340B hospitals to get full drug reimbursement for 2022, court orders

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The Department of Health and Human Services must immediately stop the 30% drug reimbursement cuts to hospitals in the 340B program, a federal judge has ruled.

The order from Judge Rudolph Contreras with the U.S. District Court for the District of Columbia rejects HHS' plan to wait until January 1, 2023, to restore the full outpatient drug payment rates to 340B hospitals. 

The order vacates the drug reimbursement rate for 340B hospitals in the 2022 Outpatient Prospective Payment System (OPPS) Rule.

Contreras said, "HHS should not be allowed to continue its unlawful 340B reimbursements for the remainder of the year just because it promises to fix the problem later."

In June, the U.S. Supreme Court ruled the 340B cuts for 2018 and 2019 were unlawful but had not ruled on 2020 or afterward.

The American Hospital Association said it is continuing to urge the administration to reimburse all the hospitals that were affected by these cuts in previous years.

WHY THIS MATTERS

Hospital groups expressed support for the court decision.

"The AHA appreciates Judge Contreras' ruling that the Department of Health and Human Services must immediately stop unlawful reimbursement cuts for 2022 for hospitals participating in the 340B drug pricing program," said Melinda Hatton, general counsel and secretary for the AHA. "Halting these cuts will help 340B hospitals provide comprehensive health services to their patients and communities."

340B President and CEO Maureen Testoni said, "This is an important victory for 340B hospitals that have been fighting these unlawful Medicare cuts for nearly six years. The Centers for Medicare and Medicaid Services has the clear responsibility to restore the appropriate payments for 340B drugs immediately, and now a federal court has ordered it to do so without delay."
 
THE LARGER TREND

The cuts have represented an annual $1.6 billion loss to hospitals.

They came about under the Trump Administration in the 2018 Outpatient Prospective Payment System Final Rule that cut drug reimbursement, first by 28.5% and then, by 22.5%.

Prior to the 2018 rule, Medicare paid 340B hospitals the average sales price of a drug, plus 6%, or $106%.

340B hospitals use the additional funding to offset the operating expenses of caring for large, underserved populations.

In June, the Supreme Court ruled in favor of hospitals' claims to 340B drug reimbursement but left questions for providers as to how they would be made whole for the two years they didn't receive billions from the Department of Health and Human Services.

In the American Hospital Association v. Becerra, the Supreme Court unanimously held that HHS exceeded its statutory authority by varying its 2018 and 2019 OPPS reimbursement rates for a particular group of hospitals – 340B hospitals – without having first conducted a statutorily mandated survey of hospitals' acquisition costs. 

The case was remanded back to federal court to decide a remedy.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org