Healthcare Business Trends
News Briefs: CMS proposes new 340B reporting requirements
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5 hours ago
The 2027 proposed rule for the Medicare Physician Fee Schedule includes a provision that would require hospitals to submit 340B Drug Pricing Program data to a centralized repository.
Providers would submit 340B-related Medicare Part D claims data to the repository starting Jan. 1. CMS intends to assess whether the data can be used to exclude 340B claims from calculations of Part D inflation rebates, as is required under the Inflation Reduction Act.
Data submission would take place quarterly and entail 340B Part D claims elements such as prescription reference number, fill number and more. The requirement would extend to drugs dispensed by contract pharmacies. Third-party administrators could submit data on behalf of a provider, although CMS says the provider would be responsible for ensuring accuracy.
The repository was scheduled to launch Oct. 1, and covered entities are encouraged to use it voluntarily prior to Jan. 1.
In other 340B claims-reporting news, Johnson & Johnson issued a notice making 340B discounts contingent on providers’ submission of claims-level data for all covered drugs beginning Sept. 15. The requirement largely mirrors policies rolled out this year by Eli Lilly, Novo Nordisk and other manufacturers.
Medicare Worksheet S-12 adds to cost-reporting demands for hospitals
Acute care hospitals are taking steps to incorporate a required new worksheet in their Medicare cost reporting.
Effective for cost-reporting periods that end on or after Jan. 1, 2026, most hospitals paid under the Inpatient Prospective Payment System must fill out Worksheet S-12.
An analysis by the tax firm Baker Tilly notes that the worksheet is the first addition to the S series since 2016. The sheet is designed to bridge hospital price transparency files and Medicare cost reporting, meaning the accuracy of a hospital’s machine-readable file will affect its cost reporting.
The stated purpose of the worksheet is to provide Medicare Advantage data for CMS to use as soon as FY29 in recalibrating Medicare severity diagnosis-related group (MS-DRG) relative payment weights. Those weights are used to annually redistribute payments across MS-DRGs.
“This transition will effectively move the MS-DRG payment weight-setting process toward a market-based approach,” Baker Tilly states.
Maryland hospitals are exempt from the S-12 reporting requirement due to their state’s all-payer global budget model. The new worksheet also does not apply to hospitals that receive only non-negotiated payments.
CMS ends Medicaid coverage of gender-affirming care for minors
Federal Medicaid funding no longer will be available to cover gender-affirming healthcare for minors, according to a CMS final rule published Aug. 13.
The rule blocks Medicaid and Children’s Health Insurance Program (CHIP) federal matching funds from reimbursing providers for what the rule refers to as “sex-rejecting procedures” in beneficiaries younger than 18 in Medicaid and 19 in CHIP. As described in the rule, such services include puberty blockers, cross-sex hormone therapy and certain surgical procedures affecting primary or secondary sex characteristics.
In response to industry comments on the proposed version of the rule, CMS is permitting a “tapering period” that authorizes continued federal funding over six months for children already receiving cross-sex hormone therapy at the rule’s Oct. 13 effective date. Funding for puberty blockers and surgeries ends immediately when the rule takes effect.
States that could be hit hardest by Medicaid SDP reductions
As required by the One Big Beautiful Bill Act, the cap on Medicaid state-directed payments (SDPs) will be phased down from the average commercial rate to 110% of the Medicare rate in Medicaid non-expansion states, and 100% of Medicare in expansion states. Here is KFF’s estimate of states where federal spending on SDPs most exceeds the new limits.
OMB federal grant rule delayed as Congress passes continuing resolution
The continuing resolution (CR) passed by the Senate in August and the House on Sept. 1 ensures the federal government will remain fully operational into December, and it also freezes implementation of a noteworthy change to grant-approval processes.
Until the CR’s Dec. 11 expiration date, the Office of Management and Budget (OMB) is blocked from finalizing a previously proposed rule regarding oversight of federal grants.
OMB’s rule would alter the awarding and administration of grants across the government, requiring agencies to adopt modified criteria. OMB initially said the rule would be finalized in time to take effect Oct. 1, but the CR provision has stymied those plans.
In issuing the pause, Congress gave itself more time to consider the implications of a far-reaching regulatory change. Within HHS alone, grants made through agencies such as the CDC, the National Institutes of Health and the Health Resources and Services Administration would be affected.
The new criteria would be intended, in part, to ensure that activities funded through grants are consistent with Trump administration policies such as rollbacks of diversity, equity and inclusion initiatives.
Federal court vacates Medicare DSH rule affecting 2005-2013 payments
In a decision with implications for a larger case, a federal court on Aug. 28 vacated a 2023 rule that affected the calculation of Medicare disproportionate share hospital (DSH) payments retroactively over nine years.
In a September 2025 ruling, a judge with the U.S. District Court for the District of Columbia had found the rule to be unjustifiably retroactive, as well as procedurally deficient. Nearly a year later, in a decision on remedies, the court vacated the rule.
However, the court did not order HHS to recalculate the DSH payment determined for the plaintiff hospital, Montefiore Medical Center, under the disputed methodology. In court filings, the Bronx, New York-based facility said application of the rule retroactively reduced its FY 2006 payment by nearly $11 million, for example.
By requiring Medicare Advantage (MA) patients to be included in the DSH formula’s Medicare fraction for the years 2005-2013, the 2023 rule retroactively reduced DSH payments across the time frame. MA patients have been included in the fraction since 2014, as required by regulations issued that year.
In April 2026, roughly 130 hospitals filed a similar case, Bay Area Healthcare Group, Ltd., et al. v. Kennedy, in the same court that heard the Montefiore litigation. The complaint cites the 2025 ruling on the Montefiore case.
CMS to implement faster Medicare coverage for breakthrough devices
Medicare coverage of some breakthrough medical devices would be accelerated under a CMS notice of proposed processes, issued Aug. 11.
New processes would include putting forth an initial national coverage determination simultaneously with FDA authorization of an eligible device and finalizing Medicare coverage within three months of authorization. As is, nine to 12 months frequently elapse between FDA authorization and the completion of CMS’s coverage review, according to the notice.
The proposed Regulatory Alignment for Predictable and Immediate Device (RAPID) coordinated coverage pathway would entail the involvement of CMS and the inclusion of Medicare beneficiaries in FDA’s investigational device exemption clinical studies.
