Court Rules Medicare Cut to 340B Drug Payment Unlawful

January 16, 2019

On Dec. 27, a federal judge ruled that the Department of Health and Human Services’ (HHS’s) nearly 30-percent cut to Medicare payment rates for many hospitals participating in the 340B drug discount program was unlawful. The American Hospital Association and several plaintiffs filed a lawsuit in September challenging the cuts, which beginning January 2018 reduced payments to affected hospitals by $1.6 billion per year. The reduction to drug payments for Washington 340B hospitals was more than $50 million per year.

WSHA joined more than 30 other hospital associations to file an amicus (friend of the court) brief in the case, emphasizing the importance of the 340B program, which was enacted by Congress more than 25 years ago to help expand access to life-saving prescription drugs and other drug treatments. The brief details how the cuts harm the communities the program serves. We are pleased by the ruling, which protects access to care for our most vulnerable communities, including low-income and uninsured individuals.

It is unclear at this point is how HHS will remedy the cuts, as the agency had already applied the savings to general outpatient prospective payment rates. The court will now receive briefings from the parties before determining the scope and type of relief for the affected hospitals and the mechanism to pay for it. WSHA will continue to monitor the issue and notify members when we have additional information. (Andrew Busz, )


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