Part B Payments for 340B Purchased Drugs

Medicare Part B pays a set amount to health care providers who furnish drugs to its beneficiaries. Certain eligible health care providers-generally, those that serve a disproportionate share of needy patients-are allowed to purchase drugs using the 340B Drug Discount Program, thereby receiving sizable statutory discounts. Past Office of Inspector General (OIG) work found that Medicare payments to providers for 340B purchased drugs substantially exceeded the providers' costs. Under the design of the 340B Program and Part B payment rules, the difference between what Medicare pays and what it costs to acquire the drugs is fully retained by the participating covered entities, allowing them to stretch scarce Federal dollars in service to their communities. However, some policymakers have questioned whether a portion of the savings mandated through the 340B Program should be passed on to Medicare and its beneficiaries.