AHA and Hospital Plaintiffs File Briefs on Recent 340B Ruling

Posted on February 06, 2019

As reported Jan. 11, a federal judge ruled in late December in favor of the American Hospital Association (AHA) and hospital plaintiffs, determining that the nearly 30 percent cut to Medicare fee-for-service payment rates for 340B drugs implemented in 2018 was unlawful and exceeded the authority of the Centers for Medicare & Medicaid Services (CMS). The judge granted the AHA's motion for a permanent injunction and ordered a supplemental brief on the question of proper remedy. 

The court-ordered brief was recently filed by the AHA and hospital plaintiffs, urging the federal court to order the Department of Health and Human Services (HHS) to “make whole” 340B hospitals that experienced the payment cuts, estimated at $1.6 billion nationally. These cuts were included in the 2018 Medicare outpatient prospective payment system (OPPS) final rule and reduced payments for 340B drugs from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent. The CMS implemented these cuts in a budget-neutral manner through a 3.2 percent increase to the 2018 OPPS conversion factor. The 2019 Medicare OPPS final rule continued the lower payment rates for 340B outpatient drugs. The brief notes that hospitals that received the reduced payments for 340B drugs should receive a supplemental payment for those claims in an amount that equals the difference between the amount received and the full payment amount plus interest.

In the recent filing, the AHA and plaintiffs said that the repayments should not be done in a budget-neutral manner, as expenditures need not be budget-neutral when they fix a prior, unlawful underpayment. The brief states that the plaintiffs’ proposal is easy to implement, will not have disruptive consequences for the Medicare program, does not require a new rulemaking for 2018, and is comparable to actions that other courts and the HHS have taken to correct previous erroneous payments to Medicare providers. 

The HHS also filed a brief in late January with its proposed remedies in the case. The two sides will respond to each other’s briefs by Feb. 14. The MHA will provide additional information as it becomes available. Members with questions should contact Vickie Kunz at the MHA.

Tags: 340B Drug Pricing Program, prescription drugs, 340B

Posted in: Issues in Healthcare, Member News

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