Court Again Rejects 340B Payment Cuts; Calls for Quick Resolution on Remedy > Hospital Association of Pennsylvania

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Court Again Rejects 340B Payment Cuts; Calls for Quick Resolution on Remedy

May 07, 2019

Consistent with a ruling during late December, a Federal District Court judge ruled yesterday that the Administration’s nearly 30 percent cut to Medicare payments to hospitals participating in the 340B Drug Pricing Program was unlawful and ordered the U.S. Department of Health and Human Services (HHS) to resolve the harm caused by the cuts “promptly.”

The ruling states that HHS will get a "first crack at crafting appropriate remedial measures.” The judge ordered HHS to report back to him on or before August 5 with its remedy proposal.

The Centers for Medicare & Medicaid Services' 2018 outpatient prospective payment system (OPPS) rule called for an almost 30 percent payment cut in hospital reimbursement for 340B drug claims.

During late December 2018, the D.C. District Court blocked the 340B payment cut for 2018 in a ruling on the lawsuit brought by the American Hospital Association, the Association of American Medical Colleges, America's Essential Hospitals, and three hospitals against HHS. The ruling this week reaffirmed that the 2018 cuts were unlawful and extended that ruling to the 2019 cuts. HHS has appealed the December 2018 decision.

Hospital plaintiffs, led by the American Hospital Association, have urged the court to make hospitals whole so that the total reimbursement for 340B claims equals the full amount as specified by the 2017 OPPS rule—before the payment cuts—plus interest.

The 340B Drug Pricing Program has enabled Pennsylvania hospitals to care for low-income and uninsured patients by purchasing certain outpatient drugs from pharmaceutical manufacturers at discounted prices. Hospitals can then use the savings to provide an expanded range of comprehensive health services to their local communities, such as increased access to care, clinical pharmacy services, community outreach programs, free vaccines, and transportation to follow-up appointments. The intent behind the program is to allow hospitals to stretch scarce resources to better serve vulnerable patients and communities.

The program has been a particularly valuable tool as the price of prescription drugs places an increasing financial burden on patients and hospitals. 

HAP will keep Pennsylvania hospitals informed of developments as legal proceedings related to the 340B program move forward.

For additional information about the 340B program or the AHA litigation, contact Jolene Calla, Esquire, HAP’s vice president, health care finance and insurance. For information about advocacy related to the 340B program or policies designed to address the high cost of pharmaceuticals, contact Laura Stevens Kent, HAP’s vice president, federal advocacy.

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