Medicare Patients Paid More in Coinsurance Than the Hospital Paid for the Drug
That's not an accusation from an advocacy group. It's what CMS found when it went and asked every hospital what it actually pays.
From January 1 to April 7 of this year, CMS ran a survey. It asked every hospital paid under the Medicare outpatient system what it really pays to acquire each drug it bills Medicare for.
Buried in the fact sheet that came out of it is this line: "In some instances, the survey revealed that the beneficiary cost sharing amount, typically 20% of the total payment amount, was greater than the total price that the hospital paid for the drug."
Read that as a patient. Your 20% share of a drug came to more than the hospital spent buying the whole dose.
How that's even possible
The 340B program lets certain hospitals buy outpatient drugs at a steep discount. That's the point of it — it's a federal discount program.
But Medicare hasn't been paying those hospitals based on the discounted price they paid. It's been paying based on a benchmark called Average Sales Price. And your coinsurance isn't calculated off what the hospital paid. It's calculated off what Medicare pays.
Discount goes to the hospital. Coinsurance is figured from a number that ignores the discount. Do that at enough of a gap and 20% of the Medicare price can float above 100% of the hospital's cost.
What CMS is proposing
On July 2, CMS issued proposed rule CMS-1850-P for calendar year 2027. For 340B-acquired drugs, it would pay Average Sales Price minus 33.4% — a number that came directly out of that survey.
CMS estimates the effect at $4.55 billion less in Medicare drug payments and $1.15 billion less in beneficiary drug payments, in the first year.
Now the part that most coverage of this will skip. By statute, the change has to be budget neutral. So CMS proposes to raise outpatient payments for non-drug services by the same amount it takes out of drug payments. The money doesn't leave the hospital system. It moves.
What that means for the patient is genuinely mixed, and CMS doesn't spell it out: your share of a 340B drug goes down, while payments for other outpatient services go up — and coinsurance on those is calculated the same way. Whether an individual patient comes out ahead depends on what they actually get treated for. That's our read of the mechanism, not a CMS finding, and we'd rather say so than pretend the $1.15 billion lands evenly.
The imaging one is simpler
Get an X-ray or an MRI at a hospital-owned outpatient department and you can pay more than you would for the identical scan at a standalone clinic. Same machine, same picture, different address, higher copay.
CMS wants to pay the physician-office rate for imaging-without-contrast at certain off-campus hospital departments. It estimates that cuts Medicare Part B spending by about $260 million in the first year: roughly $190 million in program savings and about $70 million in reduced beneficiary premiums, with patient cost-sharing falling by about another $70 million. Rural Sole Community Hospitals would be exempt.
CMS Administrator Dr. Mehmet Oz framed the package this way: "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."
None of this is law
It's a proposed rule. CMS takes comments for 60 days after it appears in the Federal Register, and it can rewrite or abandon any piece of it before anything is final. The 2.4% payment update for hospitals and surgery centers, the 33.4% discount factor, the imaging change — all proposals. Your coinsurance in July 2026 is exactly what it was in June.
Two things we went looking for and couldn't find. CMS gives no per-person saving — $1.15 billion is a collective figure across Original Medicare, and the agency doesn't say how many beneficiaries it's spread over or what a typical patient would notice. And we couldn't pin the comment deadline to a date, because the release counts 60 days from Federal Register publication and doesn't give us that publication date.
What This Means for You
If you're on Original Medicare and get drugs at a hospital outpatient department: nothing has changed yet, and nothing changes in 2026. If the rule is finalized as proposed, your 20% share of certain hospital-administered drugs would be calculated from a lower payment starting in 2027 — CMS puts the total beneficiary reduction at $1.15 billion, without saying what that looks like on one person's bill.
If you've noticed the same scan costs more at the hospital than at the clinic down the road: you weren't imagining it, and CMS says so in writing. The proposal would equalize payment for imaging-without-contrast at certain off-campus hospital departments, which it expects to lower both premiums and cost-sharing.
If you want a say: proposed rules take public comment, and a beneficiary can file one. The window is 60 days from the rule's publication in the Federal Register, on regulations.gov under CMS-1850-P.
Sources
- CMS, "CMS Acts to Strengthen Care Quality, Cut Drug Costs, and Slash Out-of-Pocket Expenses for Medicare Beneficiaries" — July 2, 2026. Source of the Administrator's quote and the $5.7 billion total figure
- CMS Fact Sheet, "Calendar Year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Proposed Rule (CMS-1850-P)" — source of the survey dates, the coinsurance-exceeds-acquisition-cost finding, the ASP minus 33.4% proposal, the $260 million imaging estimate and the 2.4% payment update
- CMS, Hospital Outpatient Prospective Payment System — program background
Disclaimer: This article is news and general information only, not medical, legal or financial advice. CMS-1850-P is a proposed rule and is not in effect; its provisions may change or be withdrawn before a final rule is issued.