Court of Appeals Again Upholds 340B Hospitals' Medicare Part B Drug Reimbursement Cuts

 Oct. 19, 2020 

As you may recall from a LUGPA communication sent this summer, the United States Court of Appeals for the District of Columbia reversed the United States District Court for the District of Columbia’s ruling in American Hospital Association vs. Azar, concluding that HHS properly exercised its authority in permitting CMS to implement a service-specific, non-budget-neutral reimbursement cut under the Outpatient Prospective Payment System.

On Friday, the full Court of Appeals for the District of Columbia declined to reconsider the July 31 decision, upholding CMS’ authority to change OPPS in order to align reimbursement for drugs acquired under the 340B program more closely to hospital costs in acquiring those drugs.

The 340B program enables safety-net hospitals, health centers, and clinics to purchase prescription medications at discounted prices. These covered entities then receive reimbursement for drugs purchased under the program at much higher rates than their acquisition costs. In recent years, critics have complained the 340B program was being abused by hospitals by not using these excess profits to help underserved populations, contrary to the program’s original intent.

The AHA has not yet exhausted their appeals, however, with last week’s ruling, the only outlet available to the AHA and their co-plaintiffs is to have the case heard by the US Supreme Court.   LUGPA continues to actively advocate for site-neutral payments, will monitor the course of the appeals and provide updates as they become available.

Court Upholds 340B Hospitals' Medicare Part B Drug Reimbursement Cuts

July 31, 2020 

For the second time in two weeks, a federal court has handed down a ruling that rebukes the hospital industry and reinforces the statutory authority of the Centers for Medicare & Medicaid Services (CMS) to make major changes to its Outpatient Prospective Payment System (OPPS).

Today, the U.S. Court of Appeals for the District of Columbia Circuit overturned a federal district judge’s ruling that CMS exceeded its statutory authority by reducing Medicare Part B drug reimbursement for 340B hospitals in 2018 and 2019. In today’s ruling, a panel of judges voted 2-1 to affirm CMS’ authority to change OPPS in order to align reimbursement for drugs acquired under the 340B program more closely to hospital costs in acquiring those drugs.

The 340B program enables safety-net hospitals, health centers, and clinics to purchase prescription medications at discounted prices. These covered entities then receive reimbursement for drugs purchased under the program at much higher rates than their acquisition costs. In recent years, critics have complained the 340B program was being abused by hospitals by not using these excess profits to help underserved populations, contrary to the program’s original intent.