CMS indicated that this change would better align Medicare reimbursement with hospitals’ costs of acquiring 340B drugs. CMS based the amount of the proposed payment reduction on a cost acquisition survey of 340B drugs completed by hospitals in early 2026. The budget neutrality requirement means that savings from reductions in 340B payments to 340B hospitals would be redistributed to both 340B and non-340B hospitals through higher payments for non-drug outpatient services. For-profit hospitals are not eligible for the 340B program and so would only see increases in reimbursement for non-drug outpatient services. These efforts have been halted by the courts due to lack of authorization from HHS, the agency that administers the 340B program.