA is backing CMS on 340B reform, but it is also trying to preserve access protections for rural and sole community hospitals. - The group’s position reflects a broader push to move Medicare payments closer to actual acquisition costs and away from hospital system cross-subsidies. - The transparency request suggests COA wants patients to see more usable price data for high-cost cancer services, not just comply with disclosure rules on paper.

What's next: - CMS will decide whether to finalize the 340B payment change in the final 2027 OPPS rule. - COA wants CMS to keep advancing site-neutral payment policies and broaden them to additional services where clinically appropriate. - COA is pressing for stronger hospital price transparency requirements in the final rule. - The group thanked CMS for addressing what it called longstanding structural problems in hospital payment and urged the agency to move quickly.