BREAKING: U.S. Appeals Court Upholds Deep Cuts in 340B Hospitals’ Medicare Part B Drug Reimbursement

Your 340B Report for Friday July 31, 2020

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U.S. Appeals Court Upholds Deep Cuts in 340B Hospitals’ Medicare Part B Drug Reimbursement

The Trump administration’s nearly 30 percent cut since 2018 in 340B hospitals’ drug reimbursement under the hospital outpatient prospective payment system (OPPS) “rests on a reasonable interpretation of the Medicare statute,” a closely divided federal appeals court ruled today.

The 2-1 decision by the U.S. Court of Appeals for the District of Columbia Circuit overturns a federal district judge’s rulings that the U.S. Center for Medicare & Medicaid Services (CMS) exceeded its statutory authority by reducing Medicare Part B drug reimbursement for 340B hospitals in 2018 and 2019. The nearly 30 percent reduction also is in place for this year.

We have reached out to the three national hospital associations that sued CMS over the cuts—American Hospital Association, Association of American Medical Colleges, and America’s Essential Hospitals—for comment on the appeals court’s decision. They and the three health systems that sued CMS over the cuts might seek a rehearing before all 17 judges on the appeals court, as they are doing in a recent court loss related to site-neutral payments.

The appeals court decision is a major setback for 340B hospitals and trade groups who challenged the case. It comes just hours before CMS might publish its OPPS proposed rule for the coming year. The White House Office of Management and Budget cleared CMS to publish the rule this morning.

340B Health President and CEO Maureen Testoni issued this statement about today’s court ruling:

We are deeply disappointed by and concerned about the decision from the U.S. Court of Appeals for the District of Columbia Circuit allowing discriminatory Medicare Part B payment cuts to continue for many hospitals participating in the 340B drug pricing program. These cuts of nearly 30% have caused real and lasting pain to safety-net hospitals and the patients they serve. Keeping these cuts in place will only deepen the damage of forced cutbacks in patient services and cancellations of planned care expansions. These effects will be especially detrimental during a global pandemic.

340B enjoys strong, bipartisan support in Congress, where many House and Senate members are on the record opposing this harmful payment policy. We again call on the Centers for Medicare & Medicaid Services (CMS) to abandon its ill-considered strategy of singling out safety-net hospitals for pay reductions and restore fairness and common sense to Part B payments. The 340B program enables safety-net hospitals, health centers, and clinics to stretch their scarce resources to serve more patients and provide more needed services. These hospitals provide 60% of all uncompensated care in the U.S. and account for 75% of all Medicaid hospital services. 340B discounts help cover some of these costs without using a single taxpayer dollar.

340B Report will provide more coverage later today or this weekend.