Changes in Service Delivery Following Site-Neutral Payment Reforms by Hospital 340B Status

Medicare site-dependent payments and the 340B Drug Pricing Program both incentivize vertical integration between hospitals and physician practices. Medicare pays higher rates to hospital outpatient departments (HOPDs) than to physician offices, incentivizing hospitals to acquire and convert standalone physician practices into off-campus HOPDs. 340B hospitals earn enhanced profits from outpatient drug delivery, which may further incentivize acquisition of new sites. We used Medicare fee-for-service claims to describe trends between 2016 and 2022 in services provided at off-campus HOPDs, an indicator of vertical integration, stratified by hospital 340B participation status. 340B hospitals delivered a higher and growing percentage of outpatient services at off-campus HOPDs than non-participating hospitals. Drugs accounted for a larger percentage of off-campus HOPD claims at 340B hospitals. At off-campus HOPDs paid site-neutral rates, service volume increased faster among 340B hospitals. Despite recent reforms, 340B hospitals may be more incentivized to pursue vertical integration than other hospitals.