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CMS drug proposal would wallop hospitals that serve poor

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The Centers for Medicare & Medicaid Services has proposed deep cuts to how much it reimburses many hospitals to buy drugs.

The proposal would change the rate paid to hospitals for drugs under  the 340B program. The  program gives hospitals that serve many low-income patients access to deep discounts on some pharmaceuticals. The new proposal would significantly cut the payments that hospitals that serve many such patients receive for those medications.

Michael Newshel, an Evercore ISI analyst, told clients: “Medicare would essentially be clawing back most of the discount from hospitals, (without any impact to payment made to drug manufacturers).”

Mr. Newshel said that while the  proposal would affect about half of all U.S. hospitals, such for-profit chains  as Tenet Healthcare Corp. and HCA Healthcare Inc. wouldn’t feel any impact, because they don’t qualify for the discount program.

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