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Some Medicare patients owe more in coinsurance than the hospital paid for their drug. That arithmetic sounds impossible. It is a consequence of the 340B drug discount program and Medicare’s payment formula. Now the Department of Health and Human Services, where I work, is proposing to narrow that gap.
Congress created the 340B drug discount program in 1992 to financially support safety net hospitals that serve low-income patients. Drug manufacturers must give them steep discounts. But Medicare, Medicaid, and commercial insurers generally reimburse them at the full amount, allowing these hospitals to keep the spread above the discounted purchasing costs.
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