CHA News

Federal Court Stops 340B Medicare Rate Cuts for Hospitals

For CFOs, CMOs, Pharmacy Managers

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Last week, a federal district court ruled that the Department of Health and Human Services (HHS) exceeded its statutory authority when it implemented a 30% reduction to 2019 Medicare reimbursement rates — included in the federal fiscal year (FFY) 2019 outpatient prospective payment system (OPPS) final rule — for certain pharmaceutical drugs covered by the 340B Drug Pricing Program.

The court’s finding mirrors a previous finding related to cuts imposed in the FFY 2018 OPPS final rule. While the court concluded there were “fatal flaws” with the agency’s rate reductions, it did not vacate either rule; instead, it remanded the two rules back to HHS so the department may attempt to remedy the court’s concerns. HHS has until Aug. 5 to provide a progress report to the court on both rules.

Both the 2018 and 2019 lawsuits were brought by the American Hospital Association, Association of American Medical Colleges, and America’s Essential Hospitals.