340B Discounts at Risk: What It Means for FQHCs and Patient Care

Federally Qualified Health Centers (FQHCs), hospitals, and health systems relying on 340B discounts are facing growing uncertainty. Courts, policymakers, and pharmaceutical manufacturers continue to push for changes that could reshape how the program operates. Recent developments have highlighted potential new restrictions and increased oversight along with the financial strain for participating providers. FQHCs and hospitals depend on 340B savings to offset costs for other under-reimbursed operations and services.

Contract Pharmacies

One area of concern is contract pharmacy participation. Since 2020, pharmaceutical manufacturers have questioned whether they must honor 340B pricing for drugs dispensed through contract pharmacies. Federal agencies initially backed healthcare providers, but recent court rulings have favored manufacturers. A case that could set a precedent may soon reach the Supreme Court. Meanwhile, some states have passed laws to protect 340B discounts, but legal challenges have created a patchwork of regulations that complicate compliance. Without federal action, health systems may need to rethink how they manage 340B participation.

Shifting to a Rebate-Based Model?

Another possible shift involves moving from upfront 340B discounts to a rebate-based model. Instead of receiving immediate savings, hospitals and FQHCs would pay wholesale drug prices and later submit claims for reimbursement. Pharmaceutical companies argue that modern systems can process rebates quickly, but hospitals and FQHCs warn that such a change could create significant cash flow challenges and add administrative burdens—especially for safety-net providers that depend on immediate savings to sustain patient care. If this model moves forward, hospitals and FQHCs may need to adjust budget strategies, explore alternative funding sources, and strengthen financial resilience.

Medicare and Legislative Developments Could Reshape 340B

Medicare reimbursement for 340B drugs is under scrutiny once again. The Trump administration reduced Medicare Part B payment rates for 340B drugs, but the Supreme Court later struck down the policy. However, the ruling left open the possibility of future reductions if based on provider acquisition cost surveys. With Republican control of Congress and the White House, policymakers may revisit reimbursement structures, potentially reducing payments and affecting the financial sustainability of the program for many hospitals and FQHCs. If Medicare rates are lowered again, they could struggle to reinvest 340B savings into patient care.

Meanwhile, Congress is exploring legislative changes that could redefine which prescriptions qualify for 340B pricing and adjust eligibility criteria for those sites. These revisions could reduce the number of prescriptions covered under the program, affecting revenue. Additionally, the new administration’s stance on 340B remains unclear. If HHS leadership reinterprets statutory requirements, manufacturers may gain greater flexibility in imposing restrictions.

What We Advise

In light of recent developments, we recommend that hospitals and healthcare providers take proactive steps to navigate the evolving 340B landscape effectively.

• Monitor Policy Discussions. We encourage readers to subscribe to Apexus, a resource to stay updated on policy changes and discussions.
• Assess Financial and Operational Exposure. Evaluate how 340B program developments affect your pharmacy structure(s) and profitability. Compare the financial and operational considerations of in-house versus contract pharmacies. If you currently use contract pharmacies, assess the resource and revenue implications of transitioning to an in-house model.
• Engage with Policymakers. Advocate for sustainable solutions by communicating with senators and representatives about the impact of losing 340B benefits. As health care entities know, the loss of 340B benefits would result in a significant percentage of lost revenue, necessitating state intervention to cover costs. If not, this could lead to program or health center closures, overwhelming hospitals and emergency rooms and creating barriers to care for vulnerable patient populations.
• Strategic Planning and Proactive Compliance. Implement strategic planning and compliance efforts to navigate the evolving 340B landscape. This includes monitoring policy and legislative changes and regularly (monthly) assessing inventory to ensure compliance with 340B eligibility criteria. For example, if a manufacturer/prescription is no longer 340B eligible, centers need to adjust pricing and alert patients as appropriate.
• Perform Scenario Analysis. Conduct scenario analysis to determine the impact of losing the 340B program entirely or transitioning to a rebate system model. Many FQHCs rely on Excel for scenario analysis, which can quickly become complex and unwieldy. AAFCPAs helps clients identify and implement financial planning and analysis software solutions to improve efficiency and streamline decision-making.

How We Help

AAFCPAs helps FQHCs navigate the complexities of the 340B program, ensuring compliance with federal regulations and preparing for audits. Our team provides comprehensive support, from testing pharmacy transactions and conducting monthly outlier reporting to assessing internal control and compliance policies. We identify risks early, recommend actionable improvements, and help maintain program integrity, whether working with in-house or contract pharmacies.

Leveraging advanced data analytics and industry knowledge, we support clients in optimizing 340B program operations. AAFCPAs works closely with you to enhance efficiency, ensure compliance, and mitigate risks, fostering long-term success and stability for your pharmacy program.

If you have questions, please contact Courtney McFarland, CPA, MSA, 340B Apexus Certified Expert™ at 774.512.4051 or cmcfarland@aafcpa.com—or your AAFCPAs Partner.