Trump Administration Proposes Rule to Cut 340B Drug Payments and Expand Site-Neutral Imaging Reimbursements

CMS proposes to lower Medicare Part B reimbursement for hospitals that purchase drugs through the 340B discount program and to extend site-neutral payment rates to hospital imaging. The draft caps drug payments at the average sales price minus 33.4%, a roughly 40% cut, and aligns imaging fees with those paid to freestanding physician offices.

HealthCareDive

The 340B program lets safety-net hospitals buy outpatient drugs at reduced prices, but Medicare often reimburses them at higher rates. The Trump administration first sought to curb these payments in 2018; the Supreme Court blocked that approach in 2022, finding the government lacked authority for a separate reimbursement plan. An April 2025 executive order required a survey of hospital drug-acquisition costs, forming the basis of the current proposal. The current rule, released in July 2026, would take effect at the start of the next calendar year if finalized.

The Independent

CMS projects $1.1 billion in Medicare savings the first year—about $800 in annual co-pay cuts per older adult with Part B coverage—and $20 billion over ten years. Imaging changes would cut Part B spending by $260 million, with $190 million in direct savings and $70 million in lower premiums. Analysts estimate a $5.7 billion reduction in drug spending in 2027. CMS says the rule aligns payments with acquisition costs and removes site-of-care price differences. A White House official, speaking anonymously, highlighted the $1.1 billion savings and said hospitals were not consulted.

The Independent

The American Hospital Association warned that cutting reimbursements could undermine hospitals’ ability to maintain essential services for patients who rely on 340B discounts. America’s Essential Hospitals called the rule an “axe to critical funding” that ignores safety-net providers. Both groups say hospital outpatient departments serve more complex and underserved populations, justifying higher rates.

The Hill

• “These proposals will undermine the ability of hospitals to maintain essential services and protect affordable access to care for those who depend on the 340B program,” — Ashley Thompson, AHA senior VP

Associated Press

• “This proposed rule focuses squarely on patient affordability by strengthening our utilization management tools, aligning drug payments with actual acquisition costs, and removing site-of-care disparities that have unnecessarily driven up costs for millions of seniors,” — Dr. Mehmet Oz, CMS Administrator

HealthCareDive

• “Medicare and patients should not be charged more for an imaging test solely because it is done in a hospital setting rather than a standalone clinic,” — CMS

The Hill

• “The rule’s so-called site neutral policy is also yet another cut to Medicare payments that hospitals desperately need to stay open and serve their communities,” — AHA

The Hill

CMS will open a notice-and-comment period for the rule. If finalized, the changes would take effect at the start of the next calendar year. Stakeholders expect possible litigation, citing the 2022 Supreme Court decision, while CMS says it will monitor the rule’s impact on Medicare spending and hospital finances.

HealthCareDive