Heather Landi | July 9, 2023
The federal government will pay eligible hospitals in the 340B program $9 billion to offset payment cuts the Supreme Court ruled unlawful last year.
In 2018, the Department of Health and Human Services (HHS) cut prescription drug payments for 340B-covered entity hospitals by nearly 30%. The American Hospital Association (AHA) and other hospital groups sued to halt the cuts, and an appellate court sided with HHS that it has the power to make the cuts.
In June 2022, the Supreme Court unanimously rejected the massive payment cuts to hospitals under the contentious 340B drug discount program and ruled the pay cuts to be unlawful.
The top court ruled that the differential payment rates for 340B-acquired drugs were unlawful because HHS didn’t follow the proper procedure. Prior to implementing the rates, HHS failed to conduct a survey of hospitals’ acquisition costs under the relevant statute, the Supreme Court ruled.
HHS argued the cuts were needed to reimburse those hospitals for the actual acquisition costs of the drugs. The 340B drug discount program requires drugmakers to offer discounts to safety net providers in exchange for participation in Medicare and Medicaid.
In its ruling, the Supreme Court returned the case to lower courts to address potential remedies. In January, U.S. District Judge Rudolph Contreras remanded the issue of repayment back to HHS.
The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (PDF) Friday outlining the proposed remedy for the 340B-acquired drug payment policy for calendar years 2018-22. The agency is proposing a one-time lump-sum payment to the roughly 1,600 340B-covered entity hospitals that were paid less due to the now-invalidated policy.
CMS estimates that for calendar year 2018 through the approximate third quarter of 2022, certain 340B providers received $10.5 billion less in 340B drug payments than they would have without the 340B policy. However, many calendar year 2022 340B drug claims have been processed, or reprocessed through standard claims processing, at the higher default payment rate since the 340B payment policy was vacated on Sept. 27, 2022.
“As a result, affected 340B providers have already received from Medicare and beneficiaries $1.5 billion of the $10.5 billion that would otherwise have had to be remedied through these reprocessed claims,” the agency said in a fact sheet about the proposed rule.
Source: Fierce Healthcare