Dive Brief:
- The Supreme Court has agreed to hear a case involving the Trump administration’s cuts of Medicare Part B reimbursement for drugs that hospitals obtain under the 340B program.
- The case pivots on whether CMS has the authority to make payment cuts under the outpatient prospective payment system. The justices are expected to hear arguments either later this year or early next year.
- A decision in favor of the hospitals could wind up curbing the power of the federal government in setting rates for the Medicare program.
Dive Insight:
The 340B program was designed to allow safety net hospitals and community clinics to obtain drugs at a steep discount in order to treat low-income patients.
Lawmakers, especially Republicans, have criticized the program as lacking accountability and oversight. It took a huge blow when the Trump administration imposed major cuts to 340B drugs dispensed through off-campus hospital outpatient sites.
Prior to the change made in 2018, 340B providers were reimbursed at the average sales price for the drug plus 6%. After that, it was the average sales price minus 22.5%. Although there has been some hope in the hospital community that the Biden administration would reverse the cuts when it publishes its updated OPPS rules later this year, hospitals have been engaged in litigation since the rule was implemented three years ago.
The American Hospital Association, the American Association of Medical Colleges, America’s Essential Hospitals and three freestanding hospitals sued not long after the rule was implemented. They won at the district court level, but the decision was reversed last year by a three-judge panel of the U.S. Court of Appeals for the District of Columbia. The appeals court also refused a request for a hearing in front of all of its judges.
“We are hopeful that the Court will reject the appellate court decision deferring to the government’s interpretation of the law that clearly imperils the important services that the 340B program helps allow eligible hospitals and health systems to provide to vulnerable communities, many of which would otherwise be unavailable,” Melinda Hatton, AHA’s general counsel, said in a statement.
The program has been embroiled in other controversy recently. At the request of hospitals, HHS informed drugmakers that their decision to stop giving the ceiling price on products sold through contract pharmacies violated 340B regulations. Some manufacturers responded by filing lawsuits seeking to stop monetary penalties on companies that do not extend the discounts to facilities using contract pharmacies.