Hospital groups, health systems sue HHS to halt $1.6B in payment cuts

Three hospital groups and three provider organizations sued HHS Monday in an attempt to stop payment cuts for drugs purchased through the 340B Drug Pricing Program.

The lawsuit, which was filed in U.S. District Court for the District of Columbia, was filed by the following hospital groups: the American Hospital Association, America's Essential Hospitals and the Association of American Medical Colleges. The groups were joined in the lawsuit by three health systems: Brewer, Maine-based Eastern Maine Healthcare Systems; Detroit-based Henry Ford Health System; and Hendersonville, N.C.-based Park Ridge Health. 

Earlier this month, CMS released its 2018 Medicare Outpatient Prospective Payment System rule, which finalizes a proposal to pay hospitals 22.5 percent less than the average sales price for drugs purchased through the 340B program. That's compared to the current payment rate of average sales price plus 6 percent. This change would reduce Medicare payments to hospitals by $1.6 billion.

The lawsuit argues the 340B provisions of the OPPS final rule violate the Social Security Act and should be set aside. The lawsuit further alleges the 340B provisions are outside of the HHS secretary's statutory authority.

The hospital groups and health systems are seeking an injunction that would prohibit HHS from implementing the 340B provisions of the OPPS final rule pending resolution of the lawsuit.

"From its beginning, the 340B Drug Pricing Program has been critical in helping hospitals stretch scarce federal resources to enhance comprehensive patient services and access to care," said Rick Pollack, president and CEO of the AHA. "CMS's decision to cut Medicare payments for so many hospitals for drugs covered under the 340B program will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations. This lawsuit will prevent these significant cuts from moving forward."

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