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AHA Asks for Prompt Repayment of 340B Funds to Hospitals

Analysis  |  By Jay Asser  
   July 06, 2022

The hospital organization wants HHS to remedy the unlawful payment cuts without applying budget neutrality.

The American Hospital Association (AHA) is urging HHS to expediently repay hospitals after the Supreme Court struck down cuts to 340B Medicare reimbursements.

With its unanimous decision, the Supreme Court sided with AHA and deemed the cuts illegal because HHS did not first survey the hospitals' drug acquisition costs. Though SCOTUS did not offer a remedy to the dispute, the ruling allows the hospitals to fight for the $1.6 billion owed to them annually.

AHA now wants 340B hospitals to be repaid the withheld funds without delay, as well as paid for the past four years in which CMS illegally cut reimbursement rates, as outlined in a letter to HHS secretary Xavier Becerra.

"We are concerned, however, that despite the Supreme Court's conclusive decision, resolution of these issues could be bogged down in needless litigation, and that hospitals will not be appropriately compensated at a time when they are weathering significant financial challenges on many fronts," AHA writes.

The hospital organization notes that when a federal district court initially ruled that the cuts were unlawful, the prior Administration took actions to delay repayments.

Along with requesting a remand to HHS to determine the appropriate remedy, the prior Administration conducted notice-and-comment rulemaking on that remedy. It also opposed the AHA's motion for an expedited remedy and offered that affected hospital be repaid on a case-by-case basis.

AHA specifically highlights the prior Administration's position that HHS is required to maintain budget neutrality when determining the appropriate remedy.

"As you know, that position would mean that some hospitals will be forced to pay back money spent years ago — including during the COVID-19 pandemic — because the federal government made a legal error," the AHA writes. "Hospitals should not have to pay for the agency's mistakes. Instead, this Administration should take the sensible (and legally correct) position that budget neutrality is not required when a court — here, all nine Justices of the Supreme Court — concludes the agency violated the law."

Finally, AHA points to HHS unlawfully citing a 2020 survey for proposing even bigger reimbursement cuts.

The survey, AHA says, failed to meet the statutory requirement for response rate because it was issued during the onset of the COVID-19 pandemic, with only 7% of hospitals responding with acquisition of cost data. It also did not meet statutory requirements when it specified that only 340B hospitals were required to complete the survey.

The quicker 340B hospitals are repaid, AHA argues, the less damage they will incur in their role serving vulnerable communities.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


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