For most of the past year, the Medicare Payment Advisory Commission (MedPAC) has been examining Medicare Part B payments to hospitals that participate in the 340B drug purchasing discount program in an effort to better align program payments with drug acquisition costs while enhancing funds available to reimburse hospitals for uncompensated care.

In July 2015, MedPAC evaluated two policy alternatives intended to address these goals: changing Medicare payment to 100 percent of the drug’s average sales price (ASP) + $24, or to 102 percent of ASP + $14 per administration day. Both options would have the effect of increasing the payment for very low priced drugs and decreasing the payment for higher cost drugs, which MedPAC believes would incentivize use of lower priced drugs.