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Judge Ends 'Unlawful' 340B Reimbursement Timeline

Analysis  |  By Amanda Norris  
   September 29, 2022

A judge rejected HHS' stated plan to wait until January 1 to restore drug payment rates to 340B hospitals.

A federal judge has ordered HHS to immediately end the nearly 30% cut in Medicare Part B drug payments to many 340B hospitals.

In July, the Supreme Court unanimously ruled that cuts to hospital reimbursement under the 340B drug discount program were unlawful, yet HHS had no immediate timeline to recoup these payments; now it must pay immediately.

Yesterday, Judge Rudolph Contreras with the U.S. District Court for the District of Columbia rejected HHS' stated plan to wait until January 1, 2023, to start restoring the full outpatient drug payment rates to 340B hospitals.

According to Contreras, "HHS should not be allowed to continue its unlawful 340B reimbursements for the remainder of the year just because it promises to fix the problem later."

340B President and CEO Maureen Testoni said in a release that "this is an important victory for 340B hospitals that have been fighting these unlawful Medicare cuts for nearly six years."

"CMS has the clear responsibility to restore the appropriate payments for 340B drugs immediately, and now a federal court has ordered it to do so without delay," Testoni said.

This ruling comes on the heels of a recently filed amicus brief by the American Hospital Association (AHA) urging immediate action to the recoupment of these payments, as the group said it was been waiting too long for reimbursements.

The AHA had this to say of Judge Contreras' ruling: "The AHA appreciates Judge Contreras' ruling … Halting these cuts will help 340B hospitals provide comprehensive health services to their patients and communities," the AHA said in a press release.

"We continue to urge the administration to promptly reimburse all the hospitals that were affected by these unlawful cuts in previous years and to ensure the remainder of the hospital field is not penalized for their prior unlawful policy, especially as hospitals and health systems continue to deal with rising costs for supplies, equipment, drugs, and labor."

“HHS should not be allowed to continue its unlawful 340B reimbursements for the remainder of the year just because it promises to fix the problem later.”

Amanda Norris is the Associate Content Manager of Finance, Payer, Revenue Cycle, and Strategy for HealthLeaders.

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