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Certain 340B Hospitals to Receive Lump-Sum Settlement

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What’s happening: A final rule from the Centers for Medicare & Medicaid Services (CMS) contains a remedy for the agency’s 340B-acquired drug payment policy that was in effect from 2018 to 2022. 

What else to know: Eligible hospitals will receive a lump-sum settlement for claims, including beneficiary cost sharing, as a result of CMS’ invalidated policy that reduced payments for separately payable outpatient drugs acquired under the 340B program.  

Other provisions of the final rule include: 

  • Budget Neutrality Adjustment: CMS finalized a .5% budget neutrality reduction to the conversion factor to offset the $7.8 billion it will pay out as a settlement. The adjustment begins in calendar year 2026 (delayed from 2025 as proposed) and is estimated to be in effect for 16 years. 
  • Settlement Timing: Medicare Administrative Contractors have 60 days to process payments once they receive instructions from CMS. 
  • Medicare Advantage (MA): CMS declined to address issues related to repayment from MA plans. It stated those issues were out of scope for the rule and that CMS cannot interfere in private contracts between MA plans and hospitals.  
  • Any hospital that believes CMS made an error in calculating its lump-sum payment should email CMS at with details about the error and any supporting documentation by 8:59 p.m. (PT) on Nov. 30. 

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