Proposed changes in the federal section 340B prescription drug discount program would hurt hospital margins.

So says Moody’s Investors Service, the credit rating agency.

According to Moody’s, the margins of non-profit hospitals are already under pressure because revenue increases are not keeping pace with prescription drug costs.  Reductions of payments under the 340B program recently proposed by the Centers for Medicare & Medicaid Services would make a challenging situation worse, Moody’s speculates.

Under the 340B program, eligible hospitals purchase prescription drugs at a discount, supply them to eligible outpatients, and use the savings they gain to provide additional services and outreach to the low-income residents of their communities.

Skeptics maintain that hospitals simply pocket the savings.

Under the regulation proposed by CMS, federal payments to 340B-eligible hospitals would be greatly reduced.

Most private safety-net hospitals participate in the 340B program and benefit considerably for it.  NAUH has asked CMS  to withdraw the proposed regulation and has urged members of Congress to contact CMS to make the same request.

Learn more about the issue and Moody’s report on the potential impact of changes in the program in this Healthcare Finance News article.