CMS Releases Proposed Remedy to Repay Unlawful 340B Cuts to Hospitals

July 20, 2023

On July 7, The Centers for Medicare and Medicaid Services (CMS) released its proposed rule to repay hospitals that participate under the 340B program and are paid under the Medicare outpatient prospective payment system (OPPS) payment but were unlawfully underpaid for outpatient drugs from 2018 to 2022.  CMS was required to propose a remedy to address underpayment as a result of a U.S. Supreme Court decision.  The court determined that CMS did not follow proper procedure in calculating and implementing what was a 30 percent cut to payment for 340B hospitals. WSHA provided an amicus brief on behalf of our members, supporting the suit by the American Hospital Association.

CMS proposes to make up the underpayments which occurred over a five-year period as a single-lump sum payment to each affected hospital, to be made in late 2023 or early 2024. The lump sum amount includes the beneficiary cost-sharing amount so hospitals will not need to collect it from patients, particularly since the time range for the services goes back several years.

At the same time, the agency proposes to offset the cost of the retroactive payment by prospectively reducing the conversion factor applicable for non-drug items and services for all hospital paid under OPPS by 0.5% annually for approximately the next 16 years, beginning in calendar year 2025.

CMS will accept comments on the proposal through September 5.  WSHA plans to submit comments and will provide members with draft comments in advance of the comment due date. (Andrew Busz,


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