“CMS’s decision in today’s rule to cut Medicare payments to hospitals for drugs covered under the 340B program will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations,” Tom Nickels, executive vice president of the American Hospital Association, says in a statement, adding, “It is not based on sound policy and punishes hospitals and patients for participation in a program outside of CMS’s jurisdiction.”

The current 340B payment calculation of 6 percent over the average sales price is the same as Medicare’s long-standing policy. But the proposed changes would mean that the CMS would pay only $65,000 for a drug costing $84,000, instead of $89,000 currently. Vaccine payments would not change. While the CMS initially estimated $900 million in savings from the reduction in payments, it now says it would save approximately $1.6 billion in 2018.

According to the report, the 340B program is controversial because it does not control how hospitals can use money received through the program. Critics say some hospitals exploit the savings.

Providers have condemned the proposed rule, saying it put safety-net hospitals particularly at risk. Although they only account for 36 percent of U.S. hospitals, 340B hospitals provide 60 percent of uncompensated care in the country. And in August, HHS’s Advisory Panel on Hospital Outpatient Payment also asked the CMS to rescind the proposal out of worry that it would hurt safety-net hospitals’ ability to care for patients.

In another part of the rule that covers payment to outpatient facilities, total knee arthroplasty will be removed by the CMS from the list of procedures that can only be performed in inpatient facilities—a change that hospitals warned earlier could have a negative effect on patient safety.

The changes will take effect on January 1.